Brutal February for Blue Chips

A late burst of selling sealed a dismal finish for the stock market, which hit a fresh 12-year low on Friday as Citigroup sold a bigger chunk of itself to the government and General Electric slashed its dividend, spooking investors who were already jittery.

The Dow Jones Industrial Average dropped 119.15 points, or 1.7%, to end at 7062.93. The blue-chip benchmark ended down 937.93 points, or 11.72% on the month -- the worst percentage drop for February since 1933, when it fell 15.62%. The Dow industrials have fallen six months in a row and are now more than 50% off their record highs hit in October of 2007.

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The S&P 500 fell 17.74 points, or 2.4%, to 735.09. Its financial sector dropped 6.5% and its health-care sector sank 4% on fears that President Barack Obama's reform plans will carve into the profits of drug makers and insurers. The S&P is off 53% from its October 2007 peak and has now seen its worst six-month drop in percentage terms -- 42.7% -- since 1932, when it dropped 45.44% in the six months ending in June.

Major market yardsticks broke through one long-term low after another this week, but the slide never quite gained intraday momentum akin to that seen during the market's late-2008 plunge. Many market veterans now expect the market to continue such a slog in the days ahead, with both new lows and short-term rallies likely.

"This decline does put some emphasis to the downside going into next week, but I'm still in a wait-and-see mode," said John Bollinger, president of Bollinger Capital Management in Manhattan Beach, Calif.

General Electric shares fell 6.5% after the conglomerate said it planned to cut its quarterly dividend to 10 cents a share from 31 cents in a move that it hopes will save $9 billion and preserve its AAA credit ratings. GE, which has shed 75% of its market value over the past year, had said that it would preserve the dividend, but analysts and investors were skeptical.

Thirty-six companies in the S&P 500 have cut their dividends since the mid-September meltdown of Lehman Brothers Holdings marking the start of a full-blown financial crisis that has since tightened its grip on the global economy. That pace of reductions appears unprecedented over any three- or four-month period, with more cuts likely on the way, said Ashwani Kaul, research director at Thomson Reuters.

"If anything, I would expect the pace to pick up over the next few months," he said. "Let's face it, these companies are doing whatever they need to preserve their capital."

Concern about the financial sector has shaped trading around the world for months, and the banking sector remained a dominant theme on Friday.

Associated Press

Specialist Glenn Caroll, left, works his post on the trading floor of the New York Stock Exchange Friday, Feb. 27, 2009 (AP Photo/David Karp)

Over the last few weeks, concern that banks would need even more capital has damped share prices across the sector and the few traders willing to even play in bank stocks are mostly holding short positions. According to Data Explorers, a short-selling data research firm based in New York and London, 2.6% of Citigroup is now out on loan, up nearly 38% from just less than two weeks ago.

"I don't plan on buying any banks anytime soon. That industry is going to zero, some winners, some losers," said Keith Walter, a portfolio manager with Artio Global Investors.

Citigroup unveiled a stock swap that would leave the government owning more than a third of the bank. The move is an acknowledgement that the billions that the U.S. has already deployed to aid Citi haven't been enough to stop its slide. Citi also said that it will record $10 billion in write-downs in its fourth quarter, boosting the year's net loss to $27.7 billion. Moody's and S&P cut their ratings on the bank's preferred stock.

The arrangement inflamed some investors' fears of bank nationalization.

"What I have more of a problem with than nationalization itself is the fact that [the government] debated nationalization for a couple of weeks," said strategist Jim Paulsen, of Wells Capital Management in Minneapolis. "That debate in itself was harmful because it created a run on the bank stocks."

The bank's stock plunged by 39% and caused a selloff in the shares of many of its peers. Bank of America, which has seen its shares battered in recent weeks in a similar manner as Citi, dropped 26%. The KBW Banks Index fell 8.7%.

The Nasdaq Composite Index fared better on the day than the other major indexes, falling 13.63 points, or 1%, to 1377.84. Intel, Research In Motion and Google managed to stake out gains. Dell jumped by 3.9% after the computer maker reported a steep loss but investors welcomed its efforts to trim its costs.

Gross domestic product decreased at a seasonally adjusted 6.2% annual rate October through December, the Commerce Department said Friday in a new, revised estimate of fourth-quarter GDP. The 6.2% decline meant the worst quarterly showing for GDP since a 6.4% decrease in first-quarter 1982 GDP.

In its original estimate, issued a month ago, the government had reported fourth-quarter 2008 GDP fell 3.8%. The sharply lower revision to a decline of 6.2% reflected adjustments downward of inventory investment, exports and consumer spending.

Treasury prices were mixed, with longer maturities sliding. The dollar gained against the euro but slid against the yen. Stocks in Europe slid on the Citi deal and U.S. economic news, with the FTSE 100 ending down 2.2%.

—Kejal Vyas contributed to this article

Write to Peter A. McKay at peter.mckay@wsj.com

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Obama Plans Major Shifts in Spending

By JACKIE CALMES

Doug Mills/The New York Times

Joining President Obama for his remarks on the budget were, from left, Vice President Joseph R. Biden Jr., Treasury Secretary Timothy F. Geithner and Peter R. Orszag, the budget director.

WASHINGTON — Proclaiming a “once in a generation” opportunity, President Obama proposed a 10-year budget on Thursday that reflects his determination in the face of recession to invest trillions of dollars and his own political capital in reshaping the nation’s priorities.

Mr. Obama would overhaul health care, begin to arrest global warming, expand the federal role in education and shift more costs to some corporations and the wealthiest taxpayers.

In a veiled gibe at the Bush years, Mr. Obama said his budget broke “from a troubled past” and attributed the current economic maelstrom to “an era of profound irresponsibility that engulfed both private and public institutions from some of our largest companies’ executive suites to the seats of power in Washington, D.C.”

Without trimming his ambitious campaign promises, the president projects a budget for the 2010 fiscal year of nearly $3.6 trillion. He said he would shrink annual deficits, now at levels not seen in six decades, mostly through higher revenue from rich individuals and polluting industries, by reducing war costs and by assuming a rate of economic growth by 2010 that private forecasters and even some White House advisers consider overly rosy.

None of the new taxes and other sources of revenue, however, would take effect until the economy recovers, administration officials said.

Mr. Obama’s first budget was light on proposals to cut spending, despite his statement at the White House on Thursday that the government would be “cutting what we don’t need to pay for what we do.” But the cuts he does propose, contrasted against his new spending, underscore the change he seeks.

Mr. Obama would slash about $5 billion in the coming year for direct payments to agribusinesses and farmers with more than $500,000 in annual revenue, and $4 billion in annual subsidies to private banks that make college loans. Instead he would increase spending for government Pell Grants to needy students, and for the first time index the maximum yearly grant for inflation.

Those two cuts alone will provoke big fights with the farm and banking lobbies and their supporters in Congress.

