Senator Barack Obama claimed the Democratic presidential nomination on Tuesday night, prevailing through an epic battle with Senator Hillary Rodham Clinton in a primary campaign that inspired millions of voters from every corner of America to demand change in Washington.
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Senator Hillary Rodham Clinton with her daughter, Chelsea, and husband, Bill, in New York on Tuesday night.
A last-minute rush of Democratic superdelegates, as well as split results from the final primaries in Montana and South Dakota, pushed Mr. Obama over the threshold of 2,118 delegates needed to be nominated at the party’s convention in Denver in August. The victory for Mr. Obama, the son of a black Kenyan father and white Kansan mother, broke racial barriers and represented a remarkable rise for a man who just four years ago served in the Illinois State Senate.
“You chose to listen not to your doubts or your fears, but to your greatest hopes and highest aspirations,” Mr. Obama told supporters at a rally in St. Paul. “Tonight, we mark the end of one historic journey with the beginning of another — a journey that will bring a new and better day to America. Because of you, tonight, I can stand before you and say that I will be the Democratic nominee for president of the United States.”
Mrs. Clinton paid tribute to Mr. Obama, but she did not leave the race. “This has been a long campaign and I will be making no decisions tonight," Mrs. Clinton told supporters in New York. She said she would be speaking with party officials about her next move.
In a combative speech, she again presented her case that she was the stronger candidate and argued that she had won the popular vote, a notion disputed by the Obama campaign.
“I want the 18 million Americans who voted for me to be respected,” she said in New York to loud cheers.
But she paid homage to Mr. Obama’s accomplishments, saying, “It has been an honor to contest the primaries with him, just as it has been an honor to call him my friend.”
Mr. Obama’s victory moved the presidential campaign to a new phase as he tangled with Senator John McCain of Arizona in televised addresses Tuesday night over Mr. Obama’s assertion that Mr. McCain would continue President Bush’s policies. Mr. McCain vigorously rebuffed that criticism in a speech in Kenner, La., in which he distanced himself from the outgoing president while contrasting his own breadth of experience with Mr. Obama’s record.
“The American people didn’t get to know me yesterday, as they are just getting to know Senator Obama,” Mr. McCain told supporters. Mr. Obama’s victory capped a marathon nominating contest that broke records on several fronts: the number of voters who participated, the amount of money raised and spent, and the sheer length of a grueling battle. The campaign, infused by tensions over race and sex, provided unexpected twists to the bitter end as Mr. Obama ultimately prevailed over Mrs. Clinton, who just a year ago appeared headed toward becoming the first woman to be nominated by a major party. The last two contests reflected the party’s continuing divisions, as Mrs. Clinton won the South Dakota primary and Mr. Obama won Montana.
The race drew to its final hours with a burst of announcements — delegate-by-delegate — of Democrats stepping forward to declare their support for Mr. Obama. The Democratic establishment, from former President Jimmy Carter to rank-and-file local officials who make up the ranks of the party’s superdelegates, rallied behind Mr. Obama as the day wore on.
When the day began, Mr. Obama needed 41 delegates to effectively claim the nomination. Just as the polls began to close in Montana and South Dakota, Mr. Obama secured the delegates he needed to end his duel with Mrs. Clinton, which wound through every state and territory in an unprecedented 57 contests over five months.
Every time a new endorsement was announced at the Obama headquarters in Chicago, campaign workers interrupted with a booming round of applause. They are members of Mr. Obama’s team — a political start up — that is responsible for defeating one of the most tried and tested operations in Democratic politics.
While the Democratic race may have ended, a new chapter began in the complicated tensions that have defined the relationship with Mr. Obama and Mrs. Clinton.
On a conference call with members of the New York Congressional delegation on Tuesday, Mrs. Clinton was asked whether she would be open to joining a ticket with Mr. Obama. She replied that she would do whatever she could — including a vice presidential bid — to help Democrats win the White House.
In his speech on Tuesday evening, Mr. Obama paid respect to his rival.
