Monday, January 26, 2009

Office politics, alive and well

Architects Derrick Choi and Miriam Spear collaborate at Panera Bread in Brookline. Below: Lawyer Rebecca Pontikes on her laptop at Peet's in Harvard Square.
Architects Derrick Choi and Miriam Spear collaborate at Panera Bread in Brookline. Below: Lawyer Rebecca Pontikes on her laptop at Peet's in Harvard Square. (Aram Boghosian for the Boston Globe (above); John Tlumacki/Globe Staff)

By Beth Teitell

Robert Wickham, a software salesman, was working on his laptop at his favorite office - the airy Cafe Fixe, in Brookline - when he took a break to explain the art of scoring a desk, er, table, and how it all comes down to contacts. If people know you, he said, they'll share a table or finish their coffee quickly. "But when you're the new guy," he said, "no one's going to give up a seat for you."

Milk, cream, or office politics with your coffee?

As the WiFi workforce expands and growing numbers of the unemployed, self-employed, even fully employed punch the clock at cafes, competitive and petty behaviors once confined to the office have been outsourced - to the corner coffee shop.

"It's like being at work," Wickham, 39, observed. "You always have to have your antenna up."

If NBC remakes "The Office" (again), the show should be set at Starbucks. The same tensions are there: the sidelong glances about annoying co-workers (coffee mates?), the fights with the boss (a role now played by baristas or assistant managers), the jockeying for the best office (the table near the power outlet).

"You do the hover," said Todd Orr, 29, a computer programmer, as he worked with his brother at Starbucks on Boylston Street in Back Bay, explaining a passive-aggressive method for landing a seat that involves assertive loiter ing. "You hope you don't get into a parking lot situation," in which some jerk jumps ahead and takes what's yours, he added. "It could start a fistfight."

Statistics on the number of people working in coffee shops (at the tables, not behind the counter) are hard to come by, but the number of coffee shops has grown from about 10,000 in 1998 to 23,000 or more today, according to Ric Rhinehart, executive director of the Specialty Coffee Association of America. "You walk into a coffee shop [in any urban area], and there's no place to sit down or plug in a laptop," he said. "It's enough of a phenomenon that there are bloggers who've blogged about laptop etiquette."

Maggie Mason of San Francisco is one of them. "I spend a few days a week working at coffee shops," she wrote in a December post on, "and I've seen some serious audacity in the last few years.

"There's always the guy communing with his computer at a table meant for four. He inevitably plugged in to the only outlet five hours ago; about the time he purchased his coffee, which has long since gone cold. Occasionally he rises to aim banter at the irritated barista, and then returns to his seat without making a purchase. . . . I once saw someone pull a screwdriver out of his bag to remove a cover plate the owner had secured over an outlet. I had to restrain myself from walking over to smack his hands away."

Speaking of power outlets, in at least one local "coffice," Panera Bread in Coolidge Corner, they became a source of tension between management and the workers (also known as customers), after managers noticed that actual customers (the kind who not only buy food but leave) were being edged out by the entrenched WiFi workforce.

A human resource issue was born. The store tried to play nice by asking laptop users to limit their time, but when that didn't work, employees covered many outlets with plates, an outcome Linn Parrish, Panera's vice president of public relations, calls a "fair solution to the situation." The rank and file has griped, but picket lines have not formed in front of the store.

Even the sun can be an issue, says Amy Alkon, a syndicated advice columnist and author of a forthcoming book on the collapse of public manners. She spends a lot of time writing in coffee shops, and has witnessed countless workplace-like disputes, including one over whether the shades should be left up, to let in light for the employees, or pulled down, to enable laptop workers to see their screens.

"There's a war between the people who work at Starbucks for a living and the people who work at Starbucks for a living they're earning someplace else," she said.

Many nomadic laptop workers enjoy the break from officemates that coffee shops provide, but anonymity isn't always guaranteed. If you work in one coffee shop too frequently, other regulars can become just as problematic as chatty co-workers.

And then there are the strangers who inject themselves into work conversations.

"We've had people chip in and offer advice about what we're doing," said Dave Gordon, senior art director of B Direct, a marketing and communications firm whose principals all work from home. He was meeting with his two colleagues at the Boylston Street Starbucks, their "conference room."

Most of the unsolicited counsel starts like this, Gordon said: "I'm sorry, but I couldn't help but overhear . . ." Then come the suggestions on how to improve whatever print ad or direct mail piece the firm's creating. People mean well, he said. So, has the firm ever used any of the ideas? "No, not really." Hey, sounds just like the real workplace.

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Earnings, economy - here comes 'terrible'

By Alexandra Twin, senior write

NEW YORK ( -- Investors this week will face the largest batch of company report cards yet, in what is quickly shaping up to be the worst quarter for corporate profits in a decade.

The earnings avalanche will test the market's mettle. Last week, the Dow fought back after falling below the 8,000 point psychological benchmark for four days in a row. Analysts say if the Dow can hang on to this level in the weeks ahead, that's a good indication that a bottom has been set.

The biggest week for earnings brings reports from 137 S&P 500 companies and 12 Dow components. Standouts include Caterpillar, American Express, McDonald's, Yahoo, Wells Fargo and Exxon Mobil.

Only 10% of the 85 S&P 500 companies that have reported so far have topped forecasts. Another 60% have met estimates and another 30% have missed, according to Thomson Reuters.

"We're in the process of absorbing just how bad the fourth quarter was," said Bernard McGinn, CEO of McGinn Investment Management. "We had a feeling things were terrible, now we're getting proof of it. The question is 'where do we go now?"

This week also brings the latest Fed policy meeting - although it's likely to be less influential than usual since the central bankers are expected to keep interest rates unchanged near zero, said Kenny Landgraf, principal and founder at Kenjol Capital Management

Investors will also digest reports on housing, consumer confidence and leading economic indicators early in the week. The end of the week brings the fourth-quarter gross domestic product (GDP) report. It's expected to have fallen by an annual rate of 5.2%, it biggest plunge in 26 years.

"Everyone is bracing for the GDP number to be pretty terrible, but the bigger surprise could come with the housing numbers, which are also expected to be awful," he said.

Landgraf said that investors are also looking for more concrete news to come from the Obama administration this week regarding the use of the remaining $350 billion of the TARP money and negotiations on the $825 billion stimulus package.

Earnings hit hard: With 15% of the S&P 500 having already reported results, fourth-quarter profits are expected to have fallen 28.1% from a year ago, according to the latest figures from tracker Thomson Reuters.

Typically, the final number is lower than where it stands at this point in the quarter. But even if the final number is no worse than where it stands now, the fourth quarter will still rank as the biggest decline for S&P 500 profits in the 10 years Thomson has been tracking results.

Worse-than-expected reports from big financial companies such as Citigroup and Bank of America have weighed heavily on the results so far.

"It's not how many companies are missing," said John Butters, Thomson Reuters' senior research analyst. "It's the size of the companies missing and the magnitude of the losses."

Financials are currently expected to lose $12.5 billion this year as opposed to their profits of $5 billion a year ago. But financials aren't alone, with 7 of 10 S&P economic sectors due to post declines.

