Stroger, Brown, Davis and Preckwinkle bring huge interest to Cook County Board race
BY LAURA WASHINGTON
Copyright by The Chicago Sun-Times
August 31, 2009
http://www.suntimes.com/news/washington/1743774,CST-EDT-laura31.article
It was standing-room only Thursday night at Malcolm X College, where four candidates for Cook County Board president faced off in a rambunctious and heated debate. More than 400 people showed up for the forum. The audience was overwhelmingly African American. It has been a long time since I've seen a black crowd this worked up about a local race. Believe me -- they care about this one.
Cook County Board President Todd Stroger won a standing ovation from dozens in the crowd when he was introduced by moderator and WVON-AM host Cliff Kelley. The Stroger loyalists were vociferous and plentiful. No revelation there, as the county workers who live in Stroger's 8th Ward probably could fill that auditorium.
Despite rumors that Stroger is wavering on his re-election bid, his appearance was feisty, confident and in it to win it.
His challengers in the Democratic primary, Dorothy Brown, clerk of the Cook County Circuit Court; U.S. Rep. Danny K. Davis, and Ald. Toni Preckwinkle (4th), gave Stroger a rough ride. They hammered him on management stumbles, cutbacks at Stroger Hospital and his tax increase. Stroger shot back that he has balanced three county budgets and protected vital services for the poor.
(According to forum sponsor WVON, Metropolitan Water Reclamation District President Terrence O'Brien, the only white candidate in the race, could not attend "due to a prior engagement.")
Dorothy "the Pearl Lady" Brown was uncharacteristically strident. In her opening remarks, she came out swinging. "We don't need people that need training wheels to be in this job," she jabbed.
Brown touted her management experience and alphabet resume -- JD, MBA and CPA, arguing "we need new ideas, not new taxes."
She also bragged, "I have not accepted a pay raise in the nine years since I've been in this office." A sign of her civic dedication, no doubt. Of course, she wouldn't need a raise, because for years she accepted cash "gifts" from her employees, a practice she finally ended after she was called out on it in June.
The tensions between Brown and Davis, who sat side by side on the dais, were palpable. I'm not sure why, but there's no love there. Davis, the seven-term congressman, former alderman and Cook County commissioner, pitched himself as the elder statesman and political bigfoot in the race.
Davis, whose stentorian skills are considerable, intoned that "our county, not just our county government . . . could very well be in a state of crisis." He has won more than 80 percent of the vote "every time I run," he proclaimed.
His booming elocution, however, couldn't cover for his lame response to a festering question about his campaign. Davis is circulating two sets of petitions for the 2010 ballot: one for the county job and one for his current seat. When asked why, he obfuscated.
Davis is a respected veteran legislator and grass-roots advocate for the disadvantaged. But his petition shenanigans are a transparent, Chicago-style maneuver to game the system. It's beneath him.
Preckwinkle, meanwhile, flunked a key political test. She didn't bring her posse. Every other candidate had a partisan cheering section, waving signs, sporting campaign T-shirts, shouting "four more years" or "time for a change." The Hyde Park alderman's cogent, wonky raps were greeted with a smattering of polite applause.
The wide-ranging forum covered many burning issues: taxes, conditions at Stroger Hospital, clinic closings and jail overcrowding. The evening's hottest topic was a question about the decriminalization of marijuana, centering on a new county ordinance that allows people caught in possession of less than 10 grams of marijuana to be ticketed rather than jailed. The law applies only to unincorporated Cook County.
To raucous cheers and giggles, all four candidates endorsed the measure.
Heh-heh. This campaign could put a new spin on the phrase "smoke-filled room."
Laura Washington blogs at TheWashingtonReport.org.
Monday, August 31, 2009
State contractors hire Madigan's law firm - Illinois House speaker: no laws broken, no conflict of interest
State contractors hire Madigan's law firm - Illinois House speaker: no laws broken, no conflict of interest
BY CHRIS FUSCO and TIM NOVAK
Copyright by The Chicago Sun-Times
August 31, 2009
http://www.suntimes.com/news/watchdogs/1743915,CST-NWS-watchdogs31.article
Over the past nine years, Illinois House Speaker Michael Madigan's law firm has made $171,000 by seeking property tax breaks for developers who get state financing to build low-income housing, records show.
His firm's payments came through the Illinois Housing Development Authority, the state agency that financed those projects.
HOW'S THIS FOR BIPARTISANSHIP?
The law firm of House Speaker Michael Madigan, who is also chairman of the Illinois Democratic Party, won a property tax break for Andrew McKenna Sr., whose son Andy McKenna was chairman of the Illinois Republican Party at the time.
Two years ago, the elder McKenna hired the Madigan & Getzendanner law firm to fight a 70 percent increase in the assessed value on his $4 million mansion in Winnetka.
Madigan's firm got Cook County Assessor James Houlihan to scale back the increase to 60 percent.
That saved McKenna $4,898 in property taxes.
Records also show the firm of Madigan & Getzendanner helped another state contractor save about $300,000 in property taxes on the Atrium Mall and food court it operates inside the James R. Thompson Center, the state's main office building in Chicago.
The mall operator is now suing the state over that deal -- a case that involved Madigan's daughter, Illinois Attorney General Lisa Madigan.
The speaker has never disclosed any of his firm's clients on ethics statements Illinois legislators must file every year. Instead, the South Side lawmaker and head of the state's Democratic Party discloses only that he provides "legal services for various individuals, partnerships and corporations."
Madigan -- the longest-serving House speaker in Illinois -- "complies with the law and often goes beyond that," says his spokesman, Steve Brown.
Madigan, Brown adds, never has represented a law client on state government matters. Nor, he says, has Madigan argued on their behalf in Springfield, only representing clients on property tax cases that involve county governments.
"The only thing they handle is property tax stuff, which is at the local level," says Brown. "There's no conflict because the firm does no work before state agencies."
The Chicago Sun-Times identified hundreds of Madigan's law firm's clients by reviewing property tax cases the firm has handled in Cook County.
Among its clients: TPG Realty Co.'s State Building Venture, which has been managing the 64,000-square-foot mall on the lower floors of the Thompson Center since 1984.
The mall has been plagued by vacancies. Madigan & Getzendanner -- which has represented TPG for at least 10 years -- has argued the company should pay less in taxes because of those vacancies.
In 2003, records show, the law firm was successful, persuading Cook County Assessor James Houlihan to lower TPG's assessment. The change saved the company about $300,000 in taxes over the next three years.
There are no public records that show how much TPG paid Madigan's firm.
In 2006, TPG -- using a different law firm -- sued the state, arguing that the Department of Central Management Services was trying to renege on a 1983 promise to let the company manage the Thompson Center mall for as long as 60 years under a 15-year lease with nine five-year renewal options. State officials argued those renewals weren't automatic and that the deal could be canceled.
As Illinois attorney general, Madigan's daughter, Lisa Madigan, had to defend the state. But she later dropped out of the case because then-Gov. Rod Blagojevich's administration wanted an outside law firm to handle the case.
TPG has prevailed in court so far, but the state is now trying to appeal the case to the Illinois Supreme Court.
Besides its involvement with the Thompson Center mall, the speaker's law firm has sought property tax reductions for six low-income housing projects in Chicago managed by four different developers, according to Illinois Housing Development Authority records. Madigan & Getzendanner billed the developers for a total of $171,000 since 2000 -- invoices that the developers then submitted to IHDA to approve for payment.
Why is IHDA involved in paying Madigan's firm's bills? Mary R. Kenney, the agency's general counsel, explained it this way:
"The authority holds a tax-and-insurance escrow for all developments in which the authority acts as the primary lender. This escrow is actually the owner's funds," Kenney said. "Expenses related to a tax appeal are also eligible expenses that may be charged against this account."
So even though Madigan's law firm isn't being paid with state money, it's still getting payments through a state agency whose budget Madigan helps control.
Brown says that's not a problem because the law firm's payments have "nothing to do with the developers getting financing from IHDA."
MADIGAN CLIENTS
Illinois House Speaker Michael Madigan also heads a law firm -- Madigan & Getzendanner -- that represents clients seeking cuts in their property tax assessments.
Among clients the firm has represented:
* John Hancock Center
* Hyatt Corp.
* Walgreens Corp.
* CVS pharmacy
* New Frontier Management, owned by indicted Republican Party power-broker William F. Cellini
* Harlem Irving Companies, owned by Michael Marchese, a friend of Mayor Daley's and shopping-center magnate
* The Columbian, a city-subsidized condo building built by developer Allison S. Davis
* East Lake Management Corp.,owned by developer Elzie Higginbottom
* State Rep. Monique Davis
* Ali D. Ata, a former state official who has pleaded guilty to tax charges
BY CHRIS FUSCO and TIM NOVAK
Copyright by The Chicago Sun-Times
August 31, 2009
http://www.suntimes.com/news/watchdogs/1743915,CST-NWS-watchdogs31.article
Over the past nine years, Illinois House Speaker Michael Madigan's law firm has made $171,000 by seeking property tax breaks for developers who get state financing to build low-income housing, records show.
His firm's payments came through the Illinois Housing Development Authority, the state agency that financed those projects.
HOW'S THIS FOR BIPARTISANSHIP?
The law firm of House Speaker Michael Madigan, who is also chairman of the Illinois Democratic Party, won a property tax break for Andrew McKenna Sr., whose son Andy McKenna was chairman of the Illinois Republican Party at the time.
Two years ago, the elder McKenna hired the Madigan & Getzendanner law firm to fight a 70 percent increase in the assessed value on his $4 million mansion in Winnetka.
Madigan's firm got Cook County Assessor James Houlihan to scale back the increase to 60 percent.
That saved McKenna $4,898 in property taxes.
Records also show the firm of Madigan & Getzendanner helped another state contractor save about $300,000 in property taxes on the Atrium Mall and food court it operates inside the James R. Thompson Center, the state's main office building in Chicago.
The mall operator is now suing the state over that deal -- a case that involved Madigan's daughter, Illinois Attorney General Lisa Madigan.
The speaker has never disclosed any of his firm's clients on ethics statements Illinois legislators must file every year. Instead, the South Side lawmaker and head of the state's Democratic Party discloses only that he provides "legal services for various individuals, partnerships and corporations."
Madigan -- the longest-serving House speaker in Illinois -- "complies with the law and often goes beyond that," says his spokesman, Steve Brown.
Madigan, Brown adds, never has represented a law client on state government matters. Nor, he says, has Madigan argued on their behalf in Springfield, only representing clients on property tax cases that involve county governments.
"The only thing they handle is property tax stuff, which is at the local level," says Brown. "There's no conflict because the firm does no work before state agencies."
The Chicago Sun-Times identified hundreds of Madigan's law firm's clients by reviewing property tax cases the firm has handled in Cook County.
Among its clients: TPG Realty Co.'s State Building Venture, which has been managing the 64,000-square-foot mall on the lower floors of the Thompson Center since 1984.
The mall has been plagued by vacancies. Madigan & Getzendanner -- which has represented TPG for at least 10 years -- has argued the company should pay less in taxes because of those vacancies.
In 2003, records show, the law firm was successful, persuading Cook County Assessor James Houlihan to lower TPG's assessment. The change saved the company about $300,000 in taxes over the next three years.
There are no public records that show how much TPG paid Madigan's firm.
In 2006, TPG -- using a different law firm -- sued the state, arguing that the Department of Central Management Services was trying to renege on a 1983 promise to let the company manage the Thompson Center mall for as long as 60 years under a 15-year lease with nine five-year renewal options. State officials argued those renewals weren't automatic and that the deal could be canceled.
As Illinois attorney general, Madigan's daughter, Lisa Madigan, had to defend the state. But she later dropped out of the case because then-Gov. Rod Blagojevich's administration wanted an outside law firm to handle the case.
TPG has prevailed in court so far, but the state is now trying to appeal the case to the Illinois Supreme Court.
Besides its involvement with the Thompson Center mall, the speaker's law firm has sought property tax reductions for six low-income housing projects in Chicago managed by four different developers, according to Illinois Housing Development Authority records. Madigan & Getzendanner billed the developers for a total of $171,000 since 2000 -- invoices that the developers then submitted to IHDA to approve for payment.
Why is IHDA involved in paying Madigan's firm's bills? Mary R. Kenney, the agency's general counsel, explained it this way:
"The authority holds a tax-and-insurance escrow for all developments in which the authority acts as the primary lender. This escrow is actually the owner's funds," Kenney said. "Expenses related to a tax appeal are also eligible expenses that may be charged against this account."
So even though Madigan's law firm isn't being paid with state money, it's still getting payments through a state agency whose budget Madigan helps control.
Brown says that's not a problem because the law firm's payments have "nothing to do with the developers getting financing from IHDA."
MADIGAN CLIENTS
Illinois House Speaker Michael Madigan also heads a law firm -- Madigan & Getzendanner -- that represents clients seeking cuts in their property tax assessments.
Among clients the firm has represented:
* John Hancock Center
* Hyatt Corp.
* Walgreens Corp.
* CVS pharmacy
* New Frontier Management, owned by indicted Republican Party power-broker William F. Cellini
* Harlem Irving Companies, owned by Michael Marchese, a friend of Mayor Daley's and shopping-center magnate
* The Columbian, a city-subsidized condo building built by developer Allison S. Davis
* East Lake Management Corp.,owned by developer Elzie Higginbottom
* State Rep. Monique Davis
* Ali D. Ata, a former state official who has pleaded guilty to tax charges
Chicago Tribune Editorial: ComEd massacre
Chicago Tribune Editorial: ComEd massacre
Copyright © 2009, Chicago Tribune
August 31, 2009
http://www.chicagotribune.com/news/opinion/editorials/chi-0831edit2aug31,0,2449246.story
Chicagoans know what happens when Commonwealth Edison crews descend on an area to trim trees and other vegetation they deem a hazard to power lines. All too often, the result is a bunch of deformed trees that look like some Edward Scissorhands disciple on acid had buzzed his way through the yard.But that's a mild description for the latest ComEd blitzkrieg in the leafy northern suburbs of Glencoe, Glenview, Northfield, Northbrook, Skokie and Wilmette.
Earlier this summer, Edison tromped out to kill vegetation and trees deemed a safety hazard beneath its towering transmission lines.
Did ComEd notify local officials and residents, as common sense would dictate? Nah.
Did ComEd carefully prune trees and trim back the lush vegetation that makes the corridor a sanctuary for wildlife? Hardly.
ComEd crews dumped gallons of an herbicide called Garlon 3A on low-lying brush over a nearly 6-mile stretch of land the utility owns through those communities. You can't miss this path of destruction: It's 130 feet wide. That's a huge eyesore of brittle, dead brush and other vegetation. It's also a fire hazard, some local fire chiefs worry.
The kicker: It could have been much worse. ComEd sent a crew to finish the job in Northfield -- what the village president calls the "epicenter" of the destruction because of ComEd's plans to wipe out evergreens, ash, linden, and spruce that serve as part of Northfield's downtown landscaping.
But those trees were too big to be killed with chemicals. So the ComEd crews stopped by Northfield's public works facility to notify the village's forester that they were preparing to start the tree cutting.
That's when Stacy Alberts Sigman, the village manager, stepped outside to see what was going on. "I was just stunned," she said. "When you looked down the corridor, as far as your eye could see, it was just dead."
She demanded that the work be stopped. And ComEd agreed to a temporary halt.
Now ComEd is scrambling to do what it should have done in the first place: Explain to officials and residents why this massive destruction is the best possible solution.
They've got a lot of explaining to do.
ComEd needs to clear foliage that can interfere with the lines, cause a safety hazard or block access for repair workers, as its spokesman pointed out.
But that demands a careful, limited and environmentally sensitive program.
As Sigman says: "They don't need an Uzi."
No, they don't. It's a blight on these communities -- and on ComEd's reputation.
Copyright © 2009, Chicago Tribune
August 31, 2009
http://www.chicagotribune.com/news/opinion/editorials/chi-0831edit2aug31,0,2449246.story
Chicagoans know what happens when Commonwealth Edison crews descend on an area to trim trees and other vegetation they deem a hazard to power lines. All too often, the result is a bunch of deformed trees that look like some Edward Scissorhands disciple on acid had buzzed his way through the yard.But that's a mild description for the latest ComEd blitzkrieg in the leafy northern suburbs of Glencoe, Glenview, Northfield, Northbrook, Skokie and Wilmette.
Earlier this summer, Edison tromped out to kill vegetation and trees deemed a safety hazard beneath its towering transmission lines.
Did ComEd notify local officials and residents, as common sense would dictate? Nah.
Did ComEd carefully prune trees and trim back the lush vegetation that makes the corridor a sanctuary for wildlife? Hardly.
ComEd crews dumped gallons of an herbicide called Garlon 3A on low-lying brush over a nearly 6-mile stretch of land the utility owns through those communities. You can't miss this path of destruction: It's 130 feet wide. That's a huge eyesore of brittle, dead brush and other vegetation. It's also a fire hazard, some local fire chiefs worry.
The kicker: It could have been much worse. ComEd sent a crew to finish the job in Northfield -- what the village president calls the "epicenter" of the destruction because of ComEd's plans to wipe out evergreens, ash, linden, and spruce that serve as part of Northfield's downtown landscaping.
But those trees were too big to be killed with chemicals. So the ComEd crews stopped by Northfield's public works facility to notify the village's forester that they were preparing to start the tree cutting.
That's when Stacy Alberts Sigman, the village manager, stepped outside to see what was going on. "I was just stunned," she said. "When you looked down the corridor, as far as your eye could see, it was just dead."
She demanded that the work be stopped. And ComEd agreed to a temporary halt.
Now ComEd is scrambling to do what it should have done in the first place: Explain to officials and residents why this massive destruction is the best possible solution.
They've got a lot of explaining to do.
ComEd needs to clear foliage that can interfere with the lines, cause a safety hazard or block access for repair workers, as its spokesman pointed out.
But that demands a careful, limited and environmentally sensitive program.
As Sigman says: "They don't need an Uzi."
No, they don't. It's a blight on these communities -- and on ComEd's reputation.
Don't dare take your iPhone abroad before reading this
Don't dare take your iPhone abroad before reading this
Karen Torme Olson
Copyright © 2009, Chicago Tribune
August 30, 2009
http://www.chicagotribune.com/travel/chi-tc-trav-phone-0825-0830aug30,0,7403227.story
Despite a satisfying three-year relationship with my smart phone, I was seduced into dumping my faithful BlackBerry for a flashy new iPhone.
I was dazzled by ads featuring everything from lightning-fast Internet connections to Mandarin Chinese translators and calorie counters. It seemed like a dream companion for my six-week trip to Central Europe.
I rushed to the nearest AT&T store and claimed a 32 gigabyte 3GS the day it hit the market, which was the day before my trip. The store was jammed, and the salesperson quickly transferred stored information from my BlackBerry to my iPhone, confirmed I had an international data plan and assured me the iPhone would travel the world as smoothly and efficiently as the BlackBerry had.
I later wished I had asked more questions, especially when my husband called midway through my trip, asking why the bill for four days of iPhone use was $500.
By then, I had been in Europe for a month and realized that my next AT&T bill would be astronomical. I had been taking and sending photos, reading and writing e-mails, surfing the Internet, downloading digital newspapers and watching mindless YouTube footage with abandon. What I didn't know was that under the little apple on the iPhone case, a megabyte meter was whirring like a windmill in a hurricane.
The bottom line: about $5,000, and I hadn't made a single phone call. I frantically tried to reach someone at AT&T who could help me unravel the mess, but it took several days and multiple transfers to reach the international desk. From there the process smoothed out. I was signed up for an appropriate global data plan retroactively, neutralizing the outrageous charges. Then I was given this tutorial for international travel:
--Turn off your iPhone's international data-roaming feature. Period. No exceptions.
