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DealBook: MF Global Said to Be in Deal Talks With Interactive Brokers

October 31, 2011 by Leave a Comment

11:01 p.m. | Updated
Jon S. Corzine, whose political ambitions came to a halt nearly two years ago when he was defeated for re-election as governor of New Jersey, is running out of time to prevent his revived Wall Street career from collapsing in failure.

His firm, MF Global — a powerhouse in the world of commodities and derivatives trading but little known outside Wall Street — was working frantically toward a potential sale late Sunday.

Those discussions, which narrowed to one bidder, Interactive Brokers, came after investors — worried that MF Global was too vulnerable to the fallout from Europe’s debt crisis — deserted the firm, making it the first American financial institution to fall victim to the sovereign debt woes.

If the firm is unable to sell itself, other options, including bankruptcy, await. MF Global has hired restructuring and bankruptcy law firms including Skadden, Arps, Slate, Meagher Flom, said people briefed on the matter but unauthorized to speak publicly. One option is for MF Global to follow a precedent set by Lehman Brothers in 2008 by seeking bankruptcy protection for the parent company while selling some assets to Interactive Brokers.

Other Wall Street firms have not been spared damage from the European debt crisis. Shares at firms as large as Morgan Stanley fell this month over concerns that they were exposed to Europe’s troubles. And investment banks and brokerage firms are still licking their wounds from market volatility that has hurt trading operations.

MF Global began buying the debt of European countries like Italy, Portugal, Spain and Ireland last year, in a bet that the discounted prices of those bonds would soon recover. Its gamble, though, went sour, suffering as Greece’s troubled economy spread woes across the Continent. Although European leaders appeared to make progress toward resolving those problems last week, and other firms rebounded, MF Global continued to suffer.

The last-ditch rescue effort is a major blow to the reputation of Mr. Corzine, 64, who formerly co-led Goldman Sachs and was also a United States senator. With a sale of MF Global, Mr. Corzine’s role at the firm will almost certainly end, though he is expected to receive a severance payment of nearly $12.1 million.

Still, the departure will be bitter for Mr. Corzine, whose first stint on Wall Street ended with his ouster from Goldman Sachs. Along with Henry M. Paulson, another Goldman co-chief executive, who would later become Treasury secretary, Mr. Corzine, a former trader, led the firm through the Asian financial crisis of 1998. But trading losses in the last quarter of that year, on top of ill will within the firm over the decision to go public, led to Mr. Corzine’s exit in January 1999.

He revived his career with a successful run for the Senate from New Jersey in 2000, and left the Senate in 2005 to run for governor of New Jersey. A weak economy and a corruption scandal helped Christopher J. Christie defeat him for re-election in 2009.

Mr. Corzine’s arrival at MF Global in March 2010 was meant to be a triumphant return to Wall Street and to bond trading after a long absence. Though it is has operations worldwide, MF Global has just 2,800 employees, making it a fraction of the size of Goldman or Lehman.

Throughout the weekend, regulators focused on completing a deal that would sell at least a portion of the firm, a move that would avert a messy bankruptcy. But given its relatively small size, the firm is unlikely to send shockwaves in the financial system.

Most of MF Global’s business involves executing and clearing trades in commodities and derivatives for clients like hedge funds. When Mr. Corzine joined, he sought to transform it into a full-fledged investment bank, in part by making riskier trades using the firm’s own capital.

A large part of that strategy backfired, as analysts and regulators worried about $6.3 billion in bonds issued by Italy, Spain, Belgium, Ireland and Portugal. By contrast, the much larger Morgan Stanley disclosed this month that it had just a $2.1 billion exposure to Europe.

Regulators were less confident in MF Global’s wager, asking it in August to raise the amount of money backing its bonds. The firm complied, though it argued that the bonds were trading at a few cents below par value.

Analysts appeared unimpressed. Late on Monday, Moody’s Investors Service downgraded the firm’s credit rating, citing both weak financial performance and its European bond holdings. The next day, the firm reported a $186 million loss, its fourth loss in six quarters.

Two days later, both Moody’s and another major agency, Fitch Ratings, downgraded MF Global to junk status. Such a move is disastrous for a financial firm, since it limits the number of trading parties willing to do business and raises borrowing costs.

Just as important, it can also scare customers, especially after the toppling of bigger firms during the financial crisis, like Bear Stearns and Lehman.

As of Friday, only a small percentage of customer money flowed out MF Global’s door, according to a person briefed on the matter. By the end of last week and through the weekend, Mr. Corzine and his advisers at Evercore Partners had called seemingly every major Wall Street firm, offering to sell MF Global, or at least some of its businesses or trading positions. While the firm had held talks with another potential buyer, Jefferies Company, by Sunday evening Interactive Brokers appeared to be in pole position.

