Tuesday, July 15, 2008

Buy.com Deal With eBay Angers Sellers

SAN FRANCISCO — The golden era of the small seller on eBay, hawking gewgaws and knickknacks from the basement or garage, is coming to a noisy and ignominious end.

An eBay ad is aimed at buyers, but it’s sellers who are miffed.

Consumers appear to be tiring of online auctions, and rivals like Amazon.com are attracting more shoppers with fixed-price listings, while eBay has been struggling for growth. To shift toward that model, eBay has struck a deal with the Web retailer Buy.com that allows the company to sell millions of books, DVDs, electronics and other items on eBay without paying the full complement of eBay fees.

The recent change is one of several under eBay’s new chief, John Donahoe, that is stirring rancor among the faithful who depend on the site for their livelihood. The deal with Buy.com has added over five million fixed-price listings to eBay.com since the beginning of the year — for items from Xbox 360 video game consoles to Weber grills.

Since eBay’s search listings favor larger sellers who can add perks like free shipping, which improve their feedback ratings, Buy.com’s presence has hurt many smaller sellers that compete in those product categories.

EBay is signaling that its future lies with big, reliable sellers, not the mom and pop shops that are objecting so vociferously to the Buy.com deal, said Tim Boyd, an Internet analyst with American Technology Research. “It’s a tragic ending to what was once a warm and fuzzy Silicon Valley story,” he said.

EBay says the Buy.com deal will fill gaps in its product offerings while making shopping more predictable. Wall Street will be paying close attention to whether people are indeed buying at eBay.com in greater numbers when eBay reports its second-quarter earnings on Wednesday. This task is made more difficult because while there are more listings, it is not clear that more people are buying.

“Frankly, we are challenging some of the core assumptions that we have made about our business,” said Stephanie Tilenius, general manager of eBay North America. “Instead of focusing on being an auction business, we are looking at what it takes to create the best marketplace out there.”

Buy.com, based in Aliso Viejo, Calif., was founded in 1997. Within two years it made an initial public offering, only to nearly implode during the dot-com bust. In 2001, Scot Blum, its founder, took the company private. Buy.com carries no inventory, brokering sales through the same distributors that sell products to physical retail stores.

Unlike many small sellers who have made eBay a home over the last decade, Buy.com is large enough that it can offer free shipping, readily accept returns and provide a toll-free phone number — just the kind of customer service that eBay executives have hoped to bring to the sometimes unruly Internet bazaar.

To accommodate Buy.com, and other large sellers in the future, eBay last month announced a new “Diamond” level for its power sellers. Unlike its other classes of sellers, which pay eBay fees to list each item and share a percentage of each sale, Diamond sellers can negotiate their own fee arrangements with eBay.

Details of eBay’s deal with Buy.com are being kept private, though it appears from the sheer number of Buy.com listings flooding the site that Buy.com is not paying listing fees.

That has enraged many sellers, who have uncorked a wave of vitriol on eBay’s community forums about this and other changes. Many believe that eBay has violated the sacred tenet of the “level playing field,” which its founder, Pierre Omidyar, established as one of the company’s basic principles.

The way that eBay’s relationship with Buy.com emerged into public view did not help matters.

Tony Libby, a seller of technology items from Maine, first noticed Buy.com’s products on eBay in a quiet experiment the two companies conducted last December. When eBay began promoting Buy.com’s listings in its search results this spring, Mr. Libby, who says he used to sell more than $250,000 in computer hardware each month, watched his sales drop 50 to 75 percent.

Mr. Libby tipped off My Blog Utopia, an eBay-watching site that published an item in April about the relationship with Buy.com before eBay had a chance to announce it itself.

“As an independent seller, I felt betrayed,” Mr. Libby said. “I’ve paid eBay many hundreds of thousands in fees over the past several years and believed them when they talked about a level playing field. And they just plain and simple are going back on their word.”

“There is fair, and there is outright stabbing you in the back,” he said.

Kevin Harmon of Charlotte, N.C., who sold books, CDs and DVDs on eBay, said he stopped selling books altogether when the Buy.com effort began. “The way our fees are structured, we can’t compete with a company with free three-day fixed price listings,” he said. “You can imagine why most sellers are pretty upset about that deal.”

