Saudi summit aims at oil prices

NEW YORK (CNNMoney.com) -- Saudi Arabia this weekend will convene a special summit on oil prices that could lead to cheaper crude on the world market.

But a Saudi decision to produce more crude likely won't come without a demand: The Kingdom is expected to press the U.S. government to impose greater controls on oil trading and take steps to strengthen the dollar.

The world's largest oil producer, stepping out of its usual role as de facto leader of OPEC, will host representatives of big oil producing nations, consumer countries and companies.

The Saudis are widely believed to be concerned that escalating oil prices - crude hovered around $134 a barrel Thursday, nearly double what it cost a year ago - will cause a permanent drop in demand as consumers get more efficient or, worse, the global economy slows.

One sign of the Saudi anxiety: The country's oil production decisions, usually left to its oil minister, appear to have been put back in the hands the Royal Family, according to Antoine Halff, deputy head of research at brokerage firm Newedge.

Fuzzy numbers

As a group, OPEC has been reluctant to raise production. Several states, enjoying the record prices, maintain there is no shortage of crude. It's a line the Saudis also touted - until recently.

Saudi Arabia now says it will pump more. The Kingdom, during a recent visit by President Bush, pledged to increase production by 300,000. Last week, they said they would boost it by another 200,000 barrels.

Those numbers are not set in stone, and Sunday's meeting may produce more details on the planned increases.

The Saudis will also seek to convince refineries and others to keep buying.

Recently, refiners worldwide have cut back in light of record prices. But that has only led to a drop in crude inventories - further pushing up the price of oil.

To inject more oil into the market, Halff said the Saudis may use the meeting to arrange for special deals with refiners and others that could bring crude to market at below-market prices. The exact nature of the deals, he noted, will probably never be disclosed.

At the very least, traders will be watching the Sunday meeting to see if those announced production increases fall closer to the 500,000 or 800,000 barrel a day mark.

Sunday showdown

The meeting holds high stakes for both Saudi Arabia and the United States. If prices don't respond, the country's credibility will suffer, and with it any notion that someone has control over these record oil prices.

"Riyadh is seen as running out of options to regain control of the market," said Halff. "Failure to do so, it is assumed, could cause prices to leap even higher."

The Saudis will also expect something from consumer nations in return.

The Kingdom has long held that oil markets are well supplied, and that speculative investing is the real culprit behind high prices.

To that end, the Saudis will likely seek more oversight of oil markets, and perhaps even limits on the amount of contracts speculators can hold.

That's something consuming counties may give them. Several proposals along those lines have bipartisan support in Congress.

More difficult to deliver, and probably more important to the Saudis, is a stronger dollar.

Like the currencies of many countries in the Middle East, the Saudi riyal is pegged to the U.S. dollar - it rises and falls with the greenback.

But while lower interest rates - and hence a lower dollar - may be what the U.S. economy needs to snap out of its slump, they have been disastrous for the red-hot Saudi economy. Inflation in Saudi Arabia has doubled in the last year and is projected to surge even higher.

"I think [Saudi Arabia] wants something from the West, particularly the U.S. ... a stronger monetary policy," Nauman Barakat, an energy trader at Macquarie Futures, wrote in a research note.

That will be hard to get.

The Federal Reserve is unlikely to raise interest rates anytime soon. And any other move by the U.S. government is likely to have little effect on the free-trading dollar
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Japan drops investigation of whalers, arrests Greenpeace activists

Tokyo, Japan — Japanese police have arrested two Greenpeace activists for exposing a whale meat scandal involving the government-sponsored whaling programme. The two activists, Junichi Sato, 31, and Toru Suzuki, 41, are being investigated for allegedly stealing a box of whale meat which they presented as evidence.

The box of the most expensive cuts of whale meat had been illicitly removed by crew of the Nisshin Maru, the whaling factory ship, following this year's Southern Ocean whale hunt. Its contents were marked "cardboard" and it was shipped to a private address. Tracked by our investigators, it was intercepted and turned over to the Public Prosecutor in Tokyo, as evidence of wide-scale corruption at the heart of the whaling operation in the Southern Ocean Whale Sanctuary.

We requested an investigation into the scandal, and the Public Prosecutor agreed that there was sufficient evidence of wrongdoing. The investigation is currently underway, and has not yet reached any conclusions. In light of evidence that the operators of the whaling operation were aware of the scandal and did nothing, we asked that the investigation not focus on crew, but on the bureaucrats who run the whaling programme at public expense.

The Japanese whaling programme costs the Japanese taxpayer 500 million yen per year (around 4.7 million US dollars).

The only arrests thus far have been of the Greenpeace activists who presented the evidence.

UPDATE 21 June 2008 The Tokyo District Prosecutor Office has announced that it has been unable to find evidence of the embezzlement and that the investigation into crew and whaling officials has been dropped.

