Despite a drop in inflation, the annual cost of employer-sponsored family health insurance coverage has risen 5% this year to $13,375, according to a new survey released Tuesday.
Employers picked up the lion’s share of that tab. Companies paid an average of $9,860, while their workers picked up the other $3,515, according to the 2009 survey of employers from the Kaiser Family Foundation and Health Research & Educational Trust. Kaiser is a nonprofit, nonpartisan health policy research foundation.
For individual coverage, annual premiums rose more modestly, up an average of 2.6% to $4,824. But those increases came as prices fell roughly 1% this year because of the recession.
Over the past decade, the annual cost of family coverage has risen 131% and the annual cost for single coverage is up 120%, according to Kaiser. In each of the past 10 years, insurance increases have outpaced inflation — sometimes by as much as 11 percentage points.
"When health care costs continue to rise so much faster than overall inflation in a bad recession, workers and employers really feel the pain," said Kaiser president and CEO Drew Altman in a statement.
Even though companies pay far more of health insurance premiums than their employees, many economists note that increases to the employer portion of health costs reduce workers’ wages over time. This year, workers’ wages have risen 3.1%, according to the Kaiser survey.
In response to the economic downturn, 22% of large employers and 21% of small employers offering health insurance to workers said they reduced the cost of health benefits or increased how much their workers had to pay through deductibles and co-payments.
The same percentage of large employers and 15% of small companies said they increased their workers’ share of the premiums.
And 42% of all firms said they are likely or somewhat likely to increase what workers pay in premiums next year, while more than 35% said they would increase deductibles or worker copayments and share of drug costs free credit report and score.
According to the survey, more than 20% of workers with employer-sponsored insurance plans must pay $1,000 in deductibles for individual coverage before their insurance policy kicks in. That’s up from 10% in 2006.
The survey comes during one of the most pivotal weeks in the health reform debate, as Senate Finance Committee Chairman Max Baucus, D-Mont., prepares to release a much-awaited reform bill worked on — although not always supported — by a bipartisan group of senators. Whether that bill can generate bipartisan support among the broader committee and others in the Senate is still an open question.
But one idea that has generated support among many in both parties is that any reform should be built around the employer-sponsored insurance system, which currently insures the majority of Americans. Efforts to curb costs within that system remains one of lawmakers’ — and employers’ — biggest challenges.
If health care costs continue to grow at an average annual rate of 8.7% — which they did over the past 10 years — Kaiser estimates the annual premium cost for employer-based family coverage will top $30,000 by 2019.
"There’s no reason to believe we’ve done anything meaningful to address the fundamental drivers of health care costs," Altman said in a conference call with reporters.
Should health reform take place and should it succeed in reducing costs the long-term trend could be altered, he said, but cost containment won’t be immediate.
Some 5,000 patients suddenly found themselves without an ob/gyn last November when Dr. Tara Wah closed her practice in Tallahassee, Fla.
Wah, 55, informed her patients in a letter that she could "no longer afford to make ends meet."
After 24 years, "I’m working longer hours than ever," she wrote. "Insurance payments for patient care have stayed virtually the same for the last 15 years, while the cost of doing business, including health insurance, staff salaries and supplies have risen."
The rising cost of malpractice insurance, particularly for her specialty, was the straw that broke the camel’s back.
"My malpractice insurance was $125,000 a year, and going up," said Wah. "The only way to get the extra money was to cut back on my salary."
But it wasn’t always like that. Being a doctor was once thought to be a path to a cushy lifestyle. Six years after she started practicing, Wah hit her "peak" income year in 1990. Then she took a pay cut every year from 1993 onward, to eventually take no salary for two months prior to permanently shutting her office.
Wasted skills
Wah no longer practices medicine. Instead, she designs and repairs jewelry. "I feel guilty. I dream about [medicine]," she said. "[But] I am so angry. I think, ‘What a waste of my training.’ "
Wah’s situation sheds light on a troubling trend of physicians leaving medicine for a career outside of health care, said Kurt Mosley, a staffing expert with Merritt Hawkins & Associates, a physician search and consulting firm.