Founded in 1977 by its chief executive, Thomas Peterffy, Interactive Brokers is a discount brokerage firm that places trades for customers on 90 exchanges.

The two firms share a deal history of sorts. In 2005, both competed for assets of Refco, which had filed for bankruptcy. MF Global emerged the victor, bidding $323 million for Refco’s assets.

Article source: http://feeds.nytimes.com/click.phdo?i=342e9f362bdedf8fc3347b334bd74ff5

Filed Under: Business News Tagged With: , ,

Madoff Family Aims to Write Its Own Future

October 31, 2011 by Leave a Comment

For nearly two years after Bernard L. Madoff confessed to running the largest Ponzi scheme in history, Ruth Madoff — who fell in love with him at 13 and married him at 18 — stood by her husband, a man the rest of the world saw as a cold-blooded monster.

She stayed despite doubts about his fidelity, hostility from friends who became his victims, and a deepening rift with her two sons, who insisted she cut herself off from him.

She finally cut the knot last fall, Mrs. Madoff said in a recent interview. “You’re going to have to leave me alone and not call,” she bluntly told her husband. When he persisted, she changed her number.

After years of silence and seclusion, Mrs. Madoff agreed to talk with a reporter for The New York Times because her surviving son, Andrew, asked her to help promote “Truth and Consequences: Life Inside the Madoff Family,” an authorized family biography by Laurie Sandell to be released Monday by Little Brown.

Tiny and slightly stooped, Mrs. Madoff arrived at the interview, held at her sister’s home in Boca Raton, Fla., dressed in cropped white canvas pants and a gray knit top. She spoke in a soft throaty voice, frequently on the edge of tears, about the devastation of her family — and thousands more around the world.

“It’s so sad,” she said. “Everything that I think about the victims — it’s hard to face, because there’s nothing I can do about any of it.”

Like so many of those victims, she now has just a thin slice of the life she once had. Turned down by several Manhattan landlords, she lives in a borrowed town house in a gated community in southeast Florida. She is facing litigation and is “afraid to spend a penny.” The damage her husband inflicted on his victims still shocks her, she said — “it was beyond anything imaginable.”

But she has slowly rebuilt a life. She worked with children who needed extra emotional support, and now spends up to four days a week as a volunteer for Meals on Wheels, where she has a small network of new friends.

A few things have not changed. Some Madoff victims still accuse her of complicity in the crime — which she denies — and attack her on the Internet or in the media whenever she is mentioned in the news. It has been that way since the day her husband, a respected Wall Street statesman, was arrested for stealing at least $17 billion in cash and $64.8 billion in paper wealth from victims around the world, including many in his extended family.

The billions taken from investors largely covered payments to other investors. But some uncounted millions helped support the lavish Madoff lifestyle — yachts, a town house in the south of France, a designer wardrobe, a 10.5-carat diamond, a private jet. Those are all gone, seized to help compensate victims.

Those treasures don’t figure in Mrs. Madoff’s best memories from “before,” she said. Instead, she spoke about being the mother of two bright, busy boys in suburban Roslyn, N.Y., and spending summers on a small boat with the boys doing chores around the docks. She added, “Those were the years that I cherish more than any others.”

Mrs. Madoff struggled to explain why she had stood by her husband, a decision that seemed to catalyze the public hostility toward her that persists to this day. Indeed, she and her husband felt so hopeless and embattled in the weeks after his arrest that they tried to commit suicide by swallowing large handfuls of Ambien, she said.

In an e-mail from prison, Mr. Madoff confirmed that he and his wife “made a feeble attempt” at suicide “while in a severe state of depression. Fortunately, we woke the next morning very sick but alive.” He concluded, “Please understand this is very difficult to admit.”

She stayed with her husband, she said, because “I come from a generation where marriage meant staying put, for better or for worse. This was agonizing, but I couldn’t abandon the man with whom I spent essentially my entire life.”

Article source: http://feeds.nytimes.com/click.phdo?i=8c70c050c8447901a5a0530894451ebe

Filed Under: Business News Tagged With: , ,

Fed Panel Is Divided on Direction

October 31, 2011 by Leave a Comment

WASHINGTON — When the Federal Reserve’s policy-making committee meets on Tuesday and Wednesday, 5 of the 10 voting members will arrive in open disagreement with the chairman, Ben S. Bernanke, about the direction of monetary policy. Three conservative members say the Fed has already done too much. Two liberals say the Fed needs to do much more.

But it is still the chairman who determines whether the central bank should expand its campaign to stimulate growth for the third time since August, and lately Mr. Bernanke has been focused on an old theme: communicating the benefits of existing policies in order to increase their impact.

The Fed “continues to explore ways to further increase transparency about its forecasts and policy plans,” Mr. Bernanke said in a mid-October speech in Boston. Later he described improved communication as perhaps the main lesson that makers of monetary policy should take from the financial crisis.

