Why Wal-Mart Set Up Shop in Italy

By JESSE DRUCKER , Wall Street Journal
November 14th, 2007 Page C1

More than 4,500 miles separate a small Wal-Mart Stores Inc. office in Florence, Italy, from the company's dozens of Illinois retail outlets. But thanks to a convoluted tax arrangement, court records show, Wal-Mart's Italian operation has helped the giant retailer cut its state tax bill in Illinois by millions of dollars a year.

Wal-Mart set its affairs so that its Italian outpost is the only operating unit of a real-estate subsidiary that controls billions of dollars of the retailer's property in Illinois and other states. Because technically its only employees are based in Italy, the real-estate unit claims its operations are foreign, exempt from Illinois corporate income taxes.

Earlier this year, the Illinois Department of Revenue objected to the Italian tax maneuver, demanding $26.4 million in back taxes, interest and penalties. Wal-Mart paid the amount in dispute and then sued the state for a refund, according to a complaint filed in May in Illinois Circuit Court in Springfield, Ill.

A Wal-Mart spokesman declined to comment beyond a prepared statement: "We have a disagreement with the state of Illinois over our tax liability last year, and we've asked a judge to resolve that for us." He declined to explain why Italy was chosen as the home of this particular foreign operation or whether Wal-Mart has other such arrangements.

The dispute with Wal-Mart is part of a wider effort by some states to crack down on what they believe is abusive use of so-called 80/20 companies. These companies are domestic subsidiaries that conduct at least 80% of their business overseas.

States typically don't tax income from outside the U.S., and many companies have used 80/20 subsidiaries to legitimately shield foreign operations from state taxation.

But authorities in several states have challenged a number of companies over the 80/20 units, claiming the structure was improperly used to shift income away from the purview of state taxing authorities.

The misuse of 80/20 companies is "shocking to the conscience," said Brian Hamer, director of the Illinois Department of Revenue. "These kinds of manipulations clearly were never contemplated by the state legislatures," added Mr. Hamer, who wouldn't comment on any single company or legal case. "It ought to have been clear to businesses that this was highly questionable conduct."

Illinois tax authorities are in a dispute with Mc Donald?'s Corp. over nearly $11 million stemming from its use of an 80/20 subsidiary. Details are sketchy, but Mc Donald?'s, based in Oak Brook, Ill., says in court papers that a Delaware financing unit that owns restaurants in St. Thomas, Virgin Islands, conducts 80% or more of its business activity outside the U.S., exempting its operations from being included in Illinois tax calculations.

Minnesota, BNSF Wrangle

Meanwhile, Minnesota tax authorities are taking issue with interest payments made by Burlington Northern Santa Fe Corp. to a pair of Delaware subsidiaries doing business in Canada. The railway company deducted the interest associated with the payments but didn't pay taxes on most of the income received by the subsidiaries. The state's revenue department says in an audit report that this was "done purely for tax avoidance purposes." The Fort Worth, Texas, company paid a disputed $4 million in back taxes and interest and sued the state in May for a refund.

A McDonald's spokeswoman said: "We believe the results of our business have been properly reported to the state of Illinois." A Burlington Northern spokesman declined to comment.
At the prodding of the Illinois revenue department, that state's legislature in 2004 passed a law essentially shutting down the abusive use of 80/20 units. The Minnesota state legislature enacted one change in 2005 and has considered several other bills since then to shut down alleged abuse of the structure.

States Crack Down

Wal-Mart's Italian tax-planning maneuver is the latest disclosure of a strategy by the firm to cut state taxes. A page-one article in The Wall Street Journal in February focused on how the Bentonville, Ark., retailer cut taxes in some states by paying rent to a real-estate investment trust it owned, even though the money never left the firm.

That REIT strategy has been challenged by tax authorities in several sates; some have enacted laws to close the REIT structure since the Journal article.

However, the REIT tax structure saved money only in some states -- those that tax income solely from operations within their borders. This taxation system, known as "separate reporting," can make it simpler for companies to shift income out of state to tax-friendly jurisdictions such as Delaware or Nevada.

But "combined reporting" states such as Illinois are much tougher. They add together all profits of a company's domestic operations, regardless of what state they are in, and then allocate a portion of those profits to their state.

Theoretically, combined reporting makes it harder for companies to shift income to more advantageous locales.