However, not all of the news has been bad. Last week Google, Apple and IBM reported earnings that were better than expected.

On the docket

Monday: December existing home sales are expected to have fallen to a 4.40 million unit annual rate from a 4.49 million unit rate in November.

The December index of leading economic indicators (LEI) is expected to have fallen 0.3% after falling 0.4% in November.

Tuesday: The January consumer confidence index from the Conference Board is expected to hold steady at an all-time low of 38.0, unchanged from December.

Also due Tuesday is the S&P/CaseShiller home index for November, expected to show steep declines.

Wednesday: The Federal Reserve concludes its two-day policy meeting with an announcement on interest rates due at around 2:15 p.m. ET. No change is expected in the fed funds rate: The central bank lowered interest rates to nearly zero in December and hinted it would keep them there for some time.

As always, the statement accompanying the decision will be critical, as it offers the Fed's assessment of the economy, now in its second year of a recession. (Full story)

Also on Wednesday, the World Economic Forum kicks off in Davos, Switzerland. It runs through Sunday.

Thursday: The December durable goods orders report is due before the start of trade. Orders are expected to have dropped 1.8% after dropping 1.5% in November.

December new home sales are due after the start of trading. Sales are expected to have fallen to a 400,000 annual unit rate from a 407,000 annual unit rate in November.

Friday: Fourth-quarter gross domestic product (GDP) is expected to have fallen by an annual rate of 5.2%, after falling by an annual rate of 0.5% in the third quarter. That would be the biggest quarterly decline in roughly 26 years.

The January Chicago PMI, a regional read on manufacturing, is expected to have fallen to 34.2 from 35.1 in December.

The University of Michigan releases its revised January consumer sentiment index, which is expected to hold steady at 61.9.

Earnings to watch

Monday: Before the start of trade, heavy-equipment maker Caterpillar (CAT, Fortune 500), a Dow component, is expected to report earnings of $1.31 per share versus $1.50 a year ago, according to a consensus of analysts surveyed by Thomson Reuters.

Fellow Dow component McDonald's (MCD, Fortune 500) is expected to report earnings of 83 cents per share versus 73 cents a year ago.

After the market close, Dow component American Express (AXP, Fortune 500) is expected to report earnings of 22 cents per share versus 71 cents a year ago.

Also after the close, biotech Amgen (AMGN, Fortune 500) is expected to report a profit of $1.07 per share versus $1 a year ago.

Tuesday: Dow component DuPont (DD, Fortune 500) is set to report results before the start of trading. The chemical maker is expected to have lost 24 cents per share, after having earned 57 cents per share a year ago.

Verizon Communications (VZ, Fortune 500), also a Dow component, is expected to report earnings of 62 cents per share, the same as it did a year ago.

After the market close, Yahoo (YHOO, Fortune 500) is expected to report earnings of 13 cents per share versus 15 cents a year ago.

Wednesday: AT&T (T, Fortune 500) reports results before the start of trade. The Dow component is expected to report earnings of 65 cents per share versus 71 cents a year ago.

Also in the morning, Wells Fargo (WFC, Fortune 500) is expected to report earnings of 33 cents per share, versus 41 cents a year ago. Wells Fargo is perceived as having held up better than a number of other banks.

Thursday: 3M (MMM, Fortune 500), due to report results before the start of trade, is expected to have earned 93 cents per share versus $1.19 a year ago. The Dow component is often seen as a proxy for the economy because of the breadth of its businesses.

After the market close, (AMZN, Fortune 500) is expected to report earnings of 39 cents per share versus 48 cents a year ago.

Friday: A pair of oil companies report results before the start of trade. Chevron (CVX, Fortune 500) is expected to have earned $1.81 per share versus $2.32 a year ago. Exxon Mobil (XOM, Fortune 500), a Dow component, is expected to report earnings of $1.47 per share versus $2.16 a year ago.

Also before the open, Dow component Honeywell (HON, Fortune 500) is expected to have earned 97 cents per share, versus 91 cents a share a year ago.

Procter & Gamble (PG, Fortune 500) is expected to have earned $1.58 per share versus 98 cents a year ago.

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Downturn Accelerates As It Circles The Globe

Washington Post Staff Writer

The global rout has altered high streets in Britain, where shops including retail icon Woolworths have gone bust. The number of jobless has climbed to nearly 2 million, a level not seen since 1997 when the Labor Party came to power.
The global rout has altered high streets in Britain, where shops including retail icon Woolworths have gone bust. The number of jobless has climbed to nearly 2 million, a level not seen since 1997 when the Labor Party came to power.

The world economy is deteriorating more quickly than leading economists predicted only weeks ago, with Britain yesterday becoming the latest nation to surprise analysts with the depth of its economic pain.

Britain posted its worst quarterly contraction since 1980 on the heels of sharper than expected slowdowns reported from Germany to China to South Korea. The grim data, analysts said, underscores how the burst of the biggest credit bubble in history is seeping into the real economies around the world, silencing construction cranes, bankrupting businesses and throwing millions of people out of work.

"In just the past few days, we've had a big downward revision, we're seeing that an even bigger deceleration is on the way than we thought," said Simon Johnson, former chief economist at the International Monetary Fund and a senior fellow at the Peterson Institute for International Economics.

The depth of the troubles, analysts say, indicates that nations may need to spend more than the billions of dollars already planned on stimulus packages to jump-start their economies, and that a global recovery could take longer, perhaps pushing into 2010.

Analysts are particularly concerned about the slowdown in China and the recession in Europe. There is mounting concern about the stability of the euro and the British pound, which dropped to a 24-year low against the dollar yesterday. Analysts are fretting about the possibility of a debt default in a euro-zone country that could send fresh shock waves through global financial markets.

The problems in Europe now appear to be as bad if not worse than those in the United States. In the last quarter of 2008, the British economy shrank at an annualized rate of 6 percent. That is worse than economists expected, but also showed the British recession may be even harsher than the one in the United States, where analysts predict data expected next week will show the U.S. economy to have contracted between 5 and 5.5 percent in the last quarter of 2008.

The meltdown is altering high streets in Britain, where retail icon Woolworths shuttered the last of its 807 branches this month after 99 years in business. Marks & Spencer, sometimes described as the bellwether of Britain's retail sector, said this month that it would close 27 stores and cut more than 1,000 jobs. The average price of a house has plummeted to mid-2004 levels, according to Halifax, Britain's biggest mortgage lender. Car sales are at a 12-year low. The number of people out of work has climbed to nearly 2 million, a level not seen since 1997 when the Labor Party came to power.

In fact, the only sector to show growth in Britain was agriculture, which accounts for about 1 percent of the overall economy.

"The question now is not how bad will 2009 be, but will we recover in 2010 and if we recover, will it only be anemic?" said Andrew Scott, professor of economics at the London Business School, adding that the housing bubble is bigger, consumer debt is higher and the speed of the slowdown faster than in previous recessions.