A first-ever survey of 12,000 primary care physicians conducted last October by Merritt Hawkins and the Physicians’ Foundation, an organization that represent the interests of physicians, showed that 10.1% of respondents planned to seek a job outside of health care in the next one to three years.
"That is a big number. It’s just very sad," said Mosley, especially in light of the shortage of primary care doctors in the United States today.
The American Medical Association said it is aware of this trend, citing the survey, but said it does not have data to show how many doctors have already prematurely exited the profession.
Regardless, Mosley said it’s a waste of training, skill, talent and money when a doctor leaves the profession in mid-career.
It takes a minimum of 10 to 12 years of training to become a doctor. In Wah’s case, she underwent 10 years of training, including medical school and residency, before she entered the workforce.
While some enter medicine because they believe it pays well, most choose it as a career because they feel it’s their calling.
"For many it’s not about the money. They have a passion for it, to take care of people," said Mosley. "It’s not easy to feel that passionately for another career after medicine."
Waste of taxpayer money
It’s also a waste of taxpayer money when a physician opts out. "We are all paying out of our pockets to produce doctors," said Mosley.
That’s because medical residency programs are mostly funded by Medicare to the tune of $9 billion to train about 100,000 residents annually, according to the Medicare Payment Advisory Commission.
"It’s Medicare that funds hospital costs to house residency programs, pay salaries of residents and sometimes pay faculties’ salaries," said Mosley.
Dr. Patricia Perry, 44, a dermatologist based in Burbank, Calif., operates a solo practice. She mostly performs medical procedures such as skin biopsies.
Perry said she’s "seeking to get out" of her profession because she’s fed up with insurance reimbursement challenges while struggling to cover other costs associated with being a doctor.
"When you get to a point where you feel unappreciated and you’re arguing with people about being paid, it takes away the passion for what you do," Perry said.
Daryl Richard, a spokesman for insurer UnitedHealthcare (UHC), said his company is taking steps to address some of providers’ concerns.
"We agree 100% that there is too much paperwork" tied to reimbursement claims, he said.
Richard said UnitedHealthcare offers a Web-based application to all of its providers that will enable the company to adjudicate claims to determine a reimbursement and a patient’s out-of-pocket expense "by the time the patient makes it to the (doctor’s) front desk."
"This takes away some of the unknown for both providers and consumers," he added.
Perry pays $2,500 a year in malpractice insurance. "I am licensed in three states. To maintain my license I have to pay a fee every one to two years in each state," she said. She also pays a considerable amount of money every year to attend annual trade conferences required by her specialty to update and hone her skills.
She said many physicians are scared to speak out about their money woes because they don’t want to be perceived as "greedy."
"I have news for you. You are already being perceived that way," she said.
Dr. Kenneth Cohn, a general surgeon with an MBA who tours the country advising doctors on non-clinical job options, says there’s a high-level of angst among U.S. physicians. "There’s absolutely a greater number who are looking for other job opportunities," he said.
It’s a reality that we have to deal with, Cohn said. The implication of it on the health care system, he said, is that doctors may have to increasingly use nurse practitioners and physicians assistants to fill in the gaps. They may also need to look to newer delivery concepts such as medical homes, in which doctor take more of a managerial role in a patient’s health care.
‘Insurance company is dictating what I do’
Dr. Douglas Evans, 50, a pediatrician based in St. Joseph, Mo., said he’s considering a mid-career change if insurer-provider relations aren’t reformed.
"I had a young football player in my office [this week]. His symptoms indicate a problem with his neck," he said in an example. "But I have to get authorization from his insurance company first to get an X-ray or an MRI. It’s an example of how insurance companies dictate to me what I have to do."
Evans is frustrated that this process will delay treatment by several days.
"My first concern is that he’s young and has his career in front of him," he said. "My second concern is that there’s a predatory lawyer out there," meaning that if his patient’s condition worsens while he waits to get authorization, it could expose him to a malpractice suit.