The Fed is focused on communication because it wants to reduce long-term interest rates, which determine the cost of borrowing for businesses and consumers, but it exerts direct influence primarily on short-term interest rates. Long-term rates reflect expectations about the future path of short-term rates, so the Fed wants to convince investors that it will continue to hold short-term rates near zero.

The central bank also could expand its extensive portfolio of Treasury securities and mortgage bonds, putting direct downward pressure on long-term rates, but Fed officials are reluctant to do so in the face of considerable political opposition and technical concerns that the purchases would absorb too much of the available stock of securities, crowding out private investors.

Charles L. Evans, president of the Federal Reserve Bank of Chicago, has proposed that the Fed should announce temporary boundaries for inflation and unemployment, pledging to keep short-term interest rates near zero until the unemployment rate drops below 7 percent from its current level above 9 percent, or the medium-term outlook for the rate of inflation rises above 3 percent. It is now somewhat below 2 percent, the maximum rate the Fed views as healthy.

“Given how badly we are doing on our employment mandate, we need to be willing to take a risk on inflation going modestly higher in the short run if that is a consequence of policies aimed at lowering unemployment,” Mr. Evans said in a recent speech.

“The Fed has done a good deal of thinking out of the box over the past four years,” he said. “I think it is time to do some more.”

A growing number of economists outside the Fed have advocated the more aggressive approach of permanently changing the central bank’s focus, from the level of inflation to a broader measure of growth — the present value of economic output — that would similarly make clear that the Fed was willing to tolerate a higher level of inflation in the short term. That approach, however, has gained little traction within the central bank.

Janet L. Yellen, the vice chairwoman of the Fed’s board of governors, described Mr. Evans’s idea as “potentially promising” in a speech in Denver two weeks ago. “Such an approach could be helpful in facilitating public understanding of how various possible shifts in the economic outlook would be likely to affect the anticipated timing of policy firming,” she said.

But she added that the approach was “not without potential pitfalls.” In particular, Fed officials are concerned that targets would be seen as destinations, conveying that the Fed was comfortable with 7 percent unemployment or 3 percent inflation.

The Fed could formally fix the 2 percent rate as a long-term target for inflation, to underscore that the current measures are temporary. Mr. Bernanke has advocated that idea in the past, but as chairman he has hesitated to pull the trigger, in part because of concerns about the political consequences if formalizing an inflation target is seen as a disregard for unemployment.

Citing these concerns, several analysts said the Fed was likely to make a more modest shift in its approach, such as publishing a prediction of the level at which it expects to maintain short-term interest rates over the next several years, alongside existing predictions of the future path of economic growth, unemployment and the rate of inflation. That could give investors greater confidence that short-term rates will remain low.

Article source: http://feeds.nytimes.com/click.phdo?i=dd71bc080c0caec75162d843959a22ee

Filed Under: Economy News Tagged With: , ,

You’re the Boss Blog: Mining Salt From the Sea

October 31, 2011 by Leave a Comment

Start-Up Chronicle

Getting a restaurant off the ground.

One of the magical aspects of running a business is how it eventually taps into everything you know, or thought you knew. Maybe that’s why you got into that particular business in the first place, without ever knowing about this secret synergy. Southfork Kitchen has drawn upon just about every experience or interest I have ever had, both obvious and all but forgotten, from music to design, food to entertainment, media to human interaction (oy, those human interactions!). More than a string of nouns, it is nearly a summation of a life.

This dawned on me as I found myself wading into the Atlantic Ocean last spring.

Back in the day, when I lived for a spell on Formentera, a Spanish island just south of Ibezia, I was fascinated by the grizzled men who made a living producing sea salt in what I considered a most quaint and natural fashion. They built a three-sided wooden stall in the ocean that jutted out from a low rock formation along the coast line. They opened a door to allow the ocean to rush in, closed it, and left the pool of sea water to bake in the Spanish sun. When they returned, salt awaited them. This was 1970 and I thought it was a charming, if primitive, method of salt production.

So primitive, in fact, that although I live a mile from the Atlantic Ocean and have walked its beaches for 30-some years, I had never thought about extracting the salt from the sea where I taught my kids to swim, threw balls for my dogs, swam with my wife and watched many a lovely lass fight the waves.

Last spring, on a whim, I started wading into the ocean that inspired the seafood restaurant, and started filling containers with water and taking them home to make salt. Making salt is a weird, inaccurate conceit — I steal the salt from the Atlantic Ocean. Or, on a kinder note, I find the salt in the sea, just rolling back and forth, waiting to be captured and transported to my backyard where I can recapture my nomadic acid days in Spain.