“Our party and our country are better off because of her,” Mr. Obama said, “and I am a better candidate for having had the honor to compete with Hillary Rodham Clinton
Friday, June 6, 2008
iPhone 2.0 Takes on the World
As Apple prepares to unveil the next version of its iPhone on June 9, fans will be focused on how much better the new device is than its predecessor. It will likely be able to run on speedier wireless networks, it may boast improved navigation services, and it's expected to support a batch of new software tools and features made by third-party developers.
But amid the speculation around what the new device may or may not do, it's easy to lose sight of a theme central to Apple's larger strategic objectives. The new version of the iPhone will do more than perhaps any other device in history to fuel Apple's ability to reach international markets.
Bigger Seller than BlackBerry?
Until now, Apple (AAPL) has officially launched the iPhone in only six countries: the U.S., Britain, France, Germany, Austria, and Ireland. But Apple's recent agreements with wireless carriers around the globe will bring the iPhone into an additional 64 countries by the end of the year. The two latest deals, announced June 4, are with Telefónica (TEF) in Spain and Softbank in Japan (BusinessWeek.com, 6/5/08).
The first iPhone has catapulted Apple into the lucrative U.S. market for so-called smartphones, which handle an array of advanced services including Web surfing and e-mail. Market research firm IDC pegs Apple's share of the U.S. market for smart wireless phones at 19%, behind Research In Motion's (RIMM) BlackBerry, which has a 44% share, and ahead of Palm's (PALM) 13% share. When it last disclosed sales, Apple had sold 4 million iPhones globally, and analysts expect the company will report sales of about 1.5 million to 1.7 million iPhones in the quarter that ends on June 30. Apple's goal is to have sold 10 million units by the end of 2008.
By enabling the iPhone to run on so-called third-generation, or 3G, networks, Apple makes the device more appealing to a global wireless customer. Within months, the phone will be officially available in key European markets like Italy, Spain, and the Scandinavian countries. Countries as varied as Australia and Uruguay are also on the docket.
Some analysts say Apple may sell 40 million or more iPhones by the end of 2009. If that prediction pans out, iPhones will outnumber BlackBerry devices, even if RIM sells the handsets at an accelerated pace. RIM had 14 million subscribers at last count and added 6 million in fiscal 2008. That track record would make the iPhone the most successful single product in Apple's history, based on adoption rates. It took the vaunted iPod four years to break the 20-million-unit mark.
Ready Market Worldwide
The iPhone stands to make Apple a more global player. In each of its last three fiscal years, sales to the Americas accounted for about 48% of the total, while Europe accounted for about 22%. "Apple must do three things if it is to be successful internationally," says Neil Mawston, an analyst with Strategy Analytics in Britain. "Expand its brand, expand its product portfolio, and broaden its international footprint."
Of course, Apple needs to do more than just make the iPhone available in more places. The iPod is still bought mainly in the U.S. According to Mawston, 60% to 70% of iPods have been sold through Apple-owned retail stores, and 70% to 80% of those are in the U.S.
The good news for Apple is that there's already demand for the iPhone in countries where it's not yet officially available.
But amid the speculation around what the new device may or may not do, it's easy to lose sight of a theme central to Apple's larger strategic objectives. The new version of the iPhone will do more than perhaps any other device in history to fuel Apple's ability to reach international markets.
Bigger Seller than BlackBerry?
Until now, Apple (AAPL) has officially launched the iPhone in only six countries: the U.S., Britain, France, Germany, Austria, and Ireland. But Apple's recent agreements with wireless carriers around the globe will bring the iPhone into an additional 64 countries by the end of the year. The two latest deals, announced June 4, are with Telefónica (TEF) in Spain and Softbank in Japan (BusinessWeek.com, 6/5/08).
The first iPhone has catapulted Apple into the lucrative U.S. market for so-called smartphones, which handle an array of advanced services including Web surfing and e-mail. Market research firm IDC pegs Apple's share of the U.S. market for smart wireless phones at 19%, behind Research In Motion's (RIMM) BlackBerry, which has a 44% share, and ahead of Palm's (PALM) 13% share. When it last disclosed sales, Apple had sold 4 million iPhones globally, and analysts expect the company will report sales of about 1.5 million to 1.7 million iPhones in the quarter that ends on June 30. Apple's goal is to have sold 10 million units by the end of 2008.