Clearly this has been a difficult investigation for the Prosecutor's Office when the level of corruption runs so deep in the whaling industry, an industry backed by powerful forces within the government. However, some questions remain unanswered:

• If Kyodo Senpaku, the company that operates the whaling ships, was legally giving out whale meat to the crew then why did they change their story three times in almost as many days?
• Why did the crew lie about the contents of the boxes containing the meat, claiming that they contained cardboard when in fact they were stuffed full of prime whale meat cuts worth tens of thousands of dollars?
• And why, before the scandal was exposed, did an official of the Japanese Fisheries agency claim that whale meat was never given to crew?

Read the full dossier of evidence, and decide for yourself

UPDATE 22 June 2008 At a hearing this morning, the "Tokyo Two" have been ordered held another ten days without charge. We are appealing that decision tomorrow. In the meantime, our lawyer believes that the number of people who have written demanding their release -- nearly 50,000 at this writing -- could help their case considerably. Please, if you have not already, take action and encourage others to do so as well: http://www.greenpeace.org/tokyo-two

"This is the backlash," said Greenpeace Executive Director Jun Hoshikawa. "We've uncovered a scandal involving powerful forces in the Japanese government that benefit from whaling, and it's not surprising they are striking back. What is surprising is that these activists, who are innocent of any crime, would be arrested for returning whale meat that was stolen from Japanese taxpayers. In whose interest were these arrests made? Because it would appear to us that this is an intimidation tactic by the government agencies responsible for a scandal."

Intimidation tactics

Our first news that an arrest was imminent came from Japanese television stations. Someone leaked the information to ensure images of Greenpeace activists under arrest appeared on news reports in Japan.

More than 40 police officers raided our offices and the homes of the activists, and spent 10 hours seizing cell phones, documents, and computers, despite the fact that we had documented every step of how we obtained the whale meat, turned the full dossier over with the evidence, and made ourselves available to police to help with the investigation at any time. A simple phone call could have brought Junichi and Toru to the police station. Instead, the government made a public spectacle of shutting Greenpeace down.

The investigation

Our four-month undercover investigation revealed evidence of an embezzlement ring involving crew members on board the Nisshin Maru, who were openly taking the best cuts of whale meat during the so-called scientific hunt, smuggling it ashore disguised as personal luggage and then passing it to traders for illegal sales.

Working from information given by former and current Kyodo Senpaku employees, we documented the off-loading of smuggled whale meat into a special truck, in full view of Kyodo Senpaku officials and crew members when the Nisshin Maru docked on April 15th, this year.

The consignment was documented by our team once it left the ship and tracked to a depot in Tokyo. One of four boxes destined for the same private address was then intercepted in order to verify the contents and establish the fraud.

The consignment notes claimed the box contained "cardboard" but in reality it held 23.5kg of salted 'prime' whale meat, worth up to US$3,000. One informer told Greenpeace that dozens of crew take as many as 20 boxes each. One crewmember was overheard to claim he had built a house on the proceeds from his whale-meat sales over the years.

Official denials

On May 8th, before the scandal broke, Takahide Naruko, an official with the Japanese Fisheries Agency, was asked by investigators whether sailors "bring back some whale meat as private souvenirs," to which he replied "Of course not," explaining that the distribution of whale meat was only through official channels, at a price set by the Fisheries Agency to offset the costs of the publicly funded whaling programme.

Following the revelations, Kyodo Senpaku, the company that runs the whaling ship, also at first denied that any whale meat was being given away or sold outside official channels, then changed their story to claim that some "souvenirs" were given to crew members. Even so, these souvenirs were described to be a few kilos of frozen whale meat -- very different from 23.5 kilos of prime cuts uncovered by Greenpeace, which the crew salt-pickle in their cabins.

On May 28th, an editorial in Asahi Shinbum noted the contradiction between claims by the Institute for Cetacean Research that souvenirs were being handed out, and the claims by Kyodo Senpaku that they were not. The newspaper called the "contrived explanations" suspicious and asked for a full investigation.

"The whaling programme in the Southern Ocean Whale Sanctuary is funded by the Japanese taxpayers, including the Greenpeace activists who have been arrested, and they have a right to know who is profiting from their money," said Mister Hoshikawa.

"The Japanese whaling programme has been shamed internationally for its lack of scientific credibility, now it is being shamed at home as well for trying to hide the corruption, and now for taking revenge on those who have exposed it. The Greenpeace activists should be immediately released."

Original here

It’s crazy, but it’s coming soon – from the same folks who brought us Iraq.

Unlike the attack on Iraq five years ago, to deal with Iran there need be no massing of troops. And, with the propaganda buildup already well under way, there need be little, if any, forewarning before shock and awe and pox – in the form of air and missile attacks – begin.

This time it will be largely the Air Force’s show, punctuated by missile and air strikes by the Navy. Israeli-American agreement has now been reached at the highest level; the armed forces planners, plotters and pilots are working out the details.

Emerging from a 90-minute White House meeting with President George W. Bush on June 4, Israeli Prime Minister Ehud Olmert said the two leaders were of one mind:

“We reached agreement on the need to take care of the Iranian threat. I left with a lot less question marks [than] I had entered with regarding the means, the timetable restrictions, and American resoluteness to deal with the problem. George Bush understands the severity of the Iranian threat and the need to vanquish it, and intends to act on that matter before the end of his term in the White House.”