Unlike many other sellers, Mr. Harmon takes a measured attitude to the changes at eBay. “We have to fit our business model to theirs. Most sellers think it should be the other way around. They are doing what they think is the best for them and we just have to try to hang onto their tail,” he said.

Ms. Tilenius at eBay said the changes were fair because anyone can achieve Diamond power-seller status and have access to the same fee discounts as Buy.com — with a certain volume of monthly sales and high feedback from buyers.

“This is open to everyone. It’s a strong incentive for sellers to strive for greatness and grow their eBay business,” she said.

EBay resisted this type of arrangement for years, arguing that bringing other large sellers to the site would dilute eBay’s brand and reputation as a dynamic flea market.

But buyers’ expectations for online commerce have changed over the years, while eBay’s stock price — it closed Friday at $28.01 — is where it was two years ago, largely because of investors’ worries about the lack of growth in the auction business, analysts said.

“People now expect that something you buy online should be nicely wrapped in a box and sitting on your doorstep 48 hours later. The best companies like Amazon do that,” said Mark Mahaney, the director for Internet research at Citigroup. “EBay has to make it clear that it can participate in the fastest part of e-commerce growth.”

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Giving Some Thought to Google, the 'Potential Monopolist'

Rob Norman
Rob Norman
The Google-Yahoo partnership has theoretical implications for the search market and, by consequence, for the whole advertising market.

It's reasonable to speculate that a successful test will lead to a growing role for Google in delivering advertising in response to Yahoo search queries. In the event this transpires, there will be a de facto consolidation in U.S. search.

Conventional wisdom asserts that there is an inherent commercial democracy in paid search. The party who bids highest and who achieves the highest quality score, comprised of price, relevance and likelihood to click, wins. And in a competitive market the price is capped by the incremental cost of the click to the advertiser in search engine A vs. search engines B, C or D and the total volume of clicks that the advertiser wants, needs or can afford.

In the world that existed before search engines, the "cost per" world was dominated by direct-response print, TV, mail and telesales channels, which offered abundant competitive choice and price/volume equations generated by that choice.

For many advertisers search is the best value in the market and made relatively better as audiences, and attention to other channels, fragment and the use of do-not-call and other commercial blockers rise. This explains the rise of search and the re-allocation of budgets from other channels.

Inevitably, the per-click price of search will continue to rise if other channels deliver less volume and efficiency, and, if not capped by internal competition in the market, they will rise to a fraction below the costs of non-search channels.
Rob Norman is CEO Group M Interaction Worldwide. His interest is in the effect technology has on changing consumer media behavior and its implications for the biggest companies in the world. His blog is On Demand.

Ultimately, the cost will rise to that marginal point at which the channel is no longer profitable for advertisers, in turn reducing the available cash for paying staff throughout the supply chain and reducing budgets for innovation and new demand-generating goods and services.

In a de facto monopoly situation, this sequence of events happens more quickly. A monopolist can rapidly test the price elasticity of the market and arrive at a moving "one penny less" price pretty quickly. An auction monopoly is no different from any other monopoly in this regard. Simply moving the reserve price for the lot in question reduces the number of bidders until only one man is standing.

Somewhere a line needs to be drawn to protect the market. We are seeing already the impact of rising commodity prices around the world and the impact oil prices have on the general economy when supply is controlled by a narrow group of producers. While it may seem trivial in comparison with oil, grain and rice, the price of advertising response is firmly embedded in the cost of goods sold on a manufacturer's balance sheet and any such rise affects factory-gate pricing and the ultimate well-being of consumers.

This comment has nothing to do with the role of agencies in the value chain but everything to do with the costs of goods on which we all depend. Google is, of course, the potential monopolist, and it would be utterly churlish not to applaud the innovation and commercial acumen that has driven its success as a business, as a partner to other businesses and as a service from which consumers derive value. However, a monopoly is a monopoly -- even if arrived at by totally fair means -- and all monopolies require regulation to protect wider economic and social interests.
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Fannie Plan a `Disaster' to Rogers; Goldman Says Sell (Update5)

By Carol Massar and Eric Martin

July 14 (Bloomberg) -- The U.S. Treasury Department's plan to shore up Fannie Mae and Freddie Mac is an ``unmitigated disaster'' and the largest U.S. mortgage lenders are ``basically insolvent,'' according to investor Jim Rogers.