I let the contraband sit overnight until the sand falls to the bottom of the container, as in an hour glass, allowing me to pour the water through a chinoise and into shallow, round baking pans. They sit in the sun two days or four. The length of time for evaporation depends on the season, the sun, the humidity, the morning dew, the evening breeze, the volume of water and perhaps several other factors I have yet to grasp.

Sometimes, I have to finish the salt in the oven. Around 100 degrees for an hour or so, until it thoroughly dries. With a fine spatula, I lift the salt from the pans. Having put a number of batches through high- and low-speed blenders, having crushed it with mortars and pestles, having tried a variety of methods in search of the best texture, I now stir the salt briskly with an old wooden spoon and leave it alone. It needs little help from me.

The amount one can harvest is surprisingly generous. Of all the oceans, the North Atlantic is the saltiest. One cubic foot of sea water, I have read, can yield more than two pounds of salt. For me, on my modest scale, a gallon and half fills an eight-ounce container with pure grey salt. (Closer to off-white than grey, akin to fresh snow on shadowy city streets.) While I do not vitiate the salt with any other flavors, no citrus or truffle, we have smoked the salt at the restaurant and are impressed. Experiments continue.

When I started this process, I was concerned with safety. After all, I had heard of salt from the farthest reaches of the globe, and selmeliers in fancy restaurants matching the appropriate salt to each course, but none of it came from the North Atlantic. That most salts sounded like potent, artisanal marijuana only heightened my intrigue: Utah Red, Himalayan Pink, Andes Rock, Balinese Deep, Silver Welsh, Hawaiian Lava, Pakistani Rock, Korean Bamboo, Jurassic Grey, Turkish Pyramid, Vietnamese Pearl, Volcanic Black, Cypriot Flake. You had to wonder why New York had never produced sea salt. Where was Atlantic City Salt Water Salt? Outer Banks Sea Salt? Key West Sea Salt?

I called the Food and Drug Administration. I told the representative I was using the salt at the restaurant. I asked if she wanted to test the salt.

“Why should we?” asked the rep.
“I don’t know what’s in it,” I said.
“I do,” she said. “Salt.”
“But there may be impurities,” I said.
“Maybe a little clay, but it’s a minuscule amount.”
“Could you test the salt, just to be sure?” I begged.
“We do not pretest products. We do not do your research and development work for you. After you have a product ready to sell, then we get involved.”
“I am not going into the salt business.”
“Then don’t worry about it.”
“I just don’t want to hurt anyone,” I said.
“Kids swallow a gallon of that stuff every day. Relax.”
“Thank you. I will try.”

She had a point. The taste of the salt was very similar to a mouthful of ocean water, the same that fish were drinking in every day. It was very salty salt, recognizable to anyone who swam or fished or breathed on the East End of Long Island. More than a few grains, when not melting into or enhancing food, were almost astringent. The crystals were large and unrefined. Common table salt is generally sodium chloride that has been kiln-dried — scorched to remove moisture — and then bolstered with iodine and anticaking agents, such as sodium aluminum silicate, or additive E-554. The trace minerals, up to 84 in some sea salt, as well as calcium, magnesium and potassium, are obliterated in the processing. Even some “sea salts” are stripped of minerals and trace elements as they are washed or boiled.

I called a lab that had tested water for me in the past. I repeated the story.
“We don’t have to test it,” I heard.
“Why not?”
“We can already tell you what’s in it.”
“What?”
“Salt!”

I was convinced. I crushed it into a finer crystal and called it Ocean Road Sea Salt because the beach where I collect, forage, pilfer, capture, contain the salt water it is at the end of Ocean Road. I put the salt into a thick glass jar that once held saffron. I brought it the restaurant so everyone could taste it and offer an opinion. We decided to use it on our home-churned butter with honey and espelette.

The very next day, a couple came to the restaurant to show me their newest product: sea salt. From a few miles down the beach in Amagansett. Steven and Natalie Judelson had been struck by a similar lightning bolt a year before and were in full commercial sea salt mode. They were selling it — $9 an ounce for plain, $11 an ounce for flavored — in the same kind of glass jar I was using. They had four varieties — salt, salt with citrus, salt with pepper, salt with herbs de provence. I marveled at the synchronicity but decided I enjoyed the harvesting (and the savings) too much to purchase their salt; none of our chefs wanted to use someone else’s proportions of lemon to salt, or salt to pepper.

Since then, I have seen Amagansett Sea Salt sold at farmers’ markets and specialty stores and winning the favor of Daniel Humm of Eleven Madison Park, one of the most successful and innovative restaurants in America. Cynical friends say I was a day late and a dollar short, that I missed a golden opportunity. I take that cum grano salis. I say mazel tov, Judelsons. I could never get my head around selling something where the contents are free, floating around in the ocean, and the only cost is harvesting and packaging and delivering.

Wait. Doesn’t that describe what we do with fish? Never mind.