Because Illinois rules apply only to domestic profits -- not world-wide income -- companies can get around the rules by figuring out ways to effectively shift income overseas.

Wal-Mart's 80/20 structure worked like this: The company first transferred its Illinois stores to its in-house REI Ts?, paid rent to the REI Ts? and then deducted those payments from its taxes. The REI Ts?, in turn, paid that money to their 99% owner, a Wal-Mart unit based in Delaware.

Ordinarily, Illinois's combined-reporting rules wouldn't permit a company to cut its taxes by shifting income to a Delaware unit. But in late 2001, Wal-Mart formed a Delaware subsidiary called WMGS Services LLC, records show. WMGS, with offices in Florence, was a wholly owned subsidiary of Wal-Mart Property Co., which also was 99% owner of Wal-Mart's main REIT.

In its filing, Wal-Mart contends that Property Co.'s ownership of the Italian unit converted Property Co. into an 80/20 company. In other words, at least 80% of its employees and its property were overseas, exempting its income from taxes.

Though Property Co. is the 99% owner of the REIT -- which owns dozens of stores in Illinois -- Wal-Mart says Property Co. owns no real estate itself. And although Wal-Mart has more than 48,000 employees in Illinois, the firm contends Property Co. has no employees in the state, either.

The only employees of Property Co. were in Italy, the company says. Property Co. was set up to own the majority of the shares of Wal-Mart's main REIT and has no employees anywhere, Wal-Mart has said in court records elsewhere. (In its court filing in Illinois, Wal-Mart says that WMGS's employees and property were in Turin, Italy; an official with the company in Florence and a Wal-Mart spokesman in the U.S. say the company doesn't have an office in Turin.)

WMGS employs 22 people at its office in central Florence, according to a company official who answered the door there on a recent weekday morning. The office is responsible for procuring merchandise from around Europe, he said. Wal-Mart has no stores in Italy.

Gulf states’ dollar peg comes under threat

By Peter Garnham

Published: November 15 2007 23:14 | Last updated: November 15 2007 23:14

Speculation heightened on Thursday that Gulf Arab states were preparing to ditch their currencies’ pegs against the dollar as the United Arab Emirates expressed concerns over the policy for the second time this week.

Sultan Nasser al-Suwaidi, governor of the UAE central bank, said on Tuesday that the dollar’s slide had pushed the country to a “crossroads” over the UAE dirham’s peg.

On Thursday, Mr al-Suwaidi followed up those comments, saying there were strong social and economic pressures to drop the dollar peg, suggesting the UAE could move to track a basket of currencies instead, which would predominantly, but not entirely, consist of dollars.

The statement sent the dirham, which has been fixed at Dh3.6725 against the dollar since 1997, sharply higher in the forward currency market, with one-year forward rates predicting a 2.7 per cent appreciation in the currency.

Kuwait switched from a dollar peg to a currency basket in May, but other members of the Gulf Co-operation Council – Saudi Arabia, the UAE, Oman, Bahrain and Qatar – have held steadfastly to their dollar pegs, in spite of the US currency slumping to record lows.

The UAE said it would only drop its dollar peg in concert with other GCC members. Saudi Arabia, the GCC’s most influential member, has so far showed strong determination to fight speculation that it would revalue the Saudi riyal, intervening aggressively last week in the forward foreign exchange market to defend the riyal’s peg.

However, analysts say the UAE’s comments could undermine the credibility of any verbal or market intervention from Saudi Arabia.

The problem for the Gulf states is that, as the Federal Reserve cuts US interest rates, a weakening dollar adds to inflationary pressures in the region.

Gerard Lyons, head of global research at Standard Chartered, says problems develop when there is a disconnect between the policies needed in one region and those needed elsewhere. This is something the UK found to its cost when it was tied to the Deutsche mark in Europe’s exchange rate mechanism in the early nineties – something which eventually forced the UK out of the ERM.

“A similar episode, albeit different in scale, is now being seen in the Gulf,” says Dr Lyons. “While the US is cutting interest rates in response to a slowing economy, the Gulf needs a tighter monetary policy to curb inflation.”

Hedge funds could benefit from any appreciation in Gulf currencies as, according to dealers in London, they started building up bets on a revaluation by the Gulf states as soon as the problems in the US mortgage market became evident in July.