Partial data released in recent days by Germany, Europe's single biggest economy, indicates its economy saw a major contraction in the last months of 2008, posting a 6 percent annualized drop, according to Howard Archer, chief Britain and European economist for IHS Global Insight in London.

That could get worse as problems mount in the European financial system. In recent days, major banks in Europe -- including the Royal Bank of Scotland -- reported surprisingly massive losses. European authorities are seen by some critics as falling behind the Americans in dealing with distress in the their financial sectors.

Standard & Poor's has downgraded Greek and Spanish bonds and warned that others, including Ireland's, may be next. The sense that some European countries are now more risky has driven up the borrowing costs for even large nations in the region, including Italy. That has made it harder for those countries to raise the vast sums needed to launch major stimulus packages aimed at economic recoveries.

Also troubling are signs that China, once a rare light in the global economy, may not prove to be the pillar of strength in Asia that many analysts had hoped. Beijing announced this week that its economy grew by 6.8 percent in the fourth quarter of 2008 -- slower than the 7 percent analysts expected -- bringing total growth for 2008 to a seven-year low. Chinese data, however, are somewhat opaque, and analysts warned the slowdown there may be sharper than Beijing is willing to admit.

That is diminishing hopes for China as Asia's economic white knight, with its growth potentially propping up economies in the region. And as China grows at a far slower rate, it is importing fewer goods from neighbors, giving export-dependent nations in the region no way to pick up the slack from plummeting demand in the United States and Europe.

Particularly hard hit is South Korea, which saw trade with China soar in recent years. But as China slows, and the United States, Europe and Japan sink into deep recessions, unsold goods are piling up at South Korea docks. This week, the government said the economy in the fourth quarter staged its sharpest drop since the Asian economic crisis swept across the country in 1998.

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Ford does not need government loans: CEO

By Soyoung Kim

NEW ORLEANS (Reuters) – Ford Motor Co has enough liquidity to fund its restructuring plan and despite the deep downturn in auto sales still sees no need to ask for government loans, Chief Executive Alan Mulally said on Saturday.

"We don't want to borrow any more money. We have sufficient liquidity to fund our transformation plan, which means our business is in a relatively good shape," Mulally told reporters on the sidelines of the National Automobile Dealers Association convention.

Ford's U.S. rivals, General Motors Corp and Chrysler LLC, won approval in December for $17.4 billion of government loans to avert collapse. Ford has asked for access to a $9 billion credit line from the U.S. government but has not sought loans. Washington has not yet responded to Ford's request.

Mulally said Ford was in a better situation than its rivals because it borrowed more than $23 billion in 2006, using most of the company's assets as security, including its well-known blue oval logo.

Mulally said U.S. industry-wide sales in January had been similar to those in December, when they fell about 36 percent from a year earlier to 10.3 million units on an annualized basis.

Ford expects an economic stimulus package being pushed by new President Barack Obama to drive a recovery in auto sales starting in the second half and maintains its forecast of U.S. auto sales at 12 million to 12.5 million units, he added.

The forecast represents the high end of prevailing expectations. Analysts have forecast U.S. sales in a range between 10.1 million and 12.5 million units for 2009.

"Right now, I think with everything planned in the fiscal and monetary policy, I am very comfortable that we are going to start to turn things around through the second half of the year," Mulally said.

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Lawyers Warned to Be Wary of Client E-Mail Scams

Brenda Sapino Jeffreys
Texas Lawyer

Houston lawyer Richard T. Howell Jr., whose firm was scammed out of $182,500 by a client who contacted and hired him through e-mail, says he is talking publicly about the situation so he can prevent other Texas lawyers from making the same mistakes.

"I'm a capital 'D' Dumbass," says Howell, who has practiced law for 23 years and is a partner in Buckley, White, Castaneda & Howell.

In October 2008, Howell became the victim of a sophisticated, international version of a classic check-fraud scam, say two Texas consumer law attorneys, as well as Dan Parsons, president of the Better Business Bureau of Greater Houston and South Texas.

"What has happened to him is a typical form of check fraud," says Richard Tomlinson, of the Law Office of Richard Tomlinson in Houston.

Because he is responsible, Howell says, he did not ask his partners to help him cover the loss, which stemmed from collections work Howell did for a client who said he was a businessman in Japan. To reimburse his firm, Howell says, he had to borrow money on a home equity loan.

In December 2008, Howell's firm sued Citibank in state court in Houston, alleging the New York bank was negligent and engaged in negligent misrepresentation when it represented to Howell that a $367,000 check -- that was supposed to be a payment to Howell's client from a customer -- had cleared when, in fact, it was a bogus check. [See the petition.]

In an answer filed in December 2008 in Buckley, White, Castaneda & Howell v. Citibank, Citibank denies the allegations and seeks a take-nothing judgment. "We are not liable for those funds," says Citibank's attorney, Yasmin Atasi, a shareholder in Winstead in Houston. She says she cannot comment further because the litigation is pending. [See the answer.]

The suit is set for trial in July in 61st District Judge Al Bennett's court in Houston.

Howell says that with a 33.3 percent fee, the prospect of collecting $3.6 million in unpaid invoices for the client was a big lure. "To me, it sounded like it could be a potentially lucrative client from Japan," Howell says.

But Howell has little hope he will ever recover the money from his former client. Tom Kelley, a spokesman for the Texas office of the attorney general, says the U.S. Secret Service typically handles investigations into crimes like the e-mail scam that Howell describes. Howell says he called the Secret Service and the Houston Police Department, but he did not file complaints with either agency. He says the HPD declined to investigate because it involved multiple jurisdictions, and the Secret Service was not interested in investigating his firm's loss, because the amount was too small.

However, Cynthia Marble, assistant special agent in charge of the Houston field office of the Secret Service, says there's no threshold amount that would lead her agency to investigate a loss like Buckley White's. "It's more the dynamics of the case and not so much the amount," she says.

Marble says the field office has no complaint on file from Howell's firm so it is not investigating the firm's loss. The investigations are difficult, she says. "Most of these cases are scams that originate overseas, and once it [money] leaves here and goes to some unknown entity overseas, it's difficult to track," she says.

Howell says he did file a complaint with the U.S. Postal Service Office of the Inspector General, but the agency hasn't reported any progress in the investigation to him.

To somewhat mitigate his embarrassment, Howell says, he has spoken to another Texas lawyer who also was the victim of similar check fraud, to the tune of $300,000. (Howell declines to identify the other lawyer.) That just proves to Howell that e-mail swindlers are preying on lawyers and running a very sophisticated scam.

"It was moving fast with me. I thought I was covering any base," Howell says.

Parsons, the Better Business Bureau official, says what Howell describes is a version of a check-fraud scheme known as the "Nigerian Scam," which the urban myth-busting Web site says often involves a putative wealthy foreigner who needs help from the victim in moving money from one place to another. says the scam lures in victims by presenting an opportunity to get something for nothing.

"They have evolved with that to so many new layers, so many new variations," Parsons says.

"The fact that money is being shipped around internationally, it has the smell of it [the Nigerian scam]. Good luck at getting it back," Parsons says, noting that the U.S. government isn't much help.