Republicans and business groups condemned the tax proposals. Robert Greenstein, executive director of the left-leaning Center on Budget and Policy Priorities, praised the budget as “bold, courageous and honest” but acknowledged that it takes on “one vested interest after another, and that will require all of the president’s skills to get through Congress.”

Mr. Obama will need the help of Democratic leaders in Congress, who promised to get to work right away. Republicans, however, were quick to charge that the proposals to raise some taxes would be job-killers, and served notice that they would challenge Mr. Obama’s agenda by drawing an ideological distinction with the Democrats.

“I have serious concerns with this budget, which demands hardworking American families and job creators turn over more of their hard-earned money to the government to pay for unprecedented spending increases,” said the Senate Republican leader, Mitch McConnell of Kentucky.

Having inherited an economy in recession and reeling from interrelated credit and housing crises, Mr. Obama starts off from a stunning deficit for 2009 that is projected to reach $1.75 trillion when the fiscal year ends Sept. 30, or nearly four times last year’s shortfall. That would represent 12.3 percent of the gross domestic product, a deficit level that is larger than any since the end of World War II.

By the last year of his term, in the 2013 fiscal year, Mr. Obama projects a deficit of $533 billion, or 3 percent of the overall economy, a level that economists consider sustainable. Even so, he foresees the level of the nation’s debt held by the public rising from 58.7 percent in the current year to 67.2 percent in a decade, a level not seen since 1951.

Of the $3.55 trillion requested for the 2010 fiscal year that begins in October, more than $2 trillion is mandatory spending for the programs — chiefly Medicare, Medicaid and Social Security — that provide benefits to all who are eligible.

Departing from the free market orthodoxy of his predecessor, George W. Bush, Mr. Obama would use the government’s powers of spending and taxation to push the private market in new directions.

With higher taxes on the wealthy and savings squeezed from health care providers, drugmakers and insurers, Mr. Obama would create a $634 billion, 10-year “health reform reserve” as a down payment to finance disease prevention, wellness programs and research on cost-effective treatments ultimately to cut health care costs. More than any other expense, health care is driving future projections of unsustainable deficits. The health reserve would also be used to create affordable insurance programs for individuals and employers.

The president would remake the energy sector to reduce reliance on foreign oil and address global warming, by requiring industries to buy permits to emit the heat-trapping gases that contribute to global warming. The revenue would pay to develop alternative energy sources and to provide tax relief for Americans facing higher prices from utilities and industries passing on their permit costs.

Mr. Obama’s tax proposals would reverse a trend toward greater income inequality in recent years by adding about $1 trillion over 10 years to the tax burden of the top 5 percent of taxpayers, roughly those making more than $250,000 a year. He would let the Bush income-tax cuts lapse after 2010 as scheduled for people at that income — he would extend them for everyone else — and limit the deductions top-earners can take. He would also raise income taxes on hedge fund and private equity partners.

“Over the past two or three decades, the top 1 percent of Americans have experienced a dramatic increase from 10 percent to more than 20 percent in the share of national income that’s accruing to them,” Mr. Obama’s director of the Office of Management and Budget, Peter R. Orszag, said in a briefing for reporters. “So we are asking them to pitch in a bit more.”

Mr. Orszag emphasized that it was “just factually wrong” to say the administration was raising taxes in a recession because the tax increases and industry permits would not take effect until at least 2011.

Republicans pounced anyway, charging that Democrats were returning to their tax-and-spend habits of the past. Senator Judd Gregg of New Hampshire, the senior Republican on the Budget Committee, asked, “Where is the restraint on spending?”

Representative Steny H. Hoyer, a Maryland Democrat who is the House majority leader, dismissed the charge in an interview by recalling the six years during the Bush administration when Republicans controlled Congress. “What they did was raise spending and raise debt,” Mr. Hoyer said. “Now we are left with the obligation to try to get us back to balance.”

Mr. Hoyer predicted that the House, where Democrats have a significant majority, would pass an energy bill this year but that health care legislation might take longer. Both initiatives face bigger hurdles in the Senate, where Republicans have just enough votes to block legislation, requiring Mr. Obama to court the few Republican moderates, as he did to pass the $787 billion two-year economic stimulus package.

In a worrisome sign for the president, one of those Republican allies on the stimulus, Senator Olympia J. Snowe of Maine, in a statement called the president’s goals “worthy” but added, “While this budget claims to be long on fiscal responsibility and deficit reduction, it falls woefully short of these objectives.”

A significant share of Mr. Obama’s projected deficit reduction owes to assumptions about economic growth that are more optimistic than private forecasts. Some Obama advisers privately objected that the rosy projections would draw criticism about manipulating the numbers, but Christina D. Romer, the chairwoman of Mr. Obama’s Council of Economic Advisers, insisted to them that the projections were realistic.

After negative growth of 1.2 percent this year, the budget projects growth of 3.2 percent in 2010, and 4 percent or more in the following three years. In contrast, the consensus of business economists surveyed by Blue Chip Economic Indicators this month projected growth no higher than 2.9 percent through 2013.

Original here

GM posts $9.6 billion 4Q loss

Tom Krisher and Kimberly S. Johnson ASSOCIATED PRESS

ASSOCIATED PRESS General Motors Corp. CEO Rick Wagoner (right) explains the company's restructuring plans Tuesday in Detroit.

DETROIT (AP) -- General Motors Corp. says it lost $9.6 billion in the fourth quarter and burned through $6.2 billion in cash as it sought government help to avoid running out of cash.

The nation's biggest domestic automaker lost $30.9 billion for all of 2008 as it struggled against a U.S. sales slump and a global recession.

GM has received $13.4 billion in federal loans and its executives are in Washington, D.C., Thursday to talk to the Obama administration about the company's request for up to $30 billion.

For the fourth quarter, GM says it lost $15.71 per share, compared with a loss of $722 million, or $1.28 per share, in the year-ago period.

Excluding special items, The Detroit company's loss was $9.65 per share. On that basis, analysts surveyed by Thomson Reuters predicted a loss of $7.40 per share.

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10 Essential Money Skills for a Bad Economy

Editor’s note: This is a guest post from J.D. Roth, who writes about smart personal finance at Get Rich Slowly.

The economy is in a shambles. The stock market’s down, unemployment’s up, and the housing market is still skidding sideways. The people I know are beginning to get nervous. They’re worried that the recession will turn worse, and that their personal finances will end up in ruins, too.

When it comes to money, the best defense is a good offense. The best way to avoid fallout from the national economy is to take control of your personal economy. By developing smart financial habits, you can remain calm even in the midst of a financial crisis. (Well, mostly calm, anyhow.)

Over the past three years, I’ve written a lot about money. Based on my experience (and feedback from my readers), here are ten essential money skills that can help you to weather the current financial storm.

Set up a budget
For many people, budgets are boring. But if you can plan where your spending will go, you’ll make better decisions with your money.