However, Hans Redeker of BNP Paribas, says the prospect of an appreciation in GCC currencies is no longer just a trade for expert hedge funds. “This has become a widespread trade that family offices, private banks and most proprietary desks have on,” he says.

Russell Jones of RBC Capital says it is in the interest of the region’s rulers to act to quell inflation. Rising inflation could prompt civil unrest from the region’s predominantly young population, he says. “The longer they delay abandoning their pegs, the more painful it will be.”

However, there is a wider context to the debate, given the strains being felt in Europe from the strong euro and a widespread feeling that some Asian currencies, including China’s renminbi, need to strengthen further.

Mervyn King, governor of the Bank of England, said this week that countries, such as China, that link their currencies to the dollar were causing increasing tensions and the matter needed to be addressed at this weekend’s G20 meeting of finance ministers and central banks in Cape Town.

When asked about GCC currency pegs, Mr King said he was concerned that states such as Saudi Arabia and the UAE might de-peg their currencies, indicating that he would prefer Asian currency appreciation to an early de-pegging from the GCC.

Mr Redeker says: “Western central banks fear that a GCC de-peg will increase commercial and financial demand for floating non-dollar currencies, such as the euro and sterling, which in current market conditions would send them sharply higher.”

Copyright The Financial Times Limited 2007

(http://ft.com)

Caterpillar warns of US recession

By Bernard Simon in Toronto

Published: October 19 2007 20:54 | Last updated: October 19 2007 20:54

Caterpillar, the US-based maker of construction equipment and heavy-duty engines, issued a bleak prognosis for the US economy on Friday, saying that it was “near to, or even in, recession”.

The warning, which included a downward revision of 2007 earnings estimates and a sober outlook for the US market in 2008, helped propel a widespread slide on Wall Street on Friday. Caterpillar shares were 6 per cent lower at $73.03 by late afternoon.

The sectors in which Caterpillar operates – trucking and construction – are widely seen as barometers of US economic health.

While Caterpillar’s net third-quarter profit climbed to a record $927m, or $1.40 a share, the improvement was entirely due to a strong performance in other parts of the world. Earnings in the third quarter of 2006 were $769m, or $1.14 a share. Revenues climbed almost 9 per cent to $11.4bn.

“We continue to see remarkable growth outside of the United States with particular strength in key industries like mining, oil and gas, electric power and marine engines,” said Jim Owens, chief executive.

But North American revenues fell by 11 per cent in the third quarter to $5bn, due to construction industry weakness, as well as a steep fall in sales of heavy trucks, many of which are fitted with Caterpillar engines.

Mr Owens said that the Federal Reserve would need to make further cuts in interest rates “to move economic growth back to nearer the economy's potential”.

Caterpillar’s estimated 2007 earnings are now in a range of $5.20-$5.60 per share, down from $5.30-$5.80. Earnings are expected to rise by 5-15 per cent next year to a fifth consecutive record. The 2007 sales projection is unchanged at about $44bn, up 6 per cent from last year, with a 5-10 per cent increase expected in 2008.

Caterpillar expects machinery and engine sales in its home market to decline by 12 per cent this year, offset by growth of 25 per cent abroad.

North America’s share of total sales is set to drop from almost 50 per cent in 2006 to 40 per cent this year.

Overall North American heavy-truck sales have tumbled 30-45 per cent each month since March, compared with a year earlier, due to the faltering economy and heavy orders in previous years in advance of tighter emission controls.

Standard & Poor’s said in a report this month that the weakening economy, especially housing and construction, “add to our concern that a rebound [in truck orders] will not begin in earnest until 2008 and perhaps the latter half of the year”.

Copyright The Financial Times Limited 2007

(http://ft.com)

Impressions of Election '08 Candidates

NOTE: Poll of 2,230 adults; 1,049 Democrats; 827 Republicans; taken Nov. 2-12, 2007; margin of error
± 2.1 percent for all adults; ± 3.0 percent for Democrats and ± 3.4 percent for Republicans.

Who would win right now? When an unidentified Democratic nominee is pitted against an unidentified Republican, the Democrat gets 42 percent of voters, the Republican 27 percent and another 27 percent don't know who they'd vote for.

(http://news.yahoo.com)

Merrill makes big play in India

By Joe Leahy in Mumbai

Published: November 19 2007 20:24 | Last updated: November 20 2007 03:16

Merrill Lynch has launched its biggest foray into India’s real estate market, joining a growing number of foreign financial institutions seeking to tap into the fast-growing but volatile sector.