Bruce Buschel owns Southfork Kitchen, a restaurant in Bridgehampton, N.Y.

Article source: http://feeds.nytimes.com/click.phdo?i=083e59d4f5681cbe018919b0f18e03f7

Filed Under: Small Business Tagged With: , ,

Japanese Officials Intervene to Weaken Yen

October 31, 2011 by Leave a Comment
Opinion »

Op-Ed: Buffering the Grand Canyon

A new safeguard is needed to prevent damage from uranium mining.

Article source: http://www.nytimes.com/2011/11/01/business/global/japanese-officials-intervene-to-weaken-yen.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Russian Aide Suggests W.T.O. Issues Can Be Resolved Soon

October 31, 2011 by Leave a Comment

The adviser, Arkady V. Dvorkovich, made the comments after a meeting between Mr. Medvedev and the president of Switzerland. Switzerland has been acting as a mediator in thorny talks with Georgia, which, as a member of the trade organization, has the power to block Russia’s membership bid.

“There are a number of issues that will require clarification,” Mr. Dvorkovich said after the talks. He said the Swiss negotiators would travel to Tbilisi, the Georgian capital, to discuss them.

“We hope that all the issues will be agreed on over the next few hours,” he said, in comments reported by the Interfax news service, adding that none were major problems.

The comments suggest that Russia is seeking some changes to a compromise proposal that Georgia endorsed Thursday. Georgia has sought trade-monitoring missions on its border with Russia, and its negotiators claimed they had softened their original position by agreeing that the monitors would be private contractors, rather than government employees. According to the proposal, put forward by Swiss mediators, the private contractors would be hired by neutral parties, like the European Union.

It is unclear what alterations Russia is seeking in the deal. Russia has long resisted monitoring in a form that would compromise Moscow’s formal recognition of two Georgian enclaves as sovereign nations. Mr. Dvorkovich spoke emphatically on the issue last week, saying of Georgia’s demands that “we cannot meet them, and we will never meet them.”

On Sunday, though, Mr. Dvorkovich said that if Russia’s outstanding concerns were addressed, he saw no “substantial impediment” to approving Russia’s accession documents at a November meeting. Russian membership would be made final at an annual ministerial meeting in December.

President Micheline Calmy-Rey of Switzerland, who met here with Mr. Medvedev on Sunday, will meet with Georgia’s president, Mikheil Saakashvili, on Monday, according to a Georgian official.

Giga Bokeria, secretary of Georgia’s National Security Council, said it was not clear whether Russia was raising significant objections to the proposal or simply seeking to clarify points that have been left vague, like the question of what public entity would oversee the company that will monitor trade on the border.

“It’s just common sense — if they accept the proposal, it’s fine,” he said. “If they are saying they need changes in the current proposal, that might mean no.”

Russia has the largest economy of any country not in the 153-member World Trade Organization, and the World Bank says that by joining, Russia could bolster its annual gross domestic product by as much as 11 percent over the long term. Short-term gains would be smaller, at 3.3 percent, and noncompetitive industries stand to suffer, leading some Russian experts to oppose membership.

Mikhail Remizov, head of the Institute of National Strategy, a research group in Russia, called membership “neither a necessity, nor some sensible benefit.” In conditions of economic crisis, it would limit Russia’s ability to use protectionist policies to support its industries, he said in an interview with the radio station Kommersant FM. By providing a roadblock, he said, Georgia had ultimately served Russia’s interests.

“Russia’s best friends often turn out to be its non-friends,” he said.

Article source: http://www.nytimes.com/2011/10/31/world/europe/russian-aide-hopeful-wto-issues-can-be-resolved-soon.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Qantas Planes Return to the Skies After Court Order

October 31, 2011 by Leave a Comment

The tribunal’s decision granted 21 days for Qantas and its workers to resolve their acrimonious dispute — which had prompted the airline’s move to halt flights — and reach a binding agreement or face compulsory arbitration.

A flight from Sydney to Jakarta departed shortly after the Australian Civil Aviation Safety Authority cleared it for takeoff on Monday afternoon, The Associated Press reported.

As many as 70,000 passengers had been stranded since Saturday during the suspension of service by the airline.

Qantas’s move to keep its planes out of the skies raised the stakes in the confrontation with its unions after months of tension between the two sides.

The airline, one of the 10 largest in the world, had been hit by a series of labor problems in recent months as employees voiced concern about wage inequality and the moving of jobs out of Australia. Workers staged various actions that included brief strikes and the refusal to work overtime.

Despite a direct appeal by the embattled Australian prime minister, Julia Gillard, to solve the matter swiftly, hundreds of flights were canceled over the weekend and it took a court order to get the planes moving again.

Ms. Gillard tried to seize some credit for the resolution in a series of news media appearances Monday, as her opponents argued that she had failed to break the impasse herself because of her ties to the labor unions.

