Wednesday, February 27, 2008

Fed ready to cut interest rates again

WASHINGTON - The Federal Reserve is ready to lower interest rates again to brace the wobbly economy even as zooming oil prices spread inflation, Chairman Ben Bernanke signaled to Congress on Wednesday.

He is fighting to keep the economy afloat after mighty blows from the housing and credit crises, while trying to contain inflation.

For now, the priority is shoring up the economy, Bernanke suggested in an appearance before the House Financial Services Committee. He pledged anew to slice a key interest rate and help the economy, which many fear is on the verge of a recession, if not already in one.

"The economic situation has become distinctly less favorable" since the summer, the Fed chief told lawmakers.

Since then, the housing slump has worsened, credit problems have intensified and the job market has deteriorated. Bernanke said that combination of bad news has made people and businesses more cautious about spending and investing, further weakening the economy.

The country should prepare for "sluggish economic activity in the near term," Bernanke said. Concern is growing about the possible return of stagflation, when stagnant growth is combined with rising inflation, for the first time since the 1970s.

Were energy prices to continue to rise at a sharp clip — something the Fed does not anticipate — it would "create a very difficult problem" for the economy, Bernanke said. Inflation would spread and growth would be further restrained, he said. If that happened, it would be a "very tough situation," he added.

The Fed is prepared to lower rates again to bolster economic growth, Bernanke said. The Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks," he said, sticking closely to assurances he offered earlier this month.

The central bank started lowering a key interest rate in September. Over just eight days in January, the Fed shaved 1.25 percentage points, the biggest one-month reduction in a quarter-century. Economists and Wall Street investors predict the Fed will cut rates again at its next meeting, March 18. Some analysts believe rates will drop again in April.

Brian Bethune, economist at Global Insight, said Bernanke's remarks "keeps the door wide open for further rate cuts."

On Wall Street, the Dow Jones industrials edged up 9.36 points.

Bernanke said that at some point this year, the Fed will need to "assess whether the stance of monetary policy is properly calibrated" to foster the Fed's objectives of price stability "in an environment of downside risks to growth."

He was hopeful that previous rate reductions and the $168 billion economic aid plan of tax rebates for people and tax breaks for business would energize the economy in the second half of 2008.

As the Fed chief began his first day of back-to-back appearances on Capitol Hill to discuss the economy, there was more bad news on the housing and manufacturing fronts. Sales of new homes fell in January for a third straight month. Orders to factories for big-ticket manufactured goods dropped in January by the largest amount in five months.

Bernanke has come under some criticism for not acting sooner in cutting rates. But Alabama Rep. Spencer Bachus, the committee's top Republican, expressed sympathy. "There is perhaps no other public figure in America who has been subjected to as much Monday morning quarterbacking as you have" over the past months, Bachus said.

The committee chairman, Rep. Barney Frank, D-Mass., suggested the economy is not suffering through a garden-variety slowdown.

He made clear that he wasn't trying to put the R-word — recession — in Bernanke's mouth. "I'm not going to be responsible for the nervous people at the stock market who overreact when you twitch your nose," Frank told Bernanke. "But the problems we now have are different."

Many of those woes are linked to the housing meltdown. Bernanke was asked when he thought the housing market might stabilize. It's possible, he said, that by "later this year it will stop being such a big drag directly" on the economy. But home prices probably will decline into next year, he added.

"It is very difficult to know, and we've been wrong before," Bernanke said.

Even as the Fed tries to bolster the economy, it must remain mindful of inflationary pressures, Bernanke said.

Oil prices, which have set records, briefly shot past $102 a barrel on Wednesday; prices eased, but still remain close to $100 a barrel.

"Should high rates of overall inflation persist," Bernanke said, "the possibility also exists that inflation expectations could become less well-anchored." If people think inflation is escalating, they will act in ways that could make things even worse, a sort of self-fulfilling prophecy. Bernanke said that could complicate the Fed's job of trying to nurture growth while keeping inflation under control.

If oil prices continue to skyrocket this year, it would be "hard to maintain low inflation," Bernanke acknowledged.