The US bank is paying about $377m for a 49 per cent share in a portfolio of residential projects managed by DLF, the country’s largest listed developer, in one of the biggest deals of its type in India.

Timothy Grady, head of global commercial real estate Asia Pacific for Merrill Lynch, said: “This partnership and these projects reflect our continued belief in and support for India”.

Wall Street investment banks have descended on India’s real-estate sector looking for opportunities since the government relaxed rules governing foreign investment in 2005.

Participants range from the proprietary arms of investment banks, such as Whitehall, Goldman Sachs’s real estate fund, to specially established Indian real estate funds.

Indian developers have also raised more than $7bn on India’s stock market and London’s Alternative Investment Market since August last year, according to estimates by Ernst & Young and the Federation of Indian Chambers of Commerce and Industry.

DLF said Merrill Lynch was buying the stake in seven “mid-income” residential projects spread across Chennai, Bangalore and Kochi in southern India and Indore in the north. The projects would take seven to eight years to complete.

The transaction, Merrill Lynch’s sixth in Indian real estate, brings its investment in the sector to about $550m.

The preferred mode for most foreign institutions had been to invest alongside the major developers, said Sri Rajan, head of Bain & Company’s private equity consulting practice in India.

Greenfield investments remain challenging for foreign investors in India because of the problems of acquiring blocks of land large enough for big projects.

Late last year, JPMorgan announced its first investment on its own balance sheet in Indian property, paying $60m for a stake in a residential project being developed by Mumbai group, Lodha Builders.

Analysts believe there will be an increasing number of such equity tie-ups as Indian developers hunt for capital.

The Reserve Bank of India, the central bank, has clamped down on foreign lending to the sector to help contain inflation and to ease pressure on the rupee, which has been appreciating against the dollar.

DLF said of the deal: “DLF continues to remain focused on keeping its net economic interest in homes business to a 10-year horizon.”

Copyright The Financial Times Limited 2007

(http://www.ft.com)

Loophole keeps FDA in the dark on tainted food imports

Updated 13h 1m ago

By Julie Schmit, USA TODAY

SAN FRANCISCO — About 150 imported food shipments a month are tested at a laboratory here for contaminants consumers shouldn't eat, like mercury in swordfish, salmonella in shrimp and filth in mushrooms.

At least 10% of the time, the lab finds the shipments contaminated, says David Eisenberg, chairman of Anresco Labs.

Most of the time, the lab tells no one but the importer who's paying for the test, Eisenberg says. The Food and Drug Administration is none the wiser.

The practice has been going on for years, at Anresco and other labs that test imported food. The FDA gets the favorable test results, but failing ones aren't sent to the FDA if importers tell labs not to send them, five lab operators told USA TODAY.

This is not news to the FDA, which regulates most of the imported foods consumers eat. There is no regulation requiring labs to send all tests to the agency. The FDA proposed that in 2004 but never followed through.
...
(http://www.usatoday.com)

Manhattan tops U.S. salaries at $2,821 per week

updated 8 minutes ago

NEW YORK (Reuters) - At $2,821 per week, people in Manhattan earned three times the average U.S. wage in the first quarter of this year, boosted by financial sector bonuses, government statistics showed on Monday.

Equivalent to nearly $147,000 per year, average weekly pay for Manhattan residents shot up 16.7 percent from the same period of 2006, maintaining its spot as the wealthiest county in the United States.

Nationally, the average rise was 5.1 percent to $885 per week, or $46,000 per year, the U.S. Bureau of Labor Statistics said.

People in Manhattan, home to Wall Street, earned three to four times more than their neighbors in other New York City boroughs and almost five times more than workers in the state of Montana.

Manhattanites in the financial activities supersector made an average of $10,156 per week, or about $528,000 per year, largely because year-end bonuses and commissions are paid in the first quarter, the bureau said in a news release.

Manhattan far outpaced the average wage in the boroughs of Queens ($831), the Bronx ($788), Brooklyn ($742) and Staten Island ($733), partially explaining its gentrification and economic discrepancies with the rest of New York City.

After Manhattan, the country's top-ranked counties in the first quarter were Fairfield, Connecticut, a New York City suburb, at $1,979, followed by Suffolk, Massachusetts, which includes Boston, at $1,659, and San Francisco at $1,639.