Taxpayers will be saddled with debt if Congress approves U.S. Treasury Secretary Henry Paulson's request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, Rogers said in a Bloomberg Television interview. Rogers is betting that Fannie Mae shares will keep tumbling.

Goldman Sachs Group Inc. analyst Daniel Zimmerman said the mortgage finance companies' shares may fall another 35 percent and lowered his share-price estimate for Fannie Mae to $7 from $18 and for Freddie Mac to $5 from $17. Freddie Mac fell 64 cents, or 8.3 percent, to $7.11 in New York Stock Exchange trading, while Fannie Mae fell 52 cents, or 5.1 percent, to $9.73.

``I don't know where these guys get the audacity to take our money, taxpayer money, and buy stock in Fannie Mae,'' Rogers, 65, said in an interview from Singapore. ``So we're going to bail out everybody else in the world. And it ruins the Federal Reserve's balance sheet and it makes the dollar more vulnerable and it increases inflation.''

The chairman of Rogers Holdings, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, also said the commodities bull market has a ``long way to go'' and advised buying agricultural commodities.

`Solvency Crisis'

Rogers, a former partner of hedge fund manager George Soros, predicted the start of the commodities rally in 1999 and started buying Chinese stocks in the same year. He traveled the world by motorcycle and car in the 1990s researching investment ideas for his books, which include ``Adventure Capitalist'' and ``Hot Commodities.''

Billionaire investor Soros said today that Fannie Mae and Freddie Mac face a ``solvency crisis,'' not a liquidity one, and that their troubles won't be the last financial disruption, Reuters reported.

``This is a very serious financial crisis and it is the most serious financial crisis of our lifetime,'' Soros told Reuters in a telephone interview. ``It is an idle dream to think that you could have this kind of crisis without the real economy being affected.''

`Going Bankrupt'

Fannie Mae and Freddie Mac each surged more than 20 percent in pre-market trading today after Paulson moved to stem a collapse in confidence in the two companies that purchase or finance almost half of the $12 trillion in U.S. home loans.

Fannie Mae's market value is now about $10 billion, down from $38.9 billion at the end of 2007. Freddie Mac's market value has shrunk to about $5 billion from $22 billion at the end of last year.

``These companies were going to go bankrupt if they hadn't stepped in to do something, and they should've gone bankrupt with all of the mistakes they've made,'' Rogers said. ``What's going to happen when you Band-Aid and put some Band-Aids on it for another year or two or three? What's going to happen three years from now when the situation's much, much, much worse?''

Paulson's proposal, which the Treasury anticipates will be incorporated into an existing congressional bill and approved this week, signals a shift toward an explicit guarantee of Fannie Mae and Freddie Mac debt.

The Federal Reserve separately authorized the firms to borrow directly from the central bank.

`The Right Thing'

Anyone who says the mortgage-finance companies should be left to fail is ``silly,'' hedge fund manager Barton Biggs said in an interview on Bloomberg Television from New York.

``Fannie and Freddie are way too big and way too big a part of the mortgage system and really the American way of life to say `Just let them go bankrupt,''' said Biggs, a former Morgan Stanley strategist who now runs the hedge fund Traxis Partners LLC. ``The Treasury, in my view, is doing the right thing.''

Washington-based Fannie Mae slid 45 percent last week, while McLean, Virginia-based Freddie Mac sank 47 percent on concern they may require a bailout that would wipe out shareholders.

Former St. Louis Federal Reserve President William Poole last week said in an interview that Freddie Mac is technically insolvent under fair value accounting, which measure a company's net worth if it had to liquidate all its assets to repay liabilities. Poole said Fannie Mae may also become insolvent this quarter.

Rogers said he had not covered his so-called short positions in Fannie Mae and would increase his bet if it were to rally. Short sellers borrow stock and then sell it in an effort to profit by repurchasing the securities later at a lower price and returning them to the holder.

The U.S. economy is in a recession, possibly the worst since World War II, Rogers said.

``They're ruining what has been one of the greatest economies in the world,'' Rogers said. Bernanke and Paulson ``are bailing out their friends on Wall Street but there are 300 million Americans that are going to have to pay for this.''

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U.S. Unveils Plan to Aid Mortgage Giants

The federal government unveiled a broad program yesterday evening to bolster troubled mortgage giants Fannie Mae and Freddie Mac, extending unprecedented support to the companies and proposing new authority to lend them money and even buy their stock.