I’m not a fan of detailed budgets. They work for many people (and if they work for you, by all means use one!), but for myself I need a simple budget, one that focuses on the Big Picture. Over the past three years, I’ve found three such budgets that my readers tell me are truly effective.

• Andrew Tobias suggests a simple three-step budget: Destroy all of your credit cards. Invest 20% of all that you earn (and never touch it). Live on the remaining 80%, no matter what.
• Elizabeth Warren’s balanced money formula is outstanding. It’s the budget I use. Allocate 20% of your after-tax income for savings (or debt reduction), 50% for needs, and the remaining 30% for wants.
• If you crave a little more complexity, try the 60% solution from Richard Jenkins at MSN Money. He says spend 20% of your pre-tax income on savings (half for retirement, half for long-term savings or debt), 60% to committed expenses, 10% to irregular expenses, and 10% for fun.

You can set up a budget on a piece of paper, or in a spreadsheet, or with a piece of software (PearBudget, for example).

[For more info: How to build a better budget]

Track your spending
This single action can work wonders for your finances. You can’t change your habits if you don’t know where the money goes. You can track your spending with a simple notebook, but most people find a computer makes things easier. You can create your own spreadsheets, or you can try a piece of personal finance software like Quicken.

There are two great ways to track your spending online: Wesabe and Mint. Both applications are great, and both offer versions for you mobile devices: Wesabe Mobile and Mint for iPhone.

[For more info: How to track your spending]

Check your credit report
It’s important to obtain a copy of your credit report at regular intervals. The credit reporting agencies are not infallible, and neither are your creditors. People make mistakes, and mistakes on your credit report can cost you money.

It used to be difficult to check your credit reports, but not anymore. In the U.S., the Fair Credit Reporting Act requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. To meet this obligation, they created AnnualCreditReport.com.

There is never a need to go through any other agency to obtain your credit report. This is an official, government-approved site. There are three ways to obtain your credit report:

• Order it online at AnnualCreditReport.com.
• Call 1-877-322-8228.
• Complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

If you’d like, you can obtain reports from all three credit reporting agencies at once. Or, you can stagger your requests, possibly requesting one report every four months from a different agency.

You will need to provide some basic information, including your social security number, and you may need to provide some personal financial information. If you plan to check your report online, be wary of impostor sites. Be absolutely certain that you have reached AnnualCreditReport.com.

[For more info: How to obtain your free credit report]

Stop junk mail
Junk mail isn’t just annoying — it can pose a danger to your financial health. Credit card applications are ripe for identity theft, and other junk mail simply tempts you to spend where you ought not spend. You save money and simplify your life by turning off the flow of junk mail at the source. Here are three ways to stem the tide:

• OptOutPrescreen.com looks like it might be a phishing site at first. It’s not. It’s an official site established by the Consumer Credit Reporting Industry to allow consumers to opt-in or opt-out of credit offers. When you complete your request, you can elect to either opt out of credit card offers for five years, or you can opt out forever.
• OptOutPrescreen.com will stop the credit card offers, but wouldn’t it be nice to stem the flood of other junk mail? You can at least put a finger in the dike by visiting the Direct Marketing Association’s Mail Preference Service, which allows consumers to to remove their names from the junk-mail lists.
• Though junk mail is annoying, it’s nothing compared to telemarketers. Fortunately, there’s an easy way to deal with them, too. The U.S. Federal Trade Commission manages the National Do-Not-Call Registry. Once you sign up, telemarketers are required by law to leave you alone. If they don’t, you can file a complaint.
• Though I’ve never used it, my readers at Get Rich Slowly often recommend Catalog Choice, which allows you to eliminate unwanted catalogs you receive by mail. This is a free service.

What if this all sounds like too much work? A service called GreenDimes will do take care of some this for you. According to the company’s FAQ, “GreenDimes reduces credit offers, insurance offers, sweepstakes offers, coupon mailers, charitable solicitations and retail catalogs that your household receives.”

[For more info: How to stop junk mail in its tracks]

Optimize your bank accounts
The internet has been a boon to savvy savers. It’s now easy to find an online savings account that offers convenience — and good interest rates. But in many cases, you can actually find better rates in special rewards checking accounts at small local credit unions and savings banks. (Some of these rates are currently as high as 6%!) If you’re happy with your current bank, call them and ask them to eliminate service fees or to give you better interest rates.

If you’re unhappy with your bank, find a new one. Here are a few popular online banks, all of which offer high interest rates and FDIC insurance:

• ING Direct
• HSBC Direct
• E*TRADE Bank
• FNBO Direct

[For more info: Which online high-yield savings account is best?]

Open an investment account
Especially given the current economy, it may seem scary to open an investment account. I’m not going to advise you whether you should invest in stocks or bonds — or neither. I’m not a financial expert. I will say, however, that it’s best to begin investing as early as possible.

Opening an investment account isn’t as scary as it may sound. And because of the magic of compound returns, making regular small investments now will pay off huge in twenty or thirty years. Consider scheduling automatic investments: have $100 (or $50 or $25) automatically deposited into a Roth IRA or your employer’s 401(k).

To learn more about automatic investing, borrow David Bach’s The Automatic Millionaire from the public library.

[For more information: What is a Roth IRA and why should you care?]

Call around for better deals
What are you paying for your credit card? Your cable? Your cell phone? You can probably find better deals elsewhere. Do some research. Did DirecTV just mail you a great offer? Did you get a zero-precent credit card mailer? Use this information as ammunition. Call your current service providers and ask if they can meet or beat the deals from their competitors. They may not, but it never hurts to ask. (My readers report about a 50-50 success rate with this tactic.)

If you want to play hardball, threaten to close your account. This is often very effective, but you have to be prepared to actually follow through with your threat. An hour or two spent calling utilities and credit card companies can free up cash now.

[For more information: Want to save money? Just ask!]

Educate yourself
Visit your public library and borrow one (and only one) personal finance book. (If you borrow more, you’re less likely to read any of them.) Take this book home and begin reading it. Which book should you choose? Any of the following are excellent starting points:

• Your Money or Your Life by Joe Dominguez and Vicki Robin
• The Total Money Makeover by Dave Ramsey
• The Millionaire Next Door by Thomas Stanley and William Danko
• The Only Investment Guide You’ll Ever Need by Andrew Tobias
• The Wealthy Barber by David Chilton

Once you’ve finished your first personal finance book, you’ll have a better idea of the topics that interest you. Return it and check out one (and only one) new personal finance book. The public library is a fantastic resource for saving money.

[For more information: 25 of the best personal finance books]

Set financial goals
Goals are the fundamental building blocks of success, not just in personal finance, but in every area of life. Without goals, you are living reactively, letting life push you around. With goals, you can live a proactive life, steering toward a destination. When you have an end in mind, it’s easier to see when you’ve made a wrong turn. You know where your path is supposed to lead.