Craig Butterworth, a communications specialist for the Va.-based National White Collar Crime Center, says the scam Howell's firm describes in its petition sounds like a variety of a "confidence fraud" in which a scammer gains the confidence of a victim, and then takes the victim's money.

"The law firm essentially fell for it -- took the bait, for lack of a better term. They gained their [the firm's] confidence. It's not all that different from the Nigerian Letter Fraud, because the circumstances are 'we did this for you, and you do this for us,'" he says.

According to the 2007 Internet Crime Report, the Internet Crime Complaint Center (IC3) received 206,884 complaints of crimes perpetrated over the Internet during 2007, with more than 90,000 of them referred to law enforcement agencies and amounting to nearly $240 million in reported losses. The IC3 received a total of 12,918 complaints in Texas in 2007, according to the most recent statistics from IC3. IC3 is a joint operation between Butterworth's group and the Federal Bureau of Investigation.


In its petition in Buckley, White, Castaneda & Howell v. Citibank, Buckley White alleges that it was retained by a Japanese company to collect $3.6 million from four of the company's customers in the United States.

The firm alleges the Japanese company signed a contingent-fee agreement and advised the firm that one of its customers had agreed to make a partial payment of the amount outstanding.

On Oct. 7, 2008, the firm alleges, it received a "Citibank Official Check" for $367,000, and the firm deposited it into its Interest on Lawyers Trust Account at Sterling Bank in Houston.

A Buckley, White, Castaneda & Howell "employee telephoned Citibank and verified that check number 310096829 in the amount of $367,500 was paid. The firm relied upon this unconditional representation in allowing a wire transfer of $182,500 to a supplier of [the Japanese company] in Hong Kong," the firm alleges in the petition.

On Oct. 10, despite Citibank's "unconditional representation," Sterling Bank informed the firm that the check had been returned as "counterfeit," the firm alleges in the petition. The firm alleges Sterling Bank drained the firm's IOLTA account -- taking more than $100,000 -- and took $77,000 from the firm's operating account to cover the wire transfer.

Howell says Sterling Bank tried to cancel the wire transfer, but it was too late. Citing privacy rules, Graham Painter, a spokesman for Sterling Bank, declines comment.

Howell says he e-mailed the client but got no reply.

The firm seeks $182,500 in actual damages for Citibank's alleged negligence and negligent misrepresentation, and it also seeks a minimum of $367,000 in punitive damages.

Howell says he was first contacted by the Japanese client on Oct. 3 to do collections work, and it was only one week later that he learned that the check was fraudulent.

After the bank called him to inform him that the check was a duplicate and not good, Howell told his partners, "I've had a loss," Howell recalls. "They were surprised."

Howell says he told his partners that he would cover the loss, because it was his responsibility. "I said that, and I did that," he says.


Howell says he thought he was running the right traps before accepting the client, by checking out the Web sites of the U.S. companies from which his prospective client wanted him to collect, by confirming that the client had a Web site, and by checking with Citibank on the legitimacy of the $367,500 check before wiring out the funds. Most of his communication with the Japanese company executive was through e-mail, but the client did telephone him a couple times. Howell says he never called the client. Nothing raised a red flag in his mind, until it was too late.

"I talked to my bank, and they said if it's been paid, you are good. That's all you need is a verification," Howell says.

Even the e-mail approach wasn't unusual. Howell does commercial litigation, but he also does collections. He says he gets referrals from other lawyers through e-mail and receives e-mail contacts from a link through the firm's Web site. While he usually meets his clients in person before they sign retainer agreements, that's not always the case, particularly when the client is from outside Texas.

Howell says he's more cautious today, but he might have prevented the loss by insisting on meeting with the client, face-to-face, before agreeing to take the work.

That's wise, Parsons says.

"It goes back to verifying the credibility of the client. That's the problem in the cyber-world. I'm not faulting the attorney. It's something they are experienced at doing, but their guard went down," he says. "Do more due diligence."

Richard Alderman, a professor at the University of Houston Law Center who teaches consumer law, says, speaking generally, that everyone, including lawyers, should be wary about getting involved in anything that sounds too good to be true.

"The second thing is to understand that when you deal with checks, that until they are finally paid and you can get some guarantee or some statement to that effect, you don't have anything," Alderman says.

Tomlinson, a former Texas assistant attorney general in the consumer protection division, cautions lawyers to be careful when doing business with overseas clients, because checks can take weeks to clear.

"The safe thing is to wait until the check is totally cleared. That doesn't mean he [Howell] doesn't have the right to rely on what the bank said," Tomlinson says.

Tomlinson and Alderman each say Howell's firm may have a claim against Citibank.

Painter, the executive vice president for corporate communications for Houston-based Sterling Bank, says check-fraud scams are "more common than people might believe" and lawyers may be targets because they try to accommodate clients.

Speaking generally about check-fraud scams, Painter says IOLTA accounts are a target, because scammers know firms use them to accept money for their clients and "checks going in are made out to all kind of parties."

"This certainly isn't the first time that those kinds of accounts are under attack," Painter says. "Every kind of business is under attack by fraud these days, so it's not at all limited to lawyers and law firms. They are just in there with everybody else."

His advice to lawyers? He says it's probably safest to refrain from getting involved in the client's business. He says, "If the money goes in through the client, it should probably go out through the client."

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GE profit down 44 percent, CEO stands by dividend

By Scott Malone

BOSTON (Reuters) - General Electric Co reported a 44 percent drop in quarterly profit on weakness at GE Capital and its lighting and appliance units, and warned that 2009 would be "extremely difficult."

Its shares tumbled nearly 11 percent to their lowest point since early 1996 as investors continued to worry about the U.S. conglomerate's ability to maintain its dividend.

GE Capital -- the company's Achilles heel for the past year -- remained the biggest drag on its results, with profit tumbling 67 percent. GE's energy infrastructure unit, which makes electric turbines and windmills, was the highlight, recording 11 percent profit growth.

Chief Executive Jeff Immelt said on Friday the result -- which met Wall Street's reduced expectations -- reflected brutal economic conditions.

"We're planning for a really tough environment," Immelt told analysts on a conference call. "The recession is tough, the financial services crisis is worse."

Investors have become increasingly concerned over the past month that the world's largest maker of jet engines may have to sacrifice its $1.24 per share annual dividend.

Analysts also are asking whether it could lose its coveted top-tier credit rating, after Standard & Poor's lowered its outlook to "negative" in December.

"GE is not fully out of the woods and macro uncertainties continue to point to continued risk for the dividend and AAA-rating," said Goldman Sachs analyst Terry Darling.

Immelt, 52, defended the dividend, calling it "a good return to investors in this moment of uncertainty. But we're not straining in order to pay it ... We've got lots of cash."

GE shares closed down $1.45 to $12.03 on the New York Stock Exchange, making it one of the heaviest drags on the Dow Jones industrial average. The Dow was off more than 1 percent earlier, before closing down 0.56 percent.

Over the past year, GE shares have tumbled about 60 percent, sharply outpacing the 32 percent fall of the Dow.