Scrambling to announce the initiative before the trading week began, federal officials said they would allow the firms for the first time to borrow money from the Federal Reserve. Officials are also seeking permission from Congress to temporarily increase the amount the companies can borrow from the Treasury and enable the government to invest directly in the firms if conditions worsen.

The two firms, which dominate the market for U.S. mortgages, have been reeling amid investor concern that the companies might not have enough capital to handle their losses due to the rising number of bad home loans. Both firms' stocks plummeted by almost half last week.

Treasury officials said last night that they were confident Congress will be able to pass the new laws they seek by the end of the week as part of a broad housing bill under consideration on Capitol Hill.

The Federal Reserve announced that it would allow Fannie Mae and Freddie Mac to borrow money on an emergency basis. The firms, should they experience a cash crunch, will be able to exchange certain assets for cash at the Fed's discount window, a privilege long enjoyed by commercial banks and extended in March to struggling investment banks.

If Fannie Mae or Freddie Mac collapsed, it could cripple the U.S. housing market, dealing a staggering blow to the wider economy, and would saddle the federal government with massive debts if it chose to seize control of either firm.

"Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies," Treasury Secretary Henry M. Paulson Jr. said in a statement he read before television cameras last night. The strength of their debt "is important to maintaining confidence and stability in our financial system and our financial markets," he said.

A failure of either company would also rattle global financial markets because their shares and debt are widely held by pension funds, mutual funds and foreign governments.

Both companies said they were financially sound but were grateful for the confidence-building efforts. The proposals, taken together, make more explicit than ever that the federal governments backs the two federally chartered companies, even though they are investor-owned.

The changes that Treasury plans would expand the amount that Fannie and Freddie could borrow from the government in the event of cash flow problems. Currently, they can each withdraw $2.25 billion. The Treasury secretary could increase that amount at his discretion.

The Treasury secretary would also have the authority to invest government money in the firms by buying their stock, a step that would only be taken if the firms don't have enough capital and are unable to raise it on private markets.

"Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer," Paulson said.

The new measures would give Paulson the authority to provide federal money to the firms after negotiating the conditions with them. Treasury officials stressed that this would allow the government to get the most favorable terms possible for taxpayers, potentially putting existing shareholders in a less favorable position.

"This is a very sweeping proposal," said Bert Ely, a banking expert and longtime critic of Fannie Mae and Freddie Mac. "This plan goes further than I thought they would go and suggests a deeper level of concern about the companies."

The initiative comes after a harried weekend of calls among officials at Treasury, the Federal Reserve and other agencies, and between Washington and Wall Street. Paulson led the creation of the plans, in sessions that went late into Friday and Saturday nights. He and Timothy F. Geithner, president of the Federal Reserve Bank of New York, held extensive conversations with Wall Street executives in preparing the initiative.

The plan aimed in part at heading off further losses of confidence in Fannie Mae and Freddie Mac on global markets and was unveiled shortly before Monday trading opened on stock markets in Asia. The announcement also came on the eve of a crucial sale of $3 billion in securities by Freddie Mac. Federal officials also worked through the weekend to ensure that the sale, a test of investor confidence, would succeed.

Government leaders opted not to inject new money into the firms directly and stopped far short of nationalizing them. Officials continue to state that the companies are financially sound and should be able to continue funding Americans' home mortgages.

A senior Treasury official said that both of his department's proposals -- the expanded credit line and the authority to make equity investments -- are envisioned as temporary, expiring after 18 months.

The official said there were extensive discussions with congressional leaders of both parties over the weekend and that "nothing suggests we will not be able to accomplish this." Key members of Congress last night endorsed the Treasury and Fed efforts, though one suggested the measures may not be adopted as quickly as the administration hopes.

Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said in an interview that he expects the thrust of what Paulson requested will be approved by the House this week and accepted by the Senate next week, allowing President Bush to sign the measure by the end of next week. He added that the plans did not amount to a "bailout." Instead they conveyed that "we don't think there's a terrible problem, but we want to reassure you if there is one, we can deal with it."