“I’ve done what I needed to do to get this dispute brought to an end, to get the planes back in the sky,” The Australian, a daily newspaper, reported her as saying.

The opposition leader, Tony Abbott, wasted no time in blaming the government for the debacle, however, which paralyzed much of the air travel throughout the country and threatened to tarnish one of the nation’s most iconic brands.

“The government didn’t do anything, so many people have been sitting in terminals because the government has been sitting on its hands,” he said in an interview on Australian television. “I think the public has had a win, but it is no thanks to the Gillard government.”

Meanwhile, the chief executive of Qantas, Alan Joyce, who faced sharp criticism over his decision to ground the fleet, struck a contrite tone as he promised to get its planes flying again.

“I apologize to all Qantas passengers that have been impacted by the industrial action by unions over the past few months and in particular the past few days,” he said in a statement after the ruling.

Qantas has had to reduce and reschedule flights for weeks because of the labor actions. But the unions said they were the injured party and accused the company of planning to outsource the company’s operations to Asia.

The grounding of the fleet cost the airline an estimated $21 million a day. Qantas, which employs about 35,000 people, said it had already been losing $16 million a week in revenue as a result of the union actions.

The carrier has several flights a day from Australia to the United States, including routes to New York, Los Angeles, Dallas and Honolulu.

Article source: http://www.nytimes.com/2011/11/01/business/global/qantas-planes-return-to-the-skies-after-court-order.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Green Column: Catastrophic Drought in Texas Causes Global Economic Ripples

October 30, 2011 by Leave a Comment

But the largest area of catastrophic drought centers on Texas. It is an angry red swath on the map, signifying what has been the driest year in the state’s history. It has brought immense hardship to farmers and ranchers, and fed incessant wildfires, as well as an enormous dust storm
that blew through the western Texas city of Lubbock in the past month.

“It’s horrible,” said Don Casey, a rancher in central Texas who sold off half his cattle after getting only about two inches of rain over a one-year stretch and may sell more. “Even if it starts raining, it’s going to take so long for the land to recover”

At the moment, 70 percent of Texas is experiencing “exceptional drought”
— the worst classification — along with 55 percent of Oklahoma and significant chunks of Louisiana, New Mexico and Kansas. Northern Mexico is also affected
.

Because it covers a huge and economically significant area, the Southwestern drought is having effects across the United States and even internationally, particularly in the food and agriculture sectors.

Some of the farthest-reaching effects may be on world cotton markets. Texas produces about 50 percent of U.S. cotton, and the United States in turn grows between 18 and 25 percent of the world’s cotton, according to Darren Hudson, director of the Cotton Economics Research Institute at Texas Tech University. This year, however, yields even from irrigated crops have fallen about 60 percent on the high plains where the bulk of Texas’s cotton crop grows, Mr. Hudson said. Farmers have given up on their “dry-land,” or unirrigated, cotton crops.

World cotton prices, which had been at historic highs, have fallen recently, Mr. Hudson said, but that is mainly because the sluggish economy and other factors have outweighed the loss of supply.

“Although prices have come down, they probably would have come down more, had we had a normal crop year,” he said.

Because production has fallen off, he said, “buyers that would normally have come to Texas for this year to buy cotton for Asian markets are starting to look elsewhere” — to other cotton-producing countries like Brazil and Australia. As those buyers form new relationships, it is possible some will not return to Texas, even when the rains resume.

Other Texas crops hurt by drought include peanuts, corn and wheat. Also, pumpkins were in short supply with the approach of Halloween, the Oct. 31 holiday of which they are a feature in the United States. Rice crops will take a hit if the drought continues next year.

The cattle industry is also reeling. Many Texas ranchers are selling off large parts of their herds as the grass dries out and water becomes scarce. Some are buying hay from farms a thousand miles away, despite the high cost of shipping.

The sell-off of cattle because of the Southwestern drought could push already-high beef prices higher during the coming years, according to Kevin Good, a senior market analyst at CattleFax, a company that does market analysis for the cattle industry. That is because many cattle are headed to the slaughterhouses now, reducing future supply.

Mr. Casey, the central Texas rancher, has devised new ways of feeding his remaining herd. Because the grass they would normally graze on has dried up, he is using a byproduct of cotton gins that has the seeds and fibers removed. But he is about to run out of this product, which is often called “cotton trash” — and with Texas cotton crops reduced, it is hard to find more. So he plans to spend a few hours a day burning thorns off prickly pear cacti that grow on his land, to make them edible for cattle.

“I’m sort of waiting for it to get cold before I’m out there with that flamethrower,” said Mr. Casey, adding that ranchers doing this should be able to get exemptions from local burn bans.

Economists at the Texas Agrilife Extension Service calculated in August that the drought’s cost to Texas agriculture had reached $5.2 billion
. The losses have only increased since then.