And Evans said insufficient reimbursement from insurers is posing a heavy financial burden on his practice.
"You can’t go to Wal-Mart (WMT, Fortune 500) and pay half the price for a loaf of bread and take the whole bread," he said. Still, he said many doctors have a hard time turning away patients for this reason alone, and end up absorbing the costs.
He warns that unless things improve, only those providers who can’t afford to do something else will be left in the system. "I am looking for something that’s still science related, like teaching biology at a university," said Evans.
Wah is disillusioned and disappointed, but maybe not completely bitter.
"For the young doctors who are just getting started, I want to say don’t give up," she said.
"After taking some time off , I might be able to do some volunteer work," she said. "I do love medicine, but I’m not [mentally] in a place right now to come back."
With Democrats and Republicans fighting a death match over health care reform, some small business owners fear that their priorities will get lost in the fray.
"Congress hasn’t approached health care reform from a small business owner’s standpoint," says Todd McCracken, president of the National Small Business Association. No one knows how the legislative battle will pan out, but here are three crucial health care issues to keep on your radar this fall.
The Penalty Box. What if hiring one more employee saddled your company with tens of thousands of dollars in federal fines? According to legislation before the House, businesses with payrolls as low as $250,000 would pay a 2% tax if they didn’t provide health insurance (that would rise to 8% as payroll grew to $400,000). And in early Senate legislation, firms that employ 25 or more workers would have to insure them all or pay a per-employee penalty. Those tipping points could discourage business growth.
The Senate Committee on Health, Education, Labor and Pensions addressed this problem in July, amending its version of the bill to exclude a firm’s first 25 employees — not just firms with 25 or fewer — from an annual fee of $750 per worker. So putting a 26th employee on the payroll would trigger only one $750 fee — not 26 of them.
More taxes, please. When did you last request more taxes? Never? Well, there’s a first time for everything.
Some entrepreneurs would like to see the federal government put a cap on the value of tax-deductible insurance. Under the current, uncapped system, big businesses can offer deluxe insurance tax-free, which helps them recruit and retain employees.
A tax on premium insurance would generate necessary funding for healthcare reform, limit plans that cover unnecessary procedures and level the playing field for small businesses. Also, Congress could grant self-employed taxpayers the same healthcare deductions as businesses.
Pool power. Small businesses and the self-employed don’t have the bargaining power of corporate behemoths. That could change if Congress gives entrepreneurs the right to form insurance purchasing pools. In 2008 and 2009 a bipartisan group of lawmakers introduced Small Business Health Options Program (SHOP) bills to allow such pools.
The last time the Federal Reserve was raising interest rates, it did so at a snail’s pace. But it may not take that gradual approach to tightening policy the next time around.
Fed officials are stressing there will be no exit from the U.S. central bank’s extraordinarily accommodative interest-rate stance for an “extended period” and analysts do not expect the first rate hike until 2010 or 2011.
The U.S. central bank slashed its benchmark overnight borrowing costs close to zero last December as part of an emergency rescue of the U.S. economy that included a raft of extraordinary lending and purchase programs, such as buying mortgage-related debt.
Fed watchers say it would be able to keep its low-rate pledge more easily if it were perceived as ready to move up quickly when it finally does begin to tighten.
In its last rate-raising cycle from mid-2004 to mid-2006, the Fed increased the overnight federal funds rate by a slim quarter point at each of 17 consecutive meetings.
This deliberate policy, known as “gradualism,” aimed to be predictable so as not to disrupt markets. In a 2004 speech, then-Fed Governor Ben Bernanke, now the central bank’s chairman, discussed reasons for gradualism, as well as an alternative, which he called the “cold turkey” approach.
Many economists believe the decision to raise rates at a “measured” pace after a long period in which they were unusually low kept monetary policy too easy for too long, fueling the housing bubble that led to the current crisis cheap credit report.
Chicago Federal Reserve Bank President Charles Evans said last week that the pace of tightening was “perhaps a little too measured.”
The Fed would want be more aggressive next time, he said.