--Whenever possible, use Wi-Fi instead of the 3G network to access e-mail and the Web.
--Turn off the phone's Fetch feature and download e-mail manually instead of automatically.
There was more, but above all, study up and be sure to read the fine print at wireless.att .com/learn/international/ roaming /travel-guide.jsp before you leave the country, lest you end up with an ohmyphone.
Karen Torme Olson
Copyright © 2009, Chicago Tribune
August 30, 2009
http://www.chicagotribune.com/travel/chi-tc-trav-phone-0825-0830aug30,0,7403227.story
Despite a satisfying three-year relationship with my smart phone, I was seduced into dumping my faithful BlackBerry for a flashy new iPhone.
I was dazzled by ads featuring everything from lightning-fast Internet connections to Mandarin Chinese translators and calorie counters. It seemed like a dream companion for my six-week trip to Central Europe.
I rushed to the nearest AT&T store and claimed a 32 gigabyte 3GS the day it hit the market, which was the day before my trip. The store was jammed, and the salesperson quickly transferred stored information from my BlackBerry to my iPhone, confirmed I had an international data plan and assured me the iPhone would travel the world as smoothly and efficiently as the BlackBerry had.
I later wished I had asked more questions, especially when my husband called midway through my trip, asking why the bill for four days of iPhone use was $500.
By then, I had been in Europe for a month and realized that my next AT&T bill would be astronomical. I had been taking and sending photos, reading and writing e-mails, surfing the Internet, downloading digital newspapers and watching mindless YouTube footage with abandon. What I didn't know was that under the little apple on the iPhone case, a megabyte meter was whirring like a windmill in a hurricane.
The bottom line: about $5,000, and I hadn't made a single phone call. I frantically tried to reach someone at AT&T who could help me unravel the mess, but it took several days and multiple transfers to reach the international desk. From there the process smoothed out. I was signed up for an appropriate global data plan retroactively, neutralizing the outrageous charges. Then I was given this tutorial for international travel:
--Turn off your iPhone's international data-roaming feature. Period. No exceptions.
--Whenever possible, use Wi-Fi instead of the 3G network to access e-mail and the Web.
--Turn off the phone's Fetch feature and download e-mail manually instead of automatically.
There was more, but above all, study up and be sure to read the fine print at wireless.att .com/learn/international/ roaming /travel-guide.jsp before you leave the country, lest you end up with an ohmyphone.
2 Firefighters Die in Los Angeles Wildfire/Los Angeles Fire Was Arson, Officials Say
2 Firefighters Die in Los Angeles Wildfire
By SHARON OTTERMAN
Copyright by The New York Times
Published: August 31, 2009
http://www.nytimes.com/2009/09/01/us/01fires.html?ref=global-home
Firefighters battling a dangerous wildfire in the mountains north of Los Angeles worked to protect a key communications site and observatory above the city early Monday, as they mourned the deaths of two firefighters who died the day before when their vehicle careened off of a slope in the fire zone, the national Forest Service said.
The blaze, called the Station Fire, has more than doubled in size since Sunday night, scorching 85,700 acres of underbrush, scrub oak and mature trees and destroying 18 homes inside the Angeles National Forest. Much of the area has been fire-free for 50 to 60 years, providing plenty of dead undergrowth to fuel the flames.
By Monday, fire officials had ordered the residents of about 10,000 homes to evacuate.
The fast-moving fire spread in all directions Sunday night into Monday, threatening at least 12,500 homes in suburban and rural communities in the San Gabriel foothills, particularly the small town of Acton 40 miles north of Los Angeles, the national Forest Service said. The night sky over the city’s northern suburbs, including La Cañada Flintridge, glowed with orange flames.
The fire was about five percent contained as of Monday morning. It was the largest of several wildfires burning around southern and central California and in Yosemite National Park on Monday.
“This is a huge and very dangerous fire,” Gov. Arnold Schwarzenegger said in a briefing at a fire command post on Sunday. Firefighters faced thick, lingering smoke and flames that reached between 80- and 100-feet high, he said.
The two Los Angeles County firefighters died while fighting the fire on a road near Mt. Gleason, just south of Acton. Flames swept into a firefighting camp and as the men tried to retreat in a vehicle, it careened down a slope, the Los Angeles County Fire Department said.
The men, who were later identified as Arnaldo Quinones, 35, of Palmdale and Tedmund Hall, 47, of San Bernardino County, died from injuries suffered in the crash and from the advancing flames, the department said.
The fire, which began on Wednesday, was a half mile away Sunday night from a critical cluster of television, radio, and cell phone communication towers serving Los Angeles, as well as a historic astronomical observatory on Mount Wilson. A Web cam at the observatory broadcast dramatic still images of the burning forest before dawn Monday. Teams of firefighters used bulldozers to build fire breaks around the site, said Shane Rollman, a fire information officer for the United States Forest Service, who warned that communications in the city, including at Los Angeles International Airport, would be impaired if the towers were damaged.
The authorities ordered communities in Crown Valley, Soledad Canyon and Aliso Canyon to evacuate as the Station Fire moved closer. In Acton, a community of 3,000 on the north side of the San Gabriel Range, residents reported over the weekend that ashes were falling from a black daytime sky, said Bruce Quintelier, another United States Forest Service fire information officer. Mr. Schwarzenegger said on Sunday that about 6,600 homes had been evacuated overall as a result of the Station Fire. By Monday morning, about 10,000 homes were evacuated.
Last week, the governor declared states of emergency in Los Angeles and Monterey counties.
At least four evacuation centers were opened for residents, and authorities also arranged special evacuation points for farmers to bring horses and other livestock from the danger zone. Small animals could be taken to La Canada High School in the West San Gabriel Valley, and horses could find safe haven at Pierce College in Woodland Hills or the Hansen Dam recreation area, the National Forest Service said.
About 2,800 firefighters worked to fight the flames, both by dumping water from helicopters and planes and by building fire breaks around the perimeter of the burn area. As of Sunday night, however, the fire ranged over 19 miles east to west, and almost 100 miles of fire break had yet to be built to keep the fire from spreading.
In foothills communities, about 150 fire trucks stood ready as a precaution to protect buildings. “This fire is probably a week away from being fully contained,” Mr. Quintelier said. “It’s just a long marathon sort of job that lies ahead.”
Temperatures, which have been in the triple-digits in some inland Los Angeles areas, were slightly lower on Sunday, somewhat easing conditions. But a significant change in the hot, dry weather was not expected for several days. A saving grace for threatened communities, however, is that winds have remained low.
Four injuries have been reported. On Saturday, three people were severely burned in Big Tujunga Canyon after they failed to heed evacuation orders, the governor said, and on Friday one firefighter was treated for heat exhaustion and smoke inhalation. Smoke lingered over much of Los Angeles county, and people with respiratory difficulties, children and the elderly in affected areas were urged to stay indoors.
Other smaller fires were still burning on Monday, including one measuring under a square mile called the 49er, which erupted around 3 p.m. near the intersection of Highway 49 and Quartz Drive in Auburn, in Placer County, fire officials said.
The 275-acre fire, whose cause was not yet determined, was 50 percent contained Monday morning and had destroyed multiple houses and business. There were no immediate reports of injuries and homes in the expected path of the blaze were evacuated, fire officials said.
To the north, in the state’s coastal midsection, a 10-square mile fire near Pinnacles National Monument near the Monterey County town of Soledad was 100 percent contained by Monday morning. It had been started by agricultural fireworks used to scare animals away from crops, The Associated Press reported. The fire destroyed at least one home and one outbuilding, fire officials said.
A state of emergency was declared Saturday for Mariposa County, where a 4,600-acre fire burned in Yosemite National Park. The blaze was 50 percent contained as of Sunday, park officials said.
Derrick Henry and Anahad O’Connor contributed reporting.
Los Angeles Fire Was Arson, Officials Say
By ANAHAD O’CONNOR
Copyright by The New York Times
Published: September 4, 2009
http://www.nytimes.com/2009/09/04/us/04fires.html?th&emc=th
A wildfire in the foothills north of Los Angeles that has claimed the lives of two firefighters, ravaged more than 250 square miles and destroyed more than 60 homes was caused by arson, the federal Forest Service said.
The Los Angeles County Sheriff’s Department has begun a homicide inquiry looking for the person or people responsible for the wildfire, which continues to burn.
The blaze, known as the Station Fire, has burned for over a week in the Angeles National Forest outside Los Angeles. After a forensic investigation, officials with the U.S. Forest Service determined on Thursday that the fire was started intentionally, and they labeled the firefighters’ deaths homicides, the Associated Press reported.
The authorities did not say where precisely the fire is believed to have begun and whether they had identified any suspects.
As of Thursday evening, the fire had consumed nearly 150,000 acres — an area more than two-fifths the size of the city of Los Angeles — and had become the largest in the county’s history. The fire has been fueled in large part by a mix of dry brush, record heat, and steep slopes that have slowed firefighters.
Still, the fire is considered particularly unusual because it has spread so quickly without the help of the ferocious Santa Ana winds, which typically drive Southern California’s wildfires. The Angeles National Forest is usually struck by about 200 fires every year, most of which are quickly controlled.
Peak fire season in Southern California begins in the fall, when the Santa Ana winds flare up. As a result fire officials have said the state could be in for a particularly long and harsh wildfire season this year.
Earlier in the day, Gov. Arnold Schwarzenegger told reporters that crews were making progress against the flames, containing about 40 percent of the Station Fire, but he cautioned that it was still far from over. Fire officials have said it could be another two weeks before the blaze is completely contained.
Mr. Schwarzenegger toured the fire-ravaged Vogel Flats area of the Angeles National Forest and later thanked firefighters for all of their work in putting out the flames. At one point on the tour, Mr. Schwarzenegger, a former bodybuilder, picked up a 30-pound dumbbell found in rubble. “Even though we are still battling those fires, we are now trying to help get people’s lives rebuilt,” he said.
By SHARON OTTERMAN
Copyright by The New York Times
Published: August 31, 2009
http://www.nytimes.com/2009/09/01/us/01fires.html?ref=global-home
Firefighters battling a dangerous wildfire in the mountains north of Los Angeles worked to protect a key communications site and observatory above the city early Monday, as they mourned the deaths of two firefighters who died the day before when their vehicle careened off of a slope in the fire zone, the national Forest Service said.
The blaze, called the Station Fire, has more than doubled in size since Sunday night, scorching 85,700 acres of underbrush, scrub oak and mature trees and destroying 18 homes inside the Angeles National Forest. Much of the area has been fire-free for 50 to 60 years, providing plenty of dead undergrowth to fuel the flames.
By Monday, fire officials had ordered the residents of about 10,000 homes to evacuate.
The fast-moving fire spread in all directions Sunday night into Monday, threatening at least 12,500 homes in suburban and rural communities in the San Gabriel foothills, particularly the small town of Acton 40 miles north of Los Angeles, the national Forest Service said. The night sky over the city’s northern suburbs, including La Cañada Flintridge, glowed with orange flames.
The fire was about five percent contained as of Monday morning. It was the largest of several wildfires burning around southern and central California and in Yosemite National Park on Monday.
“This is a huge and very dangerous fire,” Gov. Arnold Schwarzenegger said in a briefing at a fire command post on Sunday. Firefighters faced thick, lingering smoke and flames that reached between 80- and 100-feet high, he said.
The two Los Angeles County firefighters died while fighting the fire on a road near Mt. Gleason, just south of Acton. Flames swept into a firefighting camp and as the men tried to retreat in a vehicle, it careened down a slope, the Los Angeles County Fire Department said.
The men, who were later identified as Arnaldo Quinones, 35, of Palmdale and Tedmund Hall, 47, of San Bernardino County, died from injuries suffered in the crash and from the advancing flames, the department said.
The fire, which began on Wednesday, was a half mile away Sunday night from a critical cluster of television, radio, and cell phone communication towers serving Los Angeles, as well as a historic astronomical observatory on Mount Wilson. A Web cam at the observatory broadcast dramatic still images of the burning forest before dawn Monday. Teams of firefighters used bulldozers to build fire breaks around the site, said Shane Rollman, a fire information officer for the United States Forest Service, who warned that communications in the city, including at Los Angeles International Airport, would be impaired if the towers were damaged.
The authorities ordered communities in Crown Valley, Soledad Canyon and Aliso Canyon to evacuate as the Station Fire moved closer. In Acton, a community of 3,000 on the north side of the San Gabriel Range, residents reported over the weekend that ashes were falling from a black daytime sky, said Bruce Quintelier, another United States Forest Service fire information officer. Mr. Schwarzenegger said on Sunday that about 6,600 homes had been evacuated overall as a result of the Station Fire. By Monday morning, about 10,000 homes were evacuated.
Last week, the governor declared states of emergency in Los Angeles and Monterey counties.
At least four evacuation centers were opened for residents, and authorities also arranged special evacuation points for farmers to bring horses and other livestock from the danger zone. Small animals could be taken to La Canada High School in the West San Gabriel Valley, and horses could find safe haven at Pierce College in Woodland Hills or the Hansen Dam recreation area, the National Forest Service said.
About 2,800 firefighters worked to fight the flames, both by dumping water from helicopters and planes and by building fire breaks around the perimeter of the burn area. As of Sunday night, however, the fire ranged over 19 miles east to west, and almost 100 miles of fire break had yet to be built to keep the fire from spreading.
In foothills communities, about 150 fire trucks stood ready as a precaution to protect buildings. “This fire is probably a week away from being fully contained,” Mr. Quintelier said. “It’s just a long marathon sort of job that lies ahead.”
Temperatures, which have been in the triple-digits in some inland Los Angeles areas, were slightly lower on Sunday, somewhat easing conditions. But a significant change in the hot, dry weather was not expected for several days. A saving grace for threatened communities, however, is that winds have remained low.
Four injuries have been reported. On Saturday, three people were severely burned in Big Tujunga Canyon after they failed to heed evacuation orders, the governor said, and on Friday one firefighter was treated for heat exhaustion and smoke inhalation. Smoke lingered over much of Los Angeles county, and people with respiratory difficulties, children and the elderly in affected areas were urged to stay indoors.
Other smaller fires were still burning on Monday, including one measuring under a square mile called the 49er, which erupted around 3 p.m. near the intersection of Highway 49 and Quartz Drive in Auburn, in Placer County, fire officials said.
The 275-acre fire, whose cause was not yet determined, was 50 percent contained Monday morning and had destroyed multiple houses and business. There were no immediate reports of injuries and homes in the expected path of the blaze were evacuated, fire officials said.
To the north, in the state’s coastal midsection, a 10-square mile fire near Pinnacles National Monument near the Monterey County town of Soledad was 100 percent contained by Monday morning. It had been started by agricultural fireworks used to scare animals away from crops, The Associated Press reported. The fire destroyed at least one home and one outbuilding, fire officials said.
A state of emergency was declared Saturday for Mariposa County, where a 4,600-acre fire burned in Yosemite National Park. The blaze was 50 percent contained as of Sunday, park officials said.
Derrick Henry and Anahad O’Connor contributed reporting.
Los Angeles Fire Was Arson, Officials Say
By ANAHAD O’CONNOR
Copyright by The New York Times
Published: September 4, 2009
http://www.nytimes.com/2009/09/04/us/04fires.html?th&emc=th
A wildfire in the foothills north of Los Angeles that has claimed the lives of two firefighters, ravaged more than 250 square miles and destroyed more than 60 homes was caused by arson, the federal Forest Service said.
The Los Angeles County Sheriff’s Department has begun a homicide inquiry looking for the person or people responsible for the wildfire, which continues to burn.
The blaze, known as the Station Fire, has burned for over a week in the Angeles National Forest outside Los Angeles. After a forensic investigation, officials with the U.S. Forest Service determined on Thursday that the fire was started intentionally, and they labeled the firefighters’ deaths homicides, the Associated Press reported.
The authorities did not say where precisely the fire is believed to have begun and whether they had identified any suspects.
As of Thursday evening, the fire had consumed nearly 150,000 acres — an area more than two-fifths the size of the city of Los Angeles — and had become the largest in the county’s history. The fire has been fueled in large part by a mix of dry brush, record heat, and steep slopes that have slowed firefighters.
Still, the fire is considered particularly unusual because it has spread so quickly without the help of the ferocious Santa Ana winds, which typically drive Southern California’s wildfires. The Angeles National Forest is usually struck by about 200 fires every year, most of which are quickly controlled.
Peak fire season in Southern California begins in the fall, when the Santa Ana winds flare up. As a result fire officials have said the state could be in for a particularly long and harsh wildfire season this year.
Earlier in the day, Gov. Arnold Schwarzenegger told reporters that crews were making progress against the flames, containing about 40 percent of the Station Fire, but he cautioned that it was still far from over. Fire officials have said it could be another two weeks before the blaze is completely contained.
Mr. Schwarzenegger toured the fire-ravaged Vogel Flats area of the Angeles National Forest and later thanked firefighters for all of their work in putting out the flames. At one point on the tour, Mr. Schwarzenegger, a former bodybuilder, picked up a 30-pound dumbbell found in rubble. “Even though we are still battling those fires, we are now trying to help get people’s lives rebuilt,” he said.
Afghan War Is Serious but Winnable, Top General Says
Afghan War Is Serious but Winnable, Top General Says
By DEXTER FILKINS
Copyright by The New York Times
Published: August 31, 2009
http://www.nytimes.com/2009/09/01/world/asia/01military.html?ref=global-home
KABUL, Afghanistan — The top commander in Afghanistan said Monday that conditions on the ground were “serious” but that the war here is still winnable, part of a long-awaited assessment of the American-led war.
The report, prepared by Gen. Stanley A. McChrystal, the commander of American and NATO forces here, does not call for additional American soldiers and Marines. That request, if it comes, is expected to be made in the coming weeks.
General McChrystal’s assessment, delivered to senior officials, could form the basis on which President Obama could make such a decision. In recent weeks, senior American officers here have said that they do not have enough troops to succeed.
The question of sending more combat troops is potentially divisive. Possibly for this reason, American commanders and officials in Kabul were ordered to neither reveal the details of General McChrystal’s assessment nor talk about them.General McChrystal assumed command here in June with an explicit charge to reverse the course of the war. Though it is still only August, 179 American soldiers have already been killed this year, making it the deadliest yet since the war began nearly eight years ago. Still, the general said that the war can still be won.
“The situation in Afghanistan is serious, but success is achievable and demands a revised implementation strategy, commitment and resolve, and increased unity of effort,” General McChrystal said in a statement.
As the overall commander here, General McChrystal oversees about 68,000 American soldiers and marines, and about 40,000 from NATO and other countries.
American commanders say that General McChrystal’s assessment does call for a large expansion of Afghan security forces, and an acceleration of their training. There are currently about 134,000 Afghan police, and about 82,000 Afghan soldiers. Many of these units are inadequately equipped and have little logistical capability to sustain themselves.
Just how many more Afghan police and soldiers General McChrystal wants is unclear. In Iraq, where conditions have stabilized markedly over the past two years, the American-trained Iraqi security forces number about 600,000.
The main thrust of General McChrystal’s strategy has been illuminated by him and other commanders in recent weeks. The overriding goal of American and NATO forces is not so much to kill Taliban insurgents as it is to make ordinary Afghans feel secure, and by so doing, isolate the insurgents. That means using force less and focusing on economic development and good governance.
General McChrystal also intends to try to unify the effort of America’s allies, including Britain, Canada, Germany and France, all of which have troops deployed here. He may also ask those allies to contribute more troops, money and training.