Four of the 10 counties with the highest average wages were in the New York area, while three others were in and around San Francisco, near the Silicon Valley high-technology corridor.

Among the 50 states and the District of Columbia, the capital Washington ranked first at $1,428 per week, followed by New York state at $1,397, Connecticut at $1,263, Massachusetts at $1,110 and New Jersey at $1,097.

The lowest weekly wages were in Montana ($600), South Dakota ($602), North Dakota ($615) and Mississippi ($616).

(Reporting by Daniel Trotta; Editing by John O'Callaghan)

(c) Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

(http://www.cnbc.com)

Unholy Alliance Fleeces Social Security Recipients

by Laura Rowley

Posted on Thursday, November 15, 2007, 12:00AM

Virginia grandmother Ruby Fauntleroy, 74, knew something was wrong when her rent payment bounced shortly after her Social Security check had been direct-deposited into her bank account.

Fauntleroy went to the bank, where a teller told her that the account was frozen following notice of a court judgment and garnishment order by Capital One. Fauntleroy had been trying to pay off this $4,000 credit card debt for years, but dropped her monthly payment to $100 after her husband died and her income declined. Capital One sued, and won a judgment.

"I was just numb, I couldn't believe this could happen," said Fauntleroy. "I told the bank, 'You know nobody is supposed to take a government check,' but they did. I couldn't sleep at night, I couldn't eat. I thought, why are they doing this to me when I was trying to pay [my debt]?"

When Exempt Isn't

Legal aid agencies across the country say they've been flooded with calls from seniors and disabled people whose accounts have been frozen by bill collectors. This is happening even though the federal government specifically prohibits the garnishment of exempt funds such as Social Security and veterans benefits.

In the worst cases, seniors go hungry or without medication because they have no access to funds -- in some cases, for months at a time. "People can really bumble around for months trying to get their accounts unfrozen because the procedures they have to follow are so Byzantine," says Claudia Wilner, attorney with the New York-based Neighborhood Economic Development Advocacy Project (NEDAP), which handles about 200 such cases a year.

In August, three senators asked the inspector general of the Social Security Administration to investigate the extent of the problem, querying the nation's largest banks on how often the practice occurs. The Senate Finance Committee held hearings on the issue in September.

Slow to Respond

The problem comes amid enormous growth in consumer debt, and changes in technology that make it easier and cheaper for creditors to seize bank accounts. Although banks can tell whether an account contains exempt funds before they issue a freeze, they argue that ignoring a restraining order would leave them in contempt of state court.

But even when both the creditor and the bank agree a mistake has been made, bureaucracy can leave seniors in limbo for weeks. Laurie Doran, staff attorney for South Jersey Legal Services, had a client who discovered the levy on her account when she went to buy medication. "They zapped both her savings and checking, and she didn't have access to any funds," says Doran. "She came over from the pharmacy in an absolute panic."

Although attorneys for both the creditor and the bank immediately agreed to lift the freeze, it couldn't be done because the levy officer -- a liaison between the court and the bank -- was unresponsive. It took two weeks to unravel, during which the elderly woman's health deteriorated.

Death by a Thousand Fees

Moreover, some banks are making a profit off these account holders through exorbitant fees. Banks typically charge a non-refundable legal processing fee of $100 to $150 for the freeze itself. Then, when the consumer, unaware of the freeze, pays their bills, they can incur significant overdraft fees.

In one case, Chase Bank froze the checking account of a New York retiree -- whose only income was from Social Security -- following a $920 judgment for an unpaid dental bill. The woman had $929.54 in her account, but the dentist never got anything. "Chase Bank managed to grab the entire account," says her attorney, Jim Baker of the Northern Manhattan Improvement Project.

The 72-year-old wrote nine checks against the account without realizing it had been frozen; several of those checks were presented twice for payment. Chase charged $30 each time. In addition, the bank was debiting 45 cents a month from her account for credit insurance. "Every time the first of month rolled by and Chase couldn't debit its 45 cents, they charged her another $30," says Baker. In four months, the account was empty.

Even when a freeze is lifted and garnished funds are restored, banks often refuse to refund fees. "The banks say they have the right to charge fees because it's a deposit agreement," says Wilner. "They say they are not acting through the legal process, but through a contractual agreement, so the regulatory exemption doesn't apply to them."