It trades at 6.9 times forecast 2009 earnings, a sharp discount to the Dow's forward price-to-earnings ratio of 11.3.


The Fairfield, Connecticut-based company said fourth-quarter net income fell to $3.72 billion, or 35 cents per diluted share, from $6.7 billion, or 66 cents, a year earlier, as the U.S. conglomerate and economic bellwether closed out one of the toughest years in its 117-year history.

Factoring out one-time items, results met Wall Street's expectations, according to Reuters Estimates.

Revenue fell 4.8 percent to $46.21 billion.

In early December, the company sharply lowered the high end of its fourth-quarter profit forecast.

"While GE clearly is being impacted by recession and its financial business is being impacted by the financial meltdown, they are navigating it," said David Katz, chief investment officer, Matrix Asset Advisors.

The company, the only original member to remain in the Dow, stood by its 2009 outlook.

GE has ceased providing numeric per-share profit targets, instead opting to spell out a "framework" for how its individual businesses will perform. That calls for profit at its infrastructure units and its NBC Universal unit to be flat to up 5 percent for 2009, with GE Capital profit down about 40 percent.

Company officials on a conference call said they raised their forecast credit losses at GE Capital to $10 billion for the year, up from a previous forecast of $9 billion.

They also noted that infrastructure equipment orders -- an indicator of future sales -- declined 11 percent in the quarter.

Chief Financial Officer Keith Sherin in an interview expressed confidence in the company's order backlog.

"In a macro sense, for the total company, we've done a very rigorous job of making sure that what we put in our plan we thought, even with the economic problems that people have and even with the financial liquidity problems, that people are going to take those orders," Sherin said.

Across the industrial sector, companies are braced for a rough year. United Technologies Corp, the world's largest maker of elevators and air conditioners, on Wednesday warned that it expected a particularly brutal first half.

GE and United Tech look to the Obama administration's planned stimulus as a potential boost, though investors expect no effect until late this year at the earliest.

(Reporting by Scott Malone, additional reporting by Rebekah Curtis, Dominic Lau and Atul Prakash in London and Christoph Steitz in Frankfurt, Nick Zieminski and Leah Schnurr in New York; Editing by Derek Caney and Carol Bishopric)

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Harley-Davidson to cut jobs

Harley-Davidson Inc. (NYSE:HOG) has announced it will close its Wauwatosa, Wis., plant in 2010, eliminating several hundred jobs.

The Milwaukee Journal-Sentinel reported the plant's closure is part of a restructuring plan that includes the elimination of 1,100 jobs in the next two years.

Plans call for 640 jobs to be cut at the company's facilities in Wisconsin, Harley President and Chief Executive Officer Jim Ziemer told the newspaper. He said 230 of the job cuts will be in non-production positions -- mostly involving salaried personnel, including engineering, administrative and finance departments.

The newspaper reported that about 70 percent of the job reductions will occur this year, with the remainder to be made in 2010.

"These are all very tough decisions, but sometimes we have to go through some pain" to ensure the company's long-term viability, Ziemer said.

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Hamas tried to hijack ambulances during Gaza war

In ruins... a masked Hamas militant walks through the devastated area of east Jabaliya in the northern Gaza Strip.
In ruins... a masked Hamas militant walks through the devastated area of east Jabaliya in the northern Gaza Strip.

Jason Koutsoukis in Gaza City

PALESTINIAN civilians living in Gaza during the three-week war with Israel have spoken of the challenge of being caught between Hamas and Israeli soldiers as the radical Islamic movement that controls the Gaza strip attempted to hijack ambulances.

Mohammed Shriteh, 30, is an ambulance driver registered with and trained by the Palestinian Red Crescent Society.

His first day of work in the al-Quds neighbourhood was January 1, the sixth day of the war. "Mostly the war was not as fast or as chaotic as I expected," Mr Shriteh told the Herald. "We would co-ordinate with the Israelis before we pick up patients, because they have all our names, and our IDs, so they would not shoot at us."

Mr Shriteh said the more immediate threat was from Hamas, who would lure the ambulances into the heart of a battle to transport fighters to safety.

"After the first week, at night time, there was a call for a house in Jabaliya. I got to the house and there was lots of shooting and explosions all around," he said.

Because of the urgency of the call, Mr Shriteh said there was no time to arrange his movements with the IDF.

"I knew the Israelis were watching me because I could see the red laser beam in the ambulance and on me, on my body," he said.

Getting out of the ambulance and entering the house, he saw there were three Hamas fighters taking cover inside. One half of the building had already been destroyed.

"They were very scared, and very nervous … They dropped their weapons and ordered me to get them out, to put them in the ambulance and take them away. I refused, because if the IDF sees me doing this I am finished, I cannot pick up any more wounded people.

"And then one of the fighters picked up a gun and held it to my head, to force me. I still refused, and then they allowed me to leave."

Mr Shriteh says Hamas made several attempts to hijack the al-Quds Hospital's fleet of ambulances during the war.

"You hear when they are coming. People ring to tell you. So we had to get in all the ambulances and make the illusion of an emergency and only come back when they had gone."

Eyad al-Bayary, 32, lost his job as a senior nurse at the Shifa Hospital, the largest in Gaza City, about six months ago because he is closely identified with Fatah, the rival political movement of Palestinian Authority President Mahmoud Abbas.

Twice last year Mr Bayary was arrested by Hamas, and once he was jailed for six days for flying the Fatah flag above his house in Jabaliya. He now works part-time as an English teacher at al-Azhar University.

"After the first day of the war, I go to the hospital to work, to help, but I was told to go away. They tell me 'you are not needed here' and they push me away," Mr Bayary said.

Since the ceasefire was declared on January 17, Hamas has begun to systematically take revenge on anyone believed to have collaborated with Israel before the war.

Israel makes no secret of the fact that it has a network of informants inside Gaza who regularly provide information on where Hamas leaders live, where weapons are being stored and other details that formed an important part of Israel's battle plan.

According to rumour, a number of alleged collaborators have already been executed. Taher al-Nono, the Hamas government's spokesman in Gaza, told the Herald that 175 people had been arrested so far on suspicion of collaborating.

"They will be dealt with by the court and the judge and we will respect the judge's decision," Mr Nono said.

And if the sentence is death?

"We will respect the decision."

But the breakdown between Hamas and Fatah over the last 18 months did not prevent some co-operation between the two sides during the war.

The commander of one al-Aqsa Martyrs Brigade unit - the brigades are a coalition of secular militia groups which operate under the loose umbrella of Fatah - said the real enemy remains Israel.

The unit commander, who used the name Abu Ibrahim, invited the Herald into his home.

On the wall of his lounge room hung the portraits of George Habash, who founded the Popular Front for the Liberation of Palestine, a communist paramilitary organisation, and Abu Ali Mustafa, the man who succeeded Habash as leader of the PFLP and who was killed by Israeli forces in 2001.

"Of course we fought together with Hamas because we all have the same aim: to liberate our homeland," he said.

With his two-year old daughter on his knee, Mr Ibrahim, 30, said he would never accept peace or negotiation, even if it might lead to the creation of a Palestinian state.