Defense Secretary Robert M. Gates told reporters Monday that while he had not yet seen the report, he expected that it would highlight some bright spots about the Afghan military mission, along with some conclusions that he described as “gloom and doom.” Speaking in Fort Worth, Tex., he also said Afghan forces may have to grow beyond the planned level of 230,000 personnel to make headway, news services reported.
In Brussels, NATO Secretary General Anders Fogh Rasmussen said he would not rule out the necessity of more international troops in Afghanistan, but like Mr. Gates, he focused on what he called the need for additional Afghan forces.
“I would not exclude the possibility that we need more combat troops, but first and foremost I would say that we need to increase significantly the number of Afghan soldiers,” Mr. Rasmussen said in an interview at NATO headquarters in Brussels, Bloomberg reported.
As the deadliest month yet of the war for American forces came to an end, the United States military announced Monday that two American soldiers had died in separate incidents involving improvised explosive devices. The British Ministry of Defense announced separately that two British soldiers had been killed Monday in an explosion in southern Afghanistan.
Sharon Otterman contributed reporting from New York.
By DEXTER FILKINS
Copyright by The New York Times
Published: August 31, 2009
http://www.nytimes.com/2009/09/01/world/asia/01military.html?ref=global-home
KABUL, Afghanistan — The top commander in Afghanistan said Monday that conditions on the ground were “serious” but that the war here is still winnable, part of a long-awaited assessment of the American-led war.
The report, prepared by Gen. Stanley A. McChrystal, the commander of American and NATO forces here, does not call for additional American soldiers and Marines. That request, if it comes, is expected to be made in the coming weeks.
General McChrystal’s assessment, delivered to senior officials, could form the basis on which President Obama could make such a decision. In recent weeks, senior American officers here have said that they do not have enough troops to succeed.
The question of sending more combat troops is potentially divisive. Possibly for this reason, American commanders and officials in Kabul were ordered to neither reveal the details of General McChrystal’s assessment nor talk about them.General McChrystal assumed command here in June with an explicit charge to reverse the course of the war. Though it is still only August, 179 American soldiers have already been killed this year, making it the deadliest yet since the war began nearly eight years ago. Still, the general said that the war can still be won.
“The situation in Afghanistan is serious, but success is achievable and demands a revised implementation strategy, commitment and resolve, and increased unity of effort,” General McChrystal said in a statement.
As the overall commander here, General McChrystal oversees about 68,000 American soldiers and marines, and about 40,000 from NATO and other countries.
American commanders say that General McChrystal’s assessment does call for a large expansion of Afghan security forces, and an acceleration of their training. There are currently about 134,000 Afghan police, and about 82,000 Afghan soldiers. Many of these units are inadequately equipped and have little logistical capability to sustain themselves.
Just how many more Afghan police and soldiers General McChrystal wants is unclear. In Iraq, where conditions have stabilized markedly over the past two years, the American-trained Iraqi security forces number about 600,000.
The main thrust of General McChrystal’s strategy has been illuminated by him and other commanders in recent weeks. The overriding goal of American and NATO forces is not so much to kill Taliban insurgents as it is to make ordinary Afghans feel secure, and by so doing, isolate the insurgents. That means using force less and focusing on economic development and good governance.
General McChrystal also intends to try to unify the effort of America’s allies, including Britain, Canada, Germany and France, all of which have troops deployed here. He may also ask those allies to contribute more troops, money and training.
Defense Secretary Robert M. Gates told reporters Monday that while he had not yet seen the report, he expected that it would highlight some bright spots about the Afghan military mission, along with some conclusions that he described as “gloom and doom.” Speaking in Fort Worth, Tex., he also said Afghan forces may have to grow beyond the planned level of 230,000 personnel to make headway, news services reported.
In Brussels, NATO Secretary General Anders Fogh Rasmussen said he would not rule out the necessity of more international troops in Afghanistan, but like Mr. Gates, he focused on what he called the need for additional Afghan forces.
“I would not exclude the possibility that we need more combat troops, but first and foremost I would say that we need to increase significantly the number of Afghan soldiers,” Mr. Rasmussen said in an interview at NATO headquarters in Brussels, Bloomberg reported.
As the deadliest month yet of the war for American forces came to an end, the United States military announced Monday that two American soldiers had died in separate incidents involving improvised explosive devices. The British Ministry of Defense announced separately that two British soldiers had been killed Monday in an explosion in southern Afghanistan.
Sharon Otterman contributed reporting from New York.
Disney to Pay $4 Billion for Comic Giant Marvel
Disney to Pay $4 Billion for Comic Giant Marvel
By BROOKS BARNES and MICHAEL CIEPLY
Copyright by The New York Times
Published: August 31, 2009
http://www.nytimes.com/2009/09/01/business/media/01disney.html?_r=1&ref=global-home
LOS ANGELES — In a deal that redraws Hollywood’s architecture, the Walt Disney Company said Monday that it would acquire Spider-Man and his Marvel Entertainment cohorts for $4 billion.
Marvel has aggressively exploited its most popular characters through motion pictures, video games and consumer products. But Disney sees an opportunity to plug Marvel into its vaunted marketing and distribution system.
Almost immediately, for instance, Marvel characters will pop up at Disney’s theme parks in Paris, Hong Kong and Orlando, Fla. Disney’s cable television channels will showcase Marvel, while consumer products could mark an enormous area of growth, particularly overseas where the comics company has struggled to make inroads.
“Marvel’s brand and its treasure trove of content will now benefit from our extraordinary reach,” Robert A. Iger, Disney’s chief executive, said in an interview. “We paid a price that reflects the value they’ve created and the value we can create as one company. It’s a full price, but a fair price.”
The surprise acquisition points to the film industry’s biggest issue at the moment: access to capital. Those who have it are finding opportunity; those who do not may be left behind.
Marvel had tried to finance its films with the help of a $525 million in slate financing, but found it impossible on “Iron Man” and “Hulk” to meet a condition that required it to raise a third of its cash by selling overseas distribution rights. To get around the requirement, Marvel in May told investors that it would self-finance a third of each film — something that would be much easier with Disney’s muscle behind it.
The deal instantly makes Disney a partner with Paramount Pictures, Sony Pictures Entertainment and 20th Century Fox, all of which have long-term deals to make or distribute movies based on Marvel characters. Coming are new entries in Sony’s “Spider-Man” franchise and Fox’s “X-Men” series.
Over the long haul, Paramount has the most to lose, as Disney works Marvel into its system. Only last September, Paramount, a unit of Viacom, announced an agreement to distribute five Marvel films, including two “Iron Man” sequels, over several years.
Disney said it would honor Marvel’s studio contracts, but the goal is clearly to bring “Iron Man” and others in-house over time.
“We believe Viacom is unlikely to retain distribution rights to Marvel films after the agreement,” Michael C. Morris, a UBS analyst, wrote in a research note.
A Paramount’s spokeswoman had no immediate comment, other than to point toward Mr. Iger’s assurances that he would honor its terms. A spokesman for Fox did not immediately respond to a query. A Sony spokesman said, “Our deal is not affected.”
Marvel’s traditionally strong contractual position on its various projects will probably give Disney considerable ability to affect progress on and timing of various films, creating a potential headaches for studios for years to come; rivals will be trying to build schedules around movies on which Disney now has input.
As Disney’s own live-action film schedule becomes more robust, the studio may find its new partnerships and agendas bumping into each other. Only last month, Disney’s new partners from DreamWorks found themselves assuring the company that plans to develop a film based on Michael Crichton’s novel “Pirate Latitudes” would steer clear of any conflict with Disney’s plans for a fourth “Pirates of the Caribbean” movie.
Marvel’s intellectual property tends to be more popular with boys — an area where Disney could use help. While the likes of “Hannah Montana” and the blockbuster Princesses merchandising line have solidified Disney’s hold on little girls, franchises for boys have been harder to come by.
Disney XD, a new cable channel aimed at boys, already licenses 20 hours of programming a week from Marvel. As Disney seeks to expand that channel, particularly overseas, Marvel will play an even greater role.
The acquisition, which has been approved by the boards of both companies but still must be approved by Marvel shareholders, got mixed marks on Wall Street. While most analysts applauded the move as bold and strategically sound, some analysts questioned the price as too steep. Disney shares fell 3 percent in afternoon trading. Marvel shares were up 25 percent.
One question is whether Marvel’s lesser-known characters can be developed into blockbusters — a la Iron Man — and how much movie muscle the library’s most valuable assets — like Spider-Man and the X-Men — have left. The declining DVD market is also a concern.
“They are not immune from the changes that we’re seeing,” said Mr. Iger, referring to the DVD market specifically. “But they have established a footing that we think is more solid than what you typically see in the non-branded non-character driven movie.”
Mr. Iger dismissed worries about the value of Marvel’s lesser-known characters, pointing to Iron Man as an example of the opportunity.
Marvel’s development slate is relatively thin: The company works on only five or six scripts at once, compared to the dozens under way at major studios, though virtually all are expected to become finished films. Permanent staff at the Marvels Studios film unit is only about 25.
Yet the company made an enormous impression by racking up an almost unbroken series of hits after having risen from bankruptcy in 1998. The company’s major break came when it decided three years ago to make its own films rather than relying on studio partners, and struck gold with “Iron Man,” which took in about $585 million at the worldwide box office.
Marvel’s vice chairman, Peter Cuneo, in May called its comic book publishing business “the most profitable print publishing business in the world,” at an investor meeting. He said the net profit margin on that business is 40 percent or more.
The deal started to come together in June when Mr. Iger reached out to Ike Perlmutter, Marvel’s chief executive. The two men had a cordial meeting in Mr. Perlmutter’s New York office. Talks heated up in the last two weeks, with Disney agreeing to one of Marvel’s top demands: that stock be part of the deal.
“We were willing to issue these shares since it was an important component in consummating the deal,” said Thomas O. Staggs, Disney’s chief financial officer, on a conference call with investors.
Under the terms of the deal, Marvel shareholders will receive a $30 a share in cash plus about 0.745 Disney shares for each Marvel share they own. The deal is valued at $50 a share, a 29 percent premium on Marvel stock.
Mr. Staggs said he expected the deal to close by the end of the year, adding that the acquisition should start having a positive impact on Disney earnings in 2012. There are no immediate plans to move Marvel from its Manhattan Beach, Calif., headquarters.
“This deal is not principally driven by cost saving or redundancies,” Mr. Staggs said. “What really drives this is the opportunity for synergies over time.”
Mr. Perlmutter said in a statement: “Disney is the perfect home for Marvel’s fantastic library of characters given its proven ability to expand content creation and licensing businesses.” Mr. Perlmutter will oversee the Marvel properties, and will work directly with Disney’s global lines of business to build and further integrate Marvel’s properties.
The acquisition comes as Disney, with its vast theme park operations and television advertising business, has been struggling because of a lack of hit DVDs, soft advertising sales at ABC and drooping consumer spending at theme parks. Disney’s profit in the third quarter, which ended June 27, dropped 26 percent.
Over all, Disney’s net income fell to $954 million, or 51 cents a share, from $1.28 billion, or 66 cents a share, in the year-ago period. Revenue fell 7 percent, to $8.6 billion. Earnings per share for the current quarter included a one-cent restructuring charge related to an accounting gain.
By BROOKS BARNES and MICHAEL CIEPLY
Copyright by The New York Times
Published: August 31, 2009
http://www.nytimes.com/2009/09/01/business/media/01disney.html?_r=1&ref=global-home
LOS ANGELES — In a deal that redraws Hollywood’s architecture, the Walt Disney Company said Monday that it would acquire Spider-Man and his Marvel Entertainment cohorts for $4 billion.
Marvel has aggressively exploited its most popular characters through motion pictures, video games and consumer products. But Disney sees an opportunity to plug Marvel into its vaunted marketing and distribution system.
Almost immediately, for instance, Marvel characters will pop up at Disney’s theme parks in Paris, Hong Kong and Orlando, Fla. Disney’s cable television channels will showcase Marvel, while consumer products could mark an enormous area of growth, particularly overseas where the comics company has struggled to make inroads.
“Marvel’s brand and its treasure trove of content will now benefit from our extraordinary reach,” Robert A. Iger, Disney’s chief executive, said in an interview. “We paid a price that reflects the value they’ve created and the value we can create as one company. It’s a full price, but a fair price.”
The surprise acquisition points to the film industry’s biggest issue at the moment: access to capital. Those who have it are finding opportunity; those who do not may be left behind.
Marvel had tried to finance its films with the help of a $525 million in slate financing, but found it impossible on “Iron Man” and “Hulk” to meet a condition that required it to raise a third of its cash by selling overseas distribution rights. To get around the requirement, Marvel in May told investors that it would self-finance a third of each film — something that would be much easier with Disney’s muscle behind it.
The deal instantly makes Disney a partner with Paramount Pictures, Sony Pictures Entertainment and 20th Century Fox, all of which have long-term deals to make or distribute movies based on Marvel characters. Coming are new entries in Sony’s “Spider-Man” franchise and Fox’s “X-Men” series.
Over the long haul, Paramount has the most to lose, as Disney works Marvel into its system. Only last September, Paramount, a unit of Viacom, announced an agreement to distribute five Marvel films, including two “Iron Man” sequels, over several years.
Disney said it would honor Marvel’s studio contracts, but the goal is clearly to bring “Iron Man” and others in-house over time.
“We believe Viacom is unlikely to retain distribution rights to Marvel films after the agreement,” Michael C. Morris, a UBS analyst, wrote in a research note.
A Paramount’s spokeswoman had no immediate comment, other than to point toward Mr. Iger’s assurances that he would honor its terms. A spokesman for Fox did not immediately respond to a query. A Sony spokesman said, “Our deal is not affected.”
Marvel’s traditionally strong contractual position on its various projects will probably give Disney considerable ability to affect progress on and timing of various films, creating a potential headaches for studios for years to come; rivals will be trying to build schedules around movies on which Disney now has input.
As Disney’s own live-action film schedule becomes more robust, the studio may find its new partnerships and agendas bumping into each other. Only last month, Disney’s new partners from DreamWorks found themselves assuring the company that plans to develop a film based on Michael Crichton’s novel “Pirate Latitudes” would steer clear of any conflict with Disney’s plans for a fourth “Pirates of the Caribbean” movie.
Marvel’s intellectual property tends to be more popular with boys — an area where Disney could use help. While the likes of “Hannah Montana” and the blockbuster Princesses merchandising line have solidified Disney’s hold on little girls, franchises for boys have been harder to come by.
Disney XD, a new cable channel aimed at boys, already licenses 20 hours of programming a week from Marvel. As Disney seeks to expand that channel, particularly overseas, Marvel will play an even greater role.
The acquisition, which has been approved by the boards of both companies but still must be approved by Marvel shareholders, got mixed marks on Wall Street. While most analysts applauded the move as bold and strategically sound, some analysts questioned the price as too steep. Disney shares fell 3 percent in afternoon trading. Marvel shares were up 25 percent.
One question is whether Marvel’s lesser-known characters can be developed into blockbusters — a la Iron Man — and how much movie muscle the library’s most valuable assets — like Spider-Man and the X-Men — have left. The declining DVD market is also a concern.
“They are not immune from the changes that we’re seeing,” said Mr. Iger, referring to the DVD market specifically. “But they have established a footing that we think is more solid than what you typically see in the non-branded non-character driven movie.”
Mr. Iger dismissed worries about the value of Marvel’s lesser-known characters, pointing to Iron Man as an example of the opportunity.
Marvel’s development slate is relatively thin: The company works on only five or six scripts at once, compared to the dozens under way at major studios, though virtually all are expected to become finished films. Permanent staff at the Marvels Studios film unit is only about 25.
Yet the company made an enormous impression by racking up an almost unbroken series of hits after having risen from bankruptcy in 1998. The company’s major break came when it decided three years ago to make its own films rather than relying on studio partners, and struck gold with “Iron Man,” which took in about $585 million at the worldwide box office.
Marvel’s vice chairman, Peter Cuneo, in May called its comic book publishing business “the most profitable print publishing business in the world,” at an investor meeting. He said the net profit margin on that business is 40 percent or more.
The deal started to come together in June when Mr. Iger reached out to Ike Perlmutter, Marvel’s chief executive. The two men had a cordial meeting in Mr. Perlmutter’s New York office. Talks heated up in the last two weeks, with Disney agreeing to one of Marvel’s top demands: that stock be part of the deal.
“We were willing to issue these shares since it was an important component in consummating the deal,” said Thomas O. Staggs, Disney’s chief financial officer, on a conference call with investors.
Under the terms of the deal, Marvel shareholders will receive a $30 a share in cash plus about 0.745 Disney shares for each Marvel share they own. The deal is valued at $50 a share, a 29 percent premium on Marvel stock.
Mr. Staggs said he expected the deal to close by the end of the year, adding that the acquisition should start having a positive impact on Disney earnings in 2012. There are no immediate plans to move Marvel from its Manhattan Beach, Calif., headquarters.
“This deal is not principally driven by cost saving or redundancies,” Mr. Staggs said. “What really drives this is the opportunity for synergies over time.”
Mr. Perlmutter said in a statement: “Disney is the perfect home for Marvel’s fantastic library of characters given its proven ability to expand content creation and licensing businesses.” Mr. Perlmutter will oversee the Marvel properties, and will work directly with Disney’s global lines of business to build and further integrate Marvel’s properties.
The acquisition comes as Disney, with its vast theme park operations and television advertising business, has been struggling because of a lack of hit DVDs, soft advertising sales at ABC and drooping consumer spending at theme parks. Disney’s profit in the third quarter, which ended June 27, dropped 26 percent.
Over all, Disney’s net income fell to $954 million, or 51 cents a share, from $1.28 billion, or 66 cents a share, in the year-ago period. Revenue fell 7 percent, to $8.6 billion. Earnings per share for the current quarter included a one-cent restructuring charge related to an accounting gain.
New York Times Editorial: Questions About an Execution
New York Times Editorial: Questions About an Execution
Copyright by The New York Times
Published: August 30, 2009
http://www.nytimes.com/2009/08/31/opinion/31mon2.html?th&emc=th
People should have no illusions about the brutal injustice of the death penalty after all of the exonerations in recent years from DNA evidence, but the case of Cameron Todd Willingham is still shocking.
Mr. Willingham was executed for setting a fire that killed his 2-year-old daughter and 1-year-old twins, but a fire expert hired by the State of Texas has issued a report casting enormous doubt on whether the fire was arson at all. The Willingham investigation, which is continuing, is further evidence that the criminal justice system is far too flawed to justify imposing a death penalty.
After the fire, investigators decided, based in large part on burn patterns on the house’s floors, that it was intentionally set. Prosecutors charged Mr. Willingham, who escaped from the burning home, with capital murder. Mr. Willingham protested his innocence until the day the state killed him by lethal injection in 2004.
The following year, Texas created the Forensic Science Commission to investigate charges of scientific mistakes or misconduct, and the panel began looking into the Willingham case. It commissioned Craig Beyler, a nationally recognized fire expert, to examine evidence.
Mr. Beyler issued a report last week that painted an ugly picture of what passes for expert scientific investigation and testimony in a capital case in Texas. The report found that the official inquiry into the Willingham fire did not meet prevailing scientific standards of the time, much less current ones.
The investigators “had poor understandings of fire science,” Mr. Beyler said, and their “methodologies did not comport with the scientific method.” He determined that the opinions of one main investigator were “nothing more than a collection of personal beliefs that have nothing to do with science-based fire investigation.”
The report concluded that a “finding of arson could not be sustained.” The Forensic Science Commission is now asking the state fire marshal’s office for its response. It anticipates issuing a final report next year.
The commission is to be commended for conducting this inquiry, but it is outrageous that Texas is conducting its careful, highly skilled investigation after Mr. Willingham has been executed, rather than before.