“We are probably in a period where gradualism is less important than getting to the right stance in policy,” Evans said.
To be sure, the first hike won’t mean policy has suddenly become restrictive. With rates currently near zero, it would simply start taking them to a more normal base.
Indeed, the Fed may not turn aggressive until it is clear the economy needs more restraint.
“Once they decide it’s time to go for broke, it’s unlikely you’ll see the baby steps you saw in 2004 to 2006,” said Mark Gertler, a professor at New York University and a visiting scholar at the New York Federal Reserve Bank.
Interest rate futures markets, however, are pricing in a relatively gradual approach to rate hikes. While the first increase fully priced in is a relatively large half-point move in June 2010, the market sees rates up to only about 1.25 percent by the end of the year.
Of course, any decision to raise rates will depend greatly on how the economic recovery plays out.
The global economic crisis will continue and countries must do more to adopt financial market regulations, International Monetary Fund Managing Director Dominique Strauss-Kahn told a German magazine on Saturday.
“The global economic crisis will continue, even if Germany and France had some good figures in the second quarter,” Strauss-Kahn was quoted as saying in an advance copy of an article to be published in Der Spiegel on Sunday.
Strauss-Kahn said he wanted to see more action from nations to curb bankers’ pay and tighten capital requirements in the banking sector.
“It is right to say that not enough has happened. I hope the Group of 20 meeting in Pittsburgh will bring new momentum,” he said. Leaders of the G20 meet later this month to try to agree on measures to help stop a repeat of the financial crisis.
Strauss-Kahn said the lesson of the financial crisis was that the market economy needed rules to function.
“Without new rules, there will be a return to the old behavior,” he said.
Governments needed to develop ‘exit strategies’ from the stimulus packages introduced to boost economies, said Strauss-Kahn, adding, however, that it was dangerous to think the crisis was already over.
“We need such “exit strategies.” We are working on them, but I would disagree with any …. demand to think about implementing them now,” he said.
Asked by the magazine how liquidity that had been pumped onto the markets would be withdrawn, Strauss-Kahn said a combination of higher interest rates and ending direct intervention of central banks would be needed.
He also said the IMF had sufficient resources for now but that if the body were to take on additional responsibilities to coordinate a financial safety net for countries in financial difficulty, it would need a further financial boost.
(Reporting by Madeline Chambers; Editing by Andy Bruce)
Brewer Suntory Holdings, seeking overseas growth as Japan’s population ages, is in talks to buy Orangina for at least the $2.6 billion that private equity firms including Blackstone paid just three years ago.
Privately-held Suntory, itself in talks to be sold to bigger rival Kirin Holdings, would likely pay more for Orangina than Blackstone and Lion Capital did in 2006, the Wall Street Journal said.
The Orangina talks are at a delicate stage, a source told Reuters, and there is no guaranteed a deal will be reached.
"It is true that we are in talks, but nothing has been decided and I can’t comment further," a Suntory spokeswoman said.
A sale of Orangina, known for its orange-juice based soft drink sold in a distinctive bulb-shaped bottle, could spark further consolidation in the drinks sector and mark a successful exit for the private equity owners.
Buyout firms have struggled to find exit routes for their investments amid the global financial turmoil, and traditional routes of selling assets to rivals or taking them public are only just starting to become viable again.
"I think we’re going to see more deals, and deals at higher prices," said Tom Pirko, president of Bevmark LLC, a beverage consulting firm. "It’s going to be a good time, for the first time in a long time, to be a seller, as opposed to just a buyer."
Japanese firms are keen to expand overseas as beer sales decline in a rapidly ageing home market, where the population is projected to fall by a third in coming decades.
"I don’t know the details of the (Orangina) deal yet, but it seems to fit Suntory’s strategy to expand its overseas business, which is the purpose of the merger with Kirin," said Tomonobu Tsunoyama, food sector analyst at Tokai Tokyo Research Center.
Analysts have said the Kirin-Suntory combination, which would control half of Japan’s beer market and 30% of soft drinks, would bulk them up to pursue large deals overseas.