By enabling the iPhone to run on so-called third-generation, or 3G, networks, Apple makes the device more appealing to a global wireless customer. Within months, the phone will be officially available in key European markets like Italy, Spain, and the Scandinavian countries. Countries as varied as Australia and Uruguay are also on the docket.
Some analysts say Apple may sell 40 million or more iPhones by the end of 2009. If that prediction pans out, iPhones will outnumber BlackBerry devices, even if RIM sells the handsets at an accelerated pace. RIM had 14 million subscribers at last count and added 6 million in fiscal 2008. That track record would make the iPhone the most successful single product in Apple's history, based on adoption rates. It took the vaunted iPod four years to break the 20-million-unit mark.
Ready Market Worldwide
The iPhone stands to make Apple a more global player. In each of its last three fiscal years, sales to the Americas accounted for about 48% of the total, while Europe accounted for about 22%. "Apple must do three things if it is to be successful internationally," says Neil Mawston, an analyst with Strategy Analytics in Britain. "Expand its brand, expand its product portfolio, and broaden its international footprint."
Of course, Apple needs to do more than just make the iPhone available in more places. The iPod is still bought mainly in the U.S. According to Mawston, 60% to 70% of iPods have been sold through Apple-owned retail stores, and 70% to 80% of those are in the U.S.
The good news for Apple is that there's already demand for the iPhone in countries where it's not yet officially available.
Banks vs. Consumers (Guess Who Wins)
What if a judge solicited cases from big corporations by offering them a business-friendly venue in which to pursue consumers who are behind on their bills? What if the judge tried to make this pitch more appealing by teaming up with the corporations' outside lawyers? And what if the same corporations helped pay the judge's salary?
It would, of course, amount to a conflict of interest and cast doubt on the fairness of proceedings before the judge.
Yet that's essentially how one of the country's largest private arbitration firms operates. The National Arbitration Forum (NAF), a for-profit company based in Minneapolis, specializes in resolving claims by banks, credit-card companies, and major retailers that contend consumers owe them money. Often without knowing it, individuals agree in the fine print of their credit-card applications to arbitrate any disputes over bills rather than have the cases go to court. What consumers also don't know is that NAF, which dominates credit-card arbitration, operates a system in which it is exceedingly difficult for individuals to prevail.
Some current and former NAF arbitrators say they make decisions in haste—sometimes in just a few minutes—based on scant information and rarely with debtor participation. Consumers who have been through the process complain that NAF spews baffling paperwork and fails to provide the hearings that it promises. Corporations seldom lose. In California, the one state where arbitration results are made public, creditors win 99.998% of the time in NAF cases that are decided by arbitrators on the merits, according to a lawsuit filed by the San Francisco city attorney against NAF.
"NAF is nothing more than an arm of the collection industry hiding behind a veneer of impartiality," says Richard Neely, a former justice of the West Virginia supreme court who as part of his private practice arbitrated several cases for NAF in 2004 and 2005.
A DIFFERENT REALITY
NAF presents its service in print and online advertising as quicker and less expensive than litigation but every bit as unbiased. Its Web site promotes "a fair, efficient, and effective system for the resolution of commercial and civil disputes in America and worldwide."
But internal NAF documents and interviews with people familiar with the firm reveal a different reality. Behind closed doors, NAF sells itself to lenders as an effective tool for collecting debts. The point of these pitches is to persuade the companies to use the firm to resolve clashes over delinquent accounts. JPMorgan Chase (JPM) and Bank of America (BAC) are among the large institutions that do so. A September, 2007, NAF PowerPoint presentation aimed at creditors and labeled "confidential" promises "marked increase in recovery rates over existing collection methods." At times, NAF does this kind of marketing with the aid of law firms representing the very creditors it's trying to sign up as clients.
NAF, which is privately held, employs about 1,700 freelance arbitrators—mostly moonlighting lawyers and retired judges—who handle some 200,000 cases a year, most of them concerning consumer debt. Millions of credit-card accounts mandate the use of arbitration by NAF or one of its rivals. NAF also resolves disputes involving Internet domain names, auto insurance, and other matters. In 2006 it had net income of $10 million, a robust margin of 26% on revenue of $39 million, according to company documents.