Does that sound like a man concerned that Bush is just bluff and bluster?

A member of Olmert’s delegation noted that same day that the two countries had agreed to cooperate in case of an attack by Iran, and that “the meetings focused on ‘operational matters’ pertaining to the Iranian threat.” So bring ‘em on!

A show of hands please. How many believe Iran is about to attack the U.S. or Israel?

You say you missed Olmert’s account of what Bush has undertaken to do? So did I. We are indebted to intrepid journalist Chris Hedges for including the quote in his article of June 8, “The Iran Trap.”

We can perhaps be excused for missing Olmert’s confident words about “Israel’s best friend” that week. Your attention – like mine – may have been riveted on the June 5 release of the findings of the Senate Intelligence Committee regarding administration misrepresentations of pre-Iraq-war intelligence – the so-called “Phase II” investigation (also known, irreverently, as the “Waiting-for-Godot Study”).

Better late than never, I suppose.

Oversight?

Yet I found myself thinking: It took them five years, and that is what passes for oversight? Yes, the president and vice president and their courtiers lied us into war. And now a bipartisan report could assert that fact formally; and committee chair Jay Rockefeller could sum it up succinctly:

“In making the case for war, the administration repeatedly presented intelligence as fact when in reality it was unsubstantiated, contradicted, or even non-existent. As a result, the American people were led to believe that the threat from Iraq was much greater than actually existed.”

But as I listened to Senator Rockefeller, I had this sinking feeling that in five or six years time, those of us still around will be listening to a very similar post mortem looking back on an even more disastrous attack on Iran.

My colleagues and I in Veteran Intelligence Professionals for Sanity (VIPS) issued repeated warnings, before the invasion of Iraq, about the warping of intelligence. And our memoranda met considerable resonance in foreign media.

We could get no ink or airtime, however, in the Fawning Corporate Media (FCM) in the U.S. Nor can we now.

In a same-day critique of Colin Powell’s unfortunate speech to the U.N. on Feb. 5, 2003, we warned the president to widen his circle of advisers “beyond those clearly bent on a war for which we see no compelling reason and from which we believe the unintended consequences are likely to be catastrophic.”

It was a no-brainer for anyone who knew anything about intelligence, the Middle East, and the brown noses leading intelligence analysis at the CIA.

Former U.N. senior weapons inspector and former Marine major, Scott Ritter, and many others were saying the same thing. But none of us could get past the president’s praetorian guard to drop a memo into his in-box, so to speak. Nor can we now.

The “Iranian Threat”

However much the same warnings are called for now with respect to Iran, there is even less prospect that any contrarians could puncture and break through what former White House spokesman Scott McClellan calls the president’s “bubble.”

By all indications, Vice President Dick Cheney and his huge staff continue to control the flow of information to the president.

But, you say, the president cannot be unaware of the far-reaching disaster an attack on Iran would bring?

Well, this is a president who admits he does not read newspapers, but rather depends on his staff to keep him informed. And the memos Cheney does brief to Bush pooh-pooh the dangers.

This time no one is saying we will be welcomed as liberators, since the planning does not include – officially, at least – any U.S. boots on the ground.

Besides, even on important issues like the price of gasoline, the performance of the president’s staff has been spotty.

Think back on the White House press conference of Feb. 28, when Bush was asked what advice he would give to Americans facing the prospect of $4-a-gallon gasoline.

“Wait, what did you just say?” the president interrupted. “You’re predicting $4-a-gallon gasoline?…That’s interesting. I hadn’t heard that.”

A poll in January showed that nearly three-quarters of Americans were expecting $4-a-gallon gas. That forecast was widely reported in late February, and discussed by the White House press secretary at the media briefing the day before the president’s press conference.

Here’s the alarming thing: Unlike Iraq, which was prostrate after the Gulf War and a dozen years of sanctions, Iran can retaliate in a number of dangerous ways, launching a war for which our forces are ill-prepared.

The lethality, intensity and breadth of ensuing hostilities will make the violence in Iraq look, in comparison, like a volleyball game between St. Helena’s High School and Mount St. Ursula.

Cheney’s Brainchild

Attacking Iran is Vice President Dick Cheney’s brainchild, if that is the correct word.

Cheney proposed launching air strikes last summer on Iranian Revolutionary Guards bases, but was thwarted by the Joint Chiefs of Staff who insisted that would be unwise, according to J. Scott Carpenter, a senior State Department official at the time.

Chastened by the unending debacle in Iraq, this time around Pentagon officials reportedly are insisting on a “policy decision” regarding “what would happen after the Iranians would go after our folks,” according to Carpenter.

Serious concerns include the vulnerability of the critical U.S. supply line from Kuwait to Baghdad, our inability to reinforce and the eventual possibility that the U.S. might be forced into a choice between ignominious retreat and using, or threatening to use, “mini-nukes.”

Pentagon opposition was confirmed in a July 2007 commentary by former Bush adviser Michael Gerson, who noted the “fear of the military leadership” that Iran would have “escalation dominance” in any conflict with the U.S.