Scientists expect climate change to worsen the effect of droughts.

“While drought will always be a part of the natural climate variability of the Southern Plains, the impacts of drought in a warming world are likely to become even more pronounced,” David P. Brown, an official in the National Oceanic and Atmospheric Administration who is based in Fort Worth, Texas, said in an e-mail.

That is the case elsewhere, too, scientists say. Research by Eleanor Burke, a specialist in climate extremes at the Hadley Center of the Met Office in Britain, projects that if global temperatures rise by 4 degrees Celsius (7.2 degrees Fahrenheit) — a fairly high amount — then southern Africa, Southeast Asia, the Amazon and the Mediterranean region would be considerably more prone to drought
.

Analysis released last week by the National Oceanic and Atmospheric Administration found that in the Mediterranean, droughts are already increasingly common during winter, when the region typically gets more rainfall, with part of the cause being climate change caused by humans
.

In the U.S. Southwest, the current drought is generally attributed to La Niña, an intermittent Pacific Ocean phenomenon that generally causes dry and warm winters in the region.

But Texas’s state climatologist, John Nielsen-Gammon, also said that record-high temperatures over the summer — Austin, for example, experienced 90 days this year that reached 100 degrees Fahrenheit (38 degrees Celsius)
— dried out the soil and worsened the drought’s effect.

La Niña has returned, and U.S. government scientists now expect the Southwestern drought to last through February at least. That is terrible news for farmers and ranchers and will affect a number of other economic sectors too, like tourism and electric power production.

For many, the worst part about drought is not knowing when it will end.

“Uncertainty is what makes it so difficult,” said Mr. Casey, the rancher. “If we knew what was going to happen, we could make adjustments.”

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Bob Beaumont, Who Popularized Electric Cars, Dies at 79

October 30, 2011 by Leave a Comment

The cause was emphysema, said his daughter, Dina.

In the 1960s, Mr. Beaumont was so inspired by the battery-powered lunar rover and so appalled by the nation’s insatiable appetite for oil that he sold his Chrysler-Plymouth dealership in upstate New York to become a carmaker himself. Just as the Arab oil embargo was ending in 1974, the CitiCar — eight feet long, 1,100 pounds and shaped like a cheese wedge on a golf-cart chassis — began rolling out of a factory in Sebring, Fla.

The car, a two-seater with a price tag under $3,000 — about half the price of an average car at the time — was initially met with skepticism, particularly given its top speed of 26 miles an hour. Mr. Beaumont added two more batteries, allowing it to reach nearly 40 m.p.h., and sales took off.

“Everybody heard about what we were doing in Florida,” Mr. Beaumont told Baltimore City Paper in 2008, “and they came flocking to us like we were the salvation of the world.”

The company, which he called Sebring-Vanguard, soon became the sixth-largest carmaker in the United States, though well behind the Big Three, American Motors and Checker Motors. In three years, it sold 2,206 CitiCars (that’s the number Mr. Beaumont remembered, his daughter said, though other reports give figures slightly higher or lower).

But the CitiCar was dogged by questions about its roadworthiness, particularly after Consumer Reports declared it inordinately noisy, unreliable and generally “foolhardy to drive.” Mr. Beaumont successfully defended the car, whose body was encased in the same type of plastic as a football helmet, against bureaucrats in Michigan who wanted to ban it from public roads: he attacked it with a baseball bat, then suggested he test whether a Ford owned by one of the officials would withstand a similar test.

Still, in 1977, with the safety questions lingering and with oil cheap and plentiful again, Sebring-Vanguard went bankrupt. Another company bought the design and continued building a similar model, which it called the Comuta-Car, for several more years. About 4,400 of those cars and their derivatives, including a postal delivery Comuta-Van, were sold.

“He laid the pathway; he was just about 30 years too early,” said Peter Crisitello, who owns a 1977 CitiCar and organized a caravan of about a half-dozen of them to Mr. Beaumont’s home for a four-day gathering of enthusiasts in 2009.

After the CitiCar was discontinued, Mr. Beaumont moved to Maryland to run a used-car dealership and to lobby Congress to promote electric vehicles. In the 1990s he began a venture called Renaissance Cars and designed a battery-powered sports car, the Tropica, that was far more elaborate than the bare-bones CitiCar. For various reasons, it did not catch on; fewer than 25 were ever built.

Robert Gerald Beaumont was born on April 1, 1932, in Teaneck, N.J. After high school, he served for two years in the Air Force before studying business at Hartwick College in Oneonta, N.Y.

He left college before earning his degree to work at the Chrysler dealership in Kingston, which he later bought and ran for about 20 years. Despite having a wife and five children to support, his daughter said, he believed in his vision strongly enough to sell the dealership.