"I believe in the existence of Israel because it exists on my land - but the war with Israel will only end when I liberate all of my land. This last war with Israel was not the first war, and it will not be the last."

Rebuilding the Strip

GAZA CITY: Hamas will begin a big reconstruction effort in the Gaza Strip today as the territory's 1.5 million people start to recover from the devastating three-week war with Israel that claimed more than 1300 lives and destroyed thousands of buildings, factories and farms.

Life was beginning to return to a relative state of normality yesterday, with schools, universities and businesses back open.

But with most government buildings destroyed during the war, and piles of concrete rubble on street corners, Gazans face a huge effort to return the Strip to the impoverished state that existed before the war began.

Thousands of Gazans who lost their homes are still living in temporary accommodation provided in United Nations Relief and Works Agency schools, and electricity is being rationed, with homes receiving power for just a few hours a day.

A Hamas spokesman in Gaza, Ayman Taha, said his organisation would observe a truce with Israel for 18 months on the condition all the crossing points with Israel were opened.

With Hamas's popularity apparently plummeting in as a result of the war, the movement's leadership is using financial handouts to boost morale.

Hamas leaders from Gaza and Damascus, Syria, travelled to Cairo yesterday to meet Egyptian intelligence leaders and leaders of the Palestine Liberation Organisation for talks aimed at resolving Hamas's dispute with the Fatah movement of the Palestinian President Mahmoud Abbas.

In Israel the appointment of George Mitchell as special envoy of the US President, Barack Obama, to the Middle East has met with caution and suspicion.

Israeli Foreign Ministry officials were scrambling to put together a brief for Mr Mitchell, who is due to visit Jerusalem and the West Bank city of Ramallah this week, as well as Egypt and Jordan.

Israeli officials believe Mr Mitchell's first step will be to recommend the "road map for peace" plan announced by the former president George Bush in 2002 be extended.

Israelis have also begun to turn their attention to the general elections on February 10. With polls indicating the right-wing Likud party leader Benjamin Netanyahu is on track to return to the Prime Minister's office he occupied in 1996, the centrist Kadima Party leader, Tzipi Livni, warned yesterday that if the far-right won government it would lead to an inevitable rift with the US.

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Recession hits Silicon Valley as layoffs pile up

By Anupreeta Das

NEW YORK (Reuters) - The recession turned up late on Silicon Valley's doorstep but is likely to stay awhile, as technology companies slash thousands of jobs and rein in costs to make up for shrinking earnings and tight-fisted customers.

Job cuts in the technology sector have trailed other industries until recent weeks. Now they are coming fast and furious as the economic downturn grips the Valley, the strip of land in northern California that is home to household names like Google Inc and Inc.

Tech giants like Intel Corp and Microsoft Corp are laying off thousands of employees, while start-up companies are firing in smaller numbers as they struggle to survive with fewer customers and venture capital dollars.

And this is just the start, analysts say, expecting thousands more to lose their jobs this year as the recession forces the industry to slash marketing and capital spending.

"Organizations are saying, 'What is the absolute nuclear winter? Let's plan for that,'" said Adam Charlson, senior partner at executive search firm Korn/Ferry International Inc, who works closely with the recruitment divisions of top tech firms. "What you're seeing now is organizations putting those plans into reality."

Last year, Silicon Valley lost 11,700 jobs, according to Steve Levy, senior economist at the Center for the Continuing Study of the California Economy (CCSCE). The number is small compared to the 200,000 jobs lost after the dotcom bubble burst in 2000, but that is because the 2008 numbers don't reflect recent layoffs yet, he said.

"The headline is that the recession has hit Silicon Valley," Levy said. As a result, he said he was "substantially revising downward" employment predictions for 2009.

California's jobless rate hit a 14-year high of 9.3 percent in December, significantly above the national average of 7.2 percent, according to state officials.


Some analysts said they are reading the mass layoffs as preemptive acts by tech companies. When the last recession hit, tech companies were too slow in cutting costs and laying off workers, said Andy Miedler, a senior technology analyst at Edward Jones.

But not this time, he said. "Layoffs and cost-cutting are unfortunate, but companies have to make tough decisions in a rough economy to preserve their own financial position."

Mark Cannice, a professor of entrepreneurship at the University of San Francisco, said Silicon Valley has been "inoculated to some degree" after the dotcom bust.

"Many firms didn't survive .... The ones that survived are much more efficient and resilient and were funded on sounder business models," said Cannice, who publishes a quarterly Silicon Valley Venture Capitalist Confidence Index.

But he said Valley companies are not entirely immune -- especially venture capital-funded start-ups. As large companies like Microsoft and Google cut back on spending, start-ups that supply them with software and other IT could run into trouble.

With venture capital funding falling 71 percent in the fourth quarter of 2008 from a year ago, start-ups could be forced to fold up if they can't sustain their business and investors cannot fund them any longer.

But mass layoffs in the tech sector need not necessarily be all doom and gloom. They could actually boost innovation as laid-off engineers, scientists and other highly skilled individuals decide to pursue their own ideas.

Calling it "forced" entrepreneurship, Cannice said he was optimistic that the current layoffs would "unleash the next wave of creative, thoughtful entrepreneurs."

Layoffs in the traditional tech sector could also spur employment in the alternative energy sector, recruiters said.

Neil Boyden, managing director of executive search firm Boyden's technology practice group, said the so-called "cleantech" sector -- which employs environmentally friendly technologies -- will continue to grow and offer jobs.

"It's not that the sky has fallen entirely," he said.

(Reporting by Anupreeta Das; Editing by Tiffany Wu, Richard Chang)

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Suspected U.S. Missiles Kill 18 In Pakistan, January 23, 2009 · Suspected U.S. missiles killed 18 people on the Pakistan side of the Afghan border Friday, security officials said, the first attacks on the al-Qaida stronghold since President Obama took office.

At least five foreign militants were among those killed in the strikes by unmanned aircraft in two parts of the frontier region, an intelligence official said without naming them. There was no information on the identities of the others.

Pakistan's leaders had expressed hope Obama might halt the strikes, but few observers expected he would end a tactic that U.S. officials say has killed several top al-Qaida operatives and is denying the terrorist network a long-held safe haven.

The United States has staged more than 30 missile strikes inside Pakistan since August last year - a barrage seen as a sign of frustration in Washington over Islamabad's efforts to curb militants that the U.S. blames for violence in Afghanistan and fears could be planning attacks on the West.

Pakistan publicly protests the strikes in the northwest as violations of its sovereignty that often kill civilians and undermine its own campaign against terrorists that have also launched bloody attacks on domestic targets.

But many observers believe the government secretly agrees with the tactic and may provide intelligence on the targets, noting that Islamabad's admitting to assisting the attacks would be politically damaging.

The first attack Friday took place in the village of Zharki in North Waziristan, when a single drone fired three missiles in the space of 10 minutes, the security officials said.

The missiles destroyed two buildings, killing 10 people, at least five of whom were foreign militants, the officials said on condition of anonymity because they were not authorized to speak to the media.