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The Wal-Mart Puzzle

Wal-Mart. Click image to expand.
Given the economic headwinds, one would think that a retailer catering to lower-end consumers would be doubly slammed. As the subprime-mortage mess shows, people at the bottom of the income ladder are struggling. And as for the retail sector generally, don't ask. Retail sales have been sluggish in recent months, and national chains are shutting down stores by the dozen. From Nordstrom down to Target, fourth-quarter profits have been disappointing.

Which brings us to the mystery of Wal-Mart. The nation's largest retailer, which caters to working-class customers, seems to have something of a sweet spot. The stock closed Tuesday at $51.40—its highest close since March 2005. Amid the market turbulence of the last six months, Wal-Mart's stock has risen nicely and has pasted the Standard & Poor's retail index. Wal-Mart's stock makes an excellent proxy for the health of the working-class consumer. So how can it be that Wal-Mart's stock is outperforming its tonier, trendier rivals?

First, while Wal-Mart's overall sales aren't rising dramatically, they are rising—on a total and same-store basis—even as the economy grinds to a halt. In the fourth quarter (PDF), the combined U.S. sales of Wal-Mart and Sam's Club (the company's warehouse division) rose 5.2 percent, while same-store sales rose 1.6 percent for Wal-Mart and 2.5 percent for Sam's Club. And this is happening at a time when many large retailers have suffered declines in same-store sales. The reason is that Wal-Mart sells necessities, not discretionary items. The overwhelming majority of its sales are not impulse buys. Even in a recession, most people don't drastically reduce their spending on staple groceries, light bulbs, or diapers.

Second, Wal-Mart's cheapo reputation is serving it well. For much of this decade, Trading Up has been the governing retail paradigm. In an age of easy credit and expanding consumer choices, masses of consumers took to shopping for staples at cheap outlets while indulging their passions at boutiques. Underwear from Wal-Mart, but chocolates from Godiva. Mac and cheese in bulk at Costco, but Starbucks for caffeine jolts. But that mentality is so 2005. As the latte era grinds down and credit tightens, Americans have stopped trading up and started trading down. That plays right into the hands of Wal-Mart, whose brand identity is all about saving people money. Underwear and Hershey's kisses from Wal-Mart. In a pinched economy, consumers are embracing their inner skinflint. And Wal-Mart is a penny pincher's paradise.

Third, the stock market is famously a futures market. While today's closing prices reflect data on last quarter's sales and profits, they also reflect investors' beliefs about what sales and profits may be in the coming quarters. And there's good reason to believe Wal-Mart's will hold up well. Unlike many retailers, Wal-Mart expects its profits will rise modestly in 2008. And the economic-stimulus package President Bush signed earlier this month seems to have been designed to help Wal-Mart. It funnels cash to individuals making less than $75,000 or to families making less than $150,000, many of whom might shop at Wal-Mart. Three hundred dollars really isn't enough to put a dent in a payment for a new car or to pay off a mortgage, but it might be enough to spur a shopper to throw a few extra goodies into the Wal-Mart shopping cart.

Fourth, as the U.S. economy idles, the rest of the world is still growing quite rapidly. And Wal-Mart finally has meaningful international sales to report. In 2003, international sales were just 16.7 percent of overall revenues. But thanks to aggressive expansion in Mexico, China, and elsewhere, Wal-Mart has become an increasingly multinational corporation. In the 12 months that ended in January 2008, international sales rose 17.5 percent and constituted 24.2 percent of overall sales. In the most recent quarter, international sales rose 18.8 percent from the year before and for the first time accounted for more than 25 percent of total revenues. The growth in rapidly expanding international operations is adding more dollars to Wal-Mart's top line than the slower growth of the massive U.S. base. Having essentially saturated the United States, there isn't much Wal-Mart can do to increase sales dramatically here—especially at a time of economic strain. But the behemoth of Bentonville has found a way to tap into the continuing global boom.

The past several years have been something of a lost decade for Wal-Mart investors. But if the current trends of slow domestic growth and a global boom continue for the next two years, Wal-Mart may yet salvage the '00s.

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Dollar Trades Near Record Low Against Euro on Rate Differential

Feb. 28 (Bloomberg) -- The dollar traded near a record low against the euro after the yield advantage on two-year German government debt over Treasuries widened to the most in more than five years.