NAF's success is part of a broader boom in arbitration dating back to the 1980s, when companies began introducing language into employment contracts requiring that disputes with workers be resolved out of court. Mandatory arbitration spread to other kinds of agreements, including those involving credit cards.
It would, of course, amount to a conflict of interest and cast doubt on the fairness of proceedings before the judge.
Yet that's essentially how one of the country's largest private arbitration firms operates. The National Arbitration Forum (NAF), a for-profit company based in Minneapolis, specializes in resolving claims by banks, credit-card companies, and major retailers that contend consumers owe them money. Often without knowing it, individuals agree in the fine print of their credit-card applications to arbitrate any disputes over bills rather than have the cases go to court. What consumers also don't know is that NAF, which dominates credit-card arbitration, operates a system in which it is exceedingly difficult for individuals to prevail.
Some current and former NAF arbitrators say they make decisions in haste—sometimes in just a few minutes—based on scant information and rarely with debtor participation. Consumers who have been through the process complain that NAF spews baffling paperwork and fails to provide the hearings that it promises. Corporations seldom lose. In California, the one state where arbitration results are made public, creditors win 99.998% of the time in NAF cases that are decided by arbitrators on the merits, according to a lawsuit filed by the San Francisco city attorney against NAF.
"NAF is nothing more than an arm of the collection industry hiding behind a veneer of impartiality," says Richard Neely, a former justice of the West Virginia supreme court who as part of his private practice arbitrated several cases for NAF in 2004 and 2005.
A DIFFERENT REALITY
NAF presents its service in print and online advertising as quicker and less expensive than litigation but every bit as unbiased. Its Web site promotes "a fair, efficient, and effective system for the resolution of commercial and civil disputes in America and worldwide."
But internal NAF documents and interviews with people familiar with the firm reveal a different reality. Behind closed doors, NAF sells itself to lenders as an effective tool for collecting debts. The point of these pitches is to persuade the companies to use the firm to resolve clashes over delinquent accounts. JPMorgan Chase (JPM) and Bank of America (BAC) are among the large institutions that do so. A September, 2007, NAF PowerPoint presentation aimed at creditors and labeled "confidential" promises "marked increase in recovery rates over existing collection methods." At times, NAF does this kind of marketing with the aid of law firms representing the very creditors it's trying to sign up as clients.
NAF, which is privately held, employs about 1,700 freelance arbitrators—mostly moonlighting lawyers and retired judges—who handle some 200,000 cases a year, most of them concerning consumer debt. Millions of credit-card accounts mandate the use of arbitration by NAF or one of its rivals. NAF also resolves disputes involving Internet domain names, auto insurance, and other matters. In 2006 it had net income of $10 million, a robust margin of 26% on revenue of $39 million, according to company documents.
NAF's success is part of a broader boom in arbitration dating back to the 1980s, when companies began introducing language into employment contracts requiring that disputes with workers be resolved out of court. Mandatory arbitration spread to other kinds of agreements, including those involving credit cards.
An Ugly Day for Stocks
Major U.S. stock indexes each tumbled nearly 3% Friday as a surge in crude oil prices to fresh record highs and a weaker-than-expected May U.S. jobs report heightened investors' worries about inflation and the economy.
Bonds, which plunged Thursday as stocks rallied, soared in a flight to safety from the weakness in equities. Gold finished higher.
The dollar index was lower, while the euro was higher as the European Central Bank indicated it may raise interest rates.
On Friday, the blue-chip Dow Jones industrial average sank 394.64 points, or 3.13%, to end the session at 12,209.81. Transportation issues were among the hardest hit, although all Dow components fell. The broader S&P 500 index shed 43.37 points, or 3.09%, to finish at 1,360.68. The tech-heavy Nasdaq composite index declined 62 points, or 2.43%, to close at 2,487.94.