Copyright by The New York Times
Published: August 30, 2009
http://www.nytimes.com/2009/08/31/opinion/31mon2.html?th&emc=th
People should have no illusions about the brutal injustice of the death penalty after all of the exonerations in recent years from DNA evidence, but the case of Cameron Todd Willingham is still shocking.
Mr. Willingham was executed for setting a fire that killed his 2-year-old daughter and 1-year-old twins, but a fire expert hired by the State of Texas has issued a report casting enormous doubt on whether the fire was arson at all. The Willingham investigation, which is continuing, is further evidence that the criminal justice system is far too flawed to justify imposing a death penalty.
After the fire, investigators decided, based in large part on burn patterns on the house’s floors, that it was intentionally set. Prosecutors charged Mr. Willingham, who escaped from the burning home, with capital murder. Mr. Willingham protested his innocence until the day the state killed him by lethal injection in 2004.
The following year, Texas created the Forensic Science Commission to investigate charges of scientific mistakes or misconduct, and the panel began looking into the Willingham case. It commissioned Craig Beyler, a nationally recognized fire expert, to examine evidence.
Mr. Beyler issued a report last week that painted an ugly picture of what passes for expert scientific investigation and testimony in a capital case in Texas. The report found that the official inquiry into the Willingham fire did not meet prevailing scientific standards of the time, much less current ones.
The investigators “had poor understandings of fire science,” Mr. Beyler said, and their “methodologies did not comport with the scientific method.” He determined that the opinions of one main investigator were “nothing more than a collection of personal beliefs that have nothing to do with science-based fire investigation.”
The report concluded that a “finding of arson could not be sustained.” The Forensic Science Commission is now asking the state fire marshal’s office for its response. It anticipates issuing a final report next year.
The commission is to be commended for conducting this inquiry, but it is outrageous that Texas is conducting its careful, highly skilled investigation after Mr. Willingham has been executed, rather than before.
Health Bill Would Cut Drug Spending for Many on Medicare, Budget Office Says
Health Bill Would Cut Drug Spending for Many on Medicare, Budget Office Says
By ROBERT PEAR
Copyright by The New York Times
Published: August 30, 2009
http://www.nytimes.com/2009/08/31/health/policy/31drug.html?th&emc=th
WASHINGTON — Medicare beneficiaries would often have to pay higher premiums for prescription drug coverage, but many would see their total drug spending decline, so they would save money as a result of health legislation moving through the House, the Congressional Budget Office said in a recent report.
Premiums for drug coverage would rise an average of 5 percent in 2011, beyond the level expected under current law, and the increase would grow to 20 percent in 2019, the budget office said.
“However,” it said, “beneficiaries’ spending on prescription drugs apart from those premiums would fall, on average, as would their overall prescription drug spending (including both premiums and cost-sharing).”
Moreover, the budget office said, the drug-related provisions of the House bill would save the federal government $30 billion from 2010 to 2019.
The estimates were set forth in a letter from Douglas W. Elmendorf, the director of the Congressional Budget Office, to Representative Dave Camp of Michigan, the senior Republican on the House Ways and Means Committee.
Republicans have criticized the House bill on the ground that it would finance coverage for the uninsured, in part, by cutting hundreds of billions of dollars from projected Medicare spending, in ways that could adversely affect some beneficiaries. In response, Democrats have said the bill would help beneficiaries by narrowing and eventually eliminating a gap in Medicare drug coverage, informally known as a doughnut hole.
Nancy LeaMond, an executive vice president of AARP, the lobby for older Americans, welcomed the report as evidence that “health care reform will lower drug spending.”
“Opponents of reform may use today’s projections to try to stall reform,” Ms. LeaMond said, “but we hope they will look at all the facts before jumping to a false conclusion.”
The House bill would require drug companies to provide larger discounts, or rebates, on medications dispensed to low-income people enrolled in both Medicare and Medicaid. It would also require drug makers to provide 50 percent discounts on brand-name drugs in the doughnut hole, until the coverage gap was eliminated.
The budget office said premiums would increase, in part, because Medicare drug plans would have to provide additional coverage, paying some costs that beneficiaries now pay themselves.
“In return for those higher premiums,” Mr. Elmendorf said, “enrollees would receive greater protection against incurring high drug costs. As a result, beneficiaries’ spending on prescription drugs apart from the premiums would decrease, on average. That reduction in cost-sharing would outweigh the increase in premiums, again on average.”
But, Mr. Elmendorf said, the averages conceal the fact that beneficiaries would be affected in different ways.
Those who use a relatively small amount of prescription drugs would pay more in additional premiums than they would save, he said, while those who use a large amount of drugs “would gain more from lower cost-sharing than they would pay in higher premiums.”
The budget office did not estimate how many Medicare beneficiaries might see an increase in their spending for prescription drugs and drug coverage, and how many would see a reduction, under the House bill. Mr. Camp said “the vast majority of seniors” would pay more, and he said House Democrats should scrap their bill and “start over with open, bipartisan talks.”
By ROBERT PEAR
Copyright by The New York Times
Published: August 30, 2009
http://www.nytimes.com/2009/08/31/health/policy/31drug.html?th&emc=th
WASHINGTON — Medicare beneficiaries would often have to pay higher premiums for prescription drug coverage, but many would see their total drug spending decline, so they would save money as a result of health legislation moving through the House, the Congressional Budget Office said in a recent report.
Premiums for drug coverage would rise an average of 5 percent in 2011, beyond the level expected under current law, and the increase would grow to 20 percent in 2019, the budget office said.
“However,” it said, “beneficiaries’ spending on prescription drugs apart from those premiums would fall, on average, as would their overall prescription drug spending (including both premiums and cost-sharing).”
Moreover, the budget office said, the drug-related provisions of the House bill would save the federal government $30 billion from 2010 to 2019.
The estimates were set forth in a letter from Douglas W. Elmendorf, the director of the Congressional Budget Office, to Representative Dave Camp of Michigan, the senior Republican on the House Ways and Means Committee.
Republicans have criticized the House bill on the ground that it would finance coverage for the uninsured, in part, by cutting hundreds of billions of dollars from projected Medicare spending, in ways that could adversely affect some beneficiaries. In response, Democrats have said the bill would help beneficiaries by narrowing and eventually eliminating a gap in Medicare drug coverage, informally known as a doughnut hole.
Nancy LeaMond, an executive vice president of AARP, the lobby for older Americans, welcomed the report as evidence that “health care reform will lower drug spending.”
“Opponents of reform may use today’s projections to try to stall reform,” Ms. LeaMond said, “but we hope they will look at all the facts before jumping to a false conclusion.”
The House bill would require drug companies to provide larger discounts, or rebates, on medications dispensed to low-income people enrolled in both Medicare and Medicaid. It would also require drug makers to provide 50 percent discounts on brand-name drugs in the doughnut hole, until the coverage gap was eliminated.
The budget office said premiums would increase, in part, because Medicare drug plans would have to provide additional coverage, paying some costs that beneficiaries now pay themselves.
“In return for those higher premiums,” Mr. Elmendorf said, “enrollees would receive greater protection against incurring high drug costs. As a result, beneficiaries’ spending on prescription drugs apart from the premiums would decrease, on average. That reduction in cost-sharing would outweigh the increase in premiums, again on average.”
But, Mr. Elmendorf said, the averages conceal the fact that beneficiaries would be affected in different ways.
Those who use a relatively small amount of prescription drugs would pay more in additional premiums than they would save, he said, while those who use a large amount of drugs “would gain more from lower cost-sharing than they would pay in higher premiums.”
The budget office did not estimate how many Medicare beneficiaries might see an increase in their spending for prescription drugs and drug coverage, and how many would see a reduction, under the House bill. Mr. Camp said “the vast majority of seniors” would pay more, and he said House Democrats should scrap their bill and “start over with open, bipartisan talks.”
Invisible Immigrants, Old and Left With ‘Nobody to Talk To’
Invisible Immigrants, Old and Left With ‘Nobody to Talk To’
By PATRICIA LEIGH BROWN
Copyright by The New York Times
Published: August 30, 2009
http://www.nytimes.com/2009/08/31/us/31elder.html?th&emc=th
FREMONT, Calif. — They gather five days a week at a mall called the Hub, sitting on concrete planters and sipping thermoses of chai. These elderly immigrants from India are members of an all-male group called The 100 Years Living Club. They talk about crime in nearby Oakland, the cheapest flights to Delhi and how to deal with recalcitrant daughters-in-law.
Together, they fend off the well of loneliness and isolation that so often accompany the move to this country late in life from distant places, some culturally light years away.
“If I don’t come here, I have sealed lips, nobody to talk to,” said Devendra Singh, a 79-year-old widower. Meeting beside the parking lot, the men were oblivious to their fellow mall rats, backpack-carrying teenagers swigging energy drinks.
In this country of twittering youth, Mr. Singh and his friends form a gathering force: the elderly, who now make up America’s fastest-growing immigrant group. Since 1990, the number of foreign-born people over 65 has grown from 2.7 million to 4.3 million — or about 11 percent of the country’s recently arrived immigrants. Their ranks are expected to swell to 16 million by 2050. In California, one in nearly three seniors is now foreign born, according to a 2007 census survey.
Many are aging parents of naturalized American citizens, reuniting with their families. Yet experts say that America’s ethnic elderly are among the most isolated people in America. Seventy percent of recent older immigrants speak little or no English. Most do not drive. Some studies suggest depression and psychological problems are widespread, the result of language barriers, a lack of social connections and values that sometimes conflict with the dominant American culture, including those of their assimilated children.
The lives of transplanted elders are largely untracked, unknown outside their ethnic or religious communities. “They never win spelling bees,” said Judith Treas, a sociology professor and demographer at the University of California, Irvine. “They do not join criminal gangs. And nobody worries about Americans losing jobs to Korean grandmothers.”
The speed of the demographic transformation is leading many cities to reach out to the growing numbers of elderly parents in their midst. Fremont began a mobile mental health unit for homebound seniors and recruited volunteer “ambassadors” to help older immigrants navigate social service bureaucracies. In Chicago, a network of nonprofit groups has started The Depression Project, a network of community groups helping aging immigrants and others cope.
But their problems can go unnoticed because they often do not seek help. “There is a feeling that problems are very personal, and within the family,” said Gwen Yeo, the co-director of the Geriatric Education Center at the Stanford University School of Medicine.
Many who have followed their grown children here have fulfilling lives, but life in this country does not always go according to plan for seniors navigating the new, at times jagged, emotional terrain, which often means living under a child’s roof.
Mr. Singh, the widower, grew up in a boisterous Indian household with 14 family members. In Fremont, he moved in with his son’s family and devoted himself to his grandchildren, picking them up from school and ferrying them to soccer practice. Then his son and daughter-in-law decided “they wanted their privacy,” said Mr. Singh, an undertone of sadness in his voice. He reluctantly concluded he should move out.
So when he leaves the Hub, dead leaves swirling around its fake cobblestones, Mr. Singh drives to the rented room in a house he found on Craigslist. His could be a dorm room, except for the arthritis heat wraps packed neatly in plastic bins.
“In India there is a favorable bias toward the elders,” Mr. Singh said, sitting amid Hindu religious posters and a photograph of his late wife. “Here people think about what is convenient and inconvenient for them.”
Move to the Ethnoburbs
Sociologists call Mr. Singh and his cohort the “.5 generation,” distinct from the “1.5 generation” — younger transplants who became bicultural through school and work. Immigrant elders leave a familiar home, some without electricity or running water, for a multigenerational home in communities like Fremont that demographers call ethnoburbs.
A generation ago, Fremont was 76 percent Caucasian. Today, nearly one-half of its residents are Asian, 14 percent are Latino and it is home to one of the country’s largest groups of Afghan refugees (it was a setting for the best-selling book “The Kite Runner”). Along the way, a former beauty college has become a mosque; a movie house became a Bollywood multiplex; a bank, an Afghan market, and a stucco-lined street renamed Gurdwara, after the Gurdwara Sahib Sikh Temple.
Reliant on their children, late-life immigrants are a vulnerable population. “They come anticipating a great deal of family togetherness,” Professor Treas said. “But American society isn’t organized in a way that responds to their cultural expectations.”
Zia Mustafa moved to Fremont from Afghanistan with her son.
Hardev Singh, 76, and his wife, Pal Keur, 67, part of Fremont’s large Sikh community, live above the office of the Fremont Frontier Motel, its lone nod to a Western motif a dilapidated wagon wheel sign.
They rented the fluorescent-lighted apartment after living for three years with their daughter, Kamaljit Purewal, her husband, his mother and two grandchildren. As the children grew, Mr. Singh and Mrs. Keur were relegated to the garage, transformed into a room. As Mr. Singh said, “in winter it was too much cold.”(Ms. Purewal said that she “tried to give them a better life,” but felt unappreciated because her parents favored her older brother in India. “If you’re a happy family, a small house is a big house,” she said. )
Fraught family dynamics when elderly parents move in with children often leave older members without a voice in decision-making, whether about buying a house or using the shower.
Pravinchandra Patel, the 84-year-old founder of the 100 Years Living Club, intervened when he heard that the son in one family was taking his parents’ monthly Supplemental Security Income check, for $658, then doling out $20 for spending money.
“I ask the son, ‘How much money do you figure you owe your parents for your education?’ ” he said.
Crying, Not Smiling
Once a lush landscape of fruit trees and cauliflower fields, Fremont, 40 miles south of San Francisco, is now the Bay Area’s fourth-largest city, with voters from 152 countries. Physical distances can be compounded by psychic ones: 13 percent of the city’s immigrant seniors live in households isolated by language. Theirs is a late-life journey without a map.
For the men in the 100 Years Living Club, the road leads to the Hub, where they have been meeting for 14 years, since the Target store was a Montgomery Ward. Mr. Patel, who was an herbal doctor in India, started the group after he noticed his friends were in “house prisons,” as he put it, without even the confidence to use a bus. The men keep their spirits alive by sharing homemade chaat snacks. They are the lucky ones.
Two miles away, Zia Mustafa, an Afghan widow, sits at her kitchen table with its plastic tablecloth, looking at a scrapbook with bright color postcards of Turkmen girls in elaborate dress posed against an azure sky.
Mrs. Mustafa arrived here on a desolate emotional road. Her husband and eldest son were killed by a rocket in Kabul; her son Waheed, now 24 and living with her in Fremont, lost his leg in the attack. Other children remain in Afghanistan and Pakistan.
“My family is divided in three,” she said through a translator, weeping.
Waheed Mustafa, after surgery in Oakland, leads the life of a young man in his 20s — going to school, working out, talking on his cellphone, hanging out with friends.
Mrs. Mustafa, who was home-schooled in the Koran, spends her days watching television soap operas, attempting to decipher stories through actors’ facial expressions. She sleeps with the lights on, worrying that even within these safe white walls this son, too, will not come back.
“They come from a country where it takes so much to survive, yet they feel they haven’t done enough,” said Dr. Sudha Manjunath, a psychiatrist who consults with the city’s mental health unit. “To tell them now, ‘It’s time to take care of yourself’ — well, they’ve never heard of such things.”
A recent health survey by Dr. Carl Stempel, a sociology professor at California State University, East Bay, found that most Afghan women here suffer from post-traumatic stress.
“I thought they would be so happy in this country — all the houses, the food, the cars,” said Najia Hamid, who founded the Afghan Elderly Association of the Bay Area, an outreach group for widows, with seed money from Fremont. “But I was met with crying.”
Young couples who need to work to support families have imported grandparents in part to baby-sit. There is a misguided assumption that baby-sitting is sustenance enough for the aging, said Moina Shaiq, founder of the Muslim Support Network, which brings seniors together. “We are all social beings. How much can you talk to your grandchildren?” Mrs. Shaiq said.
Small Things Matter
In 1965 changes to immigration policy allowed naturalized citizens to sponsor the immigration of parents without quota restrictions. By 1996, a growing perception that elderly immigrants were “gaming the system” — that their children were pledging to support them and then enrolling their parents in the Supplemental Security Income and food stamp programs — became an impetus for welfare reform. Congress imposed a five-year waiting period for Medicaid and Temporary Assistance for Needy Families and restricted S.S.I. and food stamp eligibility for adults.
Some states, including California and New York, have chosen to eliminate the waiting period for Medicaid for lawfully residing immigrants, paying with state money.
Michael Fix, senior vice president of the Migration Policy Institute, a nonprofit center in Washington, said that as immigrants form a larger part of the elderly population, “all the issues that bear on health care and social services will increasingly be transformed in part into immigrant issues.”
In 2007, according to census data, about 16 percent of immigrant seniors lived below the poverty line, compared with 12 percent of native-born elderly, said Steven P. Wallace, the associate director of the Center for Health Policy Research at the University of California, Los Angeles. Another 24 percent of immigrant elderly are “the near-poor,” he said, “sitting on the edge of a cliff.”
Kashmir Singh Shahi, 43, a former engineer who was born in India, is a volunteer the Community Ambassador Program for Seniors, offering people like Hardev Singh an attuned ear.
Mr. Singh, a retired driving instructor for the Indian army, is 76 and determined to work full time. He takes two buses to work the night shift at a gas station an hour away. “I don’t want to become idle in the heart,” he said matter-of-factly.
Mr. Singh had not been to a doctor in years, and Mr. Shahi helped him and his wife apply for Medicare. Mr. Singh is also entitled to Social Security but will not accept the additional assistance.
Mr. Shahi’s experiences with his own parents have illuminated the way for his clients. He came to the Bay Area in 1991 to work at a fiber optics company, and he sponsored his parents six years later.
After his father died, Mr. Shahi changed careers so he could care for his mother, who has suffered from depression.
She shares a room with her 12-year-old grandson, Kirat, improbably surrounded by Iron Man and Incredible Hulk posters. In this affectionate setting, amid decorations for her granddaughter’s Sweet 16 party, the 84-year-old woman sat quietly, blue slippers on her feet, her eyes cast downward at her folded hands.
“In India, she would walk to the grocery store, go next door to have tea, talk about common things like the wheat and the corn,” said Mr. Shahi of the ingrained visiting culture so universally missed by many ethnic elders. “At home anyone can knock on the door anytime, to relieve the pressure. Here nothing is similar.”
So at the end of his day counseling others, Mr. Shahi sits with his mother before she goes to bed. He always asks if she needs any warm milk.
“The small things matter,” he said of his mother and other elders longing for home. “The feeling that they are welcomed.”
By PATRICIA LEIGH BROWN
Copyright by The New York Times
Published: August 30, 2009
http://www.nytimes.com/2009/08/31/us/31elder.html?th&emc=th
FREMONT, Calif. — They gather five days a week at a mall called the Hub, sitting on concrete planters and sipping thermoses of chai. These elderly immigrants from India are members of an all-male group called The 100 Years Living Club. They talk about crime in nearby Oakland, the cheapest flights to Delhi and how to deal with recalcitrant daughters-in-law.
Together, they fend off the well of loneliness and isolation that so often accompany the move to this country late in life from distant places, some culturally light years away.
“If I don’t come here, I have sealed lips, nobody to talk to,” said Devendra Singh, a 79-year-old widower. Meeting beside the parking lot, the men were oblivious to their fellow mall rats, backpack-carrying teenagers swigging energy drinks.
In this country of twittering youth, Mr. Singh and his friends form a gathering force: the elderly, who now make up America’s fastest-growing immigrant group. Since 1990, the number of foreign-born people over 65 has grown from 2.7 million to 4.3 million — or about 11 percent of the country’s recently arrived immigrants. Their ranks are expected to swell to 16 million by 2050. In California, one in nearly three seniors is now foreign born, according to a 2007 census survey.