Sen. Charles E. Schumer (D-N.Y.), who chairs the Joint Economic Committee, also welcomed the plan. "It will be reassuring to investors, bondholders and mortgage-holders that the federal government will be behind these agencies should it be needed," he said in a statement. "The Treasury's plan is surgical and carefully thought out and will maximize confidence in Fannie and Freddie while minimizing potential costs to U.S. taxpayers."

Another component of the plan is to give the Federal Reserve a "consultative" role in setting the firms' capital requirements. That would enable the Fed, which works to ensure the stability of the financial system, to help set requirements on Fannie's and Freddie's finances that might lessen the risks they pose to the broader economy.

The actions mark the most extensive government intervention into the financial world since the Fed rescued Wall Street investment bank Bear Stearns from bankruptcy in March. They are also designed to allow the companies to continue their roles making funding available for Americans to buy homes.

The firms funded about 70 percent of the home mortgages issued in the first three months of the year, but investors fear that the companies do not have enough capital to weather the eventual losses on bad loans on their balance sheets. Freddie Mac's shares have tumbled 88 percent since their high in 2006, and Fannie Mae's stock is off 85 percent since its most recent peak last year.

Separately, the Securities and Exchange Commission announced yesterday that it and other regulators will immediately begin to examine whether securities prices have been manipulated by the intentional spread of false information. This action was timed in part to coincide with the government's announcement about its aid to Fannie Mae and Freddie Mac.

Also yesterday, the Federal Deposit Insurance Corp. issued a statement indicating that IndyMac, the failed California-based bank it took over Friday, will reopen today with all its functions operating normally.

Staff writer David S. Hilzenrath contributed to this report.

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Analysts Say More Banks Will Fail

As home prices continue to decline and loan defaults mount, federal regulators are bracing for dozens of American banks to fail over the next year.

But after a large mortgage lender in California collapsed late Friday, Wall Street analysts began posing two crucial questions: Just how many banks might falter? And, more urgently, which one could be next?

The nation’s banks are in far less danger than they were in the late 1980s and early 1990s, when more than 1,000 federally insured institutions went under during the savings-and-loan crisis. The debacle, the greatest collapse of American financial institutions since the Depression, prompted a government bailout that cost taxpayers about $125 billion.

But the troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. Other lenders are likely to shut branches or seek mergers.

“Everybody is drawing up lists, trying to figure out who the next bank is, No. 1, and No. 2, how many of them are there,” said Richard X. Bove, the banking analyst with Ladenburg Thalmann, who released a list of troubled banks over the weekend. “And No. 3, from the standpoint of Washington, how badly is it going to affect the economy?”

Many investors are on edge after federal regulators seized the California lender, IndyMac Bank, one of the nation’s largest savings and loans, last week. With $32 billion in assets, IndyMac, a spinoff of the Countrywide Financial Corporation, was the biggest American lender to fail in more than two decades.

Now, as the Bush administration grapples with the crisis at the nation’s two largest mortgage finance companies, Fannie Mae and Freddie Mac, a rush of earnings reports in the coming days and weeks from some of the nation’s largest financial companies are likely to provide more gloomy reminders about the sorry state of the industry.

The future of Fannie Mae and Freddie Mac is vital to the banks, savings and loans and credit unions, which own $1.3 trillion of securities issued or guaranteed by the two mortgage companies. If the mortgage giants ever defaulted on those obligations, banks might be forced to raise billions of dollars in additional capital.

The large institutions set to report results this week, including Citigroup and Merrill Lynch, are in no danger of failing, but some are expected to report more multibillion-dollar write-offs.

But time may be running out for some small and midsize lenders. They vary in size and location, but their common woe is the collapsed real estate market and souring mortgage loans. Most of these banks are far smaller than the industry giants that have drawn so much scrutiny from regulators and investors.

Still, only six lenders have failed so far this year, including IndyMac. In 1994, the Federal Deposit Insurance Corporation listed 575 banks that it considered to be troubled. As of this spring, the agency was worried about just 90 banks. That number may go up in August, when the government releases an updated list.

“Failed banks are a lagging indicator, not a leading indicator,” said William Isaac, who was chairman of the F.D.I.C. in the early 1980s and is now the chairman of the Secura Group, a finance consulting firm in Virginia. “So you will see more troubled, more failed banks this year.”

And yet IndyMac, one of the nation’s largest mortgage lenders, was not on the government’s troubled bank list this spring — an indication that other troubled banks may be below the radar.