Activity in the broader market was resoundingly negative. On the New York stock exchange, 26 stocks were lower in price for every six that gained. The ratio on the Nasdaq was 23-5 negative.
“It was a fairly quiet week until Thursday and Friday, when all hell broke loose,” says S&P chief technical strategist Mark Arbeter. “The rebound in crude, along with the
spike in the May unemployment rate, was too much for the stock market to take in one day, so today was just plain ugly.”
Among the groups suffering significant losses in Friday’s rout: The S&P Airlines index was down 4.3% as the industry, which had a couple of days of positive results, felt renewed pressure from the spike is crude oil.
The S&P Homebuilders index fell 6.4% amid pres reports of record levels of mortgage delinquencies and foreclosures in the first quarter.
The S&P Regional Banks index fell 4.1% on a Wall Street Journal report that National City’s (NCC) banking unit, which has been buffeted by rising bad loans, has recently entered into a "memorandum of understanding" with federal regulators, effectively putting the bank on probation.
The S&P Multi-line Insurance index sank 3.9% on weakness in shares of American International Group (AIG) on reports that the SEC is investigation whether AIG overstated the value of contracts linked to subprime mortgages.
Crude oil staged an extraordinary recovery from its recent slump. July West Texas Intermediate crude-oil futures were up $11.13 a barrel in late trading Friday to a record $138.92, spurred by heightened tensions in the Middle East and Asia and a weaker US dollar.
Market watchers said crude oil scored one of its biggest one-day gains ever after Shaul Mofaz, Israel's transportation minister and a contender for the post of prime minister, told the daily newspaper Yediot Ahronot that Israel will have to attack Iran if it doesn't abandon its nuclear development. In addition, Morgan Stanley issued at note stating current crude oil shipping patterns are suggesting WTI oil could reach $150 per barrel by July 4.
The oil run-up was a carryover of Thursday's late $5.49 surge that had Rep. Bart Stupak (D., Mich.) complaining oil and products markets were being "manipulated" by the biggest trading houses in the futures markets. But he said a probe hasn't uncovered illegal activity. Wall Street firms denied the charges.
U.S. nonfarm payrolls fell 49,000 in May, in line with market expectations. Both April and May were downwardly revised to -28,000 and -88,000, respectively (-20,000 and -81,000 previously).
The big surprise in the report: The unemployment rate jumped to 5.5% from 5.0% in April, and was well above the 5.1% expected.
Bonds, which plunged Thursday as stocks rallied, soared in a flight to safety from the weakness in equities. Gold finished higher.
The dollar index was lower, while the euro was higher as the European Central Bank indicated it may raise interest rates.
On Friday, the blue-chip Dow Jones industrial average sank 394.64 points, or 3.13%, to end the session at 12,209.81. Transportation issues were among the hardest hit, although all Dow components fell. The broader S&P 500 index shed 43.37 points, or 3.09%, to finish at 1,360.68. The tech-heavy Nasdaq composite index declined 62 points, or 2.43%, to close at 2,487.94.
Activity in the broader market was resoundingly negative. On the New York stock exchange, 26 stocks were lower in price for every six that gained. The ratio on the Nasdaq was 23-5 negative.
“It was a fairly quiet week until Thursday and Friday, when all hell broke loose,” says S&P chief technical strategist Mark Arbeter. “The rebound in crude, along with the
spike in the May unemployment rate, was too much for the stock market to take in one day, so today was just plain ugly.”
Among the groups suffering significant losses in Friday’s rout: The S&P Airlines index was down 4.3% as the industry, which had a couple of days of positive results, felt renewed pressure from the spike is crude oil.
The S&P Homebuilders index fell 6.4% amid pres reports of record levels of mortgage delinquencies and foreclosures in the first quarter.
The S&P Regional Banks index fell 4.1% on a Wall Street Journal report that National City’s (NCC) banking unit, which has been buffeted by rising bad loans, has recently entered into a "memorandum of understanding" with federal regulators, effectively putting the bank on probation.
The S&P Multi-line Insurance index sank 3.9% on weakness in shares of American International Group (AIG) on reports that the SEC is investigation whether AIG overstated the value of contracts linked to subprime mortgages.