The U.S. currency headed for a second monthly loss versus the euro and reached a 24-year low against the Australian dollar on speculation Federal Reserve Chairman Ben S. Bernanke will elaborate on plans to cut interest rates in testimony to the Senate today. The yield premium on two-year German bunds over similar-maturity U.S. debt widened to 1.41 percentage points today, the most since October 2002.

``I am super-bearish on the dollar,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``The yield differential is buffeting the dollar and favoring the euro.''

The U.S. currency traded at $1.5103 per euro at 6:40 a.m. in London, after touching $1.5144 in New York yesterday, the weakest since the euro's debut in 1999. The dollar dropped to 106.32 yen from 106.49 yen yesterday, when it fell to 105.96, the lowest since Feb. 7. It may decline to $1.52 a euro and 105.80 yen today, Ishikawa forecast.

The yen rose against the euro and 14 of the 16 most-active currencies as Asian stocks fell, encouraging investors to reduce holdings of higher-yielding assets funded with loans in Japan. It rose to 160.51 per euro from 161.01 in New York yesterday.

The yuan rose the most this year on speculation China will seek faster currency gains to slow inflation. It climbed 0.34 percent to 7.1174 per dollar, compared with 7.1420 yesterday.

February Slump

The Australian dollar touched 94.57 U.S. cents, the highest since March 1984, before trading at 94.07 cents, as traders bet the Reserve Bank of Australia will raise its 7 percent benchmark rate again next week. Australia's benchmark interest rate is 4 percentage points above the Fed's 3 percent target.

The currency's 14-day relative strength index against the U.S. dollar reached 75.74 yesterday. A level above 70 signals a currency is likely to change direction. Morgan Stanley, the second-largest U.S. securities firm, said in a research note yesterday investors should sell the Australian dollar once it hits 94 U.S. cents.

The dollar is the second-worst performer versus the euro this month among the 16 major currencies after the British pound, falling 1.7 percent, as the housing recession worsened and consumer confidence sank. An index that tracks the U.S. currency against six major counterparts dropped yesterday to 74.213, the lowest since its inception in 1973.

The dollar weakened past $1.51 per euro yesterday after Bernanke told the House Financial Services Committee that the Fed ``will act in a timely manner'' to insure against ``downside risks'' to the economy. Bernanke testifies to the Senate Banking Committee today at 10 a.m. in Washington.

Yen, Stocks

Futures on the Chicago Board of Trade show traders expect the Fed to cut rates to at least 2 percent by mid-year, from 3 percent now. The bank has slashed rates from 5.25 percent in September, and is scheduled to meet next on March 18.

The yen advanced versus the Canadian dollar and the South African rand, two favorites of so-called carry trades.

A Japanese government report today showed January factory production fell at twice the pace economists predicted, fueling speculation a slowdown in the U.S. is spreading into Japan.

``The yen is being propelled by risk reduction among investors,'' said Koji Fukaya, a senior strategist at Deutsche Securities, the Tokyo unit of Deutsche Bank AG, the world's biggest currency trader.

Euro, Jobs

Japan's currency may move between 106 and 107 per dollar for the rest of this week, Fukaya said.

The yen advanced 0.2 percent to 108.36 against the Canadian dollar from 108.63. It rose 0.7 percent to 14.1980 versus the rand from 14.3132. The MSCI Asia Pacific Index of regional stocks declined 0.5 percent, halting a three-day, 4 percent rally.

The euro was supported by speculation a German report today will show the unemployment rate fell to the lowest in more than 15 years in February. Germany's jobless rate dropped to 8 percent this month, the lowest since November 1992, according to a Bloomberg News survey of economists before the government report at 9:55 a.m. local time.

The euro advanced versus 10 of the 16 most-active currencies in the past five days after European Central Bank policy makers yesterday reiterated concern that inflation may quicken and voiced optimism economic growth may be resilient to a U.S. slowdown.

``ECB officials indicated there's no change in their hawkish stance on rates,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``The euro is likely to strengthen.''

Europe's single currency may rise to $1.5150 and 161.35 yen today, Soma forecast.

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L Ron Hubbard plagiarized Scientology

Evidence that L. Rob Hubbard plagiarised Scientology from a 1934 German book called "Scientologie." The text seems to map to various hoo-haw from the cult's official doctrine, too. Link (Thanks, Marilyn!)