The F.D.I.C. has $53 billion set aside to reimburse consumers for deposits lost at failed banks. IndyMac will eat up $4 billion to $8 billion of that fund, the agency estimates, and that could force it to raise more money from the banks that it insures.

The agency does not disclose which banks it thinks are troubled. But analysts are circulating their own lists, and short sellers — investors who bet against stocks — are piling on. In recent weeks, the share prices of some regional banks, like the BankUnited Financial Corporation, in Florida, and the Downey Financial Corporation, in California, have stumbled hard amid concern about their financial health. A BankUnited spokeswoman said the lender had largely avoided risky subprime loans.

In his “Who Is Next?” report over the weekend, Mr. Bove listed the fraction of loans at banks that are nonperforming, meaning, for example, that the assets have been foreclosed on or that payments are 90 days past due. He came up with what he called a danger zone, which was a percentage above 5 percent. Seven banks fell in this category.

An important issue for the regional and community banks will be whether they have managed to sell their riskiest loans to Wall Street firms.

And the government may have fewer failures than in the past because private investment funds might buy some troubled lenders. Regulators are considering rule changes that would allow private equity firms to buy larger shares of banks, and several prominent investors, like Wilbur Ross, have raised funds to leap in.

Eric Dash contributed reporting.

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Study: How Pot Became An American Pastime

The Netherlands, with its permissive marijuana laws, may be known as the cannabis capital of the world. But a survey published this month in PLoS Medicine, a journal of the Public Library of Science, suggests that the Dutch don't actually experiment with pot as much as one would expect. Despite tougher drug policies in this country, Americans were twice as likely to have tried marijuana than the Dutch, according to the survey. In fact, Americans were more likely to have tried marijuana or cocaine than people in any of the 16 other countries, including France, Spain, South Africa, Mexico and Colombia, that the survey covered.

Researchers found that 42% of people surveyed in the United States had tried marijuana at least once, and 16% had tried cocaine. About 20% of residents surveyed in the Netherlands, by contrast, reported having tried pot; in Asian countries, such as Japan and China, marijuana use was virtually "non-existent," the study found. New Zealand was the only other country to claim roughly the same percentage of pot smokers as the U.S., but no other nation came close to the proportion of Americans who reported trying cocaine.

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Cheating girlfriend hid dead newborn baby in car boot to keep pregnancy secret from partner

Claire Jones

Claire Jones, 32, hid her stillborn baby's body in a car boot

A woman hid her dead newborn baby in the boot of her car to keep an affair and resulting pregnancy secret from her partner.

Marketing executive Claire Jones, 32, found she was expecting after a fling with a man she met through work.

To explain her expanding stomach, she told her family, friends and partner of five years David Stoneman that a wheat allergy was making her put on weight.

After giving birth alone in her mother's bathroom on December 27 last year, she wrapped the stillborn baby in a carrier bag and binbags.

She then drove to the semidetached house she shared with Mr Stoneman, 33.

Jones then acted as if nothing had happened with her partner and colleagues.

But South Wales Police were tipped off by a health worker who noticed that her pregnancy had been registered but there was no record of a birth.

Officers called at her home in St Mellons, Cardiff, ten days later.

She told officers the baby had been stillborn and she had flushed the body down the toilet.

Forensic experts searched her £125,000 home and were planning to dig up the garden and search the drains when the baby's body was found in the boot of Jones's car.

She admitted she had been leading a double life with Mr Stoneman in Cardiff and an unnamed colleague in Swansea who was the father of the baby.

The scene at Claire Jones' home in Cardiff when police discovered the body of a newborn baby in January this year

Mr Stoneman, who was questioned and released without charge, left the couple's home soon after he discovered what had happened. He refused to comment yesterday.

Two inconclusive post-mortem examinations of the infant's body were carried out, including one by a Home Office pathologist.

Jones was charged with endeavouring to conceal the birth of a child.

Appearing at Cardiff Crown Court yesterday, she spoke only to confirm her name and admit the charge.

Prosecutor Dan Williams told Judge John Curran: 'The prosecution is satisfied the single count now before the court is the appropriate one.'

Peter Heyward, defending, asked for social inquiry reports before Jones is sentenced.

He added: 'Clearly, this is a serious and a distressing case.