Hours later, a second missile struck a house in South Waziristan, killing eight people, the officials said, giving no more details.

The United States does not acknowledges firing the missiles, which are believed to be mostly fired from drones operated by the CIA and launched from neighboring Afghanistan.

According to an AP tally based on accounts from Pakistani security officials, at least 263 people - most of them alleged militants - have been killed in the strikes since last August.

A U.S. strike on New Years Eve killed two Kenyans said to be among al-Qaida's top operatives on the FBI's most-wanted terrorist list, an American official said recently.

Gen. David Petraeus, who is in charge of the wars in Iraq and Afghanistan, told the AP late last year that at least three top extremist leaders were killed in recent months due to the missile strikes.

Pakistan's government has little control over the border region, which is considered a likely hiding place for al-Qaida chief Osama bin Laden and other terror leaders.

Obama is making the war in Afghanistan and the intertwined al-Qaida fight in Pakistan his top foreign policy priority. He has not commented on the missile strike policy, but struck a hawkish tone during his election campaign.

On Thursday, he named former U.N. Ambassador Richard Holbrooke a special envoy to both countries, an appointment welcomed by Pakistan's government.

In a statement, the country's foreign office said it "looked forward to enhanced and fruitful engagement with the special envoy to further the cause of peace and stability of the region."

Earlier Friday, a suicide attack and a roadside bomb killed two soldiers and three civilians in the Swat Valley, a one-time tourist destination close to the border region, officials said.

Pakistan has launched military offensives in parts of the northwest, but insurgents are making inroads in Swat, blowing up schools, killing police and soldiers and calling for the imposition of a hard-line interpretation of Islamic law.

Militancy in Swat is seen as especially dangerous for Pakistan because the valley lies away from the areas where al-Qaida and the Taliban have traditionally operated.

An indication of the difficulties facing the government, more than 1,000 hard-liners demonstrated in the capital, saying there would only be peace in Swat and other frontier regions if the government severs its ties with the United States.

"The lawlessness cannot end until the end of the pro-America policy," one speaker told the crowd gathered close to the Parliament building in Islamabad.

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Top chefs push Obama to improve food policy


WASHINGTON -Visiting one of his favorite Chicago restaurants in November, Barack Obama was asked by an excited waitress if he wanted the restaurant's special margarita made with the finest ingredients, straight up and shaken at the table.
"You know that's the way I roll," Obama replied jokingly.
Rick Bayless, the chef of that restaurant, Topolobampo, says Obama's comfortable demeanor at the table — slumped contentedly in his chair, clearly there to enjoy himself — bodes well for the nation's food policy. While former President George W. Bush rarely visited restaurants and didn't often talk about what he ate, Obama dines out frequently and enjoys exploring different foods.
"He's the kind of diner who wants to taste all sorts of things," Bayless says. "What I'm hoping is that he's going to recognize that we need to do what we can in our country to encourage real food for everyone."
Phrases like "real food" and "farm-to-table" may sound like elitist jargon tossed around at upscale restaurants. But the country's top chefs, several of whom traveled to Washington for Obama's inauguration this week, hope that Obama's flair for good food will encourage people to expand their horizons when it comes to what they eat.
These chefs tout locally grown, environmentally friendly and — most importantly — nutritious food. They urge diners, even those who may never be able to afford to eat at their restaurants, to grow their own vegetables, shop at farmer's markets and pay attention to where their food comes from.
Dan Barber, chef at New York's popular Blue Hill restaurant and a frequent critic of the country's food policy, says a few small gestures from the president and first lady Michelle Obama could accomplish what many of the chefs have been working toward for years.
"I recognize that I'm an elitist guy," says Barber, who cooked a $500-a-plate meal for incoming Obama aides and other guests at a small charity fundraiser the night before the inauguration. "Increasingly raise awareness, but don't do it through chefs like me. ... My advice would be more of a symbolic nature, and to not underestimate what can be done through the White House."
Barber said good food needs more publicity, and he hopes Obama and his wife will advertise what they are eating and what they are feeding their children, 10-year-old Malia and 7-year-old Sasha.
Many high-end chefs like Barber believe that most food in the United States is over-processed, over-subsidized and grown with no regard to the environment, making it harder for small farms to make a profit selling more natural, nutritious food.
Barber cooks with food grown at his farm, the Stone Barns Center for Food and Agriculture in Pocantico Hills, N.Y. At the pre-inauguration fundraiser, organized along with several other dinners by food guru Alice Waters, passed hors d'oeuvres included carrots, lettuce and cauliflower — untarnished and raw, delicious in their natural form. Sweet beets had been recently chiseled from Stone Barns' frozen ground, and hog snouts left over from slaughter were used as a garnish on a plate of Maine sea scallops.
Most of the chefs say they realize food policy and government support for larger corporate farms won't change any time soon. Congress, with Obama's support, overwhelmingly enacted a $290 billion farm bill last year that directs many subsidies to the largest agricultural players.
But Obama has already given chefs like Barber a small reason to hope. At his confirmation hearing, Agriculture Secretary Tom Vilsack made an overture to the growing number of food groups and experts who have criticized government subsidies for large corporate farms, saying he will seek to work "with those who seek programs and practices that lead to more nutritious food produced in a sustainable way."
"There's a lot of work that can be done in this area," Vilsack said after he was sworn in.
Other chefs in town for the inauguration and Waters' dinners had many suggestions to improve food policy. Daniel Boulud, the veteran New York chef of the restaurant Daniel who has cooked for at least five former presidents, said he thinks the Department of Agriculture should form an agency that exclusively oversees small farms. Lidia Bastianich, a New York-based Italian chef who has starred in several cooking shows on public television, says the government needs to encourage regulations and incentives to small farmers to give them the opportunity to compete against the "big giants."
Chef Tom Colicchio, the lead judge on the popular cable television series "Top Chef," agrees. He says foods that are genetically engineered should be labeled as such and fewer subsidies should go to corporate farms.
But despite loftier goals, Bayless, the Chicago chef, says the Obamas could make a world of difference if they just publish what they are eating every day.
"Everyone's going to want to be like the Obamas," he said.

Copyright 2009 The Associated Press.

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Police hired actors to rob bank

Police chiefs in China have been slammed for hiring actors to rob a bank as a training exercise - without telling anyone else.

The robbers are rounded up /Quirky China News

Only the director and the deputy director of the Zhenzhou police department knew it was a drill - everyone else, including the bank, thought it was a real raid.

Four 'robbers' rushed into the Post Office Bank, disarmed security and demanded all the people inside drop to the floor. They even snatched a customer's bag containing £20,000, reports Guangzhou Daily.

Critics said police officers, unaware that it was a training drill, could easily have used their guns on the fleeing robbers.

They were also concerned about the psychological effect on bank cashiers and customers who had been put through a traumatic situation.

The four robbers ran out of the bank in four different directions. But within two hours, all had been caught by different police divisions in the city.

A police spokesman said later that police didn't have a preset plan for the drill and all timing, location, and method of robbery were decided on the spot.