Japanese food and beverages companies are increasingly active overseas, spending ¥526 billion ($5.7 billion) on acquisitions in the first eight months of this year, nearly double the amount for all of last year, Thomson Reuters data shows.
Shaking up drinks
Lion Capital and Blackstone bought Orangina, which gets most of its revenue from Western Europe, in February 2006 from what was then Cadbury Schweppes for 1.85 billion euros ($2.6 billion at current rates).
The British candy and drinks giant later separated its remaining U.S. soft drink business into another company, now called Dr Pepper Snapple Group Inc (DPS, Fortune 500) credit scores for free.
The confectionary company Cadbury Plc (CBY) is now the subject of an unsolicited takeover bid from U.S. giant Kraft Foods Inc (KFT, Fortune 500).
Pirko said Orangina tended to sell well at restaurants, which have been suffering in the downturn as cash-strapped consumers dine more at home to save money.
"Orangina, aside from the iconic bottle and the fact that it always had good on-premise business, has a hard time competing on the shelf," he said.
Orangina was invented by a Spanish chemist and first made in Algeria, which was then ruled from France. The company now has about 2,500 employees and had 2008 sales of about 1 billion euros.
Suntory and Kirin said in July they had begun preliminary merger talks, a deal that would create a food and drinks giant with $41 billion in annual sales.
Japan’s beer market has shrunk 15% in volume terms in the past decade as a wave of baby boomers neared retirement — a demographic shift that has prompted Suntory and Kirin to aggressively diversify out of Japan and away from beer.
Suntory, known in Japan for its "Premium Malt’s" beer and "Boss" canned coffee, paid more than 600 million euros for Danone’s Frucor juice unit last year and has said it was ready to spend another $2 billion or so on acquisitions.
The company sells soft drinks in China and other Asian markets but does not have a non-alcohol beverage business in Europe, where it runs wineries and a whisky distillery.
Kirin, the maker of "Ichibanshibori" beer and "Afternoon Tea" bottled drinks has been most aggressive among Japanese breweries overseas, spending $1.5 billion in the past two years to buy Australia’s National Foods and Dairy Farmers.
It spent another $1.4 billion on a 49% stake in the Philippines’ San Miguel Brewery this year and is spending about $2.8 billion to take full ownership of Australia’s No. 2 beer maker, Lion Nathan, from its current 46% stake.
Tsunoyama said there will likely be more acquisitions by Japanese food and beverage companies, especially given the strength of the yen.
"They are relatively well-positioned financially and the yen is moving higher," he said.
A Kirin spokesman said his firm had no comment on the news of Suntory’s acquisition talks.
Shares of Kirin ended up 1.2%, underperforming a 2% gain in the benchmark Nikkei average.
John, Paul, George and Ringo are getting the band back together, in a manner of speaking, with a new Beatles-themed video game and digital upgrade of the group’s entire catalog both released Wednesday.
"The Beatles: Rock Band," which was produced by MTV Games and Harmonix, allows players to sing and play along with 45 of band’s songs using simulated guitars, drums and a microphone.
Also out Wednesday are digitally re-mastered versions of all 15 Beatles albums. The entire catalog will be available as a 16-disk set with special features including album art, liner notes, rare photographs and short documentary films. Re-mastered versions of each album will also be sold individually.
Not that The Beatles, nearly four decades removed from their last performance together, need the exposure. According to Apple Corps Ltd., which markets the Beatles worldwide, the Fab Four has sold more than 600 million records, tapes and CDs since they exploded on the scene in the early 1960s.
But the new products will help "bring the band into the 21st century," said Bruce Burch, director of the University of Georgia’s music business program.
"Great music is great music," Burch said. "But the ways of introducing it to a younger audience are different now, and this will help expose the Beatles to a whole new generation."
Downloads?
The buzz surrounding Wednesday’s releases had many industry watchers convinced that the Beatles’ music would be available on iTunes imminently. Especially since Apple, iTunes parent, had scheduled a special "music" event on Wednesday.