Many are aging parents of naturalized American citizens, reuniting with their families. Yet experts say that America’s ethnic elderly are among the most isolated people in America. Seventy percent of recent older immigrants speak little or no English. Most do not drive. Some studies suggest depression and psychological problems are widespread, the result of language barriers, a lack of social connections and values that sometimes conflict with the dominant American culture, including those of their assimilated children.
The lives of transplanted elders are largely untracked, unknown outside their ethnic or religious communities. “They never win spelling bees,” said Judith Treas, a sociology professor and demographer at the University of California, Irvine. “They do not join criminal gangs. And nobody worries about Americans losing jobs to Korean grandmothers.”
The speed of the demographic transformation is leading many cities to reach out to the growing numbers of elderly parents in their midst. Fremont began a mobile mental health unit for homebound seniors and recruited volunteer “ambassadors” to help older immigrants navigate social service bureaucracies. In Chicago, a network of nonprofit groups has started The Depression Project, a network of community groups helping aging immigrants and others cope.
But their problems can go unnoticed because they often do not seek help. “There is a feeling that problems are very personal, and within the family,” said Gwen Yeo, the co-director of the Geriatric Education Center at the Stanford University School of Medicine.
Many who have followed their grown children here have fulfilling lives, but life in this country does not always go according to plan for seniors navigating the new, at times jagged, emotional terrain, which often means living under a child’s roof.
Mr. Singh, the widower, grew up in a boisterous Indian household with 14 family members. In Fremont, he moved in with his son’s family and devoted himself to his grandchildren, picking them up from school and ferrying them to soccer practice. Then his son and daughter-in-law decided “they wanted their privacy,” said Mr. Singh, an undertone of sadness in his voice. He reluctantly concluded he should move out.
So when he leaves the Hub, dead leaves swirling around its fake cobblestones, Mr. Singh drives to the rented room in a house he found on Craigslist. His could be a dorm room, except for the arthritis heat wraps packed neatly in plastic bins.
“In India there is a favorable bias toward the elders,” Mr. Singh said, sitting amid Hindu religious posters and a photograph of his late wife. “Here people think about what is convenient and inconvenient for them.”
Move to the Ethnoburbs
Sociologists call Mr. Singh and his cohort the “.5 generation,” distinct from the “1.5 generation” — younger transplants who became bicultural through school and work. Immigrant elders leave a familiar home, some without electricity or running water, for a multigenerational home in communities like Fremont that demographers call ethnoburbs.
A generation ago, Fremont was 76 percent Caucasian. Today, nearly one-half of its residents are Asian, 14 percent are Latino and it is home to one of the country’s largest groups of Afghan refugees (it was a setting for the best-selling book “The Kite Runner”). Along the way, a former beauty college has become a mosque; a movie house became a Bollywood multiplex; a bank, an Afghan market, and a stucco-lined street renamed Gurdwara, after the Gurdwara Sahib Sikh Temple.
Reliant on their children, late-life immigrants are a vulnerable population. “They come anticipating a great deal of family togetherness,” Professor Treas said. “But American society isn’t organized in a way that responds to their cultural expectations.”
Zia Mustafa moved to Fremont from Afghanistan with her son.
Hardev Singh, 76, and his wife, Pal Keur, 67, part of Fremont’s large Sikh community, live above the office of the Fremont Frontier Motel, its lone nod to a Western motif a dilapidated wagon wheel sign.
They rented the fluorescent-lighted apartment after living for three years with their daughter, Kamaljit Purewal, her husband, his mother and two grandchildren. As the children grew, Mr. Singh and Mrs. Keur were relegated to the garage, transformed into a room. As Mr. Singh said, “in winter it was too much cold.”(Ms. Purewal said that she “tried to give them a better life,” but felt unappreciated because her parents favored her older brother in India. “If you’re a happy family, a small house is a big house,” she said. )
Fraught family dynamics when elderly parents move in with children often leave older members without a voice in decision-making, whether about buying a house or using the shower.
Pravinchandra Patel, the 84-year-old founder of the 100 Years Living Club, intervened when he heard that the son in one family was taking his parents’ monthly Supplemental Security Income check, for $658, then doling out $20 for spending money.
“I ask the son, ‘How much money do you figure you owe your parents for your education?’ ” he said.
Crying, Not Smiling
Once a lush landscape of fruit trees and cauliflower fields, Fremont, 40 miles south of San Francisco, is now the Bay Area’s fourth-largest city, with voters from 152 countries. Physical distances can be compounded by psychic ones: 13 percent of the city’s immigrant seniors live in households isolated by language. Theirs is a late-life journey without a map.
For the men in the 100 Years Living Club, the road leads to the Hub, where they have been meeting for 14 years, since the Target store was a Montgomery Ward. Mr. Patel, who was an herbal doctor in India, started the group after he noticed his friends were in “house prisons,” as he put it, without even the confidence to use a bus. The men keep their spirits alive by sharing homemade chaat snacks. They are the lucky ones.
Two miles away, Zia Mustafa, an Afghan widow, sits at her kitchen table with its plastic tablecloth, looking at a scrapbook with bright color postcards of Turkmen girls in elaborate dress posed against an azure sky.
Mrs. Mustafa arrived here on a desolate emotional road. Her husband and eldest son were killed by a rocket in Kabul; her son Waheed, now 24 and living with her in Fremont, lost his leg in the attack. Other children remain in Afghanistan and Pakistan.
“My family is divided in three,” she said through a translator, weeping.
Waheed Mustafa, after surgery in Oakland, leads the life of a young man in his 20s — going to school, working out, talking on his cellphone, hanging out with friends.
Mrs. Mustafa, who was home-schooled in the Koran, spends her days watching television soap operas, attempting to decipher stories through actors’ facial expressions. She sleeps with the lights on, worrying that even within these safe white walls this son, too, will not come back.
“They come from a country where it takes so much to survive, yet they feel they haven’t done enough,” said Dr. Sudha Manjunath, a psychiatrist who consults with the city’s mental health unit. “To tell them now, ‘It’s time to take care of yourself’ — well, they’ve never heard of such things.”
A recent health survey by Dr. Carl Stempel, a sociology professor at California State University, East Bay, found that most Afghan women here suffer from post-traumatic stress.
“I thought they would be so happy in this country — all the houses, the food, the cars,” said Najia Hamid, who founded the Afghan Elderly Association of the Bay Area, an outreach group for widows, with seed money from Fremont. “But I was met with crying.”
Young couples who need to work to support families have imported grandparents in part to baby-sit. There is a misguided assumption that baby-sitting is sustenance enough for the aging, said Moina Shaiq, founder of the Muslim Support Network, which brings seniors together. “We are all social beings. How much can you talk to your grandchildren?” Mrs. Shaiq said.
Small Things Matter
In 1965 changes to immigration policy allowed naturalized citizens to sponsor the immigration of parents without quota restrictions. By 1996, a growing perception that elderly immigrants were “gaming the system” — that their children were pledging to support them and then enrolling their parents in the Supplemental Security Income and food stamp programs — became an impetus for welfare reform. Congress imposed a five-year waiting period for Medicaid and Temporary Assistance for Needy Families and restricted S.S.I. and food stamp eligibility for adults.
Some states, including California and New York, have chosen to eliminate the waiting period for Medicaid for lawfully residing immigrants, paying with state money.
Michael Fix, senior vice president of the Migration Policy Institute, a nonprofit center in Washington, said that as immigrants form a larger part of the elderly population, “all the issues that bear on health care and social services will increasingly be transformed in part into immigrant issues.”
In 2007, according to census data, about 16 percent of immigrant seniors lived below the poverty line, compared with 12 percent of native-born elderly, said Steven P. Wallace, the associate director of the Center for Health Policy Research at the University of California, Los Angeles. Another 24 percent of immigrant elderly are “the near-poor,” he said, “sitting on the edge of a cliff.”
Kashmir Singh Shahi, 43, a former engineer who was born in India, is a volunteer the Community Ambassador Program for Seniors, offering people like Hardev Singh an attuned ear.
Mr. Singh, a retired driving instructor for the Indian army, is 76 and determined to work full time. He takes two buses to work the night shift at a gas station an hour away. “I don’t want to become idle in the heart,” he said matter-of-factly.
Mr. Singh had not been to a doctor in years, and Mr. Shahi helped him and his wife apply for Medicare. Mr. Singh is also entitled to Social Security but will not accept the additional assistance.
Mr. Shahi’s experiences with his own parents have illuminated the way for his clients. He came to the Bay Area in 1991 to work at a fiber optics company, and he sponsored his parents six years later.
After his father died, Mr. Shahi changed careers so he could care for his mother, who has suffered from depression.
She shares a room with her 12-year-old grandson, Kirat, improbably surrounded by Iron Man and Incredible Hulk posters. In this affectionate setting, amid decorations for her granddaughter’s Sweet 16 party, the 84-year-old woman sat quietly, blue slippers on her feet, her eyes cast downward at her folded hands.
“In India, she would walk to the grocery store, go next door to have tea, talk about common things like the wheat and the corn,” said Mr. Shahi of the ingrained visiting culture so universally missed by many ethnic elders. “At home anyone can knock on the door anytime, to relieve the pressure. Here nothing is similar.”
So at the end of his day counseling others, Mr. Shahi sits with his mother before she goes to bed. He always asks if she needs any warm milk.
“The small things matter,” he said of his mother and other elders longing for home. “The feeling that they are welcomed.”
With Bold Stand, Japan Opposition Wins a Landslide
With Bold Stand, Japan Opposition Wins a Landslide
By MARTIN FACKLER
Copyright by The New York Times
Published: August 30, 2009
http://www.nytimes.com/2009/08/31/world/asia/31japan.html?th&emc=th
TOKYO — Japan’s voters cast out the Liberal Democratic Party for only the second time in postwar history on Sunday, handing a landslide victory to a party that campaigned on a promise to reverse a generation-long economic decline and to redefine Tokyo’s relationship with Washington.
Many Japanese saw the vote as the final blow to the island nation’s postwar order, which has been slowly unraveling since the economy collapsed in the early 1990s.
In the powerful lower house, the opposition Democrats virtually swapped places with the governing Liberal Democratic Party, winning 308 of the 480 seats, a 175 percent increase that gives them control of the chamber, according to the national broadcaster NHK. The incumbents took just 119 seats, about a third of their previous total. The remaining seats were won by smaller parties.
The exhilarating sense that Japan had reached a turning point drew long lines of voters to polling stations in Tokyo, where they braved darkening skies from an approaching typhoon. About 70 percent of eligible voters cast ballots, according to NHK, the highest turnout in nearly two decades.
“I want the Democratic Party to have a go at running the country,” said Akiko Tanaka, a 34-year-old nursing home care worker who voted at a junior high school in the Tokyo suburb of Sayama. “If we keep going like we’ve been, nothing will get better. We need a new government.”
A top priority for the new government will be simply maintaining the unity it achieved on Sunday. The largely untested Democrats, a broad coalition of former Socialists and Liberal Democrat defectors, hope to avoid the mistakes of the only previous non-Liberal Democratic government, in 1993, which collapsed in just 11 months because of infighting and defections.
That imperative virtually assures no sudden, radical departures in foreign policy. Rather, analysts expect the Democrats to focus at least initially on their more ambitious domestic agenda.
The party has pledged to change the postwar paradigm here as well, promising to ease growing social inequality by handing more money and social benefits directly to residents rather than to industry or other interest groups.
It has promised to strengthen the social safety net and raise the low birthrate by giving families cash handouts of $270 per month per child. And the party has said it will rein in the powerful central ministries in Tokyo, which have run postwar Japan on the Liberal Democrats’ behalf.
But even here, most people have not embraced the party’s platform with much enthusiasm, nor are they optimistic about the Democrats’ ability to solve looming problems like the growing government debt and a rapidly aging population.
To many voters, the most important fact of this election was that they finally had a choice.
“This vote is about making a system where parties that fail get kicked out,” said Yoshiyuki Kobayashi, 40, one of the white-collar corporate workers known here as salarymen. “We need to teach politicians to be nervous.”
“This has been a revolutionary election,” Yukio Hatoyama, the party leader and presumptive new prime minister, told reporters. “The people have shown the courage to take politics into their own hands.”
Mr. Hatoyama, who is expected to assemble a government in two to three weeks, has spoken of the end of American-dominated globalization and of the need to reorient Japan toward Asia. His party’s campaign manifesto calls for an “equal partnership” with the United States and a “reconsidering” of the 50,000-strong American military presence here.
One change on the horizon may be the renegotiation of a deal with Washington to relocate the United States Marine Corps’ Futenma airfield, on the island of Okinawa. Many island residents want to evict the base altogether.
The Democrats, who opposed the American-led war in Iraq, have also said they may end the Japanese Navy’s refueling of American and allied warships in the Indian Ocean.
The White House issued a statement on Sunday saying it was “confident that the strong U.S.-Japan alliance and the close partnership between our two countries will continue to flourish” under the new government. “President Obama looks forward to working closely with the new Japanese prime minister on a broad range of global, regional and bilateral issues,” the statement said.
Political analysts expect Japan to remain a close American ally, but one that is more assertive and less willing to follow Washington’s lead automatically.
“This is what happens when you have a government in Japan that must be responsive to public opinion,” said Daniel C. Sneider, a researcher on East Asia at Stanford University. “It will end the habits from decades of a relationship in which Japan didn’t challenge the United States.”
At the same time, the Democrats want to improve relations with other Asian countries, including on the touchy issue of history. Analysts say the party seeks to reverse Japan’s growing isolation in the region under decades of right-wing Liberal Democratic rule.
Such changes are not likely to come quickly. Diplomatic analysts expect the Democrats to steer clear of security issues for the time being because they could prove too divisive for a party dependent on a broad ideological spectrum.
And some analysts have played down the rhetoric of Mr. Hatoyama, a bushy-haired former management professor, as a nod to his party’s left-leaning base rather than a firm pledge to alter dealings with the United States drastically. In recent interviews, Democratic leaders have insisted there will be no major changes in that relationship.
“It’s complete nonsense that a non-Liberal Democratic government will hurt U.S.-Japan relations,” said Tetsuro Fukuyama, a Democratic lawmaker who oversaw production of the campaign manifesto. “But there are many things left unchanged from the last 50 years that need to be re-examined.”
Analysts, however, saw the vote less as an embrace of the Democrats than a resounding rejection of the incumbents. The conservative Liberal Democrats, who with their precursors have held or shared power for 62 of the past 63 years, led Japan from bombed-out rubble to economic miracle, while keeping it firmly in Washington’s camp.
But the party has appeared increasingly exhausted and directionless, and Japan’s traditionally apolitical electorate, in a rare display of popular democratic muscle, firmly blamed it for the decline of this former economic superpower and its increasingly cloudy future.
“We have been trying to outgrow this old one-party system ever since the collapse of the Berlin Wall,” said Takeshi Sasaki, a political expert and former president of the University of Tokyo. “It took two decades, but we finally made it.”
Prime Minister Taro Aso told reporters that he would take responsibility for the defeat, and stepped down Monday as head of the party.
Makiko Inoue contributed reporting from Sayama, Japan.
By MARTIN FACKLER
Copyright by The New York Times
Published: August 30, 2009
http://www.nytimes.com/2009/08/31/world/asia/31japan.html?th&emc=th
TOKYO — Japan’s voters cast out the Liberal Democratic Party for only the second time in postwar history on Sunday, handing a landslide victory to a party that campaigned on a promise to reverse a generation-long economic decline and to redefine Tokyo’s relationship with Washington.
Many Japanese saw the vote as the final blow to the island nation’s postwar order, which has been slowly unraveling since the economy collapsed in the early 1990s.
In the powerful lower house, the opposition Democrats virtually swapped places with the governing Liberal Democratic Party, winning 308 of the 480 seats, a 175 percent increase that gives them control of the chamber, according to the national broadcaster NHK. The incumbents took just 119 seats, about a third of their previous total. The remaining seats were won by smaller parties.
The exhilarating sense that Japan had reached a turning point drew long lines of voters to polling stations in Tokyo, where they braved darkening skies from an approaching typhoon. About 70 percent of eligible voters cast ballots, according to NHK, the highest turnout in nearly two decades.
“I want the Democratic Party to have a go at running the country,” said Akiko Tanaka, a 34-year-old nursing home care worker who voted at a junior high school in the Tokyo suburb of Sayama. “If we keep going like we’ve been, nothing will get better. We need a new government.”
A top priority for the new government will be simply maintaining the unity it achieved on Sunday. The largely untested Democrats, a broad coalition of former Socialists and Liberal Democrat defectors, hope to avoid the mistakes of the only previous non-Liberal Democratic government, in 1993, which collapsed in just 11 months because of infighting and defections.
That imperative virtually assures no sudden, radical departures in foreign policy. Rather, analysts expect the Democrats to focus at least initially on their more ambitious domestic agenda.
The party has pledged to change the postwar paradigm here as well, promising to ease growing social inequality by handing more money and social benefits directly to residents rather than to industry or other interest groups.
It has promised to strengthen the social safety net and raise the low birthrate by giving families cash handouts of $270 per month per child. And the party has said it will rein in the powerful central ministries in Tokyo, which have run postwar Japan on the Liberal Democrats’ behalf.
But even here, most people have not embraced the party’s platform with much enthusiasm, nor are they optimistic about the Democrats’ ability to solve looming problems like the growing government debt and a rapidly aging population.
To many voters, the most important fact of this election was that they finally had a choice.
“This vote is about making a system where parties that fail get kicked out,” said Yoshiyuki Kobayashi, 40, one of the white-collar corporate workers known here as salarymen. “We need to teach politicians to be nervous.”
“This has been a revolutionary election,” Yukio Hatoyama, the party leader and presumptive new prime minister, told reporters. “The people have shown the courage to take politics into their own hands.”
Mr. Hatoyama, who is expected to assemble a government in two to three weeks, has spoken of the end of American-dominated globalization and of the need to reorient Japan toward Asia. His party’s campaign manifesto calls for an “equal partnership” with the United States and a “reconsidering” of the 50,000-strong American military presence here.
One change on the horizon may be the renegotiation of a deal with Washington to relocate the United States Marine Corps’ Futenma airfield, on the island of Okinawa. Many island residents want to evict the base altogether.
The Democrats, who opposed the American-led war in Iraq, have also said they may end the Japanese Navy’s refueling of American and allied warships in the Indian Ocean.
The White House issued a statement on Sunday saying it was “confident that the strong U.S.-Japan alliance and the close partnership between our two countries will continue to flourish” under the new government. “President Obama looks forward to working closely with the new Japanese prime minister on a broad range of global, regional and bilateral issues,” the statement said.
Political analysts expect Japan to remain a close American ally, but one that is more assertive and less willing to follow Washington’s lead automatically.
“This is what happens when you have a government in Japan that must be responsive to public opinion,” said Daniel C. Sneider, a researcher on East Asia at Stanford University. “It will end the habits from decades of a relationship in which Japan didn’t challenge the United States.”
At the same time, the Democrats want to improve relations with other Asian countries, including on the touchy issue of history. Analysts say the party seeks to reverse Japan’s growing isolation in the region under decades of right-wing Liberal Democratic rule.
Such changes are not likely to come quickly. Diplomatic analysts expect the Democrats to steer clear of security issues for the time being because they could prove too divisive for a party dependent on a broad ideological spectrum.
And some analysts have played down the rhetoric of Mr. Hatoyama, a bushy-haired former management professor, as a nod to his party’s left-leaning base rather than a firm pledge to alter dealings with the United States drastically. In recent interviews, Democratic leaders have insisted there will be no major changes in that relationship.