Here’s an excellent set of basic financial goals that you can build upon:

• Establish a $1000 emergency fund.
• Pay off credit card debt.
• Fully fund a Roth IRA each year.
• Save for major expenses: house, marriage, car, etc.

No matter the state of your personal finances, whether you’re wealthy or poor or somewhere in between, take time to set goals. State them in positive terms. Make them specific. Put a deadline on achieving them. Make them actionable. Write them down. Work a little toward them every day. (It’s much easier to achieve goals when you focus on the individual steps toward them.)

[For more information: The road to wealth is paved with goals]

Create a money file
The final This can be an actual file, or it can be a shoebox. It can even be an encrypted file on your hard drive. It simply needs to be an easy-to-access location in which you keep all of your important financial information, including account numbers, service providers, phone numbers, etc. This final step ties together all the work you’ve done on Money Day.

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Fear of Obama drives gun stocks higher

Anthony Mirhaydari

Rising concern over increased regulation from the Obama White House has gun buffs stocking up on the latest tactical rifles and pistols. This helps the fortunes of gun makers Smith & Wesson (SWHC) and Ruger (RGR) as well as specialty retailer Cabela's (CAB), which specializes in firearms and hunting gear.

Ruger reported Tuesday that gun sales increased 81% in the fourth quarter on new products and "robust firearms demand." Its order backlog now stands at $48 million. Smith & Wesson plans to double revenue within the next three years and reported increased sales from "speculation on the outcome of the presidential election." Cabela's reported that same-store sales rose 2.2% over the holiday election season -- a time of great distress for other retailers.

With that kind of performance, it's not surprising investors are flocking to these names. Over the last week, while the S&P 500 is down 2%, Smith & Wesson is up 56%, Cabela's has gained 35%, and Rugers added 44%.

Based on my conversation with Wedbush Morgan analyst Rommel Dionisio, much of the sales increase has been in self-defense firearms like military-type semi-automatics or pistols. Sales of traditional bolt-action hunting rifles and shotguns remain steady. Cabela's spokesman Joe Arterburn notes that many of these customers are first-time buyers who "have never had a handgun in their home but believe now ... is a good time to buy them." In other words, people aren't looking to hunt deer; they're worried about other people.

The question, of course, is whether this performance will continue or will end up being a brief, post-election buying binge. According to the FBI, background checks on potential gun buyers increased 29% last month over the same period in 2007. Although Obama has always played down the gun rights issue, many seize on his off-the-cuff remarks last year that people "cling to guns and religion" during times of economic stress. For the record, he has tried to soothe jumpy nerves: "I believe in common sense gun safety law, and I believe in the second amendment. And so, lawful gun owners have nothing to fear."

Nevertheless, as the economic picture darkens, it's more than possible people will stop fearing our new president and start worrying about a Mad Max-like apocalyptic scenario. Just look the huge increase in the popularity of physical gold. Sales of the popular American Eagle gold coin are up four-fold while commodity investors are increasingly opting for physical delivery of gold bullion instead of settling futures contracts in cash. Bankers are reporting that more clients are hoarding gold in their vaults.

Sure, this is crazy. But remember that humans aren't rational and that fear is the strongest of all emotions. Forget traditional defensive sectors like utilities and healthcare. Go with guns and gold.

Update: Attorney General Eric Holder told reporters Wednesday that President Obama would like to "reinstitute the ban on the sale of assault weapons" that expired in 2004 under the Bush administration. Holder said the ban would not only be a "positive move" by the United States, but would help reduce the trafficking of guns to the drug cartels in Mexico. It looks like the gun boom is far from over.

Image credit: jeroen020

Disclosure: The author does not own or control shares in any of the companies mentioned.

Anthony Mirhaydari is a contributor to the Strategic Advantage investment newsletter. He can be contacted at anthony.mirhaydari@live.com. Feel free to comment below.

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Many stimulus requests simply silly

Tom Barlow

The lines are forming at the stimulus trough, and the definition of 'shovel-ready' has proven to be amazingly broad and sometimes outright silly. The State of Ohio, for example, has received requests for everything from a pro wrestling team to an origami paper-folding company, according to The Columbus Dispatch.

Among requests (and please keep in mind these are requests, not grants, so blame the requestor) made to Ohio Governor Ted Strickland's office for stimulus cash include:

• $200,000 to train the economically challenged as Ultimate Impact Wrestlers. "We would need to obtain a building for training and shows as we have currently been using my garage for training and this [is]unheated."
• $2.8 million for a demonstration track for the MonoMobile, an electric car that hooks up to a track for long-distance trips. (Robert Heinlein lives!)
• $3,200 to replace Levalor-style blinds in three classrooms in Medina.
• $7,500 for a Chillicothe coffee business to produce reusable plastic coffee containers for its customers (how does this differ from the travel mug I use every day?)

• $8,000 to make "Hand folding Origami decorations by Senior Citizens to sell on Ebay and Amazon to assist in small increases in income for those that can not meet their monthly expenses."
• $10,000 to start a web site to "facilitate the imagination and dreams of all children and their families" through creative writing.
• $10,000 for-profit a Warren coffee house to expand special events to give kids "a place to hang out and stay off the streets."

$15,000 for a Stark County man to buy a new pickup and plow to add to his mowing business.

$15,000 for a new storefront for a Clinton County convenience store owner which employs four people .

$15,000 for a Warren County person to clear debt from "predatory lending."

$25,000 to add four dancers to a Cleveland-area ballet company.

$33,000 to a St. Marys company to aid and advise people with disabilities to dress for success.

$45,000 for Newark photographer to pay his interns.

$50,000 for "We are in inflatable business with 170000 gross sales. We get kids motivated and teach them team work." What do suppose an inflatable business is? A brokerage house?

$50,000 for an Archbold firm- "Design firm specializing in home, building and product design. Home and building design will support local construction industry. Product design will support local efforts to design and invent products."

$50,000 for a Toledo-area publisher to produce and market "the first comprehensive positive-thinking skill series for children."

$25,900 for a Napoleon dentist to give his staffers a much-needed raise.

$40,000 to teach speed-reading to the Ohio State Highway Patrol which will "result in an on-the-job time saving of at least one hour per day on the average."

$70,000 for a skate park in Greenfield.

$75,000 to a Jefferson County person to cut up fallen trees and sell as firewood, build and put up bird feeders.

$80,000 to build a health spa in Columbus.

$144,000 to a Westerville company to train and employ commissioned salespeople (nature of business unstated).

$1.2 million for a Tiffin company to grow hydroponic produce and distribute it to poor people.

$1.5 million to fund health claims for a Dublin company which purportedly employs 1,400 people.

$20 billion to a College Corners man who states "I have a few projects to work on around the Boone household, and as long as Uncle Sugar is passing out money from the paychecks of future generations, I thought why not stick it to those yet unborn suckers, the ones we don't abort first, of course. Oh, you may conclude there might be a couple of planned cost overruns, but you know how those darned government funded projects go."