Trolling for Delinquencies

The problems are becoming more frequent because of the burgeoning debt collection industry. In 2005, $110 billion in face-value debt was purchased by third-party debt buyers, 90 percent of it credit card receivables, according to the Association of Credit and Collection Professionals.

In New York City, the number of consumer debt cases filed in civil court has grown 300 percent in 5 years, to 320,000 cases in 2006, according to a new report from the Urban Justice Center. Ninety percent were brought by third-party debt buyers. Almost $1 billion in claims were made against New York City residents, and creditors obtained judgments of nearly $800 million, the center estimates.

Once a default judgment goes through, the creditor's attorney sends an electronic information subpoena and restraining notice, which has the same power as a court order. The cost is minimal. "The volume of collection activity is way up," says Baker. "Creditors used to have to have some reason for thinking someone had an account at a specific bank. Now they simply send out a blanket email to every bank in the tri-state area, and say, 'If so-and-so has an account, freeze it.'"

On the consumer side, the problem is compounded by direct deposit: This year, 85 percent of Social Security recipients received their payments electronically, up from 41.5 percent in 1985. Someone who encounters a freeze may have subsequent checks slip into the account before they're able to find their way through the legal maze.

Frozen and Refrozen

Meanwhile, creditors who are rebuffed often turn around and file a new claim for the same debt. New Yorker Waverly Taliaferro, 70, worked for decades as a photographer before retiring in 2001. He and his wife lived off of his Social Security payment and her income. In 2003, when she was laid off, they fell behind on a credit card bill. Their account was frozen in 2006, which Taliaferro discovered on his way to the grocery store. Over the next 23 days, he says, he and his wife survived on a 10-pound bag of brown rice.

After his lawyer was able to remove the freeze, Taliaferro began receiving his check by mail, and paying $23 to a check-cashing service to cash it. Six months later, his attorney told him that Chase Bank had issued a policy not to freeze exempt funds, so Taliaferro opened an account -- and received a $100 bonus from the bank for using direct deposit. The account was frozen 16 days later because it contained non-exempt funds -- what was left of the bonus money from Chase.

"Absolutely nothing will stop that debt buyer from trying to freeze it again," says Taliaferro's attorney, Johnson Tyler of South Brooklyn Legal Services. "When a credit card company sells off a debt, they don't sell it with a red flag that says, 'We tried to collect and she's on Social Security.' It's sold as part of a bundle of debt. We have cases where the debt buyer froze the account three times in a row on a client who is homeless and mentally impaired. A judge ordered them to stop and they still did it."

A Modern-Day Debtors' Prison?

Consumer advocates say Congress should adopt federal legislation modeled after a California law that prohibits a restraint on the first $2,500 of any account into which Social Security funds are directly deposited.

"That would simplify things for the banks, and essentially effectuate the whole purpose of what Congress wanted to accomplish with exemption laws," says Tyler.

For her part, Fauntleroy says she's done with credit cards, although she still gets daily offers in the mail. "They keep trying, but I won't bite -- I even got one from Capital One," she says. "Either they're crazy or they think I am!"

Like Fauntleroy, many seniors try to make good on their debts, legal advocates say. "Many of our clients made payments for years until they couldn't do it anymore," says Patricia Duecy, a paralegal with Legal Services of Northern Virginia who worked on Fauntleroy's case. "Some of them did pay them off -- if you looked at what they actually charged, outside of late fees and interest.

"A long time ago the country made a decision that when a person is old or poor, they should have a subsistence income to pay for rent, food, and medicine," Duecy adds. "The money is supposed to be going to their basic needs and not going into the hands of debt collectors. If we can't protect the most vulnerable among us, what are we doing?"

(http://finance.yahoo.com)

Transcontinental Driving Record Claimed to be Broke

Friday , October 19, 2007

By Rick Leventhal

Full disclosure: I like to drive fast. Always have.

I was intrigued and excited to meet and interview Alexander Roy, who, with a co-driver, claims to have broken the unofficial transcontinental driving record, racing from New York City to the Santa Monica Pier in 31 hours and four minutes in a 2000 BMW M5.

The pair are backing up their boast with plenty of documentation, including in-car video, GPS markers, eyewitnesses, and a time card punched in Manhattan and again when they reached the California coast (the time card machine was flown across country and held on the pier by a waiting friend).