“It’s complete nonsense that a non-Liberal Democratic government will hurt U.S.-Japan relations,” said Tetsuro Fukuyama, a Democratic lawmaker who oversaw production of the campaign manifesto. “But there are many things left unchanged from the last 50 years that need to be re-examined.”
Analysts, however, saw the vote less as an embrace of the Democrats than a resounding rejection of the incumbents. The conservative Liberal Democrats, who with their precursors have held or shared power for 62 of the past 63 years, led Japan from bombed-out rubble to economic miracle, while keeping it firmly in Washington’s camp.
But the party has appeared increasingly exhausted and directionless, and Japan’s traditionally apolitical electorate, in a rare display of popular democratic muscle, firmly blamed it for the decline of this former economic superpower and its increasingly cloudy future.
“We have been trying to outgrow this old one-party system ever since the collapse of the Berlin Wall,” said Takeshi Sasaki, a political expert and former president of the University of Tokyo. “It took two decades, but we finally made it.”
Prime Minister Taro Aso told reporters that he would take responsibility for the defeat, and stepped down Monday as head of the party.
Makiko Inoue contributed reporting from Sayama, Japan.
As Big Banks Repay Bailout Money, U.S. Sees a Profit
As Big Banks Repay Bailout Money, U.S. Sees a Profit
By ZACHERY KOUWE
Copyright by The New York Times
Published: August 30, 2009
http://www.nytimes.com/2009/08/31/business/economy/31taxpayer.html?th&emc=th
Nearly a year after the federal rescue of the nation’s biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in aid that many critics thought might never be seen again.
The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.
These early returns are by no means a full accounting of the huge financial rescue undertaken by the federal government last year to stabilize teetering banks and other companies.
The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.
But the mere hint of bailout profits for the nearly year-old Troubled Asset Relief Program has been received as a welcome surprise. It has also spurred hopes that the government could soon get out of the banking business.
“The taxpayers want their money back and they want the government out of our banking system,” Representative Jeb Hensarling, a Texas Republican and a member of the Congressional Oversight Panel examining the relief program, said in an interview.
Profits were hardly high on the list of government priorities last October, when a financial panic was in full swing and the Treasury Department started spending roughly $240 billion to buy preferred shares from hundreds of banks that were facing huge potential losses from troubled mortgages. Bank stocks began teetering after Lehman Brothers collapsed and the government rescued A.I.G., and fear gripped the financial industry around the world.
American taxpayers were told they would eventually make a modest return from these investments, including a 5 percent quarterly dividend on the banks’ preferred shares and warrants to buy stock in the banks at a set price over 10 years.
But critics at the time warned that taxpayers might not see any profits, and that it could take years for the banks to repay the loans.
As Congress debated the bailout bill last September that would authorize the Treasury Department to spend up to $700 billion to stem the financial crisis, Representative Mac Thornberry, Republican of Texas, said: “Seven hundred billion dollars of taxpayer money should not be used as a hopeful experiment.”
So far, that experiment is more than paying off. The government has taken profits of about $1.4 billion on its investment in Goldman Sachs, $1.3 billion on Morgan Stanley and $414 million on American Express. The five other banks that repaid the government — Northern Trust, Bank of New York Mellon, State Street, U.S. Bancorp and BB&T — each brought in $100 million to $334 million in profit.
The figure does not include the roughly $35 million the government has earned from 14 smaller banks that have paid back their loans. The government bought shares in these and many other financial companies last fall, when sinking confidence among investors pushed down many bank stocks to just a few dollars a share. As the banks strengthened and became profitable, the government authorized them to pay back the preferred stock, which had been paying quarterly dividends since October.
But the real profit came as banks were permitted to buy back the so-called warrants, whose low fixed price provided a windfall for the government as the shares of the companies soared.
Despite the early proceeds from the bailout program, a debate remains over whether the government could have done even better with its bank investments.
If private investors had taken a stake in the banks last October on par with the government’s, they would have had profits three times as large — about $12 billion, or 44 percent if tallied on an annual basis, according to Linus Wilson, a finance professor at the University of Louisiana at Lafayette, who analyzed the data for The Times.
Why the discrepancy? Finance experts say the government overpaid for the bank assets it bought, because its chief priority was to stabilize the teetering financial system, not to maximize profit.
“Had these banks tried to raise money any other way, they probably would have had to pay quite a bit more than the government received,” said Espen Robak, head of Pluris Valuation Advisors, which analyzes the value of large financial institutions.
A Congressional oversight panel concluded in February that the Treasury paid an average of 34 percent more than the estimated fair value of the assets it received.
Of course, many finance experts suggest that the comparison is academic at best, because there is no way to know what might have become of the banks or the financial system as a whole had the government not acted.
“Taxpayers should heave a sigh of relief that the investment in the banks protected them from even more catastrophic losses from more bank failures,” said Aswath Damodaran, a finance professor at the Stern School of Business at New York University.
A more direct comparison of profits can be made with the investment performance of other governments that poured money into ailing banks last fall.
The Swiss government, for example, said last week that it had pulled in a handsome profit for taxpayers on a $5.6 billion bailout it gave to UBS, the troubled Swiss bank, at the height of the financial crisis in October. The government netted $1 billion on its investment, a gain equal to a 32 percent annual return.
“They are substantially in the money,” Guy de Blonay, a fund manager at Henderson New Star in London, said after the announcement.
American taxpayers could still collect additional profits on their investments in two other big banks that have repaid their preferred stock but not their warrants: JPMorgan Chase and Capital One. They are expected to yield over $3.1 billion in gains for the Treasury in the next month or so, although the full tally will depend on how much they will pay to buy back their warrants.
And the government is owed about $6.2 billion in interest payments from banks that have not yet repaid their federal money.
But all the profits taxpayers have won could still be wiped out by two deeply troubled institutions. Both Citigroup and Bank of America are still holding mortgages and other loans that were once worth billions of dollars but whose revised values are uncertain. If they prove “toxic” because they cannot attract buyers, they could leave large holes in the banks’ balance sheets.
Neither bank is ready to repay its bailout money anytime soon, even though the banks’ stock prices have surged in the last month, leaving the government sitting on paper profits of about $18 billion between them.
Eric Dash contributed reporting.
By ZACHERY KOUWE
Copyright by The New York Times
Published: August 30, 2009
http://www.nytimes.com/2009/08/31/business/economy/31taxpayer.html?th&emc=th
Nearly a year after the federal rescue of the nation’s biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in aid that many critics thought might never be seen again.
The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.
These early returns are by no means a full accounting of the huge financial rescue undertaken by the federal government last year to stabilize teetering banks and other companies.
The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.
But the mere hint of bailout profits for the nearly year-old Troubled Asset Relief Program has been received as a welcome surprise. It has also spurred hopes that the government could soon get out of the banking business.
“The taxpayers want their money back and they want the government out of our banking system,” Representative Jeb Hensarling, a Texas Republican and a member of the Congressional Oversight Panel examining the relief program, said in an interview.
Profits were hardly high on the list of government priorities last October, when a financial panic was in full swing and the Treasury Department started spending roughly $240 billion to buy preferred shares from hundreds of banks that were facing huge potential losses from troubled mortgages. Bank stocks began teetering after Lehman Brothers collapsed and the government rescued A.I.G., and fear gripped the financial industry around the world.
American taxpayers were told they would eventually make a modest return from these investments, including a 5 percent quarterly dividend on the banks’ preferred shares and warrants to buy stock in the banks at a set price over 10 years.
But critics at the time warned that taxpayers might not see any profits, and that it could take years for the banks to repay the loans.
As Congress debated the bailout bill last September that would authorize the Treasury Department to spend up to $700 billion to stem the financial crisis, Representative Mac Thornberry, Republican of Texas, said: “Seven hundred billion dollars of taxpayer money should not be used as a hopeful experiment.”
So far, that experiment is more than paying off. The government has taken profits of about $1.4 billion on its investment in Goldman Sachs, $1.3 billion on Morgan Stanley and $414 million on American Express. The five other banks that repaid the government — Northern Trust, Bank of New York Mellon, State Street, U.S. Bancorp and BB&T — each brought in $100 million to $334 million in profit.
The figure does not include the roughly $35 million the government has earned from 14 smaller banks that have paid back their loans. The government bought shares in these and many other financial companies last fall, when sinking confidence among investors pushed down many bank stocks to just a few dollars a share. As the banks strengthened and became profitable, the government authorized them to pay back the preferred stock, which had been paying quarterly dividends since October.
But the real profit came as banks were permitted to buy back the so-called warrants, whose low fixed price provided a windfall for the government as the shares of the companies soared.
Despite the early proceeds from the bailout program, a debate remains over whether the government could have done even better with its bank investments.
If private investors had taken a stake in the banks last October on par with the government’s, they would have had profits three times as large — about $12 billion, or 44 percent if tallied on an annual basis, according to Linus Wilson, a finance professor at the University of Louisiana at Lafayette, who analyzed the data for The Times.
Why the discrepancy? Finance experts say the government overpaid for the bank assets it bought, because its chief priority was to stabilize the teetering financial system, not to maximize profit.
“Had these banks tried to raise money any other way, they probably would have had to pay quite a bit more than the government received,” said Espen Robak, head of Pluris Valuation Advisors, which analyzes the value of large financial institutions.
A Congressional oversight panel concluded in February that the Treasury paid an average of 34 percent more than the estimated fair value of the assets it received.
Of course, many finance experts suggest that the comparison is academic at best, because there is no way to know what might have become of the banks or the financial system as a whole had the government not acted.
“Taxpayers should heave a sigh of relief that the investment in the banks protected them from even more catastrophic losses from more bank failures,” said Aswath Damodaran, a finance professor at the Stern School of Business at New York University.
A more direct comparison of profits can be made with the investment performance of other governments that poured money into ailing banks last fall.
The Swiss government, for example, said last week that it had pulled in a handsome profit for taxpayers on a $5.6 billion bailout it gave to UBS, the troubled Swiss bank, at the height of the financial crisis in October. The government netted $1 billion on its investment, a gain equal to a 32 percent annual return.
“They are substantially in the money,” Guy de Blonay, a fund manager at Henderson New Star in London, said after the announcement.
American taxpayers could still collect additional profits on their investments in two other big banks that have repaid their preferred stock but not their warrants: JPMorgan Chase and Capital One. They are expected to yield over $3.1 billion in gains for the Treasury in the next month or so, although the full tally will depend on how much they will pay to buy back their warrants.
And the government is owed about $6.2 billion in interest payments from banks that have not yet repaid their federal money.
But all the profits taxpayers have won could still be wiped out by two deeply troubled institutions. Both Citigroup and Bank of America are still holding mortgages and other loans that were once worth billions of dollars but whose revised values are uncertain. If they prove “toxic” because they cannot attract buyers, they could leave large holes in the banks’ balance sheets.
Neither bank is ready to repay its bailout money anytime soon, even though the banks’ stock prices have surged in the last month, leaving the government sitting on paper profits of about $18 billion between them.
Eric Dash contributed reporting.
Sunday, August 30, 2009
Government involvement
Government involvement
This morning I was awoken by my alarm clock powered by electricity generated by the public power monopoly regulated by the U.S. Department of Energy.
I then took a shower in the clean water provided by a municipal water utility.
After that, I turned on the TV to one of the FCC-regulated channels to see what the National Weather Service of the National Oceanographic and Atmospheric Administration determined the weather was going to be like, using satellites designed, built, and launched by the National Aeronautics and Space Administration.
I watched this while eating my breakfast of U.S. Department of Agriculture-inspected food and taking the drugs which have been determined as safe by the U.S. Food and Drug Administration.
At the appropriate time, as regulated by the U.S. Congress and kept accurate by the National Institute of Standards and Technology and the U.S. Naval Observatory, I get into my National Highway Traffic Safety Administration-approved automobile and set out to work on the roads build by the local, state, and federal Departments of Transportation, possibly stopping to purchase additional fuel of a quality level determined by the Environmental Protection Agency, using legal tender issued by the Federal Reserve Bank.
On the way out the door I deposit any mail I have to be sent out via the U.S. Postal Service and drop the kids off at the public school.
After spending another day not being maimed or killed at work thanks to the workplace regulations imposed by the Department of Labor and the Occupational Safety and Health administration, enjoying another two meals which again do not kill me because of the USDA, I drive my NHTSA car back home on the DOT roads, to my house which has not burned down in my absence because of the state and local building codes and Fire Marshal's inspection, and which has not been plundered of all its valuables thanks to the local police department.
And then I log on to the internet - which was developed by the Defense Advanced Research Projects Administration - and post on Freerepublic.com and Fox News forums about how SOCIALISM in medicine is BAD because the government can't do anything right
This morning I was awoken by my alarm clock powered by electricity generated by the public power monopoly regulated by the U.S. Department of Energy.
I then took a shower in the clean water provided by a municipal water utility.
After that, I turned on the TV to one of the FCC-regulated channels to see what the National Weather Service of the National Oceanographic and Atmospheric Administration determined the weather was going to be like, using satellites designed, built, and launched by the National Aeronautics and Space Administration.
I watched this while eating my breakfast of U.S. Department of Agriculture-inspected food and taking the drugs which have been determined as safe by the U.S. Food and Drug Administration.
At the appropriate time, as regulated by the U.S. Congress and kept accurate by the National Institute of Standards and Technology and the U.S. Naval Observatory, I get into my National Highway Traffic Safety Administration-approved automobile and set out to work on the roads build by the local, state, and federal Departments of Transportation, possibly stopping to purchase additional fuel of a quality level determined by the Environmental Protection Agency, using legal tender issued by the Federal Reserve Bank.
On the way out the door I deposit any mail I have to be sent out via the U.S. Postal Service and drop the kids off at the public school.
After spending another day not being maimed or killed at work thanks to the workplace regulations imposed by the Department of Labor and the Occupational Safety and Health administration, enjoying another two meals which again do not kill me because of the USDA, I drive my NHTSA car back home on the DOT roads, to my house which has not burned down in my absence because of the state and local building codes and Fire Marshal's inspection, and which has not been plundered of all its valuables thanks to the local police department.
And then I log on to the internet - which was developed by the Defense Advanced Research Projects Administration - and post on Freerepublic.com and Fox News forums about how SOCIALISM in medicine is BAD because the government can't do anything right
New York Times Editorial: Majority Rule on Health Care Reform
New York Times Editorial: Majority Rule on Health Care Reform
Copyright by The New York Times
Published: August 29, 2009
http://www.nytimes.com/2009/08/30/opinion/30sun1.html?th&emc=th
The talk in Washington is that Senate Democrats are preparing to push through health care reforms using parliamentary procedures that will allow a simple majority to prevail in their chamber, as it does in the House, instead of the 60 votes needed to overcome the filibuster that Senate Republicans are sure to mount.
With the death of Senator Edward Kennedy, the Democrats do not have the votes just among their 57 members (and the two independents) to break a filibuster, and not all of these can be counted on to vote in lock step. If the Democrats want to enact health care reform this year, they appear to have little choice but to adopt a high-risk, go-it-alone, majority-rules strategy.
We say this with considerable regret because a bipartisan compromise would be the surest way to achieve comprehensive reforms with broad public support. But the ideological split between the parties is too wide — and the animosities too deep — for that to be possible.
In recent weeks, it has become inescapably clear that Republicans are unlikely to vote for substantial reform this year. Many seem bent on scuttling President Obama’s signature domestic issue no matter the cost. As Senator Jim DeMint, Republican of South Carolina, so infamously put it: “If we’re able to stop Obama on this, it will be his Waterloo. It will break him.”
•
Superficially seductive calls to scale down the effort until the recession ends or to take time for further deliberations should be ignored. There has been more than enough debate and the recession will almost certainly be over before the major features of reform kick in several years from now. Those who fear that a trillion-dollar reform will add to the nation’s deficit burden should remember that these changes are intended to be deficit-neutral over the next decade.
Delay would be foolish politically. The Democrats have substantial majorities in the House and the Senate this year. Next year, as the midterm elections approach, it will be even harder for legislators to take controversial stands. After the elections, if history is any guide, the Democratic majorities could be smaller.
Mr. Obama should know from sad experience the pitfalls of seeking bipartisan cooperation from a Republican Party that has sloughed off most of its moderates and is dominated by its right wing. His stimulus package was supported by no Republicans in the House and only three Republicans in the Senate, so-called moderates whose support was won by shrinking the package below the size at which it would have done the most good.
Now the same sort of damaging retreat may be happening in the Senate Finance Committee. Three committees in the House and one in the Senate have used their Democratic majorities to approve liberal health reform bills. The only bipartisan negotiations are between a rump group of three Democrats and three Republicans on the Finance Committee who hail from largely rural states with small populations, namely Iowa, Maine, Montana, New Mexico, North Dakota and Wyoming. Somehow this small, unrepresentative group has emerged as the focal point for bipartisan health care reform.
The six have been working hard to reach agreement, but the concessions demanded by Republicans will most likely make the reform effort weaker and smaller. They could, for example, reduce the scale of the program and the subsidies for low-income people; drop the idea of a government-run insurance plan to compete with private insurers; and eliminate a requirement that employers offer coverage to their workers or pay a penalty.
Even if the group reaches an agreement, which is by no means certain, its compromise is unlikely to win support from a Republican Party that seems bent on delay. Leading Senate Republicans have seen little in the emerging compromise that they are willing to support.
Two of the Republicans working on the compromise — Charles Grassley of Iowa and Michael Enzi of Wyoming — have said they would not vote for a bill that could not win broad support, which Mr. Enzi defined as 75 to 80 senators, implying that roughly half of the Senate’s Republicans must sign on. That is unlikely — no matter how good or bipartisan or middle-of-the-road any bill may be.
The Democrats are thus well advised to start preparing to use an arcane parliamentary tactic known as “budget reconciliation” that would let them sidestep a Republican filibuster and approve reform proposals by a simple majority.
•
The approach is risky. Reconciliation bills are primarily intended to deal with budget items that affect the deficit, not with substantive legislation like health care reform. Senators could challenge as “extraneous” any provisions that do not change spending or revenues over the next five years, or would have a budget impact that is “merely incidental” to some broader policy purpose, or would increase the deficit in Year 6 and beyond.
So how much of the proposed health care reforms could plausibly fit into a reconciliation bill? The answer seems to be: quite a lot, though nobody knows for sure.
Knowledgeable analysts from both parties believe that these important elements of reform will probably pass muster because of their budgetary impact: expansion of Medicaid for the poor; subsidies to help low-income people buy insurance; new taxes to pay for the trillion-dollar program; Medicare cuts to help finance the program; mandates on individuals to buy insurance and on employers to offer coverage; and tax credits to help small businesses provide insurance.
Even the public plan so reviled by Republicans could probably qualify, especially if it is given greater power than currently planned to dictate the prices it will pay to hospitals, doctors, drug companies and other providers, thus saving the government lots of money in subsidies.
Greater uncertainty surrounds two other critical elements: new rules requiring insurance companies to accept all applicants and charge them the same premiums without regard to medical condition, and the creation of new exchanges in which people forced to buy their own insurance could find cheaper policies than are currently available.
Republicans claim that they want to make medical insurance and care cheaper and give ordinary Americans more choices. But given their drive to kill health reform at any cost, they might well argue that these are programmatic changes whose budgetary impact is “merely incidental.” Democrats would very likely counter that they are so intertwined with other reforms that they are “a necessary term or condition” for other provisions that do affect spending or revenues, which could allow them to be kept in the bill.
Nobody knows how the Senate parliamentarian, an obscure official who advises the presiding officer, would rule on any of these complicated issues. But if he were to take a narrow view and eliminate important features, it could leave the reform package riddled with holes — perhaps providing subsidies to buy insurance on exchanges that do not exist, for example. Thus there are plans afoot to use a second bill to pass whatever reforms will not fit under the rubric of reconciliation, but those would be subject to filibuster and would have to depend on their general popularity (insurance reforms are enormously popular) to win 60 votes for passage.