To date, over 8,000 separate requests (the vast majority legitimate) have been received. Most fall with these areas:

• Roads, bridges, sewers and other infrastructure
• Law enforcement staffing, training and equipment
• Community health and wellness programs (including many targeting obesity)
• Historical preservation
• Recreation (trails, particularly)

As I reviewed these many requests, I found myself wondering just how many of these were 'shovel ready' because they were already budgeted? How many communities are simply sticking their own money back in their pockets until they see if they can get stimulus funds instead?

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The Two Documents Everyone Should Read to Better Understand the Crisis

As a white-collar criminologist and former financial regulator much of my research studies what causes financial markets to become profoundly dysfunctional. The FBI has been warning of an "epidemic" of mortgage fraud since September 2004. It also reports that lenders initiated 80% of these frauds.¹ When the person that controls a seemingly legitimate business or government agency uses it as a "weapon" to defraud we categorize it as a "control fraud" ("The Organization as 'Weapon' in White Collar Crime." Wheeler & Rothman 1982; The Best Way to Rob a Bank is to Own One. Black 2005). Financial control frauds' "weapon of choice" is accounting. Control frauds cause greater financial losses than all other forms of property crime -- combined. Control fraud epidemics can arise when financial deregulation and desupervision and perverse compensation systems create a "criminogenic environment" (Big Money Crime. Calavita, Pontell & Tillman 1997.)

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence. To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.

Don't ask; don't tell: book profits, "earn" bonuses and closet your losses

The first document everyone should read is by S&P, the largest of the rating agencies. The context of the document is that a professional credit rater has told his superiors that he needs to examine the mortgage loan files to evaluate the risk of a complex financial derivative whose risk and market value depend on the credit quality of the nonprime mortgages "underlying" the derivative. A senior manager sends a blistering reply with this forceful punctuation:

Any request for loan level tapes is TOTALLY UNREASONABLE!!! Most investors don't have it and can't provide it. [W]e MUST produce a credit estimate. It is your responsibility to provide those credit estimates and your responsibility to devise some method for doing so.

Fraud is the principal credit risk of nonprime mortgage lending. It is impossible to detect fraud without reviewing a sample of the loan files. Paper loan files are bulky, so they are photographed and the images are stored on computer tapes. Unfortunately, "most investors" (the large commercial and investment banks that purchased nonprime loans and pooled them to create financial derivatives) did not review the loan files before purchasing nonprime loans and did not even require the lender to provide loan tapes.

The rating agencies never reviewed samples of loan files before giving AAA ratings to nonprime mortgage financial derivatives. The "AAA" rating is supposed to indicate that there is virtually no credit risk -- the risk is equivalent to U.S. government bonds, which finance refers to as "risk-free." We know that the rating agencies attained their lucrative profits because they gave AAA ratings to nonprime financial derivatives exposed to staggering default risk. A graph of their profits in this era rises like a stairway to heaven [PDF]. We also know that turning a blind eye to the mortgage fraud epidemic was the only way the rating agencies could hope to attain those profits. If they had reviewed even small samples of nonprime loans they would have had only two choices: (1) rating them as toxic waste, which would have made it impossible to sell the nonprime financial derivatives or (2) documenting that they were committing, and aiding and abetting, accounting control fraud.

Worse, the S&P document demonstrates that the investment and commercial banks that purchased nonprime loans, pooled them to create financial derivatives, and sold them to others engaged in the same willful blindness. They did not review samples of loan files because doing so would have exposed the toxic nature of the assets they were buying and selling. The entire business was premised on a massive lie -- that fraudulent, toxic nonprime mortgage loans were virtually risk-free. The lie was so blatant that the banks even pooled loans that were known in the trade as "liar's loans" and obtained AAA ratings despite FBI warnings that mortgage fraud was "epidemic." The supposedly most financially sophisticated entities in the world -- in the core of their expertise, evaluating credit risk -- did not undertake the most basic and essential step to evaluate the most dangerous credit risk. They did not review the loan files. In the short and intermediate-term this optimized their accounting fraud but it was also certain to destroy the corporation if it purchased or retained significant nonprime paper.

Stress this: stress tests are useless against the nonprime problems

What commentators have missed is that the big banks often do not have the vital nonprime loan files now. That means that neither they nor the Treasury know their asset quality. It also means that Geithner's "stress tests" can't "test" assets when they don't have the essential information to "stress." No files means the vital data are unavailable, which means no meaningful stress tests are possible of the nonprime assets that are causing the greatest losses.

The results were disconcerting

A rating agency (Fitch) first reviewed a small sample of nonprime loan files after the secondary market in nonprime loan paper collapsed and nonprime lending virtually ceased. The second document everyone should read is Fitch's report on what they found.

Fitch's analysts conducted an independent analysis of these files with the benefit of the full origination and servicing files. The result of the analysis was disconcerting at best, as there was the appearance of fraud or misrepresentation in almost every file.

[F]raud was not only present, but, in most cases, could have been identified with adequate underwriting, quality control and fraud prevention tools prior to the loan funding. Fitch believes that this targeted sampling of files was sufficient to determine that inadequate underwriting controls and, therefore, fraud is a factor in the defaults and losses on recent vintage pools.

Fitch also explained [PDF] why these forms of mortgage fraud cause severe losses.

For example, for an origination program that relies on owner occupancy to offset other risk factors, a borrower fraudulently stating its intent to occupy will dramatically alter the probability of the loan defaulting. When this scenario happens with a borrower who purchased the property as a short-term investment, based on the anticipation that the value would increase, the layering of risk is greatly multiplied. If the same borrower also misrepresented his income, and cannot afford to pay the loan unless he successfully sells the property, the loan will almost certainly default and result in a loss, as there is no type of loss mitigation, including modification, which can rectify these issues.

The widespread claim that nonprime loan originators that sold their loans caused the crisis because they "had no skin in the game" ignores the fundamental causes. The ultra sophisticated buyers knew the originators had no skin in the game. Neoclassical economics and finance predicts that because they know that the nonprime originators have perverse incentives to sell them toxic loans they will take particular care in their due diligence to detect and block any such sales. They assuredly would never buy assets that the trade openly labeled as fraudulent, after receiving FBI warnings of a fraud epidemic, without the taking exceptional due diligence precautions. The rating agencies' concerns for their reputations would make them even more cautious. Real markets, however, became perverse -- "due diligence" and "private market discipline" became oxymoronic. These two documents are enough to begin to understand:

• the FBI accurately described mortgage fraud as "epidemic"
• nonprime lenders are overwhelmingly responsible for the epidemic
• the fraud was so endemic that it would have been easy to spot if anyone looked
• the lenders, the banks that created nonprime derivatives, the rating agencies, and the buyers all operated on a "don't ask; don't tell" policy
• willful blindness was essential to originate, sell, pool and resell the loans
• willful blindness was the pretext for not posting loss reserves
• both forms of blindness made high (fictional) profits certain when the bubble was expanding rapidly and massive (real) losses certain when it collapsed
• the worse the nonprime loan quality the higher the fees and interest rates, and the faster the growth in nonprime lending and pooling the greater the immediate fictional profits and (eventual) real losses
• the greater the destruction of wealth, the greater the (fictional) profits, bonuses, and stock appreciation
• many of the big banks are deeply insolvent due to severe credit losses
• those big banks and Treasury don't know how insolvent they are because they didn't even have the loan files
• a "stress test" can't remedy the banks' problem -- they do not have the loan files

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Group of Rich Americans Sues UBS to Keep Names Secret in Tax Case

By LYNNLEY BROWNING

UBS was sued on Tuesday in a Swiss federal court by wealthy American clients seeking to prevent the disclosure of their identities as part of a tax-evasion investigation by the United States Justice Department.