But the speculation ultimately proved false. Apple made no mention of Lennon and Co. coming to the music site.
The Beatles are one of the few bands whose catalogue has never been approved for sale as digital downloads on iTunes. That could be part of a "conscious strategy to maintain some level of exclusivity," said Sonal Gandhi, a media industry analyst at Forrester Research.
Gandhi acknowledge that CD sales have been slipping for years, but she said the new Beatles set would be a hit with die-hard Beatles fans who are willing to pay extra for the special features.
Indeed, the $260 set was sold out on Amazon.com (AMZN, Fortune 500) even before the official release.
"The set is really targeted at heavy Beatles fans who have the money to spend on a collectors item," Gandhi said. "The video game is more for people who aren’t that familiar with the Beatles."
"The Beatles: Rock Band" builds on the already popular Rock Band format, which has sold 13 million units since coming out in 2007.
In the new game, players choose from a variety of Beatles songs ranging from the early hit "A Hard Day’s Night" to the later "Lucy in the Sky with Diamonds." Players can also select one of several famous venues from the band’s career, including its two most famous American venues — the Ed Sullivan Theater and Shea Stadium in New York.
The game software retails for $59.99, but a "limited edition premium bundle," which includes a full set of instruments designed to resemble those played by the Beatles, is available for $249.99.
"There’s no doubt this game will be successful," said Jesse Divinich, an analyst for the video game research firm Electronic Entertainment Design & Research. He said the game would have to sell 1.2 million units to break even, which he expects to happen within one month.
All rights reserved
For the game to come to fruition, MTV Games/Harmonix had to tap a complex consortium of entities that own rights to the various songs, as well as the images of John Lennon, Paul McCartney, George Harrison and Ringo Starr.
Paul DeGooyer, MTV’s vice president of home entertainment, said the deal required the cooperation of EMI Music for all of the songs. Rights to the intellectual property — the words and music of the composers –required the participation of a variety of owners, he added.
The bulk of the songbook of Lennon and McCartney, who are responsible for most of the band’s hits, is owned by Sony/ATV Music. That’s a consortium which includes Sony Corp. and the estate of Michael Jackson, who died on June 25.
Most of the Beatles’ songs composed by Harrison, including "Something" and "While My Guitar Gently Weeps," are controlled by Harrisongs Ltd. Ringo Starr, one of two surviving Beatles along with McCartney, controls his own work.
Lastly, the Beatles’ likeness is owned by Apple Corps, which was formed by the band in 1968 to market its recordings and other related material.
MTV Networks is a unit of Viacom Inc. (VIA)
The Nasdaq hit its highest point in almost a year Tuesday and the Dow and S&P 500 also climbed as commodity shares rallied, and General Electric was upgraded.
Bond prices sank, raising the corresponding yields, while the dollar fell to its lowest point in almost a year. Commodity prices surged.
The Dow Jones industrial average (INDU) gained 56 points, or 0.6%, ending close to 10-month highs. The S&P 500 (SPX) index added 9 points, or 0.9%, ending close to 11-month highs. The Nasdaq composite (COMP) advanced 19 points, or 0.9% and ended at the highest point since Oct. 1, 2008.
Last week, Wall Street ended a choppy week lower as investors hunkered down after a strong August and ahead of the long holiday weekend. All financial markets were closed Monday for Labor Day.
But Wall Streeters returned in better spirits Monday, scooping up a variety of stocks, led by the commodities sector.
A more than 4% spike in oil prices and gold prices that briefly topped $1,000 gave a lift to the influential commodities sector. Dow stocks Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) were the biggest gainers on the blue-chip average. A rally in metals stocks lifted the Gold Bugs (HUI) index by 1%.
Tempering the advance was a selloff in some of the financial shares that rallied late in the summer, including Fannie Mae (FNM, Fortune 500), Freddie Mac (FRE, Fortune 500), Citigroup (C, Fortune 500) and AIG (AIG, Fortune 500). Dow component Travelers (TRV, Fortune 500) also retreated.