"The goal was to test different divisions' reaction and coordination," he said.

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The First Nonsmoking Nation

If you're indignant that your boss just shut the smoking room and outraged that you have to leave the bar to light up, take heart. Life could be worse. You could be Bhutanese.

The tiny, trendy Himalayan kingdom recently became the world's first nonsmoking nation. Since Dec. 17, it has been illegal to smoke in public or sell tobacco. Violators are fined the equivalent of $232—more than two months' salary in Bhutan. Authorities heralded the ban by igniting a bonfire of cigarette cartons in the capital, Thimphu, and stringing banners across the main thoroughfare, exhorting people to kick the habit. As if they have a choice.

Meddling with an issue as personal as smoking is always tricky, and politicians err at their own peril. Yet Bhutan's ban appears to be sticking and with little public outcry. Even the country's smokers seem resigned to a smoke-free future. "If you can't get it, you can't smoke it," concludes Tshewang Dendup, who works for Bhutan's only broadcaster. He picked up his smoking habit while studying at Berkeley, but says he is now rapidly "downsizing" his consumption.

So, how has Bhutan managed to pull off a nationwide smoking ban while other nations dither? Bhutan is a Buddhist nation, and many Buddhists believe smoking is bad for their karma. Then again, Sri Lanka and Thailand are also predominantly Buddhist, and plenty of people smoke there.

The answer lies not in Bhutan's religion but in its famous quirkiness. This is a country that has elevated contrariness to a national trait. Convention says an impoverished yet stunningly beautiful nation like Bhutan should welcome tourists with open arms—and count the dollars. Yet Bhutan restricts the number of foreign tourists (about 9,000 last year) and charges fees of $200 per day. Convention says that gross national product is the best measure of national progress. Yet Bhutan is aiming for another mark: What it calls "gross national happiness." If Bhutan were a celebrity, it would be Johnny Depp—reclusive, a bit odd, but endearing nonetheless.

The Himalayas that surround and engulf Bhutan are a curse and a blessing, cushioning the nation from the shock waves that globalization has generated in other developing countries. The first foreign tourists only arrived in 1974. Television and the Internet are even more novel, having arrived only in 1999. Yet Bhutan largely remains the Shangri-la that wealthy tourists crave. Thimphu is the world's only capital city with no traffic lights.

So, having sat out the traditional development rush, Bhutan hopes to steer its own course, avoiding the mistakes of the industrialized world. Because of its homogenous and small population (anywhere from 800,000 to 2 million people, depending on which estimates you believe), Bhutan just might succeed in barring the demon weed. The nation's unusual culture makes a sudden and complete tobacco ban possible. The country is ruled by a benevolent king, Jigme Singye Wangchuk, who is widely revered and universally obeyed. "Bhutanese are pretty happy to sacrifice for their fellow citizen," says Linda Leaming, an American who has lived in Bhutan for the past eight years. "The individual is subjugated to the good of society."

It also helps that Bhutan has few smokers compared other nations. Only about 1 percent of the population lights up, according to the health ministry. (Foreign observers believe the actual figure is 3 percent or 4 percent.) Tobacco isn't grown in Bhutan. It is a very small, poor market, and it costs a tremendous amount to import goods. All these are factors that have reduced interest in cigarettes.

Yet, even in obedient Bhutan, a few whispers of dissent have cropped up—where else?—on the Internet. "Policy makers wake up," griped one anonymous Bhutanese, writing about the smoking ban on the Web site "There is something called personal rights that should be upheld. Educate rather than force or impose." Others worry the tobacco ban will merely encourage a black market in Marlboros. Also others chime in that Bhutan faces more pressing problems than smoking: corruption, alcoholism, and a penchant for doma or betel nut, which Bhutanese chew habitually. Doma, a stimulant that turns your saliva red, has been linked to higher incidence of oral cancer.

Bhutan's parliament, which passed the smoking ban, anticipated complaints. It added a few sizable loopholes. Foreigners can still smoke and import tobacco (but if caught selling it to Bhutanese they will be charged with smuggling). Bhutanese are, technically, allowed to smoke in their homes and can even import small quantities of tobacco for "personal use," though they'll pay as much as 200 percent in customs duties and sales taxes for the pleasure.

Bhutanese officials say that, by banning tobacco, they hope to set an example for the rest of the world. Ireland recently banned smoking in public places, though the sale of tobacco remains legal. Other European countries, such as Norway, are enacting less-stringent smoking bans.

In most of Asia, though, the trend is toward more smokers, not fewer, as countries rush to emulate Western habits and as tobacco companies look east for new customers. Once again, Bhutan finds itself the exception to the rule.

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Europe to Ask Wealthy Nations to Adopt Carbon Trading System


BRUSSELS — The European Commission was preparing an appeal on Friday to wealthy countries — and to the United States in particular — to adopt carbon trading as one of the main mechanisms for curbing greenhouse gas emissions.

The Europeans are drafting their proposal as the United States enters a period of intense debate over the wisdom of adopting such market-based systems following the inauguration of President Obama.

Mr. Obama endorsed a similar system to cap and trade carbon dioxide, the main greenhouse gas, during his election campaign. That system sets a limit on emissions, and those who exceed it must buy or trade permits to meet it.

The main alternative to a cap-and-trade system is a tax on emissions. Many analysts say that would be a more straightforward way of limiting planet-warming gases from industry.

So far, Europe has created the largest single market for trading permits to emit carbon dioxide, while Australia and some groups of American states have begun their own initiatives. But the European system has also come under fire for doing too little to stop pollution and for creating vast windfall profits for some industries, like coal-burning utilities.

European officials have acknowledged that the European Union’s emissions trading system has had a rocky start. But they say it has become more effective following a pilot phase, which ran from 2005 to 2007.

European Union governments approved further measures late last year aimed at reducing the scope for lobbying by governments and industry that diluted the effectiveness of the system during the pilot phase.

The commission’s proposals could still change before they are officially presented Wednesday by Stavros Dimas, the European Union environment commissioner. They are meant to lay out Europe’s stance as nations prepare for international talks in December in Copenhagen to negotiate a successor agreement to the Kyoto climate treaty.

A centerpiece of the commission’s proposals is “strategic bilateral partnerships” with the United States “to create a trans-Atlantic carbon market,” according to the proposals, seen on Friday by The New York Times.

The proposals also seek to encourage the participation of developing nations by helping them finance ways to adapt to climate change and cut emissions.

In the past, efforts at reaching global, coordinated action on climate change have been undermined in large part because the United States insisted on binding emissions limits for countries like India and China. Those countries resisted mandatory rules, saying they had the right to industrialize and improve their citizens’ standards of living.

Some of the businesses that regard emissions regulation favorably because it could promote new investment opportunities welcomed the latest proposals.

Adam Nathan, a spokesman for the Carbon Markets and Investors Association, a trade group, praised the central role for the carbon market set out by the commission. But he warned that support from the United States and others would be critical.

“Cooperation with the Obama administration must focus on leveraging comparable action from the United States and supporting developing countries in their efforts,” he said.

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