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New Hampshire May Be The 13th State To Decriminalize Marijuana

New Hampshire may be the next state to decriminalize marijuana, following the lead of 12 states so far, as two New Hampshire legislators from Nashua have filed the legislation papers. The bill is to be voted on next month by the state House of Representatives, and would decrease the penalty for small amounts of marijuana to a $200 civil fine.

The news comes at a time when the general sentiment about pot of the American people is shifting. Almost half of the United States population has at least experimented with pot, and while many still believe it should not be fully legalized, having a criminal record for pot is beginning to seem more and more excessive.

The debate will be lively with many supporters and opponents of the legislation. The opposition of the bill feels that decreasing the penalties for marijuana possession will encourage its use among the younger generations and cause them to believe that using marijuana is ok.

I do agree with people who say smoking pot all day all the time will lead to a lazy and unfulfilling life. That is why it is our responsibility as parents, friends, brothers, sisters, and people to educate each other about moderation in all parts of life. While there are many risks associated with marijuana, there are also many benefits.

Even for those of us that are not citizens of New Hampshire, the future of marijuana’s legal status is close to the hearts of many. Personally I support the decriminalization, and full legalization would benefit the country greatly in new tax revenues and reduced law enforcement costs. Even though I am not from New Hampshire, I whole-heartedly believe in their motto “Live Free or Die!” and to me part of being free is having the right to make your own decisions.

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China Eats Crow Over Faked Photo Of Rare Antelope

HONG KONG -- It turns out that train tracks in Tibet aren't where the antelope play.

Earlier this week, Xinhua, China's state-run news agency, issued an unusual public apology for publishing a doctored photograph of Tibetan wildlife frolicking near a high-speed train.

The deception -- uncovered by Chinese Internet users who sniffed out a Photoshop scam in the award-winning picture -- has brought on a big debate about media ethics, China's troubled relationship with Tibet, and how pregnant antelope react to noise.

The antelope imbroglio began in the summer of 2006. The Chinese government was celebrating its latest engineering feat, and an enthusiastic wildlife photographer from the Daqing Evening News was camped out on the Tibetan plateau eating energy bars and waiting for antelope to pass.


On July 1, 2006, in an event scheduled to coincide with the Communist Party's 85th birthday, Chinese President Hu Jintao hosted the launch of China's train to the "roof of the world." The $4 billion Qinghai-Xizang railway -- a remarkable system that transports passengers to an altitude (16,000 feet) so high that ballpoint pens can explode en route from the air-pressure change -- traverses 1,200 miles of rugged terrain to connect the rest of China to the remote Tibetan plateau.

The train, which soon brought many visitors to the pristine homeland of Tibetan Buddhists, became a flash point for China's long simmering tensions with Tibet. During construction, it drew fierce protests from environmentalists who said it would threaten the breeding grounds of the chiru, an endangered antelope species found mainly in China.

When the train service began, a remarkable photograph appeared in hundreds of newspapers, and it eased environmental concerns. The picture, captioned "Qinghai-Tibet railway opens green passage for wildlife," featured dozens of antelope galloping peacefully across the Tibetan landscape, unfazed as the gleaming silver train raced beside them.

The photo was the work of Liu Weiqing, a 41-year-old photographer who had been camped with his Jeep on the Tibetan plateau since March, as part of a highly publicized series by the Daqing Evening News, a regional newspaper, to raise awareness of the rare Tibetan antelope. Mr. Liu was also under contract with Xinhua to provide photos for China's largest government-run news service.

"One man, one car, one year...and a campaign to protect Tibetan antelope," he wrote on his blog describing the project.

Once nearly wiped out by poachers who made shawls from its wool, the chiru's numbers have increased in recent years, and the knobby-kneed bovid has emerged as a symbol of China's environmental-protection efforts. Yingying the Tibetan Antelope is one of the five official mascots of the 2008 Beijing Olympics.

Some antelope lovers knew from the start that something was wrong with Mr. Liu's photo. "I was really shocked when I first saw the photo," says Yang Xin, of the antelope protection group Green River. For starters, he says, many of the antelope in the picture appeared to be pregnant and there were no young with the herd. That was a tip-off because many antelope would have given birth before late June when the photo was supposedly taken.