'She is now living with her mother and there have been no difficulties.'

Jones will be sentenced next month and was remanded on bail to her mother's home.

The judge said: ' Nothing should be read into the fact bail has been granted today.'

Mr Stoneman and Jones are no longer together. A former neighbour said: 'It's all very sad. They were a nice couple and Claire had a good job.

'When she put on weight last year she told everyone she had been diagnosed with an intolerance to wheat.

'No one questioned it and she said she was getting treatment which would sort it out.'

Another added: 'It must have been a double shock for him - first that she had had a baby but also that she had been seeing someone behind his back.'

It is understood Jones saw a doctor when she suspected she was pregnant in May of last year.

Her fears were confirmed but she failed to attend antenatal clinics or appointments for scans.

A police source said: 'We were called in because there was a record of a woman being pregnant but no record of her baby being born.

' It is a very sad set of circumstances.'

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Study: As gas prices go up, auto deaths drop

High gas prices are posted at a Shell gas station in San Mateo, Calif., Thursday, July 10, 2008. The average roadside price for gasoline on Thursday stood at $4.104 a gallon — just a hair below the record $4.108 hit Monday, according to auto club AAA, the Oil Price Information Service and Wright Express. (AP Photo/Paul Sakuma)
AP Photo: High gas prices are posted at a Shell gas station in San Mateo, Calif., Thursday,...

By JOAN LOWY, Associated Press

WASHINGTON - High gas prices could turn out to be a lifesaver for some drivers. The authors of a new study say gas prices are causing driving declines that could result in a third fewer auto deaths annually, with the most dramatic drop likely to be among teen drivers.

Professors Michael Morrisey of the University of Alabama at Birmingham and David Grabowski of Harvard Medical School said they found that for every 10 percent increase in gas prices there was a 2.3 percent decline in auto deaths. For drivers ages 15 to 17, the decline was 6 percent, and for ages 18 to 21, it was 3.2 percent.

Their study looked at fatalities from 1985 to 2006, when gas prices reached about $2.50 a gallon. With gas now averaging more than $4 a gallon, Morrisey said he expects to see much greater drop — about 1,000 deaths a month.

With annual auto deaths typically ranging from about 38,000 to 40,000 a year, a drop of 12,000 deaths would cut the total by nearly a third, Morrisey said in an interview with The Associated Press.

"I think there is some silver lining here in higher gas prices in that we will see a public health gain," Grabowski said. But he cautioned that their estimate of a decline of 1,000 deaths a month could be offset somewhat by the shift under way to smaller, lighter, more fuel-efficient cars and the increase in motorcycle and scooter driving.

Morrisey said the study also found the "same kind of symmetry" between gas prices and auto deaths when prices go down.

"When that happens we drive more, we drive bigger cars, we drive faster and fatalities are higher," he said.

Morrisey and Grabowski found a nearly identical relationship between gas prices and auto deaths in an earlier study that covered 1983 to 2000. The studies used auto deaths tabulated by the National Highway Traffic Safety Administration, which hasn't yet released figures for 2007.

Clarence Ditlow, executive director of the nonprofit Center for Auto Safety, said it makes sense that auto deaths would decline as driving decreases in response to rising gas prices.

"There are a whole bunch of factors that are influenced by higher gasoline prices — teenagers don't have as much money, so you have the most risky drivers driving less; people are switching out of the bigger, older more dangerous vehicles, and people also know if they drive slower they're going to save gasoline," Ditlow said. "So, from a societal viewpoint, higher gasoline prices have a great number of benefits, and one of the most important benefits is fewer traffic fatalities."

But Ditlow said he would be "delighted and amazed" to see deaths drop by a third. He said the declines in driving, while record-setting, still aren't great enough to suggest such a dramatic drop is likely.

The Department of Transportation said last month that Americans drove 1.4 billion fewer highway miles in April, the sixth month in a row that driving was down and a historic turnaround after decades of annual increases in driving.

"We're out there on a limb a little bit," Morrisey acknowledged, "but given that we get such consistent stories across the two time periods (in both studies) with somewhat different methodology, they seem to be pretty robust estimates."

Morrisey and Grabowski presented their findings to a meeting of the American Society of Health Economists in Raleigh-Durham, N.C., last month. The study was funded by the Robert Wood Johnson Foundation.

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