I'm not endorsing the feat. I'm not encouraging anyone else to attempt it. It's dangerous and could've been deadly for innocent people along the 2,795 mile route. I do believe Alex when he tells me he did all he could to mitigate the dangers to others, and I believe him when he tells me he lost sleep worrying about it. He says they plotted the course on interstate highways during a stretch of time when traffic would be at a minimum (over the Columbus Day weekend in 2006), and avoided reckless driving that might call attention to themselves, since a single police stop would've likely ended their chance at infamy. Roy says they didn't tailgate, didn't weave, didn't flash lights at other drivers, and avoided passing on the right or at super high speeds.

He's an interesting character who took his pursuit of the record very seriously, enlisting the help of friends to create spreadsheets documenting checkpoints, mileage and time goals, gas station stops and driver rotations. They mapped out the route mile by mile, choosing the roads of least resistance, avoiding tolls, traffic lights, and construction projects. Alex says they only hit four tolls and three or four red lights and three turns the entire way and had only one scare of a possible police stop in Oklahom

He says they averaged 90.1 miles per hour and still managed to get 17.6 mpg, even with the extra weight of a spare 20-gallon gas tank in the rear. They spent most of the trip in sixth gear, avoiding heavy acceleration and aggressive braking, hitting their highest speeds (up to 160 mph) on stretches of empty road in the late night and early morning hours, assisted by night vision cameras with thermal imaging monitors inside to reveal animals, obstacles, officers, even potholes not clearly visible to the naked eye. The car was also equipped with four GPS units (one each for the driver, co-driver and backseat and a backup), police scanners, a CB radio, a radar detector, laser jammers, stabilized binoculars (day and night vision) and an air-to-ground radio to keep in touch with a Cessna overhead, flown by a friend who led Alex and his team across the midwest.

Alex tells me he hopes other people don't try to replicate his feat, not because he doesn't want his record broken, but because he doesn't want anyone to get hurt. The speed demon claims he doesn't speed anymore and won't try to repeat his high-speed journey, although he may race on a track from time to time. He's now spending his time promoting a book he wrote about his life and exploits and record-breaking run. When I asked him about his motivation, he spoke of his late father who dreamed of and attempted to take part in the Cannonball run, and of his own love for the film, but reiterated the physical and emotional tolls of two years of planning and 30-plus hours of wide-eyed high-speed driving.

"I think everybody, at the end of the day, is inspired by Burt Reynolds," he said with a smile. "Because that's funny. Cannonball Run is funny. What we did I think is incredible and maybe fascinating — but I don't think it was funny."

(http://www.foxnews.com)

Democrats to benefit some in U.S. health sector

Fri Nov 16, 2007 5:01pm EST

By Kim Dixon and Lisa Richwine

NEW YORK (Reuters) -

While Republicans vying for the U.S. presidency warn about Democratic plans for a "government takeover of healthcare," many companies in the sector see opportunities should a Democrat win.

Supporting cheaper versions of pricey biologic drugs and helping Americans without health insurance are among the benefits cited by executives this week at the Reuters Health Summit in New York.

The spiraling cost of health care is often named the biggest domestic policy worry in national polls.

Democrats back more expansive measures to boost coverage of the 47 million Americans currently uninsured and support greater us of generic drugs to curb costs.

"What Democrats are very likely to support is a national approach to the uninsured," said David Snow, chief executive at Medco Health Solutions Inc (MHS.N: Quote, Profile, Research). "Net-net for Medco, it's a good thing."

Medco was spun off of drugmaker Merck & Co (MRK.N: Quote, Profile, Research) in 2003 and sells pharmacy services to employers and the government, reaching 60 million people. Demand for its services would likely grow if more people were insured. Rivals include CVS Caremark (CVS.N: Quote, Profile, Research) and Express Scripts (ESRX.O: Quote, Profile, Research)

Executives, including big drugmakers more wary of government involvement, say the pressure to hold down health costs means the government's role is likely to expand under either party.

"Ultimately, I don't think the American public wants to spend more than more than 16 percent of their GDP (gross domestic product) on healthcare," UK's Shire Plc (SHP.L: Quote, Profile, Research) chief executive Matthew Emmens said.

Health care costs were about 16 percent of GDP in 2005, according to government data, but are projected to rise to nearly 20 percent of GDP by 2016.