In late 2006, Mr. Liu's picture was declared a top 10 "photo of the year" by CCTV, China's state-run television network. Mr. Liu appeared in fatigues on national TV and described waiting in a pit for eight days for the antelope to pass at precisely the same moment as the train.

"I wanted to capture the harmony among the Tibetan antelope, the train, men and nature," he told the audience, standing on stage in front of a big projection of the photo.

Media critics say the photo's deeper message was hard to miss. "It's such a perfect propaganda photo," says David Bandurski a researcher at the University of Hong Kong China Media Project. "They don't tend to give journalism prizes to reports that rock the boat."

Other photographs that took home awards that night included "Facing a harmonious future," a picture of Chinese President Hu posing with world leaders, and a "A trip to apologize," a picture of a Japanese monk apologizing to China for Japanese atrocities in World War II. CCTV didn't reply to inquiries about its criteria for photo awards.

Suspicions about the photo became public last week after Mr. Liu's photograph was displayed in Beijing's subway system. An anonymous Chinese Internet user going by the screen name Dajiala raised questions about the photo's authenticity on one of China's largest photography Web sites. Dajiala, a photographer who claimed to idolize Mr. Liu, said he was studying a copy of the photo posted on Beijing's Line 5 subway platform when he rubbed some dust off it and noticed something odd.

"At the bottom of the photograph, there was a very obvious line," he wrote. "I examined it very carefully and it was obviously the stitching of two different images....Was this decisive moment just a simple Photoshop trick?"

His post created an online storm. Photographers blew up the image and analyzed each out-of-place pixel. Animal behaviorists weighed in, explaining that antelope are shy and noise-sensitive, and would scatter in panic at the sound of the high-speed train. When the chat-room controversy spread to China's largest Internet portals, the Chengdu Business Daily confronted Mr. Liu.

Cornered by the mounting evidence, Mr. Liu admitted he had indeed used Photoshop to blend two pictures, according to the newspaper.

Mr. Liu resigned from the Daqing Evening News and posted a statement on his blog. "I have no reason to continue my sacred career as a newsman," he wrote. "I am not qualified for the job." His editor then resigned, too, and the newspaper posted an apology on its Web site. The newspaper didn't respond to repeated calls to its office. Mr. Liu didn't answer calls to his cellphone.

Some of China's Internet users expressed outrage that a photo easy to spot as fake had been widely circulated by major organizations. "We need an apology! This is very important for journalistic photography in China," wrote one Internet user on a photography site.

It isn't clear what was behind Mr. Liu's deception. Some suspected he was the victim of his own ambition, and doctored the photo knowing that its patriotic message would appeal to China's news agencies. "Liu knows how to please his master," wrote one anonymous poster on the Internet.

His friends say he was dedicated to his job and determined to raise the profile of the embattled antelope. "He was a good guy," says Zhou Zhuogang, an environmental activist from Shenzhen in southern China who met Mr. Liu in the summer of 2006 when the two men were at a volunteer station on the Tibetan plateau. "He loved photography, and he loved the antelope. I don't know what pushed him to do this."

Some suspect pressure to create the photo came from above. "When everybody points a finger to the photographer, we actually missed the real core problem here," says Wang Yangbo, editor of Wen Wei Pao, a Hong Kong Daily. The photographers "are nobodies in the scheme of things here," she adds.

Earlier this week, CCTV posted a statement on its Web site saying it was revoking Mr. Liu's award. On Monday, Xinhua, China's largest news organization, and several other government news organizations published an apology for circulating the photo. The companies said they would delete all of Mr. Liu's images from their databases.

"We call on the public to work together with us to uphold the authenticity principle of news reporting," the statement said. Xinhua didn't respond to requests for comment.

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Treasure hunters dig for Hitler's gold

  • Story Highlights
  • Digging in search of lost Nazi gold resumed on Tuesday
  • Treasure hunters think 2 tons of treasure could be buried in mountainside
  • Men behind mission battle doubts: "What if we find nothing again?"

DEUTSCHNEUDORF, Germany (CNN) -- Digging has resumed at a site in the southeastern German town of Deutschneudorf, where treasure hunters believe there are almost 2 tons of Nazi gold and possibly clues to the whereabouts of the legendary Amber Room, a prize taken from a Russian castle during World War II.