The lawsuit accuses UBS and Switzerland’s financial regulator, the Swiss Financial Market Supervisory Authority, or Finma, of violating Swiss bank secrecy laws and of conducting what Swiss law considers illegal activities with foreign authorities. It also named Peter Kurer, the chairman of UBS, and Eugen Haltiner, the chairman of Finma, as defendants.

The suit, filed by a lawyer in Zurich, Andreas Rued, on behalf of nearly a dozen American clients, underscores the growing clash between Swiss banking secrecy laws and those of the United States. Tax evasion is not considered a crime in Switzerland. Disclosing client names under Swiss law is a criminal offense and can expose bank executives and officers to fines, prison terms and other penalties.

UBS is the world’s largest private bank and Switzerland is the world’s largest offshore tax haven, with trillions of dollars in assets.

The lawsuit, which UBS described in an internal memo late Tuesday, stems from UBS’s agreement last week to turn over to federal authorities in Washington the names of 250 wealthy Americans suspected of using secret UBS offshore accounts and entities to evade taxes.

UBS reached a $780 million deferred-prosecution agreement to settle accusations that it used undisclosed offshore private banking services to help wealthy Americans evade taxes. But the bank is still under scrutiny by the Justice Department, which is seeking to force it to disclose the names of the 52,000 American clients it suspects may have evaded taxes.

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Supreme Court sides with AT&T in broadband case

by Marguerite Reardon

The U.S. Supreme Court has sided with an AT&T subsidiary in an antitrust lawsuit that accused the phone company of anticompetitive practices over pricing for its broadband Internet services.

The justices ruled unanimously in favor of AT&T's Pacific Bell Telephone subsidiary, which had been accused of a "price squeeze" aimed at eliminating competition for DSL broadband service, Reuters reported Wednesday.

The plaintiffs in the case were competing Internet service providers, including LinkLine Communications and Notelog, which buy high-speed Internet service from AT&T at wholesale prices and resell the service to consumers. The ISPs involved in the case compete directly with AT&T in offering DSL service.

Under federal law, AT&T's Pacific Bell (now doing business as AT&T California) is required to sell service providers wholesale access to its telephone network. But the plaintiffs argued in their lawsuit, which was filed in 2003 in federal court in California, that AT&T's prices were too high. They claimed that AT&T had inflated the price it charged them while it reduced the price of the retail service to consumers, which effectively undercut the competition. The plaintiffs argued this was a "price squeeze."

But Chief Justice John Roberts disagreed. He wrote in the ruling that the "price-squeeze" claim did not apply in this case.

"We decline the invitation to recognize such claims. Two wrong claims do not make one that is right," he wrote.

The Supreme Court reversed a decision by a U.S. appeals court in San Francisco. The ruling was the latest in a series of recent decisions by the Supreme Court that have generally made it harder to bring antitrust lawsuits, Reuters reported.

Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie.

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Wall Street sinks as Obama warns of oversight

By Chuck Mikolajczak

NEW YORK (Reuters) - Stocks fell on Wednesday after President Barack Obama warned of stricter oversight for Wall Street, raising the specter of greater regulation that investors fear could sap profits.

Obama's comments near the market close rattled investors when he said financial institutions that pose a serious risk to markets should be subject to serious government supervision.

"Whenever there is a question about how large the government role will be ... the market doesn't like that," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

"As we came close to the bell we got the curveball: our president came on TV," he said.

Trade was choppy on Wednesday, with stocks buffeted by uncertainty over Washington's plan to shore up the banking system and weak housing sales. The market had turned briefly positive after the government gave details on stress tests of banks' capital levels, with investors betting that banks would be able to withstand the news tests with relative ease, before finally falling in late trade.

The Dow Jones industrial average (DJI:^DJI - News) was down 80.05 points, or 1.09 percent, at 7,270.89. The Standard & Poor's 500 Index (^SPX - News) was down 8.24 points, or 1.07 percent, at 764.90. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was down 16.40 points, or 1.14 percent, at 1,425.43.

The Dow is down 9.1 percent for the month and 17.2 percent year-to-date.

Sales of previously owned U.S. homes plunged much more than expected in January, pulling down shares of homebuilders and big manufacturers.

The Dow Jones Home Construction index (DJI:^DJUSHB - News) fell 2.1 percent, while United Technologies (NYSE:UTX - News) and Caterpillar Inc (NYSE:CAT - News) slid more than 3 percent.

After the closing bell, shares of Fluor Corp (NYSE:FLR - News) rose 4.3 percent after the engineering and construction company posted a quarterly profit that topped Wall Street estimates and maintained its earnings outlook for the year.

Bank of America (NYSE:BAC - News) jumped 9 percent to $5.16 and JPMorgan Chase (NYSE:JPM - News) added 3.4 percent to $21.73, but both pared earlier gains after Obama warned of greater oversight.

On Nasdaq, shares of First Solar (NasdaqGS:FSLR - News), a maker of thin-film solar modules, plunged almost 22 percent to $107.65 after it gave a bleak short-term industry outlook.

Shares of Wynn Resorts Ltd (NasdaqGS:WYNN - News) fell nearly 16 percent to $21.75 after the casino operator reported a fourth-quarter loss as the recession hurt business and it recorded a tax expense.

Shares of insurer Lincoln National Corp. (NYSE:LNC - News) fell 14 percent after it slashed its dividend more than 95 percent. The S&P Life Insurance index (^GSPLIFE - News) fell 5.3 percent.

Trading was active on the New York Stock Exchange, with about 1.8 billion shares changing hands, above last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.43 billion shares traded, above last year's daily average of 2.28 billion.

Declining stocks outnumbered advancing ones on the NYSE by 3 to 2 while decliners beat advancers on the Nasdaq by about 7 to 3.

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'Five rockets' fired into Israel

Palestinian militants in the Gaza Strip have reportedly fired five rockets over the border into Israeli territory but there is no indication of casualties.