Another hurdle is that the reconciliation legislation covers only the next five years, while the Democratic plans are devised to be deficit-neutral over 10 years. The practical effect is that the Democrats will almost surely need to find added revenues or budget cuts within the first five years.
Another Senate rule, which applies whether reconciliation is used or not, requires that the reforms enacted now not cause an increase in the deficit for decades to come, a difficult but probably not impossible hurdle to surmount.
•
Clearly the reconciliation approach is a risky and less desirable way to enact comprehensive health care reforms. The only worse approach would be to retreat to modest gestures in an effort to win Republican acquiescence. It is barely possible that the Senate Finance Committee might pull off a miracle and devise a comprehensive solution that could win broad support, or get one or more Republicans to vote to break a filibuster. If not, the Democrats need to push for as much reform as possible through majority vote.
Copyright by The New York Times
Published: August 29, 2009
http://www.nytimes.com/2009/08/30/opinion/30sun1.html?th&emc=th
The talk in Washington is that Senate Democrats are preparing to push through health care reforms using parliamentary procedures that will allow a simple majority to prevail in their chamber, as it does in the House, instead of the 60 votes needed to overcome the filibuster that Senate Republicans are sure to mount.
With the death of Senator Edward Kennedy, the Democrats do not have the votes just among their 57 members (and the two independents) to break a filibuster, and not all of these can be counted on to vote in lock step. If the Democrats want to enact health care reform this year, they appear to have little choice but to adopt a high-risk, go-it-alone, majority-rules strategy.
We say this with considerable regret because a bipartisan compromise would be the surest way to achieve comprehensive reforms with broad public support. But the ideological split between the parties is too wide — and the animosities too deep — for that to be possible.
In recent weeks, it has become inescapably clear that Republicans are unlikely to vote for substantial reform this year. Many seem bent on scuttling President Obama’s signature domestic issue no matter the cost. As Senator Jim DeMint, Republican of South Carolina, so infamously put it: “If we’re able to stop Obama on this, it will be his Waterloo. It will break him.”
•
Superficially seductive calls to scale down the effort until the recession ends or to take time for further deliberations should be ignored. There has been more than enough debate and the recession will almost certainly be over before the major features of reform kick in several years from now. Those who fear that a trillion-dollar reform will add to the nation’s deficit burden should remember that these changes are intended to be deficit-neutral over the next decade.
Delay would be foolish politically. The Democrats have substantial majorities in the House and the Senate this year. Next year, as the midterm elections approach, it will be even harder for legislators to take controversial stands. After the elections, if history is any guide, the Democratic majorities could be smaller.
Mr. Obama should know from sad experience the pitfalls of seeking bipartisan cooperation from a Republican Party that has sloughed off most of its moderates and is dominated by its right wing. His stimulus package was supported by no Republicans in the House and only three Republicans in the Senate, so-called moderates whose support was won by shrinking the package below the size at which it would have done the most good.
Now the same sort of damaging retreat may be happening in the Senate Finance Committee. Three committees in the House and one in the Senate have used their Democratic majorities to approve liberal health reform bills. The only bipartisan negotiations are between a rump group of three Democrats and three Republicans on the Finance Committee who hail from largely rural states with small populations, namely Iowa, Maine, Montana, New Mexico, North Dakota and Wyoming. Somehow this small, unrepresentative group has emerged as the focal point for bipartisan health care reform.
The six have been working hard to reach agreement, but the concessions demanded by Republicans will most likely make the reform effort weaker and smaller. They could, for example, reduce the scale of the program and the subsidies for low-income people; drop the idea of a government-run insurance plan to compete with private insurers; and eliminate a requirement that employers offer coverage to their workers or pay a penalty.
Even if the group reaches an agreement, which is by no means certain, its compromise is unlikely to win support from a Republican Party that seems bent on delay. Leading Senate Republicans have seen little in the emerging compromise that they are willing to support.
Two of the Republicans working on the compromise — Charles Grassley of Iowa and Michael Enzi of Wyoming — have said they would not vote for a bill that could not win broad support, which Mr. Enzi defined as 75 to 80 senators, implying that roughly half of the Senate’s Republicans must sign on. That is unlikely — no matter how good or bipartisan or middle-of-the-road any bill may be.
The Democrats are thus well advised to start preparing to use an arcane parliamentary tactic known as “budget reconciliation” that would let them sidestep a Republican filibuster and approve reform proposals by a simple majority.
•
The approach is risky. Reconciliation bills are primarily intended to deal with budget items that affect the deficit, not with substantive legislation like health care reform. Senators could challenge as “extraneous” any provisions that do not change spending or revenues over the next five years, or would have a budget impact that is “merely incidental” to some broader policy purpose, or would increase the deficit in Year 6 and beyond.
So how much of the proposed health care reforms could plausibly fit into a reconciliation bill? The answer seems to be: quite a lot, though nobody knows for sure.
Knowledgeable analysts from both parties believe that these important elements of reform will probably pass muster because of their budgetary impact: expansion of Medicaid for the poor; subsidies to help low-income people buy insurance; new taxes to pay for the trillion-dollar program; Medicare cuts to help finance the program; mandates on individuals to buy insurance and on employers to offer coverage; and tax credits to help small businesses provide insurance.
Even the public plan so reviled by Republicans could probably qualify, especially if it is given greater power than currently planned to dictate the prices it will pay to hospitals, doctors, drug companies and other providers, thus saving the government lots of money in subsidies.
Greater uncertainty surrounds two other critical elements: new rules requiring insurance companies to accept all applicants and charge them the same premiums without regard to medical condition, and the creation of new exchanges in which people forced to buy their own insurance could find cheaper policies than are currently available.
Republicans claim that they want to make medical insurance and care cheaper and give ordinary Americans more choices. But given their drive to kill health reform at any cost, they might well argue that these are programmatic changes whose budgetary impact is “merely incidental.” Democrats would very likely counter that they are so intertwined with other reforms that they are “a necessary term or condition” for other provisions that do affect spending or revenues, which could allow them to be kept in the bill.
Nobody knows how the Senate parliamentarian, an obscure official who advises the presiding officer, would rule on any of these complicated issues. But if he were to take a narrow view and eliminate important features, it could leave the reform package riddled with holes — perhaps providing subsidies to buy insurance on exchanges that do not exist, for example. Thus there are plans afoot to use a second bill to pass whatever reforms will not fit under the rubric of reconciliation, but those would be subject to filibuster and would have to depend on their general popularity (insurance reforms are enormously popular) to win 60 votes for passage.
Another hurdle is that the reconciliation legislation covers only the next five years, while the Democratic plans are devised to be deficit-neutral over 10 years. The practical effect is that the Democrats will almost surely need to find added revenues or budget cuts within the first five years.
Another Senate rule, which applies whether reconciliation is used or not, requires that the reforms enacted now not cause an increase in the deficit for decades to come, a difficult but probably not impossible hurdle to surmount.
•
Clearly the reconciliation approach is a risky and less desirable way to enact comprehensive health care reforms. The only worse approach would be to retreat to modest gestures in an effort to win Republican acquiescence. It is barely possible that the Senate Finance Committee might pull off a miracle and devise a comprehensive solution that could win broad support, or get one or more Republicans to vote to break a filibuster. If not, the Democrats need to push for as much reform as possible through majority vote.
Hey, PC, Who Taught You to Fight Back?
Hey, PC, Who Taught You to Fight Back?
By DEVIN LEONARD
Copyright by The New York Times
Published: August 29, 2009
http://www.nytimes.com/2009/08/30/business/media/30ad.html?th&emc=th
SEAN SILER would never be mistaken for a movie star. A former Navy officer who wears glasses and is a tad on the heavy side, Mr. Siler works at Microsoft, where he oversees the Windows division’s adoption of new Internet connectivity software called IPv6.
A Microsoft ad featured Lauren, who was shopping on a budget and decided not to spring for a $1,000 MacBook.
But there were audible gasps last summer when Mr. Siler, 39, auditioned for Microsoft’s new ad campaign for Windows, created by Crispin Porter & Bogusky, the Miami agency best known for its cheeky work for Mini Cooper and Burger King.
“I was like, ‘Are you kidding?’ ” recalls Rob Reilly, one of the agency’s executive creative directors. “It couldn’t have been more perfect.”
Everybody agreed that Mr. Siler looked exactly like PC, the character played by the comedian John Hodgman in Apple’s popular “Get a Mac” ads that lampoon Windows-based computers and those who love them. Two weeks later, Mr. Siler reported to a nearby television studio. The agency dressed him in PC’s dorky uniform — white shirt, baggy khakis, brown sport coat and matching brown tie — and handed him a script with the lines: “I’m a PC. And I’ve been made into a stereotype.”
Mr. Siler joined a parade of environmentalists, budget-conscious laptop shoppers, mixed martial arts fighters, mash-up DJs and remarkably tech-savvy preschoolers who appear in Microsoft’s new campaign, which is intended to show that real Windows users aren’t all clueless drones.
For Mr. Siler, the experience was almost like being a geeky incarnation of Brad Pitt. His e-mail address was on the screen, and he received 4,000 messages from viewers — some from grateful parents whose children had wanted expensive Macs over PCs and now had second thoughts.
Crispin put up a video on YouTube in which Mr. Siler discussed his role in the campaign; it was viewed more than 702,000 times. At work, he was constantly interrupted by his fellow Microsoft employees. “For a couple of weeks,” Mr. Siler recalls, “I had people coming by my office and saying: ‘Hey, you are the PC guy, aren’t you? That’s so cool!’ ”
His mother wasn’t so sure. “You look so horrible,” she told him. “You don’t look anything like that man. Why did they make you look so bad?”
Somebody better explain to Mr. Siler’s mother that this isn’t a beauty contest; it’s an ad war, one destined to go down in history with the cola wars of the 1980s and ’90s and the Hertz-Avis feud of the 1960s. According to TNS Media Intelligence, Apple spent $264 million on television ads last year, 71 percent more than Microsoft. In the first six months of 2009, however, Microsoft responded with $163 million worth of commercials, more than twice Apple’s spending.
Surprisingly, Microsoft, which has never been known for running cool ads, has landed some punches. Shortly after the Microsoft campaign started, Apple unleashed commercials that mocked its competitor as spending money on advertising when it should have been fixing Vista, its much-maligned operating system.
“It got Apple’s attention, didn’t it?” says Robert X. Cringely, host of PBS’s NerdTV.
FOR years, Microsoft was the stodgy market leader. It sold 90 percent of the world’s operating system software, and generally left the advertising to Dell, H.P. and other hardware makers who licensed Windows. The only time Microsoft hawked its most recognizable brand on television was when the latest version of the software hit the shelves. Then the company flooded the airwaves with commercials full of loud music and swirling imagery saying that the new version of Windows is out — and that it’s awesome!
Apple is the classic smaller insurgent. Its share for desktops and laptops in the United States is just over 8 percent. Every time Apple grabs another point of market share from Microsoft’s partners, its stock price climbs. And one way that Apple has tried to gain share is by running clever ads that ridicule everything Microsoft stands for.
There’s no better example than “Get a Mac,” unveiled three years ago by Apple’s longtime ad agency, TBWA/Chiat/Day. No technology company would choose Mr. Hodgman’s character, PC, to personify its brand. He reeks of the past. He boasts of using his desktop to make spreadsheets and ridicules his more youthful friend, Mac, played by the actor Justin Long, for using his desktop for “juvenile” pursuits like blogging and movie making — even through it’s clear that PC would like to be in on the fun. He just can’t get his Windows computer to do his bidding.
Like a classic sitcom character — think Ralph Kramden of “The Honeymooners” — PC is always dreaming up ill-advised schemes intended to show his superiority. He’s thwarted by viruses, system crashes and other problems more associated with Windows-based computers than Apple’s products — and, recently, he has become a hapless apologist for Vista. Mr. Long’s character smugly watches his friend’s pratfalls, glancing at the audience with raised eyebrows as if to say, “If only this poor guy would buy a Mac. . . .”
PC will never learn. Not as long as he keeps driving sales for Apple. Since 2006, the year that he first appeared in all his pasty-faced glory, Apple’s share of the computer desktop market in the United States has more than doubled, according to IDC, the technology industry research firm. Its stock price, meanwhile, has risen 142 percent since May 2006, while Microsoft’s has barely budged. Yes, the astonishing success of newer Apple products like the iPod and the iPhone has helped. But the PC character should also take a bow. (Representatives of Apple and TBWA/Chiat/Day declined to be interviewed for this article.)
Apple’s ads put Microsoft in a bind. One of Madison Avenue’s rules is that a market leader never acknowledges a smaller competitor in its advertising. What’s more, if Microsoft responded with ads that backfired, it would look just like Mr. Hodgman’s character. Maybe it was better to grin and bear it.
Then, last year, Microsoft hired Crispin Porter and struck back with uncharacteristic wit. There was Mr. Siler’s star turn. The agency also handed bunches of cash to shoppers and asked them to choose between a PC and a Mac. Lauren, a 20-something in one of the “Laptop Hunter” spots, is giddy about the money she has left over when she selects a $699 H.P. with a 17-inch screen, rather than a $1,000 Mac with a 13-inch screen. “I guess I’m just not cool enough to be a Mac person,” she sighs. This time, the joke was on Apple. In a recession, it’s pretty hip to save $300.
Microsoft’s effort to inspire PC pride seemed to resonate after its debut last September. According to IDC, Mac shipments in the United States plummeted 20 percent in the fourth quarter of 2008 versus the previous quarter, as the economy went into a tailspin, while those of PCs manufactured by Dell and H.P. fell only 13 percent and 3 percent, respectively.
Microsoft was quick to declare victory — maybe too quick. In the second quarter this year, Mac sales in the United States rebounded 34 percent, IDC said, while Dell and H.P. had more modest gains. Even more humbling for Microsoft was the company’s announcement in late July that its year-over-year operating income for the quarter declined 29 percent.
As a result, some analysts have argued that the Microsoft campaign has failed. But they, too, may be too hasty. We are only weeks away from the Oct. 22 release of Windows 7, which may undo much of the company’s self-inflicted damage from Vista. PC users, many of whom skipped buying Vista machines, could be holding off until then to buy. And the introduction of Windows 7 will be accompanied by yet another Crispin Porter ad blitz.
“You are not so embarrassed to take your PC out of the bag on a plane anymore,” said Mr. Reilly at the ad agency. “It’s actually kind of cool that you do. I know this is working.”
EVERY Wednesday, Lee Clow, the creative director of TBWA/Chiat/Day, travels from Los Angeles to Cupertino, Calif., for his weekly meeting with Steven P. Jobs, the Apple chief executive. They started doing this years ago and have created ads that are as stylish and cool as anything on television. Usually, the subtext of these ads is that Microsoft is the Evil Empire.
Mr. Jobs started working with Mr. Clow, a laid-back former surfer dude, in the early 1980s when Mr. Clow helped to create Apple’s path-breaking “1984” television commercial introducing the Macintosh. The ad’s unsubtle message was that buyers of the new machine would be striking against I.B.M., portrayed as Apple’s Orwellian foe.
Mr. Jobs struggled to persuade Apple’s board to run the ad, which was directed by Ridley Scott. Mr. Clow was similarly adamant when his boss, the late Jay Chiat, tried to shelve it. The ad ran only once, during the 1984 Super Bowl, but it has never been forgotten.
Apple forced out Mr. Jobs the next year and hired a new ad agency, BBDO. But when Mr. Jobs returned triumphantly to the company in 1997, he reunited with TBWA/Chiat/Day. Mr. Clow brought him the idea for “Think Different,” a campaign that identified Apple with figures like Bob Dylan, Albert Einstein and Martin Luther King Jr. Mr. Jobs used it to introduce the iMac and to re-establish Apple as an iconoclast.
TBWA/Chiat/Day went on to create the 2002 “Switchers” campaign, in which the director Errol Morris filmed real computer users describing why they ditched their PCs for a Mac. Who can forget Ellen Feiss, the slow-talking teenager who made the hearts of young geeks flutter when she explained how her PC ate her homework? “It was, like, beep beep beep beep beep beep beep,” Ms. Feiss says. “And then, like, half of my paper was gone.”
Then came the iPod ads from TWBA/Chiat/Day that not only helped drive sales of Apple’s breakout product, but also made stars of little-known indie rock acts like Feist. Such is the power of Apple’s marketing wizardry.
Many of Apple’s new customers were plugging their iPods into PCs. Mr. Clow proposed “Get a Mac” to get them thinking about springing for an Apple machine. Mr. Jobs was intrigued. But he wanted the ads to be perfect.
“The discussion within Apple was: ‘Is this the right tone? How young a guy should Mac be? How dorky do we make PC look?’ ” recalls Ken Segall, a former TBWA/Chiat/Day creative director who worked early on as a consultant for Apple on the campaign. “It went many rounds before Steve was comfortable with the idea. Then he loved it.”
IN spring 2007, a year after Apple introduced the “Get a Mac” ads, Steve Ballmer, the Microsoft C.E.O., barged into the office of Mich Mathews, head of the company’s central marketing group. The two had talked about a campaign that would repair the damage from the Apple ads.
Ms. Mathews recalls Mr. Ballmer enthusiastically asking her, “When are we going to move?”
Advertising has never seemed to be part of Microsoft’s DNA. The chairman, Bill Gates, “never really seemed to get marketing,” says Rob Enderle, a longtime technology industry analyst. And for many years, Mr. Enderle says, Mr. Ballmer “just didn’t think it was worth spending the money on it.”
The company’s Windows campaigns seemed to reflect executives’ lack of interest. Perhaps the best example was the push for Microsoft Vista in 2007, created by McCann Erickson with the slogan “The Wow Starts Now.” It showed people gaping in childlike wonder at the newest version of Windows. But Vista, to put it mildly, didn’t live up to the ads.
“The operating system was visually beautiful,” said Jeff Musser, a former McCann Erickson creative director who worked on the campaign. “But it was a bad product. I didn’t really hear anybody saying, ‘Wow.’ ”
There were also cultural issues at Microsoft when it came to advertising. On Madison Avenue, they say that the more hands that touch an advertisement, the worse it becomes. Microsoft felt differently. “They thought the more people saw it and gave an opinion, the better it would be,” Mr. Musser said. “That’s how you develop software. It’s not how you develop great creative.”
So Ms. Mathews tried to change things. She set up a nine-member task force to figure out a marketing strategy and keep meddlers at arm’s length.
In February 2008, Microsoft picked Crispin Porter. At the agency, Mr. Reilly was initially apprehensive. He didn’t even own a PC; he had an ultraslim MacBook Air. (He has since bought himself two PCs — a Sony Vaio and a Lenovo ThinkPad.)
The adman also wondered whether Microsoft was ready for a Crispin campaign. Mr. Reilly himself oversees the agency’s irreverent work for Burger King, aimed at young men hungering for menu items like the Triple Whopper.
He wanted to come up with a campaign that would redefine Windows, and he counseled against ads that attacked Apple. Then he changed his tune. Last summer in Apple ads, Mr. Hodgman’s PC character morphed into a personification of Microsoft itself. PC was haunted by problems with Vista. He took up yoga to calm his nerves, only to discover that his teacher was on edge because Vista wreaked havoc on her billing system. PC tried to find peace by creating a line of herbal teas with names like “Crashy-Time Camomile” and “Raspberry Restart.”
“As the tone of their campaign became more and more negative, we were like, ‘We gotta do something,’ ” Mr. Reilly said. “That’s where the whole notion of ‘I’m a PC’ and putting a face on our users came about. We have a billion users. That’s who our cast is, whereas Apple is just two fictitious characters.”