Writing in the Washington Post last July, Gerson indicated that “escalation dominance” means, “in a broadened conflict, the Iranians could complicate our lives in Iraq and the region more than we complicate theirs.”

The Joint Chiefs also have opposed the option of attacking Iran’s nuclear sites, according to former Iran specialist at the National Security Council, Hillary Mann, who has close ties with senior Pentagon officials.

Mann confirmed that Adm. William Fallon joined the Joint Chiefs in strongly opposing such an attack, adding that he made his opposition known to the White House, as well.

The outspoken Fallon was forced to resign in March, and will be replaced as CENTCOM commander by Gen. David Petraeus – apparently in September. Petraeus has already demonstrated his penchant to circumvent the chain of command in order to do Cheney’s bidding (by making false claims about Iranian weaponry in Iraq, for example).

In sum, a perfect storm seems to be gathering in late summer or early fall.

Controlled Media

The experience of those of us whose job it was to analyze the controlled media of the Soviet Union and China for insights into Russian and Chinese intentions have been able to put that experience to good use in monitoring our own controlled media as they parrot the party line.

Suffice it to say that the FCM is already well embarked, a la Iraq, on its accustomed mission to provide stenographic services for the White House to indoctrinate Americans on the “threat” from Iran and prepare them for the planned air and missile attacks.

At least this time we are spared the “mushroom cloud” bugaboo. Neither Bush nor Cheney wish to call attention, even indirectly, to the fact that all 16 U.S. intelligence agencies concluded last November that Iran had stopped nuclear weapons-related work in 2003 and had not resumed it as of last year.

In a pre-FCM age, it would have been looked on as inopportune, at the least, to manufacture intelligence to justify another war hard on the heels of a congressional report that on Iraq the administration made significant claims not supported by the intelligence.

But (surprise, surprise!) the very damning Senate Intelligence Committee report got meager exposure in the media.

So far it has been a handful of senior military officers that have kept us from war with Iran. It hardly suffices to give them vocal encouragement, or to warn them that the post WW-II Nuremberg Tribunal ruled explicitly that “just-following-orders” is no defense when war crimes are involved.

And still less when the “supreme international crime” – a war of aggression is involved.

Senior officers trying to slow the juggernaut lumbering along toward an attack on Iran have been scandalized watching what can only be described as unconscionable dereliction of duty in the House of Representatives, which the Constitution charges with the duty of impeaching a president, vice president or other senior official charged with high crimes and misdemeanors.

Where Are You, Conyers?

In 2005, before John Conyers became chair of the House Committee on the Judiciary, he introduced a bill to explore impeaching the president and was asked by Lewis Lapham of Harpers why he was for impeachment then. He replied:

“To take away the excuse that we didn’t know. So that two, or four, or ten years from now, if somebody should ask, ‘Where were you, Conyers, and where was the U.S. Congress?’ when the Bush administration declared the Constitution inoperative…none of the company here present can plead ignorance or temporary insanity [or] say that ‘somehow it escaped our notice.’”

In the three years since then, the train of abuses and usurpations has gotten longer and Conyers has become chair of the committee. Yet he has dawdled and dawdled, and has shown no appetite for impeachment.

On July 23, 2007, Conyers told Cindy Sheehan, Rev. Lennox Yearwood, and me that he would need 218 votes in the House and they were not there.

A week ago, 251 members of the House voted to refer to Conyers’ committee the 35 Articles of Impeachment proposed by Congressman Dennis Kucinich.

Former Congresswoman Elizabeth Holtzman, who sat on Judiciary with Conyers when it voted out three articles of impeachment on President Richard Nixon, spoke out immediately: “The House should commence an impeachment inquiry forthwith.”

Much of the work has been done. As Holtzman noted, Kucinich’s Articles of Impeachment, together with the Senate report that on Iraq we were led to war based on false pretenses – arguably the most serious charge – go a long way toward jump-starting any additional investigative work Congress needs to do.

And seldom mentioned is the voluminous book published by Conyers himself, “Constitution in Crisis,” containing a wealth of relevant detail on the crimes of the current executive.

Conyers’ complaint that there is not enough time is a dog that won’t hunt, as Lyndon Johnson would say.

How can Conyers say this one day, and on the next say that if Bush attacks Iran, well then, the House may move toward impeachment.

Afraid of the media?

During the meeting last July with Cindy Sheehan, Rev. Yearwood and me, and during an interview in December on “Democracy Now,” Conyers was surprisingly candid in expressing his fear of Fox News and how it could paint Democrats as divisive if they pursued impeachment.

Ironically, this time it is Fox and the rest of the FCM that is afraid – witness their virtual silence on Kucinich’s very damning 35 Articles of Impeachment.

The only way to encourage constructive media attention would be for Conyers to act. The FCM could be expected to fulminate against that, but they could not afford to ignore impeachment, as they are able to ignore other unpleasant things – like preparations for another “war of choice.”

I would argue that perhaps the most effective way to prevent air and missile attacks on Iran and a wider Middle East war is to proceed as Elizabeth Holtzman urges – with impeachment “forthwith.”