"We’ve had an amazingly strong summer," said Ben Halliburton, chief investment officer at Tradition Capital Management. "As the rate of decline has slowed in profits and revenues, stocks have improved."
All three major markets rose between 11% and 13% over the summer. But after such a run, "it’s show-me-the-money time for the economy and profits in the third quarter," Halliburton said. "The improvements have to start or people are going to doubt the rally and back out."
September is typically a tough month for Wall Street as market pros return from their summer vacations with a cleaning-house mentality. It is the worst month on Wall Street in terms of percentage losses for the Dow, S&P 500 and Nasdaq composite, according to Stock Trader’s Almanac.
Over the last few weeks, the S&P 500 seesawed across 1000, a key psychological level that traders watch. That seesawing may continue for the next few weeks, said Todd Salamone, director of trading at Schaeffer’s Investment Research.
"We expect the S&P 500 to battle between around 980 and 1060," Salamone said. "There’s no big commitment to accumulate stocks at this point."
He said that stocks may not move much in one way or the other until at least the middle of October, when the third-quarter profit reports start to pour in free credit score online.
Company news: Hopes that a period of dealmaking could resume helped nudge the advance along Tuesday.
Kraft Foods (KFT, Fortune 500) shares slumped almost 6% after British candy maker Cadbury (CBY) spurned its $16.7 billion takeover offer. However, the company, a Dow component, said it would continue to pursue a merger. Cadbury shares jumped 38%.
General Electric (GE, Fortune 500) shares rallied 4.5% after JPMorgan upgraded the stock to "overweight" from "neutral."
Among other movers, Opexa Therapeutics (OPXA) surged 270% after a mid-stage study showed that at least 83% of patients taking its multiple sclerosis drug had not relapsed one year later.
Economy: Leaders from the world’s 20 biggest economies, meeting over the weekend, agreed to continue to provide stimulus to support the global recovery.
Consumers cut their borrowing in July by $21.6 billion, the most on records dating back to 1943. Economists thought credit would fall by $4 billion. Credit fell by a revised $15.5 billion in June.
World markets: Global markets gained after gold topped $1,000 an ounce. In Europe, London’s FTSE 100, France’s CAC 40 and the German DAX all gained modestly.
In Asia, the Japanese Nikkei gained 0.7% and the Hong Kong Hang Seng added 2.1%.
Oil and gold: U.S. light crude oil for October delivery rose $3.08 to settle at $71.10 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose $3.10 to settle at $999.80 an ounce after surpassing $1,000 earlier in the session.
Bonds and currency: Treasury prices fell, raising the yield on the benchmark 10-year note to 3.46%, from 3.44% late Friday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar fell versus the euro and the Japanese yen.
Market breadth was positive. On the New York Stock Exchange, winners topped losers three to one on volume of 1.32 billion shares. On the Nasdaq, advancers beat decliners eight to five on volume of 2.04 billion shares.
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Rhode Island will be open for business Friday.
State workers were scheduled to take their first of 12 furlough days ordered by Gov. Donald Carcieri. But a state Supreme Court justice temporary blocked the shutdown Thursday after several employee unions sued, arguing the move violated their contracts.
More states are furloughing workers these days than at any time since the Eisenhower administration, but unions are increasingly fighting back. Rhode Island workers’ victory Thursday is the latest in a string of legal actions aimed at stopping the shutdowns.
Last month, a federal judge sided with government workers in Prince George’s County, Maryland, who argued that a 10-day furlough violated their contract. After winning a similar ruling in July, Hawaii unions continue to battle Gov. Linda Lingle over her ongoing efforts to institute furloughs.
A growing number of states are turning to furloughs in hopes of balancing their budgets. The recession — and accompanying decline in tax revenues — has wreaked havoc on state spending plans.
Some 750,000 workers in 21 states are being affected by furloughs, said Sujit CanagaRetna, senior fiscal analyst at the Council of State Governments.
"It’s the most number of furloughs we’ve seen in 50 years," he said. "It’s a further indication of the gravity of the financial situation."