Crispin recruited influential Windows fans like the “Desperate Housewives” star Eva Longoria. “I feel bad about the little PC guy,” she said this month. “He is always getting beaten up.” It also brought in some who would appeal to niche audiences, like the Pittsburgh mash-up D.J. Gregg Gillis, who is better known as Girl Talk.
When Mr. Ballmer finally saw the ads in September, he congratulated Ms. Mathews and gave her a high-five. Then, Ms. Mathews says, he started shouting, “I’m a PC!”
THE new Windows campaign got off to an inauspicious start. Puzzling ads featuring Mr. Gates kidding around with the comedian Jerry Seinfeld left a lot of people scratching their heads. The ads quickly disappeared.
As the “I’m a PC” ads with Mr. Siler replaced them two weeks later, Apple’s “Get a Mac” spots disappeared. Microsoft doesn’t think that was a coincidence. When PC and Mac reappeared, it was in the advertising that criticized Microsoft as spending on ads rather than on Vista.
Microsoft thought that it had scored a point. “You’ve got to look at that and say, ‘You are not advertising to consumers; you’re advertising to the Microsoft marketing department,’ ” Ms. Mathews says. “I just admit that did bring a smile to my face.”
Emboldened, Microsoft continued its barrages. In February, it unveiled its “Rookies” ads, arguing that PCs are so easy to use that even Kylie, an adorable 4 1/2-year old, could upload a picture of her goldfish, Dorothy, onto her PC and e-mail it to her relatives. You want to make fun of Kylie, Apple? Microsoft and Crispin dare you to try it.
The next month, Microsoft deployed its “Laptop Hunters” ads. They clearly moved the needle in Microsoft’s favor. Ted Marzilli, a managing director of BrandIndex, a company that tracks consumer perceptions, said that at the beginning of the year, adults thought Apple offered more value than Microsoft. In May, however, Microsoft closed the gap in the firm’s surveys. “Apple took a hit,” Mr. Marzilli said. “Since then, they have been neck and neck.”
In June, Microsoft felt that it had more reason to gloat. The chief financial officer, B. Kevin Turner, says he got a call from an Apple lawyer who asked him to change the ads because Apple was lowering its prices by $100. “I did cartwheels down the hallway,” Mr. Turner subsequently boasted in speech at a New Orleans conference.
Then Apple announced its second-quarter rebound. And for some analysts, it seemed like game over. “The reality is that Apple’s business has been impacted by the overall economy, not by Microsoft’s campaign,” said Gene Munster, senior research analyst at Piper Jaffray. “Those ‘What can I get for 1,000 bucks’ ads? That was a clever campaign. But it never really caught on. If you compare it to ‘Get a Mac,’ it didn’t even register.”
And yet Apple keeps responding. On Friday, it released its Snow Leopard operating system a month ahead of schedule, accompanied by a new round of “Get a Mac” ads. One involves a red-headed woman who is clearly intended to resemble Microsoft’s Lauren. PC introduces her to his suave friend, a top-of-the-line model played by Patrick Warburton, who was David Puddy on “Seinfeld.” She declines to buy a Windows machine when they can’t promise that she won’t have virus woes.
Microsoft, however, has found it enjoys mixing it up with Apple on the airwaves. In July, Mr. Ballmer told analysts that Crispin’s work had been “quite effective.” He promised that Microsoft would continue investing heavily in Windows marketing. “We didn’t do that three, four, five, six years ago,” he added.
For Mr. Siler, this is a welcome change. “I’ve never seen more pride at Microsoft,” he says. “You walk through the campus, and you see people’s laptops that have ‘I’m a PC’ stickers on them. I walk in the company store, and there are these huge banners that say, ‘I’m a PC’ and shirts and ties and mugs. I think I made a difference. My God, that’s so cool!”
By DEVIN LEONARD
Copyright by The New York Times
Published: August 29, 2009
http://www.nytimes.com/2009/08/30/business/media/30ad.html?th&emc=th
SEAN SILER would never be mistaken for a movie star. A former Navy officer who wears glasses and is a tad on the heavy side, Mr. Siler works at Microsoft, where he oversees the Windows division’s adoption of new Internet connectivity software called IPv6.
A Microsoft ad featured Lauren, who was shopping on a budget and decided not to spring for a $1,000 MacBook.
But there were audible gasps last summer when Mr. Siler, 39, auditioned for Microsoft’s new ad campaign for Windows, created by Crispin Porter & Bogusky, the Miami agency best known for its cheeky work for Mini Cooper and Burger King.
“I was like, ‘Are you kidding?’ ” recalls Rob Reilly, one of the agency’s executive creative directors. “It couldn’t have been more perfect.”
Everybody agreed that Mr. Siler looked exactly like PC, the character played by the comedian John Hodgman in Apple’s popular “Get a Mac” ads that lampoon Windows-based computers and those who love them. Two weeks later, Mr. Siler reported to a nearby television studio. The agency dressed him in PC’s dorky uniform — white shirt, baggy khakis, brown sport coat and matching brown tie — and handed him a script with the lines: “I’m a PC. And I’ve been made into a stereotype.”
Mr. Siler joined a parade of environmentalists, budget-conscious laptop shoppers, mixed martial arts fighters, mash-up DJs and remarkably tech-savvy preschoolers who appear in Microsoft’s new campaign, which is intended to show that real Windows users aren’t all clueless drones.
For Mr. Siler, the experience was almost like being a geeky incarnation of Brad Pitt. His e-mail address was on the screen, and he received 4,000 messages from viewers — some from grateful parents whose children had wanted expensive Macs over PCs and now had second thoughts.
Crispin put up a video on YouTube in which Mr. Siler discussed his role in the campaign; it was viewed more than 702,000 times. At work, he was constantly interrupted by his fellow Microsoft employees. “For a couple of weeks,” Mr. Siler recalls, “I had people coming by my office and saying: ‘Hey, you are the PC guy, aren’t you? That’s so cool!’ ”
His mother wasn’t so sure. “You look so horrible,” she told him. “You don’t look anything like that man. Why did they make you look so bad?”
Somebody better explain to Mr. Siler’s mother that this isn’t a beauty contest; it’s an ad war, one destined to go down in history with the cola wars of the 1980s and ’90s and the Hertz-Avis feud of the 1960s. According to TNS Media Intelligence, Apple spent $264 million on television ads last year, 71 percent more than Microsoft. In the first six months of 2009, however, Microsoft responded with $163 million worth of commercials, more than twice Apple’s spending.
Surprisingly, Microsoft, which has never been known for running cool ads, has landed some punches. Shortly after the Microsoft campaign started, Apple unleashed commercials that mocked its competitor as spending money on advertising when it should have been fixing Vista, its much-maligned operating system.
“It got Apple’s attention, didn’t it?” says Robert X. Cringely, host of PBS’s NerdTV.
FOR years, Microsoft was the stodgy market leader. It sold 90 percent of the world’s operating system software, and generally left the advertising to Dell, H.P. and other hardware makers who licensed Windows. The only time Microsoft hawked its most recognizable brand on television was when the latest version of the software hit the shelves. Then the company flooded the airwaves with commercials full of loud music and swirling imagery saying that the new version of Windows is out — and that it’s awesome!
Apple is the classic smaller insurgent. Its share for desktops and laptops in the United States is just over 8 percent. Every time Apple grabs another point of market share from Microsoft’s partners, its stock price climbs. And one way that Apple has tried to gain share is by running clever ads that ridicule everything Microsoft stands for.
There’s no better example than “Get a Mac,” unveiled three years ago by Apple’s longtime ad agency, TBWA/Chiat/Day. No technology company would choose Mr. Hodgman’s character, PC, to personify its brand. He reeks of the past. He boasts of using his desktop to make spreadsheets and ridicules his more youthful friend, Mac, played by the actor Justin Long, for using his desktop for “juvenile” pursuits like blogging and movie making — even through it’s clear that PC would like to be in on the fun. He just can’t get his Windows computer to do his bidding.
Like a classic sitcom character — think Ralph Kramden of “The Honeymooners” — PC is always dreaming up ill-advised schemes intended to show his superiority. He’s thwarted by viruses, system crashes and other problems more associated with Windows-based computers than Apple’s products — and, recently, he has become a hapless apologist for Vista. Mr. Long’s character smugly watches his friend’s pratfalls, glancing at the audience with raised eyebrows as if to say, “If only this poor guy would buy a Mac. . . .”
PC will never learn. Not as long as he keeps driving sales for Apple. Since 2006, the year that he first appeared in all his pasty-faced glory, Apple’s share of the computer desktop market in the United States has more than doubled, according to IDC, the technology industry research firm. Its stock price, meanwhile, has risen 142 percent since May 2006, while Microsoft’s has barely budged. Yes, the astonishing success of newer Apple products like the iPod and the iPhone has helped. But the PC character should also take a bow. (Representatives of Apple and TBWA/Chiat/Day declined to be interviewed for this article.)
Apple’s ads put Microsoft in a bind. One of Madison Avenue’s rules is that a market leader never acknowledges a smaller competitor in its advertising. What’s more, if Microsoft responded with ads that backfired, it would look just like Mr. Hodgman’s character. Maybe it was better to grin and bear it.
Then, last year, Microsoft hired Crispin Porter and struck back with uncharacteristic wit. There was Mr. Siler’s star turn. The agency also handed bunches of cash to shoppers and asked them to choose between a PC and a Mac. Lauren, a 20-something in one of the “Laptop Hunter” spots, is giddy about the money she has left over when she selects a $699 H.P. with a 17-inch screen, rather than a $1,000 Mac with a 13-inch screen. “I guess I’m just not cool enough to be a Mac person,” she sighs. This time, the joke was on Apple. In a recession, it’s pretty hip to save $300.
Microsoft’s effort to inspire PC pride seemed to resonate after its debut last September. According to IDC, Mac shipments in the United States plummeted 20 percent in the fourth quarter of 2008 versus the previous quarter, as the economy went into a tailspin, while those of PCs manufactured by Dell and H.P. fell only 13 percent and 3 percent, respectively.
Microsoft was quick to declare victory — maybe too quick. In the second quarter this year, Mac sales in the United States rebounded 34 percent, IDC said, while Dell and H.P. had more modest gains. Even more humbling for Microsoft was the company’s announcement in late July that its year-over-year operating income for the quarter declined 29 percent.
As a result, some analysts have argued that the Microsoft campaign has failed. But they, too, may be too hasty. We are only weeks away from the Oct. 22 release of Windows 7, which may undo much of the company’s self-inflicted damage from Vista. PC users, many of whom skipped buying Vista machines, could be holding off until then to buy. And the introduction of Windows 7 will be accompanied by yet another Crispin Porter ad blitz.
“You are not so embarrassed to take your PC out of the bag on a plane anymore,” said Mr. Reilly at the ad agency. “It’s actually kind of cool that you do. I know this is working.”
EVERY Wednesday, Lee Clow, the creative director of TBWA/Chiat/Day, travels from Los Angeles to Cupertino, Calif., for his weekly meeting with Steven P. Jobs, the Apple chief executive. They started doing this years ago and have created ads that are as stylish and cool as anything on television. Usually, the subtext of these ads is that Microsoft is the Evil Empire.
Mr. Jobs started working with Mr. Clow, a laid-back former surfer dude, in the early 1980s when Mr. Clow helped to create Apple’s path-breaking “1984” television commercial introducing the Macintosh. The ad’s unsubtle message was that buyers of the new machine would be striking against I.B.M., portrayed as Apple’s Orwellian foe.
Mr. Jobs struggled to persuade Apple’s board to run the ad, which was directed by Ridley Scott. Mr. Clow was similarly adamant when his boss, the late Jay Chiat, tried to shelve it. The ad ran only once, during the 1984 Super Bowl, but it has never been forgotten.
Apple forced out Mr. Jobs the next year and hired a new ad agency, BBDO. But when Mr. Jobs returned triumphantly to the company in 1997, he reunited with TBWA/Chiat/Day. Mr. Clow brought him the idea for “Think Different,” a campaign that identified Apple with figures like Bob Dylan, Albert Einstein and Martin Luther King Jr. Mr. Jobs used it to introduce the iMac and to re-establish Apple as an iconoclast.
TBWA/Chiat/Day went on to create the 2002 “Switchers” campaign, in which the director Errol Morris filmed real computer users describing why they ditched their PCs for a Mac. Who can forget Ellen Feiss, the slow-talking teenager who made the hearts of young geeks flutter when she explained how her PC ate her homework? “It was, like, beep beep beep beep beep beep beep,” Ms. Feiss says. “And then, like, half of my paper was gone.”
Then came the iPod ads from TWBA/Chiat/Day that not only helped drive sales of Apple’s breakout product, but also made stars of little-known indie rock acts like Feist. Such is the power of Apple’s marketing wizardry.
Many of Apple’s new customers were plugging their iPods into PCs. Mr. Clow proposed “Get a Mac” to get them thinking about springing for an Apple machine. Mr. Jobs was intrigued. But he wanted the ads to be perfect.
“The discussion within Apple was: ‘Is this the right tone? How young a guy should Mac be? How dorky do we make PC look?’ ” recalls Ken Segall, a former TBWA/Chiat/Day creative director who worked early on as a consultant for Apple on the campaign. “It went many rounds before Steve was comfortable with the idea. Then he loved it.”
IN spring 2007, a year after Apple introduced the “Get a Mac” ads, Steve Ballmer, the Microsoft C.E.O., barged into the office of Mich Mathews, head of the company’s central marketing group. The two had talked about a campaign that would repair the damage from the Apple ads.
Ms. Mathews recalls Mr. Ballmer enthusiastically asking her, “When are we going to move?”
Advertising has never seemed to be part of Microsoft’s DNA. The chairman, Bill Gates, “never really seemed to get marketing,” says Rob Enderle, a longtime technology industry analyst. And for many years, Mr. Enderle says, Mr. Ballmer “just didn’t think it was worth spending the money on it.”
The company’s Windows campaigns seemed to reflect executives’ lack of interest. Perhaps the best example was the push for Microsoft Vista in 2007, created by McCann Erickson with the slogan “The Wow Starts Now.” It showed people gaping in childlike wonder at the newest version of Windows. But Vista, to put it mildly, didn’t live up to the ads.
“The operating system was visually beautiful,” said Jeff Musser, a former McCann Erickson creative director who worked on the campaign. “But it was a bad product. I didn’t really hear anybody saying, ‘Wow.’ ”
There were also cultural issues at Microsoft when it came to advertising. On Madison Avenue, they say that the more hands that touch an advertisement, the worse it becomes. Microsoft felt differently. “They thought the more people saw it and gave an opinion, the better it would be,” Mr. Musser said. “That’s how you develop software. It’s not how you develop great creative.”
So Ms. Mathews tried to change things. She set up a nine-member task force to figure out a marketing strategy and keep meddlers at arm’s length.
In February 2008, Microsoft picked Crispin Porter. At the agency, Mr. Reilly was initially apprehensive. He didn’t even own a PC; he had an ultraslim MacBook Air. (He has since bought himself two PCs — a Sony Vaio and a Lenovo ThinkPad.)
The adman also wondered whether Microsoft was ready for a Crispin campaign. Mr. Reilly himself oversees the agency’s irreverent work for Burger King, aimed at young men hungering for menu items like the Triple Whopper.
He wanted to come up with a campaign that would redefine Windows, and he counseled against ads that attacked Apple. Then he changed his tune. Last summer in Apple ads, Mr. Hodgman’s PC character morphed into a personification of Microsoft itself. PC was haunted by problems with Vista. He took up yoga to calm his nerves, only to discover that his teacher was on edge because Vista wreaked havoc on her billing system. PC tried to find peace by creating a line of herbal teas with names like “Crashy-Time Camomile” and “Raspberry Restart.”
“As the tone of their campaign became more and more negative, we were like, ‘We gotta do something,’ ” Mr. Reilly said. “That’s where the whole notion of ‘I’m a PC’ and putting a face on our users came about. We have a billion users. That’s who our cast is, whereas Apple is just two fictitious characters.”
Crispin recruited influential Windows fans like the “Desperate Housewives” star Eva Longoria. “I feel bad about the little PC guy,” she said this month. “He is always getting beaten up.” It also brought in some who would appeal to niche audiences, like the Pittsburgh mash-up D.J. Gregg Gillis, who is better known as Girl Talk.
When Mr. Ballmer finally saw the ads in September, he congratulated Ms. Mathews and gave her a high-five. Then, Ms. Mathews says, he started shouting, “I’m a PC!”
THE new Windows campaign got off to an inauspicious start. Puzzling ads featuring Mr. Gates kidding around with the comedian Jerry Seinfeld left a lot of people scratching their heads. The ads quickly disappeared.
As the “I’m a PC” ads with Mr. Siler replaced them two weeks later, Apple’s “Get a Mac” spots disappeared. Microsoft doesn’t think that was a coincidence. When PC and Mac reappeared, it was in the advertising that criticized Microsoft as spending on ads rather than on Vista.
Microsoft thought that it had scored a point. “You’ve got to look at that and say, ‘You are not advertising to consumers; you’re advertising to the Microsoft marketing department,’ ” Ms. Mathews says. “I just admit that did bring a smile to my face.”
Emboldened, Microsoft continued its barrages. In February, it unveiled its “Rookies” ads, arguing that PCs are so easy to use that even Kylie, an adorable 4 1/2-year old, could upload a picture of her goldfish, Dorothy, onto her PC and e-mail it to her relatives. You want to make fun of Kylie, Apple? Microsoft and Crispin dare you to try it.
The next month, Microsoft deployed its “Laptop Hunters” ads. They clearly moved the needle in Microsoft’s favor. Ted Marzilli, a managing director of BrandIndex, a company that tracks consumer perceptions, said that at the beginning of the year, adults thought Apple offered more value than Microsoft. In May, however, Microsoft closed the gap in the firm’s surveys. “Apple took a hit,” Mr. Marzilli said. “Since then, they have been neck and neck.”
In June, Microsoft felt that it had more reason to gloat. The chief financial officer, B. Kevin Turner, says he got a call from an Apple lawyer who asked him to change the ads because Apple was lowering its prices by $100. “I did cartwheels down the hallway,” Mr. Turner subsequently boasted in speech at a New Orleans conference.
Then Apple announced its second-quarter rebound. And for some analysts, it seemed like game over. “The reality is that Apple’s business has been impacted by the overall economy, not by Microsoft’s campaign,” said Gene Munster, senior research analyst at Piper Jaffray. “Those ‘What can I get for 1,000 bucks’ ads? That was a clever campaign. But it never really caught on. If you compare it to ‘Get a Mac,’ it didn’t even register.”
And yet Apple keeps responding. On Friday, it released its Snow Leopard operating system a month ahead of schedule, accompanied by a new round of “Get a Mac” ads. One involves a red-headed woman who is clearly intended to resemble Microsoft’s Lauren. PC introduces her to his suave friend, a top-of-the-line model played by Patrick Warburton, who was David Puddy on “Seinfeld.” She declines to buy a Windows machine when they can’t promise that she won’t have virus woes.
Microsoft, however, has found it enjoys mixing it up with Apple on the airwaves. In July, Mr. Ballmer told analysts that Crispin’s work had been “quite effective.” He promised that Microsoft would continue investing heavily in Windows marketing. “We didn’t do that three, four, five, six years ago,” he added.
For Mr. Siler, this is a welcome change. “I’ve never seen more pride at Microsoft,” he says. “You walk through the campus, and you see people’s laptops that have ‘I’m a PC’ stickers on them. I walk in the company store, and there are these huge banners that say, ‘I’m a PC’ and shirts and ties and mugs. I think I made a difference. My God, that’s so cool!”
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