Does Conyers not owe at least that much encouragement to those courageous officers who have stood up to Cheney in trying to prevent wider war and catastrophe in the Middle East?

Scott McClellan has been quite clear in reminding us that once the president decided to invade Iraq, he was not going to let anything stop him. There is ample evidence that Bush has taken a similar decision with respect to Iran – with Olmert as his chief counsel, no less.

It is getting late, but this is due largely to Conyers’ own dithering. Now, to his credit, Dennis Kucinich has forced the issue with 35 well-drafted Articles of Impeachment.

What the country needs is the young John Conyers back. Not the one now surrounded by fancy lawyers and held in check by the House leaders.

In October 1974, after he and the even younger Elizabeth Holtzman faced up to their duty on House Judiciary and voted out three Articles of Impeachment on President Richard Nixon, Conyers wrote this:

“This inquiry was forced on us by an accumulation of disclosures which, finally and after unnecessary delays, could no longer be ignored…Impeachment is difficult and it is painful, but the courage to do what must be done is the price of remaining free.”

Someone needs to ask John Conyers if he still believes that; and, if he does, he must summon the courage to “do what must be done.”

Original here

8 Reasons You Should Not Expect an Inheritance

You’ve probably heard about the bumper sticker, even if you haven’t seen it. It’s the one on Cadillacs in Florida and Lexuses in Arizona that says “I’m spending my children’s inheritance.”

Photoillustration by Tony Cenicola/The New York Times

Some transfers of wealth are made while the parents are alive, leaving little to pass down after death.

We’ve laughed at that for years. But the truth is, retirees have a lot of demands on their savings. Out-of-pocket health care costs, for one, are rising fast. At the same time, many people are not waiting until they die to help their children and grandchildren financially. And some are finding creative ways to draw on money that would otherwise be part of their estate.

For all these reasons and many more (I’ve ticked off eight below), it would be a bad idea to plan on getting any inheritance from your older relatives.

Many people have figured this out, though not all. An AARP analysis of the Federal Reserve Board’s 2004 Survey of Consumer Finances noted that 21 percent of people born after 1964 thought they would inherit some money someday. After all, most of them still have living parents or grandparents.

But with each passing year, the pressures on the nest eggs of those older people will only grow. The truly rich will be fine, as they usually are. But a lot of other people, even retirees with net worths well into the seven figures, could end up spending every dime before they die.

There is nothing wrong with that, by the way. This is a judgment-free column on that front. There is no moral obligation to leave a cent to the next generation. And there are some people who struggle each day to make ends meet who only wish they could leave an inheritance.

But for those who thought that they would have something to pass on, or that money would be coming to them, here are some of the things that may get in the way.

People who make it to 65 will live a lot longer. As of 2005, according to National Center for Health Statistics data, males aged 65 could expect to live to 82; for females, it was 85. That’s 37 years of living expenses for couples, and it isn’t easy or fun to scale back your standard of living.

Want to get a sense of how long you or your older relatives may live? Drop the phrase “How long will I live” into a search engine and play with some of the longevity questionnaires that pop up on the results page.

Social Security and Medicare will probably change. It’s hard to find anyone who thinks those programs will get much more generous. Medicare premiums will rise, and the program may cover fewer procedures or not cover emerging ones. Meanwhile, taxes on Social Security benefits may rise, and everyone may have to wait longer to collect.

Fewer people have pensions, so they’re more wedded to the markets. In 2005, according to the Employee Benefits Research Institute, 63 percent of workers in the private sector worked for employers who offered only 401(k) or similar plans, not traditional pensions.

As pensions continue to disappear, retirees and those close to the final quitting time will depend more heavily on how their investments perform. And as large numbers bet heavily on stocks to finance 20-plus years of retirement cruises and Cadillacs, some will inevitably lose big.

Out-of-pocket health care costs for retirees may soon hit seven figures a couple. Sounds crazy, right? Sure, these postretirement costs probably won’t get that high for people who have employer-provided retiree health insurance, though few in the private sector do anymore.

For those who don’t have such insurance and are retiring this year at age 65, the mutual fund giant Fidelity figures they will need $225,000 to cover their health care costs in retirement, though that doesn’t include over-the-counter drugs, dentistry or nursing home expenses.

For 55-year-old couples, the numbers could go much higher, according to projections by the Employee Benefit Research Institute. Once these people hit 65, if they pay all Medicare costs, purchase Medigap coverage beyond that and have prescription costs higher than 90 percent of their peers, they’ll need $1,064,000 in savings to finance these costs over the rest of their lives.

Divorced individuals may pass on less money. Splitting up can be expensive in itself, and maintaining two households for decades afterward will often cost more than sharing a dwelling.

Even if the parents have money left over, the ones who didn’t have custody of the children may be less inclined to pass an inheritance on to them. “The ties that parents have with kids and their interest in supporting them could well be weakened by the fact that they haven’t spent much time with them,” said Laurence J. Kotlikoff, an economics professor at Boston University and the co-author of “Spend ’Til the End,” which gives readers a new way to think about financial planning.