Heinz Peter Haustein, one of the two treasure hunters and a member of Germany's parliament, said: "We have already hit a hollow area under the surface, it's filled with water and we are not sure if it is the cave we are looking for."

Digging was stopped more than a week ago amid safety concerns, as authorities and the treasure hunters feared that the shaft might collapse and that the cave -- if it is there -- may be rigged with explosives or poisonous booby traps.

At a news conference Friday, Christian Hanisch, the other treasure hunter, said that geological surveying equipment had located a possible cave about 30 feet under the surface containing "precious metals that can only be either gold or silver. The instruments would not have reacted to any other metal like copper." PhotoSee photos from hunt for lost Nazi gold »

Hanisch pointed out that his father, who was a navigator in the Luftwaffe, the Nazi air force, was one of the troops said to have been involved in hiding art, gold and silver as the Nazis realized that they would lose the war.

He said that when his father died, he left coordinates leading to the spot in Deutschneudorf.

"It's not about getting the reward," Hanisch said at the site. "I just want to know if my father was right and if my instincts were right."

Haustein, who is paying for the expedition, said he hopes that finding the gold could lead to the Amber Room, whose interior is made completely of amber and gold. It was looted by the Nazis from a castle in St. Petersburg, Russia, after Adolf Hitler's forces invaded the Soviet Union in 1941.

The room looked so majestic, many called it "the eighth wonder of the world." It disappeared after the war, and today a replica stands in its place in St. Petersburg.

Although parts of the Amber Room have resurfaced, the vast majority remains missing.

Haustein has been looking for the room for more than 12 years. VideoWatch hunt for Nazi gold at German mountain »

"I am certain that large parts of the Amber Room are buried somewhere here," he said.

He said he has collected much circumstantial evidence suggesting that the Nazis hid the Amber Room in old copper mines around Deutschneudorf, but he has no proof.

Haustein said the Nazis began bringing valuables including art, gold and silver to the region around Deutschneudorf as early as summer 1944.

Deutschneudorf is in Germany's Ore Mountains, and the mountain where the treasure hunters claim to have found the Nazi gold was a copper mine until the 19th century. Although the mine was shut down in 1882, geologists found evidence that soldiers from Hitler's Wehrmacht -- the German armed forces -- had been there. The machine guns, parts of uniforms and explosives are on display at the town's museum.

Though both treasure hunters say they are certain they will find cultural goods, both admit that they fear disappointment.

"Of course, if you embark on something like this, you ask yourself: 'What if we find nothing again? What if I was fooled?' " Haustein said. "But every man has to go his own way, for better or for worse."

If they do find the treasure, Haustein says, it would legally belong to Germany, although he would recommend that Germany give any Amber Room parts back to Russia.

Treasure hunters have typically received rewards of 10 percent of the value of the goods found, but Hanisch says there are no laws dictating the reward amount.

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Man Stabs Movie Theater Patrons at Horror Movie

The movie was The Signal (the fascinating and gruesome trailer is below), a horror flick where most of the credited cast has names like "Random Body" and, err, "Random Body." As mentioned in Friday's LAist Weekend Movie Guide, it was a hit at Sundance 2007.

Well, imagine watching this scary movie in a near empty theater. That's what was happening Sunday night around 7:30 p.m. at the Fullerton AMC Theater in Orange County. Then imagine, possibly during a stabbing scene (it's a pretty intense horror movie, so the odds are there), that you are getting stabbed yourself. Yeah, that happened to two men in separate parts of the theater when another patron yielded a knife. One victim, was stabbed in the arm, but another had his lungs punctured, but officials say he is expected to survive.

Earlier in the day, a man with a similar description (male, 20s, black spikey hair, 5'10") was kicked out of the theater for being drunk. Employees and police think he may be connected while the two victims say they do not know their attacker.

KNBC reported last night during the 11 o'clock news that the movie was paused during a stabbing scene when officials arrived and inferred that only three people were in the theater at the time of the incident (the two victims and the suspect). However, Lt. Basham, a watch commander with the Fullerton Police Department cannot confirm some of these facts and said there was some fiction being reported in the media along with this story. However, he can confirm that police are still searching for the suspect who fled through the backdoors of the theater.