Of the conventional wisdom that Democrats are worse for healthcare than Republicans, Emmens said: "I don't believe that."

Many pharmaceutical executives worry about pressure on prices coming from employers who provide health insurance and individuals who have seen their co-payments increase.

"Hopefully in the U.S. we'll be able to address that more with market forces and less through government intervention," Roche Holding AG (ROG.VX: Quote, Profile, Research) chief executive Franz Humer said.

One factor driving costs is so-called biologic drugs, man-made versions of human proteins that are more complex to make and often several times more expensive than chemical-based drugs.

Legislation creating a legal pathway to approve cheaper generic versions has stalled in Congress but more Democrats than Republicans back it.

One company that wants to sell generic biologics is Abbott Laboratories' (ABT.N: Quote, Profile, Research) spin-off Hospira Inc (HSP.N: Quote, Profile, Research). Hospira Chief Executive Chris Begley said companies seeking to cut health costs are poised to benefit in the current environment.

"If you can't afford something, does it really add value?" he said, referring to branded drug prices.

Hospital companies struggling with rising levels of unpaid medical bills and are encouraged by proposals to increase insurance coverage.

The "further on the left you get, the more comprehensive their solutions tend to be and the more they care about getting everyone into the system," which would benefit the industry, said hospital chain Tenet Healthcare's (THC.N: Quote, Profile, Research) Chief Executive Trevor Fetter.

HEDGING BETS

Major drugmakers oppose several measures backed by Democrats, such as legalizing cheaper imported prescriptions from Canada and letting the government negotiate drug prices in the federal Medicare health program.

"Historically they have been seen as a little distant from the industry," said Schering-Plough Corp (SGP.N: Quote, Profile, Research) Chief Executive Fred Hassan, adding that individual Democrats have been supportive.

Companies are hedging their bets, with national polls showing Democrats have a shot at the White House and could retain control of both houses of the U.S. Congress.

The sector has significantly boosted the proportion of campaign contributions going to Democrats in the 2008 election cycle, compared with 2006, according to the Center for Responsive Politics.

Individuals and political action committees associated with the health sector have given just over half their contributions thus far to Democrats, about $3.9 million, versus $3.8 million to Republicans, according the group.

That contrasts with the 2006 election cycle, where the sector gave about two-thirds of their contributions, or $13.2 million to Republicans, versus $6.1 million to Democrats.

Smaller biotech companies may be especially vulnerable to effort to hold down drug prices.

"If you don't have a free market mechanism for pricing, it's going to dampen the investment climate, and that is going to hurt the smaller companies more than the big companies," Onyx Pharmaceuticals Inc (ONXX.O: Quote, Profile, Research) chief executive Hollings Renton said.

In the end, the industry's worries are tempered by the belief that Americans will not want to give up the idea of choice -- of pharmaceuticals, doctors or health plans.

"Even the proposals put out by the candidates are moderate," said Schering-Plough's Hassan. "Nobody is saying we are going to do away with employer-sponsored health care."

(Editing by Tim Dobbyn)

(http://www.reuters.com)

Terror crackdown: Passengers forced to answer 53 questions BEFORE they travel

Terror crackdown: Passengers forced to answer 53 questions BEFORE they travel

By JAMES SLACK - Last updated at 17:37pm on 15th November 2007

Travellers face price hikes and confusion after the Government unveiled plans to take up to 53 pieces of information from anyone entering or leaving Britain.

For every journey, security officials will want credit card details, holiday contact numbers, travel plans, email addresses, car numbers and even any previous missed flights.

The information, taken when a ticket is bought, will be shared among police, customs, immigration and the security services for at least 24 hours before a journey is due to take place.

Anybody about whom the authorities are dubious can be turned away when they arrive at the airport or station with their baggage.

Those with outstanding court fines, such as a speeding penalty, could also be barred from leaving the country, even if they pose no security risk.

The information required under the "e-borders" system was revealed as Gordon Brown announced plans to tighten security at shopping centres, airports and ports.

This could mean additional screening of baggage and passenger searches, with resulting delays for travellers.

The e-borders scheme is expected to cost at least £1.2billion over the next decade.

Travel companies, which will run up a bill of £20million a year compiling the information, will pass on the cost to customers via ticket prices, and the Government is considering introducing its own charge on travellers to recoup costs.

(http://www.dailymail.co.uk)