Crude oil staged an extraordinary recovery from its recent slump. July West Texas Intermediate crude-oil futures were up $11.13 a barrel in late trading Friday to a record $138.92, spurred by heightened tensions in the Middle East and Asia and a weaker US dollar.
Market watchers said crude oil scored one of its biggest one-day gains ever after Shaul Mofaz, Israel's transportation minister and a contender for the post of prime minister, told the daily newspaper Yediot Ahronot that Israel will have to attack Iran if it doesn't abandon its nuclear development. In addition, Morgan Stanley issued at note stating current crude oil shipping patterns are suggesting WTI oil could reach $150 per barrel by July 4.
The oil run-up was a carryover of Thursday's late $5.49 surge that had Rep. Bart Stupak (D., Mich.) complaining oil and products markets were being "manipulated" by the biggest trading houses in the futures markets. But he said a probe hasn't uncovered illegal activity. Wall Street firms denied the charges.
U.S. nonfarm payrolls fell 49,000 in May, in line with market expectations. Both April and May were downwardly revised to -28,000 and -88,000, respectively (-20,000 and -81,000 previously).
The big surprise in the report: The unemployment rate jumped to 5.5% from 5.0% in April, and was well above the 5.1% expected.
Icahn Presses Yahoo to Sell to Microsoft
l C. Icahn told Yahoo on Friday that it should offer to sell the company to Microsoft for $34.375 a share, or about $48.7 billion.
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Times Topics: The Battle for Yahoo
Bits: Icahn vs. Yahoo: The Latest Exchange
In his latest letter to Roy J. Bostock, Yahoo’s chairman, Mr. Icahn said that if Microsoft did not accept the offer “in a friendly and cooperative transaction,” he would push Yahoo to do a deal with Google if he won control of the Yahoo board.
Mr. Icahn, who has offered a dissident slate to replace Yahoo’s board at its annual meeting on Aug. 1, had not previously named a price at which he believed Yahoo should agree to a sale.
Microsoft walked away from a $33 a share, or $47.5 billion offer, on May 3, after Yahoo demanded $37 a share.
Yahoo shares closed in trading up 11 cents to $26.44.
Mr. Icahn, a veteran of many shareholder campaigns, renewed his attack on Yahoo and its co-founder, Jerry Yang, whom he accused of “sabotaging” the possibility of a deal with Microsoft. Investment funds controlled by Mr. Icahn hold about 59 million shares and options, or about 4.28 percent of the company.
Mr. Icahn reiterated his previous demand that Yahoo cancel a “change of control” severance plan that awards accelerated benefits to the bulk of Yahoo’s staff members in the event of a takeover.
Mr. Icahn cited a recent shareholder lawsuit against Yahoo, in which the company estimated the value of the plan at “a staggering $2.4 billion,” which he said is “a major obstacle” to any Microsoft acquisition.
Yahoo, in response, said Mr. Icahn had an “inaccurate interpretation” of its employee retention plan but did not elaborate. “Mr. Icahn’s suggestion that we cancel our retention plan would have a destabilizing impact on Yahoo,” it said.
It also said Mr. Icahn had no “credible plan to operate Yahoo” if he won his proxy campaign.
It reiterated that it was “open to any transaction, including a sale to Microsoft if it is in the best interests of shareholders.”
Microsoft declined to comment.
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Related
Times Topics: The Battle for Yahoo
Bits: Icahn vs. Yahoo: The Latest Exchange
In his latest letter to Roy J. Bostock, Yahoo’s chairman, Mr. Icahn said that if Microsoft did not accept the offer “in a friendly and cooperative transaction,” he would push Yahoo to do a deal with Google if he won control of the Yahoo board.
Mr. Icahn, who has offered a dissident slate to replace Yahoo’s board at its annual meeting on Aug. 1, had not previously named a price at which he believed Yahoo should agree to a sale.
Microsoft walked away from a $33 a share, or $47.5 billion offer, on May 3, after Yahoo demanded $37 a share.
Yahoo shares closed in trading up 11 cents to $26.44.