Most governors work out agreements with employee unions in order to avoid legal action, experts said. They argue furloughs are more palatable than layoffs.
"Usually budget deals are negotiated," said Nick Johnson, director of the Center on Budget and Policy Priorities’ state fiscal project. "It’s unusual to wind up in court quick payday loan."
But it may become more common. In Rhode Island, the two sides are returning to court next Friday for the full Supreme Court to review the unions’ request.
Carcieri, however, said Thursday that he has no choice but to reduce the state payroll. He has asked his department chiefs to identify the last 1,000 people hired and begin notifying them of impending job reductions.
"Preventing the state from moving forward with the shutdown days cripples our ability to address growing budget gaps," Carcieri said in a statement.
Carcieri announced late last month that he would shut down the government for 12 days during fiscal 2010, which ends July 1. This equates to a 4.6% pay cut for public employees, but would save the state $21.6 million. The furlough was in part to slash $67.8 million from the budget.
Union officials, however, argue there are other ways to address the state’s fiscal shortfall, such as raising taxes.
"You cannot balance the state budget on the backs of state workers," said J. Michael Downey, president of Rhode Island Council 94 of the American Federation of State, County and Municipal Employees.
Have you suffered a setback because of the economy? What are you doing to overcome it and get back on track? If you’ve been confronted with some challenge during this recession but are fighting back, send an email to realstories@cnnmoney.com and you could be profiled in an upcoming segment on CNN. For the CNNMoney.com Comment Policy, click here.
“You don’t have a gun; that’s good.”
That was how Richard Fuld greeted a Reuters reporter who had tracked him down to his country house in a bucolic setting beside a river and amid tree-covered slopes in Ketchum, Idaho last Friday.
The man vilified for the collapse of Lehman Brothers almost a year ago, a failure that triggered the global economic crisis, seemed burdened but not crushed by the pressure of the upcoming anniversary.
Standing on his gravelly driveway wearing a black fleece vest, dark gray shorts and sandals, Fuld indicated he was torn about speaking out in his own defense, partly because of ongoing litigation but also because he felt the world was not ready to listen.
“You know what? The anniversary’s coming up,” he said. “I’ve been pummeled, I’ve been dumped on, and it’s all going to happen again. I can handle it. You know what, let them line up.”
Fuld again emphasized his concern about what will be said and written about him in the days leading up to the September 15 anniversary of the Lehman collapse but also stressed his ability to see it through.
“They’re looking for someone to dump on right now, and that’s me,” Fuld lamented and later added: “You know what they say? ‘This too shall pass.’”
Fuld, 63, took Lehman’s reins in 1994 when it was troubled and rebuilt it into the fourth-largest U.S. investment bank, a Wall Street powerhouse whose massively profitable mortgage banking machine inspired rivals’ envy. Even Goldman Sachs was nervous.
But it was forced to file the biggest bankruptcy in U.S. history after it choked under the weight of souring assets and lost investor confidence, and as the U.S. government and Federal Reserve failed to find a buyer and decided not to come up with a rescue package.
Fuld was then humiliated before a Congressional panel last October as stock markets spiraled downwards. He was told by one politician that he was the designated “villain” of the day and screamed at by protesters who called for him to be jailed.
Since then, he has mostly ducked the spotlight, allowing an image of greed, arrogance and failure to cling unchallenged to his name.
In Ketchum on Friday, Fuld said he wanted to speak but didn’t see the point. “Nobody wants to hear it. The facts are out there. Nobody wants to hear it, especially not from me.”
The former CEO, who embraced the “gorilla” nickname that characterized his fierce and intimidating business style, looked and sounded sad as he lingered with the surprise visitor outside the house, which is beside a river in the Rocky Mountains.
Fuld, who said he had hiked up a nearby mountain earlier in the day, declined to speak about his current work.
But friends and acquaintances say he has started his own consulting firm named Matrix Advisors LLC, based out of an office on Third Avenue in New York. He is also doing some work for restructuring firm Alvarez and Marsal, helping to unwind Lehman free of charge, according to sources.
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