One rocket damaged a school in the southern city of Ashkelon but the building was closed at the time, the Israeli military say.

A second hit open ground outside the city and three fell just beyond Gaza without causing damage, they add.

There were no immediate claims of responsibility for the attacks.

Both Israel and the main Palestinian militant group in Gaza, Hamas, declared unilateral truces after Israel ended its three-week Gaza offensive on 17 January.

Several rocket strikes and other attacks from Gaza have been reported since then, apparently involving smaller militant groups.

Israel has responded with air strikes.

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Genital mutilation: Women fight Africa's taboo

They broke the silence from tribal elders and politicians – but paid a high personal price for trying to protect millions of young girls from the knife

By Katrina Manson in Sierra Leone

Rugiatu Turay campaigns for the end of female genital mutilation

The female journalist was snatched by members of a secret society, forcibly stripped and made to parade naked through the streets. It might sound like an atrocity from the time when Sierra Leone was ripped apart by a bloody civil war, but in fact the public humiliation was exacted in the diamond-rich eastern town of Kenema just this month. The woman's alleged crime was reporting on female genital mutilation.

While the attack was condemned by media watchdogs as "disgraceful behaviour worthy of a bygone age", one woman who was not surprised was Rugiatu Turay. When she was 12 Ms Turay was stolen away by family members and underwent what some politely refer to as "circumcision". She calls it "torture". For the past six years, she has been waging a war against the practice, which many in Sierra Leone, including senior politicians, see as an initiation rite.

Her organisation, the Amazonian Initiative Movement, tries to protect young girls from the knife. "I picked the name because I am trying to talk about strong, powerful women," she says Ms Turay, who works with her 20-strong staff in and around the northern town of Lunsar. So far, she has persuaded about 400 practitioners of female genital mutiliation (FGM), who are often called soweis, to lay down their blades and stop their role in the traditional bondo ceremony. "Silence means consent. But if you say the truth people listen ... We go to the schools, mosques, everywhere."

As reward for her tenacious efforts, she has received death threats and been attacked by juju men, sometimes armed with magic, sometimes with machetes. She describes a time when more than a hundred people paraded a symbolic corpse outside her home to suggest her own death: "They came right in front of me sharpening their cutlasses."

But so many times has she failed to die, that locals now think she is immune. "Now they believe I have special powers. They do nothing to me."

Ms Turay was mutilated at her aunt's house where she was staying with her three sisters and her cousin. "We didn't even know that we were going to be initiated," she says. "They called me to get water and then outside they just grabbed me."

She was blindfolded, stripped, and laid on the ground. Heavy women sat on her arms, her chest, her legs. Her mouth was stuffed with a rag. Her clitoris was cut off with a crude knife. Despite profuse bleeding she was forced to walk, was beaten and had hot pepper water poured into her eyes.

"My mother had always told me never to let anyone touch me there. I was scared and I tried to fight them off. Nobody talked to me but there was all this clapping, singing, shouting," recalls Ms Turay. "When I tried to walk on the seventh day I could not walk. All they could say is 'Today you have become a woman'."

Ms Turay is among the estimated 94 per cent of girls who undergo FGM in Sierra Leone. The practice – which forms part of a ceremony of initiation rites overseen by women-only secret societies such as bondo and sande – can cause severe bleeding, infection, cysts and sometimes death, but is largely ignored.

Reasons for the process vary, but many people cite tradition and culture, saying it is essential preparation for marriage and womanhood; binds communities to each other and to their ancestors; and restricts women's sexual behaviour.

Last year, UN agencies came out strongly against the practice, labelling it "painful and traumatic", a violation of human rights and demanding it be abandoned within a generation. "It has no health benefits and harms girls and women in many ways," said the UN's World Health Organisation (WHO). "The practice causes severe pain and has several immediate and long-term health consequences, including difficulties in childbirth."

Yet many international aid organisations are too scared to do anything about it in public for fear of being labelled cultural imperialists. A recent Sierra Leone child rights bill dropped any mention of FGM at the last minute, and politicians – including President Ernest Bai Koroma – baulk at the mention of the subject.

A decade ago, a female politician who later became the minister for social welfare said: "We will sew the mouths up of those preaching against bondo." More recently, politicians are rumoured to have sponsored mass cutting ceremonies, which can be relatively costly affairs in one of the world's poorest countries, in an effort to secure votes in elections.

"Secret societies have become intertwined with modern political life in Sierra Leone and retain considerable power and influence," wrote the anthropologist Dr Richard Fanthorpe in a paper commissioned by the UN.

When I asked President Koroma – whose country receives more aid per person from Britain than any other donor recipient – about his position on the practice, it was the first time I saw the usually affable leader lost for words. Unable to reach for his usually ubiquitous wide toothy smile, he meandered awkwardly through an answer: "Let people in civil society deal with this issue."

That leaves the fight against FGM, which the WHO says has been conducted on 92 million African girls – and rising by up to three million a year – to the odd brave soul such as Ms Turay. The 26-year-old is among a number of anti-FGM campaigners slowly achieving results. In her effort to keep some safe from cutting, Ms Turay has even adopted 14 children from Sierra Leone and Guinea.

Girls under 15 regularly undergo the cutting and for the newly initiated, it remains a frightening process shrouded in secrecy. "You should not tell anybody about circumcision or else your stomach will swell and you'll die," one young girl who didn't know her age told me quietly in her local Temne language.

Ms Turay hopes her struggle will help break such taboos of talking about the cutting in public, although it may also spur more reactionary moves, such as this month's punishment meted out to the journalist in Kenema. And it is no easy task persuading the practitioners to abandon what they see as a rite of passage. Girls as young as five are trained to become circumcisers and it is an income-generator in a poverty-stricken country, still struggling to shrug off the legacy of the 1991-2002 civil war.

"I didn't like it when it happened to me and I worry about the pain of the girl, but I do it because they pay me, and because we met our ancestors doing it," says practitioner Marion Kanu, 35, whose two children are also practitioners.

Others have seen the error of their ways. "I regret it now," says another sowei who has vowed to stop. But it is not always easy to hang up the knife. One woman practitioner who said she would stop the cutting was kidnapped by members of the bundu society. Both her and her baby were beaten and taken to the bush for three days without food or water; the mother was raped. Her life was saved only by Ms Turay's intervention.

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Dobson resigns as chairman of Focus on the Family

By ERIC GORSKI, AP Religion Writer

AP – In a Tuesday, March 11, 2008 photo, Christian evangelical leader and founder of 'Focus on the Family', …

DENVER – Conservative evangelical leader James Dobson has resigned as chairman of Focus on the Family but will continue to play a prominent role at the organization he founded more than three decades ago.

Dobson notified the board of his decision Wednesday, and the 950 employees of the Colorado Springs, Colo.-based ministry were informed Friday morning, said Jim Daly, the group's president and chief executive officer.