Mr. Icahn, a veteran of many shareholder campaigns, renewed his attack on Yahoo and its co-founder, Jerry Yang, whom he accused of “sabotaging” the possibility of a deal with Microsoft. Investment funds controlled by Mr. Icahn hold about 59 million shares and options, or about 4.28 percent of the company.
Mr. Icahn reiterated his previous demand that Yahoo cancel a “change of control” severance plan that awards accelerated benefits to the bulk of Yahoo’s staff members in the event of a takeover.
Mr. Icahn cited a recent shareholder lawsuit against Yahoo, in which the company estimated the value of the plan at “a staggering $2.4 billion,” which he said is “a major obstacle” to any Microsoft acquisition.
Yahoo, in response, said Mr. Icahn had an “inaccurate interpretation” of its employee retention plan but did not elaborate. “Mr. Icahn’s suggestion that we cancel our retention plan would have a destabilizing impact on Yahoo,” it said.
It also said Mr. Icahn had no “credible plan to operate Yahoo” if he won his proxy campaign.
It reiterated that it was “open to any transaction, including a sale to Microsoft if it is in the best interests of shareholders.”
Microsoft declined to comment.
Jobs Down for 5th Month; Oil’s Rise Adds to Gloom
The unemployment rate surged to 5.5 percent in May from 5 percent — the sharpest monthly spike in 22 years — as the economy lost 49,000 jobs, registering a fifth consecutive month of decline, the Labor Department reported Friday.
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Multimedia
The Labor Picture in May
Back Story With Jad Mouawad and Peter Goodman (mp3)The weak jobs report, coupled with a staggering rise in the price of oil — up a record $10.75 a barrel to more than $138 — unleashed a feverish sell-off on Wall Street, sending the Dow Jones industrial average down nearly 400 points. The dollar plunged against several major currencies.
Investors’ recent hopes that the United States might yet skirt a recession sank swiftly in the face of gloomy indications that the economy is gripped by a slowdown and pressured by record fuel prices.
For tens of millions of Americans struggling to pay bills, the jobs report added an official stamp of authority to a dispiriting reality they already know: A deteriorating labor market is eliminating paychecks just as they are needed to compensate for the soaring cost of food and fuel, and as the fall in house prices hacks away at household wealth and access to credit.
“It’s unambiguously ugly,” said Robert Barbera, chief economist at the research and trading firm ITG. “The average American already knows that gas prices are up a ton and it’s really hard to find a job. Sally and Sam on Main Street are already well aware of this, and that’s why sentiment surveys are lower than they were in each of the last two recessions.”
President Bush acknowledged the jump in unemployment as an indication of “slow economic growth,” but he held out hope that $100 billion in tax rebates now being distributed to American households would spur spending and generate jobs.
"We’re beginning to see the signs that the stimulus may be working," Mr. Bush said during a swearing-in ceremony for the housing secretary, Steven C. Preston.
In a presidential election year in which the economy has emerged as a crucial issue, both major candidates used the employment data as an opportunity to criticize their opponent’s governing philosophy.
“The wrong change for our country would be an economic agenda based upon the policies of the past that advocate higher taxes,” said Senator John McCain, Republican of Arizona, in a written statement. “To help families at this critical time, we cannot afford to go backward as Senator Obama advocates."
Senator Barack Obama, Democrat of Illinois, called the labor report “a reminder that working families continue to bear the brunt of the failed Bush economic policies that John McCain wants to continue,” in a statement. “We can’t afford John McCain’s plan to spend billions of dollars on tax breaks for big corporations and wealthy C.E.O.’s.”
Democrats on Capitol Hill and advocates for the unemployed pointed to the spike in joblessness in arguing for the swift extension of federal unemployment insurance.
Among the 8.55 million people who were unemployed in May, 1.55 million had been unemployed for 27 weeks or longer. Unemployment benefits now expire after 26 weeks. An Iraq war financing bill approved by the Senate includes a provision that would extend cash benefits for an additional 13 weeks.
“It would show a new level of callousness by Congress, a new level of disconnect between Washington and the rest of the country, not to pass an extension now,” said Andrew Stettner, executive director of the National Employment Law Project, an advocacy group.