It’s getting easier to drain a home’s equity. Homeowners who are 62 or older (though there are some exceptions) can take out a reverse mortgage, which is roughly akin to a home equity loan that you don’t have to pay back until you (or your heirs) sell the house. So homeowners can tap the equity in their homes without having to make monthly payments to repay the debt.

So far, borrowers have taken out roughly 450,000 of these loans since 1990, according to the National Reverse Mortgage Lenders Association. But the pace is picking up. Lenders, including mainstream operations like Bank of America and Wells Fargo, wrote more than 100,000 of them for the first time in the year ended Sept. 30, 2007.

Meanwhile, the association says, retirees are increasingly using mortgages as a financial tool — and not simply as a last resort to pay for health care emergencies and the like.

Indeed, there is nothing to stop people from using the loan proceeds for vacations or cars or whatever they want. Millions just may do that someday, which makes reverse mortgages a real wild card. Their growth certainly raises the likelihood that large portions of family homesteads in America will end up belonging to banks, not heirs.

Life insurance may not offer much help. It’s now possible for people to sell their life insurance policies to investors in many circumstances. For a $1 million policy, an investor would pay some fraction of that immediately to the original policy holder, then hang on to the policy to collect the full amount when the seller dies. The more people who do this, the less money for any heirs.

Meanwhile, the popularity of term life insurance, where policy holders are covered for 10 or 20 years or so but then get nothing afterward if they don’t get a new policy, could also have an impact. Many people stop buying term life insurance after their children become adults or once a spouse dies. Their heirs will get nothing in the way of a payout.

The transfer of wealth will increasingly happen while the older generations are still alive. People in the latter halves of their lives now find themselves financing college tuition for grandchildren, chipping in when children or grandchildren graduate with five and six figures in student loan debt, supplying down payments in a tightening mortgage market and bailing the younger generations out of a host of other financial calamities.

Sometimes, this is part of a concerted effort to reduce an estate that could be subject to taxes. Other times, it’s pure necessity.

But it may well be everything you’ll ever get. If you put it to good use now, perhaps you won’t have to choose later between selling your life insurance and draining your home equity.

Smart Ways To Profit From Foreclosures

With 700,000 bank-owned homes on the market, and another one million in some state of foreclosure, according to RealtyTrac, an Irvine, Calif., provider of foreclosure listings, you might be tempted to add a distressed property to your portfolio.

Beware. Buying a home in foreclosure is not for the meek. Those with an appetite for risk, however, will find the tumultuous market stocked with plenty of investment opportunities.

These may include the sale of brand new luxury homes in an upscale Nashville community for half their marked value or a bank giving away a foreclosed property in a poor Detroit neighborhood for back maintenance.

In Depth: Smart Ways To Profit From Foreclosures

But this complex arena is teeming with professionals. Private equity juggernaut Blackstone Group (nyse: BX - news - people ) alone this year raised an $11 billion war chest to chase distressed properties, and large homebuilders looking to recapitalize, like Centex (nyse: CTX - news - people ) and Lennar (nyse: LEN - news - people ), unloaded over $1.5 billion in homes to vulture funds between December 2007 and April 2008, for between 30 and 40 cents on the dollar.

Whether you're looking to flip a home, buy into a neighborhood you couldn't otherwise afford or planning to rent the home, you, like these big companies, must have heaps of cash on hand.

There are properties that can be turned within a few months, but the overall market is still slow. Even if you have a renter lined up or have enough money for a 10% to 20% down payment, you should be ready to weather a depressed market for another two or three years.

Go to the county assessor's office and study recent sales for price-per-square foot and time spent on market to determine what sort of price you can expect at resale. Be conservative. If you are renting, calculate a capitalization rate, and subtract 10% or more of the annual yield for maintenance and depreciation. Make sure that your endeavor is still profitable if you incur two to three years of carrying costs and depreciation.

It's also crucial to remember that bad loans that plagued speculators and unprepared borrowers don't simply disappear when distressed owners sell their properties. Unless the property goes through foreclosure auction and becomes bank-owned, outstanding liens and fees are simply transferred to the new owner. If you plan to buy out of pre-foreclosure, make sure the property has a clean title; otherwise you'll just be trading places with the distressed homeowner.

In such situations, outstanding fees, second liens and the like aren't automatically washed away. It isn't always the case that pre-foreclosure homes lack clear title, but once a home goes into the auction on the courthouse steps and is bought back by the bank, it is clear of all the bad loans that got the original owner into trouble. Making sure a home has clean title is a critical first step to a sound investment.

Click here to see how one buyer is turning foreclosed properties into cash.

It's also important to note that you make money on a foreclosure the moment you buy the home. You can make a good return if you're selling in a sinking market, for example, by unloading a home at 70 cents on the dollar, if you bought it for 50 cents on the dollar. In heavily hit foreclosure areas, banks are juggling so many properties that offers on distressed homes, out-of-business homebuilders' developments and excess inventory are being entertained at under-listing prices.

What's housing like in your neighborhood? Weigh in. Post your thoughts in the Readers Comment section below.