From the LAist Weekend Movie Guide, February 22
The Signal is one of those movies that simply shouldn't work. It's made by young filmmakers (three co-directors working independently actually) and it's both low-budget and high-concept. Nevertheless, it provides some real scares and should be a welcome tonic to any horror fan tired of American knock-offs of better Asian films. It was a hit at Sundance 2007 and finally hits screens today. See it.

Photo by CarbonNYC via Flickr

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FDIC to Add Staff as

WASHINGTON -- The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation's housing and credit markets continue to worsen.

he FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.

FDIC spokesman Andrew Gray said the agency was looking to bulk up "for preparedness purposes." The division now has 223 employees, mostly based in Dallas.

The agency, which insures accounts at more than 8,000 financial institutions, is also seeking to hire an outside firm that would help manage mortgages and other assets at insolvent banks, according to a newspaper advertisement.

In public, policy makers are debating what role the government should play in trying to stabilize the housing market and minimize foreclosures. Meanwhile, regulators have worked discreetly behind the scenes to closely monitor the growing number of troubled banks and thrifts considered at risk.

"Regulators are bracing for well over 100 bank failures in the next 12 to 24 months, with concentrations in Rust Belt states like Michigan and Ohio, and the states that are suffering severe housing-market problems like California, Florida, and Georgia," said Jaret Seiberg, Washington policy analyst for financial-services firm Stanford Group.

In job postings on its Web site, the FDIC said it is looking for people with "skill in performing duties associated with a financial-institution closing, such as receivership management, resolutions and/or asset disposition; knowledge of the resolutions process as it relates to complex financial institutions." Such positions would require "very frequent overnight travel," the posting said, and would pay up to $180,770.

"The notion of bringing back some people who have been through it before is very smart," said William Isaac, who was FDIC chairman from 1981 until 1985. All told, the FDIC has roughly 4,600 employees, far fewer than the about 15,000 it had as recently as 1992.

On Sunday, the FDIC ran a newspaper ad seeking companies that could service commercial loans, mortgages and student loans in the event of a bank failure. It didn't say how much a company could earn in this area.

The FDIC rated 65 banks and thrifts as "problem" institutions at the end of the third quarter of 2007, up from 47 institutions a year earlier. Both figures are low by historical standards. At the end of 1993, there were 572 "problem" banks and thrifts. The FDIC is expected to update its data on "problem" institutions today.

Before the housing market soured, the banking industry was enjoying one of its most profitable stretches in U.S. history. There wasn't a single bank failure from July 2005 through January 2007, an unprecedented span.

There have only been four bank failures in the past 12 months, a rate the FDIC has easily been able to handle.

In many parts of the country, the housing-market decline has hamstrung banks, and regulators have reported weakening performance of commercial real estate, small business and credit-card loans. Exacerbating the situation is a cash-flow crunch, which makes it harder for banks to obtain funding to originate new loans.

FDIC Chairman Sheila Bair, Comptroller of the Currency John Dugan and Office of Thrift Supervision Director John Reich have warned of a pickup in bank failures. Last week, Mr. Reich reported that the thrift industry lost a record $5.2 billion in the fourth quarter.

The FDIC was created by Congress in the 1930s after a series of bank runs during the Great Depression. At the end of 2007, it had $52.4 billion in its fund that backstops the nation's insured deposits.

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Starbucks closes to learn how to make coffee

Beverage cups featuring the logo of Starbucks Coffee. Photograph: Stephen Chernin/Getty

Americans will have to cope without blended Frappuccino and blueberry coffee cake for a few hours today as Starbucks shuts its 7,100 company-owned stores for a nationwide barista training session.

Starbucks chairman Howard Schultz has ordered the unprecedented three-hour afternoon closure as part of an effort to improve coffee quality and revive the chain's flagging fortunes.

It has prompted frenzied action by competitors hoping to snatch Starbucks customers. Dunkin' Donuts has declared Tuesday a cut-price coffee day with prices slashed to 99 cents (50p) so that "no coffee lover is denied a delicious espresso-based beverage".