Dobson, 72, will continue to host Focus on the Family's flagship radio program, write a monthly newsletter and speak out on moral issues, Daly said.

Dobson's resignation as board chairman "lessens his administrative burden" and is the latest step in a succession plan, the group said. Dobson began relinquishing control six years ago by stepping down as president and CEO.

"One of the common errors of founder-presidents is to hold to the reins of leadership too long, thereby preventing the next generation from being prepared for executive authority," Dobson said in a statement. "... Though letting go is difficult after three decades of intensive labor, it is the wise thing to do."

While Focus on the Family emphasizes that it devotes most of its resources to offering parenting and marriage advice, it is best known for promoting conservative moral stands in politics.

Dobson, a child psychologist and author, has gotten more involved in politics in recent years. He endorsed Republican John McCain last year after initially saying he would not, and also sharply criticized Democratic candidate Barack Obama.

On political matters, Dobson "will continue to speak out as he always has — a private citizen and not a representative of the organization he founded," said Gary Schneeberger, a Focus on the Family spokesman. He said the nonprofit ministry and Focus on the Family Action — an affiliate set up under a different section of the tax code that permits more political activity — will continue to be active on public policy.

Dobson has a devoted following. His radio broadcast reaches an estimated 1.5 million U.S. listeners daily. Yet critics say his influence is waning, pointing to evangelicals pushing to broaden the movement's agenda beyond abortion, gay marriage and other issues Dobson views as most vital.

"In the short term, in the near term, Dr. Dobson will stay committed to the issues close to his heart," Daly said in an interview. "He'll continue to speak out on those topics."

Gay-rights and liberal groups issued statements Friday warning that Dobson is not leaving the scene. Americans United for Separation of Church and State portrayed the move as Focus on the Family "merely rearranging the deck chairs on its big, intolerant ship."

D. Michael Lindsay, a Rice University sociologist who studies evangelicals and politics, said that although Dobson will continue to be Focus on the Family's public face, his board resignation is significant because "he no longer has his hands on the levers of power" there.

Observers have questioned whether Dobson's organization can remain a key player once its founder steps away. Longtime Dobson ally Gary Bauer said in an interview Friday he believes it can.

"Their constituency not only wants help on how to keep a marriage strong or how to deal with a challenging child, but also feels as if it's surrounded by hostile territory in the culture," said Bauer, former president of the Family Research Council, which Dobson founded in the early 1980s.

Daly said there is no timetable for Dobson to leave the radio program, and the group will "look for the next voice for the next generation" while Dobson remains on the air.

That will likely mean not one person behind the microphone but several speaking on their respective areas of expertise, Daly said. The organization, anticipating a post-Dobson era, for several years has tried out different voices on the broadcast and in giving media interviews on hot-button social issues.

At the same time, Focus officials have acknowledged difficulties in raising money from younger families critical to its future. The economy also has hurt. Last fall Focus on the Family eliminated more than 200 staff positions, its largest employee cutbacks ever.

Daly said the group is now "right on track" with a revised annual budget of $138 million. The new board chairman is retired Air Force Lt. Gen. Patrick P. Caruana, a longtime board member and a former executive with defense contractor Northrup Grumman.

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World's Best Job Website Flooded In Final Hours

BRISBANE, Australia — A lucky 200 people have been shortlisted for the chance to become the caretaker of a tropical Australian island, dubbed by promoters as the "Best Job in the World."

But tourism officials acknowledged Friday that many last-minute applications were lost because the Web site was flooded with traffic.

Nearly 35,000 people submitted video applications for the job with Tourism Queensland, which pays a salary of 150,000 Australian dollars ($97,000) to relax on Hamilton Island in the Great Barrier Reef for six months while writing a blog to promote the island.

The job is part of a AU$1.7 million campaign to publicize the charms of northeastern Queensland state.

Anthony Hayes, Tourism Queensland's chief executive, said a wave of 7,500 applications hit the Web site in the 72 hours before Monday's deadline.

"This massive amount of traffic understandably slowed the site down and regretfully some people weren't able to get their video application in on time," he said. "It has been frankly heartbreaking because people have gone to so much trouble, and we have lost some fantastic applications. But to be fair to everyone, we have to be consistent."

The tourism board will announce 50 finalists Tuesday on its Web site. The public will then have until March 24 to vote for their favorite applicant.

The top vote-getter and 10 other people chosen by the tourism board will be flown to Hamilton Island for interviews. The winner will be announced May 6, and the job begins July 1.

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Mexico to send up to 5,000 more troops to Ciudad Juarez

Troops stand guard outside a building in Ciudad Juarez where federal security officials are meeting to discuss the escalating violence in the border city.

The increase would triple the law enforcement presence in the border city, which has been racked by drug violence. Its police chief quit recently and its mayor has received threats.

By Ken Ellingwood

Reporting from Mexico City -- Amid growing alarm over drug violence in Ciudad Juarez, Mexico, the Mexican government will deploy as many as 5,000 more troops to the border city, officials said Thursday.

The increase would triple the number of troops and federal police officers operating there as part of President Felipe Calderon's offensive against drug traffickers.
Ciudad Juarez Mayor Jose Reyes Ferriz said the added troops would give the military a higher profile by taking control of police functions, including street patrols. Currently, soldiers tend highway checkpoints, guard crime scenes and take part in special operations, such as house searches.

The city is without a police chief. Roberto Orduña Cruz quit last week after several officers were slain and someone posted threats saying more would be killed unless he stepped down.

On Wednesday, top Mexican security officials traveled to Ciudad Juarez to reassure local leaders and vowed to significantly boost the federal presence.
A little more than 2,000 soldiers and 425 federal police officers are assigned to Juarez in addition to local police, army spokesman Enrique Torres said. He said the reinforcements could begin to arrive in two weeks.

The move would represent a continuation of Calderon's strategy of relying on the army and federal police to counter drug-trafficking gangs in the country's main smuggling corridors. He had deployed 45,000 soldiers and 5,000 police officers across the nation as part of the crackdown, launched two years ago.

The offensive has sparked shootouts between soldiers and traffickers and triggered vicious fighting between drug gangs that has propelled the country's fast-climbing death toll. More than 6,000 people were slain in 2008, and the figure has exceeded 900 this year, according to unofficial tallies by the news media.

Ciudad Juarez, which had about 1,600 killings last year, has been on edge over the police chief's resignation and threats that appeared over the weekend against the mayor.

Reyes and other officials have described the police slayings and threats as "acts of terrorism."

In a radio interview Thursday, Reyes said the city's 1,600-member police force was too small even before officers were ordered to double up in patrol cars after the recent threats. A beefed-up military contingent will help combat other crimes, such as robberies, kidnappings and extortion, the mayor said.

Reyes has vowed to continue trying to clean up the city's corruption-laden police force, which, like many in Mexico, has been infiltrated by drug smugglers.

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