Just don't get attached. As in any market, falling in love with a home--and overpaying--is a surefire way to lose money in a highly risky one.

When you've located an appealing property, order a new appraisal and study foreclosure patterns in the neighborhood. You'll also want to explore creative financing options to defer costs.

However you do the math, the most important thing to keep in mind is that the investment has to be worthwhile--even if you can't sell the home at your desired price for two or three years and the current housing market deteriorates a further 10% to 20%.

If that's a model you can live with, it might be time for a subscription to a foreclosure listing service.

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The secret of Bill Gates' success

By Charles Miller
BBC Money Programme

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From schoolboy to software titan, Bill Gates on how it all started

As Bill Gates prepares to end his full-time work at Microsoft, he tells the BBC in an interview that it wasn't just what Microsoft did, but what his rivals didn't do that let Microsoft get ahead.

"Most of our competitors were very poorly run," he tells Fiona Bruce, for The Money Programme.

"They did not understand how to bring in people with business experience and people with engineering experience and put them together. They did not understand how to go around the world."

Sir Alan Sugar, one of Britain's computer pioneers with his Amstrad range, testifies to Microsoft's global mobility even as a comparatively small company in the 1980s.

Amstrad, in Brentwood, Essex, was visited by a Microsoft salesman - or "mid-Atlantic smoothie" as Sir Alan describes him - who came to sell Microsoft's MS-DOS operating system.

Bill Gates explains how internet fever changed Microsoft in the 1990s

Sir Alan declined, telling the salesman he was quite happy with the rival DR-DOS system from Digital Research for his new computer, explaining that "we're a consumer electronics manufacturer here, we're not a bunch of geeks, we don't give a sh**".

But the Microsoft man wouldn't take no for an answer, and "was constantly coming back each day" to the Amstrad offices, Sir Alan says, until a deal was done.

Long game

Sir Alan believes he got the better of it, buying MS-DOS for a pittance, a figure he's legally unable to disclose to this day according to the contract he signed with Microsoft.

From Mr Gates' point of view, it was all part of the long game.

Getting MS-DOS out there was more important than the price of any particular deal.

Debates about Microsoft's tactics to win dominance of the software industry have been stuck in entrenched positions for years.

On the one side are Microsoft's competitors, along with some government regulators and courts, arguing that the company has benefited from strong-arm, even illegal practices.

On the other, Mr Gates and his colleagues insist their only purpose in life is to make "great software" and that if customers don't like it, they wouldn't choose it.

The interview with Mr Gates adds a new dimension to the debate.

Steve Wozniak co-founder of Apple Computer on how it all began

"Most of our competitors were one-product wonders," he says.

"They would do their one product, but never get their engineering sorted out.

"They did not think about software in this broad way. They did not think about tools or efficiency. They would therefore do one product, but would not renew it to get it to the next generation."

Self-serving claims?

Doug Klunder, a former Microsoft staffer, and the lead programmer for Microsoft's Excel spreadsheet agrees.

"People forget that what really launched Microsoft was [the programming language] Basic," he says.

"And then they made the transition to DOS, and then to applications and then to Windows, and managed to do all of those successfully."

Klunder says it was Mr Gates' ability to understand the business as well as the technical side that gave Microsoft the edge.

On the other side of the argument is Mitch Kapor, founder of the Lotus Corporation.

Lotus was at one time bigger than Microsoft, thanks to the success of its 1-2-3 spreadsheet software.

Mr Kapor pulls no punches in his criticisms of Microsoft.

"Claims by Microsoft that people were buying the software because it was good are pretty self-serving," he says.

"I'd like to smoke what he was smoking."

Intermediary

Mr Kapor claims that Microsoft "took advantage" of its position in controlling the operating system to make life hard for independent software developers like Lotus.

Microsoft's challenges in the age of the internet

When these criticisms are put to Mr Gates, he says he finds it "ironic" that he could be accused of such a thing when Microsoft had "evangelised" its software to other companies, begging them "please write software for our platform".

And when the criticism is attributed to Mr Kapor, Mr Gates says that he had personally visited Lotus "so many times" to plead with the company to adapt 1-2-3 to work on Windows.

In a sense, it is possible for both sides of the argument to be right.

On the one hand, Microsoft did hold the fate of other software companies in its hands.

When it decided to develop Windows, smaller companies had to fall in line with Microsoft's plans, or risk disaster.

But it is also true that because of the success of Microsoft software, its operating system became the intermediary between one industry, of application developers, and another, the computer manufacturers.

Slow response?

Heidi Roizen is a software entrepreneur who became a friend of Mr Gates.

She says of Microsoft that "because they were the operating system, everyone else in the industry had to deal with them".

Stepping into Bill Gates' shoes, by Microsoft's Ray Ozzie

Microsoft's clout was, by this argument, unavoidable.

Mr Gates himself attributes the success of Microsoft's own applications in 1995 - providing a second great profit centre alongside the operating systems business - to the tardiness of other companies in shipping products ready for Windows.

"We tried to get everyone who did productivity software to come along and support Windows," he says.