During the session, Starbucks' baristas will get a "hands-on espresso training experience". In a letter to staff, Schultz said: "Starbucks partners will have an opportunity to connect and deepen their passion for coffee with the ultimate goal of transforming the customer experience."

Schultz, the architect of Starbucks' growth during the 1990s, returned to hands-on management last month after shareholder unrest triggered the departure of chief executive Jim Donald.

The company's shares dived 42% last year on signs that consumers were falling out of love with Starbucks. Investors were alarmed by figures showing a 1% fall in the average number of transactions per store.

In a raft of changes aimed at restoring momentum, Starbucks is cutting 600 jobs, introducing free wireless internet connection and axing hot breakfast sandwiches, which were criticised for interfering with the aroma of coffee.

Shultz says he wants to restore an "emotional connection" with customers. But the shutdown is being mocked by independent coffee stores that have long suffered under the shadow of Starbucks.

Coffee Klatch, a small Los Angeles outfit, said it will offer free coffee to all customers while its bigger rival goes dark.

"I'm not sure why it's going to take them three hours to learn how to press a button," said Coffee Klatch's owner, Mike Perry, who described his own beverages as "expertly crafted" in contrast to Starbucks' machines.

Britain's Starbucks outlets will not be affected by the closure. The chain's international stores are faring better than those in the US. Phil Broad, UK managing director, said: "The business continues to perform well with five consecutive years of high single-digit growth in comparable sales."

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Internet Ad Revenue Exceeds $21B in 2007

NEW YORK (AP) — Online advertising revenues exceeded $21 billion for the first time in 2007, although preliminary data compiled by an industry trade group also suggest growth is slowing.

The Interactive Advertising Bureau said its estimates show ad revenues grew 25 percent last year from nearly $17 billion in 2006. In dollar amounts, the estimated gain was $4.2 billion — less than the 35 percent and $4.3 billion growth seen in 2006 over 2005.

Analysts have said the growth rate was bound to slow as the Internet commands a larger share of the advertising pie, taking dollars away from traditional media like newspapers. By most accounts, the Internet still represents less than 10 percent of all U.S. ad spending, meaning there's room for a lot more growth, even at a slower rate.

PricewaterhouseCoopers LLP, which conducts a quarterly survey for the advertising trade group using data from the 15 largest online ad sellers, said fourth-quarter revenues totaled about $5.9 billion, topping the previous record of $5.2 billion in the third quarter.

David Silverman of PricewaterhouseCoopers said the latest record numbers demonstrate that interactive media continue to be important to consumers and marketers.

The IAB said final data and breakdowns by ad types would be available in May. Typically, the most lucrative are keyword ads such as those displayed alongside search results at Google Inc. and other search engines.

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S Africa to allow elephant cull

Elephants in South Africa's Tembe Elephant Park
The issue of culling is extremely divisive

The South African government has said it will allow elephants to be culled for the first time in 13 years.

In a statement given to journalists on Monday, the government said a cull was needed to control elephant numbers.

The elephant population is thought to have grown from 8,000 to 18,000 since the government banned culls in 1995.

The statement acknowledged that the issue would rouse "strong emotions", and the news will anger many animal rights campaigners.

They have already threatened to call tourist boycotts and take legal action against the measure, which had been expected.

The capture of wild elephants - to be used in elephant-back safaris, for example - is also a matter of controversy in South Africa. In the statement, the government said this would be banned, except for purposes of rehabilitation into the wild.

'Last resort'

In the statement, Minister of Environmental Affairs and Tourism Marthinus van Schalkwyk said culling would be an option of last resort that was acceptable only under strict conditions.

How much like us do elephants have to be before killing them becomes murder?
Animal Rights Africa

He said other measures, including better management of elephant enclosures, translocation, and elephant contraception, could also be used.

And he said culling - an option which will become available from 1 May - was only being adopted after consultation "with all shades of opinion".

But Mr van Schalkwyk said the interests of "balanced biodiversity or people living in proximity to elephants" must also be taken into account.


People living close to elephants have complained that elephants are dangerous, eat crops and compete with people for water.

But the campaign group Animal Rights Africa says elephants have highly developed cognitive abilities, and a high degree of self-awareness.

"How much like us do elephants have to be before killing them becomes murder?" it asked in a statement anticipating the announcement.

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