“Financially it was a big gamble, but in his heart it wasn’t,” Dina Beaumont said. “Recently we realized how many of those CitiCars are still on the road today. They’re still running, and we’ve never heard of a fatality or any serious accident.”

In recent years, she said, her father was pleased to see automakers unveil plans for mainstream electric cars like the Nissan Leaf and the Chevrolet Volt, though he was disappointed that General Motors added a gas generator to the Volt instead of making it purely electric.

In addition to his daughter, Mr. Beaumont is survived by his wife, Loretta; his sons, Marc, Robert Jr., Steven and Matthew; and 11 grandchildren.

While developing the CitiCar and the Tropica, Mr. Beaumont often ran into resistance from the auto industry and its allies in government, said David Goldstein, a longtime friend and the former president of the Electric Vehicle Association of Greater Washington, D.C.

“As he got more and more publicity, people were asking why Detroit couldn’t do this, and Detroit saw this as a threat to their existing business model,” Mr. Goldstein said. “In the end he was amused that after all these years Detroit had come around to his way of thinking.”

He added, “I’m now driving a Volt, and I believe I owe that legacy to Bob.”

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Day & Meyer, Murray & Young: Warehouse of the Rich

October 30, 2011 by Leave a Comment

This building actually exists, and you will find it on an otherwise unremarkable stretch of Second Avenue, just north of the end of the Ed Koch Queensboro Bridge. It is the Day Meyer, Murray Young warehouse, and since it opened in 1928 it has been the storage building of choice for many of New York’s wealthiest families, most prestigious art dealers and grandest museums.

The company’s early client list reads like a condensation of the New York Social Register, with names like Astor and Auchincloss, du Pont and Guggenheim, Havemeyer and Vanderbilt prominent. The press baron William Randolph Hearst stored entire rooms bought in Europe there during the construction of his castle at San Simeon, Calif.

It was at Day Meyer that the art dealers Joseph Duveen and Georges Wildenstein stored the Old Master and Impressionist paintings that became the foundations of many of America’s most important private and public collections.

Later, the warehouse safeguarded the personal effects of giants of midcentury industry, among them the movie producer Samuel Goldwyn, the CBS executive William S. Paley and the I.B.M. executive Thomas J. Watson Jr.

There were cultural figures, also. Marlene Dietrich and Walter Cronkite stored valuables at Day Meyer, as did the writers Norman Mailer and Erich Maria Remarque. Mailer was so pleased with the company’s long years of service holding his archive that in 1995, he sent along a signed copy of his book “Oswald’s Tale: An American Mystery” in gratitude. “Thanks for safeguarding all my loot,” he wrote on the half title page.

Over the years, the building has served not just as a warehouse of physical goods, but also as a three-dimensional map of the city’s social life, tracking its shifting focus from grand families to corporate achievers to today’s culture of celebrity. These days, the most famous client at Day Meyer is not an Astor or a Vanderbilt, but Whoopi Goldberg. “These are the only people I trust with my things,” she said in an e-mail message.

What has not changed is that people of means still need a place to store their belongings, and they are still doing so at that somewhat mysterious building on Second Avenue.

“IT’S interesting that so few people in the neighborhood know what it is,” said Robin Young, who is in the third generation of her family to serve as the company’s chief executive. “They stick their heads in the window and say what is this building? From the outside it looks very Gotham City.”

What they see inside is a formal lobby with a floor of tiled marble and a handsome table of carved wood dressed with an antique model ship. A grandfather clock stands sentinel to the side. It is a space more befitting the entry to a Wall Street banking house than a typical mini-storage warehouse.

“It has a sense of heritage to it,” Andrew S. Dolkart, an architectural historian at Columbia University, said. “It was going for the Park Avenue audience, so it wanted to be something people would feel comfortable storing their old art in.”

The company dates from the late 19th century, when it was founded as a white-glove specialist in the packing and shipping of furniture and fine art.

Then, as now, New Yorkers did not hold the moving business in particularly high esteem. Day Meyer, however, made it a business to know how to deal with the valuables of the well-heeled, and to set those clients at ease.

Highly polished furniture was covered with wax paper, and then padded with burlap. China, glass and other fragile objects were packed in excelsior and placed in barrels and boxes. “Proper protection of each type of article must be understood,” advised a gold-embossed company brochure that was sent to a select list of the city’s best addresses.

Moving, not storage, was initially the firm’s primary revenue stream. When the city’s wealthiest needed to store things, they could do so in the basements or attics of their town houses, or in stables they owned or rented. Warehouses were primarily reserved for industry, though there were exceptions. The society architect Stanford White was all but bankrupted when a warehouse blaze destroyed his most valued possessions in 1905.

Article source: http://feeds.nytimes.com/click.phdo?i=4cf63e3d3bf7fd0d1842a12fb049990a

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