"But they were quite slow, so our own Windows applications, Word, Excel, were doing incredibly well."

'Conservative approach'

Others will say it wasn't as simple as that.

But there is a final essential element in the Microsoft formula, which is indisputable: its use of massive cash mountains to insulate itself against the vagaries of the market or the failure of a particular product.

Mr Gates describes this as his "conservative balance sheet approach".

In the early days, Mr Gates explains, he needed money in the bank to provide security for the families of his first dozen employees, most of whom had shown enough faith in him to move to Albuquerque, New Mexico, the location of Microsoft's first office.

But as the company expanded he wanted "great financial strength so we would have the flexibility to do software in the new way, or whatever we wanted to do".

Mr Gates is proud to claim "we are very conservative", and points out that "even today, if you look at the Microsoft balance sheet, you will see that we keep quite a bit of cash on hand".

Well, yes, more than $25bn should be enough for a good few rainy days.

Original here

The Smaller the Better, Automakers Are Finding

DETROIT — The demand for fuel-efficient small cars and hybrids is so fierce that automakers cannot produce them fast enough.

Limited supply of some of the hottest models is taking its toll on an industry that has already suffered a 14 percent drop in unit sales in the United States this year.

Analysts say that June sales are coming in at the lowest monthly rate in at least 15 years, partly because manufacturers have been unable to satisfy the surging demand for compact cars and hybrid models.

Sales for the month so far are equal to an annualized selling rate of 12.5 million vehicles, according to the market research firm J. D. Power & Associates.

“It’s abysmally low, the lowest we have seen in a long time,” said Tom Libby, J. D. Power’s chief industry analyst. “And the inventories of small cars are hurting sales, no doubt about it.”

With gasoline prices topping $4 a gallon, consumers are overwhelming dealerships with demand for the littlest vehicles in the showroom.

Mr. Libby said that the tiny Honda Fit is on a dealer’s lot an average of 11 days before it is sold, half the time of traditional quick sellers like the Cadillac CTS and Mercedes-Benz C300 luxury sedans.

“These are amazingly low numbers for a car of this type,” he said. “If gas prices stay where they are, I think we’ll see this for quite a while.”

Hybrids are even more difficult to buy. Four of the 10 fastest-selling vehicles are hybrids, led by the Toyota Prius, which sells within four days of arriving at the dealer, according to J. D. Power. The average time to sale for the industry in June, by comparison, is 57 days.

But while inventories are low, manufacturers cannot move quickly enough to increase production of popular small cars like the Toyota Corolla, Honda Civic and Ford Focus.

Ford Motor Company, for example is running its Wayne, Mich., assembly plant on overtime and Saturdays in an effort to meet demand for the Focus.

General Motors had planned to add a third shift in September to its small-car plant in Ohio, but recently moved the start date up to August.

A Toyota spokesman said the Japanese automaker was limited by production to selling 175,000 Priuses in the United States this year, no matter how hot the demand.

Honda Motor will open a new plant in Indiana late this year that will increase its output of Civics by 200,000 a year. The automaker has already increased production of the car at factories in Ohio and Canada.

“Even though we’ve got more vehicles in the pipeline than ever before, we didn’t expect to sell 53,000 Civics in May,” said a Honda spokesman, Edward K. Miller.

Dealers say that sales have been constrained based on availability. “Most of the Civics and hybrids are coming in already sold,” said John Rooney, the new-car sales manager at Pearson Honda in Richmond, Va. “Generally, right now people are waiting a couple of weeks or a couple of months for these vehicles.”

Honda has doubled its allocation of Fit subcompacts for the American market to about 80,000 vehicles a year, Mr. Miller said.

Still, consumers are finding the supply tight. Bob DiGiacomo, a schoolteacher in Fogelsville, Pa., put down a deposit on a Fit four weeks before the model he wanted became available. To get it, he drove 90 minutes to a dealership in Philadelphia.

“Gas mileage was a big factor for us buying the Fit,” he said. “The money I’ll save on gas in a year will pay for insurance on the car.”

Auto executives have been startled by the rapid shift this year by consumers from bigger vehicles like pickups and S.U.V.’s into small cars and lightweight crossovers.

Small cars now account for more one in five vehicles sold, and the numbers are rising. Less than a decade ago, the percentage was one in eight.

While some automakers — Honda, for example — have flexible plants that can shift productions from minivans or crossovers to cars, the factories of Detroit automakers are limited to specific models.

So while Ford has shut down its big S.U.V. plant in Wayne, Mich., for nine weeks because those vehicles are not selling, its nearby Focus plant is running extra hours.

“This seismic shift in the marketplace has definitely taken us and everybody else by surprise,” said George Pipas, Ford’s market analyst.

Mr. Pipas said that Ford currently has a 20-day supply of Focuses nationwide, well below the 60-day supply that is considered the industry norm.

The automaker, based in Dearborn, Mich., is drafting a major overhaul of its manufacturing plans in North America to address the shift to smaller cars.

But for now, it has a red-hot product in the Focus, and not enough production to meet demand.

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