The White House has said it would veto the bill for imposing deadlines on the withdrawal of troops from Iraq. The administration also argues that jobless benefits should not be extended, with the unemployment rate still low by historical measures. Tony Fratto, a White House spokesman, said Friday’s report did not change that position.
The spike in joblessness significantly cooled talk that the Federal Reserve could stop worrying about recession and might soon begin to raise interest rates to choke off rising prices for crucial goods like gasoline and food.
Since last fall, as fears of recession have grown along with the financial turmoil resulting from falling home prices, the Fed has cut interest rates to encourage investment and spur economic activity. A chorus of economists has warned that the Fed has unleashed too much easy money, feeding inflation and driving down the dollar. Some have suggested the Fed might have to reverse course and raise rates. Not anymore, as the labor market continues to offer up evidence of enduring trouble.
“There’s a greater chance of peace breaking out in the Middle East,” said Mr. Barbera, the ITG economist.
Skip to next paragraph
Multimedia
The Labor Picture in May
Back Story With Jad Mouawad and Peter Goodman (mp3)The weak jobs report, coupled with a staggering rise in the price of oil — up a record $10.75 a barrel to more than $138 — unleashed a feverish sell-off on Wall Street, sending the Dow Jones industrial average down nearly 400 points. The dollar plunged against several major currencies.
Investors’ recent hopes that the United States might yet skirt a recession sank swiftly in the face of gloomy indications that the economy is gripped by a slowdown and pressured by record fuel prices.
For tens of millions of Americans struggling to pay bills, the jobs report added an official stamp of authority to a dispiriting reality they already know: A deteriorating labor market is eliminating paychecks just as they are needed to compensate for the soaring cost of food and fuel, and as the fall in house prices hacks away at household wealth and access to credit.
“It’s unambiguously ugly,” said Robert Barbera, chief economist at the research and trading firm ITG. “The average American already knows that gas prices are up a ton and it’s really hard to find a job. Sally and Sam on Main Street are already well aware of this, and that’s why sentiment surveys are lower than they were in each of the last two recessions.”
President Bush acknowledged the jump in unemployment as an indication of “slow economic growth,” but he held out hope that $100 billion in tax rebates now being distributed to American households would spur spending and generate jobs.
"We’re beginning to see the signs that the stimulus may be working," Mr. Bush said during a swearing-in ceremony for the housing secretary, Steven C. Preston.
In a presidential election year in which the economy has emerged as a crucial issue, both major candidates used the employment data as an opportunity to criticize their opponent’s governing philosophy.
“The wrong change for our country would be an economic agenda based upon the policies of the past that advocate higher taxes,” said Senator John McCain, Republican of Arizona, in a written statement. “To help families at this critical time, we cannot afford to go backward as Senator Obama advocates."
Senator Barack Obama, Democrat of Illinois, called the labor report “a reminder that working families continue to bear the brunt of the failed Bush economic policies that John McCain wants to continue,” in a statement. “We can’t afford John McCain’s plan to spend billions of dollars on tax breaks for big corporations and wealthy C.E.O.’s.”
Democrats on Capitol Hill and advocates for the unemployed pointed to the spike in joblessness in arguing for the swift extension of federal unemployment insurance.
Among the 8.55 million people who were unemployed in May, 1.55 million had been unemployed for 27 weeks or longer. Unemployment benefits now expire after 26 weeks. An Iraq war financing bill approved by the Senate includes a provision that would extend cash benefits for an additional 13 weeks.
“It would show a new level of callousness by Congress, a new level of disconnect between Washington and the rest of the country, not to pass an extension now,” said Andrew Stettner, executive director of the National Employment Law Project, an advocacy group.
The White House has said it would veto the bill for imposing deadlines on the withdrawal of troops from Iraq. The administration also argues that jobless benefits should not be extended, with the unemployment rate still low by historical measures. Tony Fratto, a White House spokesman, said Friday’s report did not change that position.
The spike in joblessness significantly cooled talk that the Federal Reserve could stop worrying about recession and might soon begin to raise interest rates to choke off rising prices for crucial goods like gasoline and food.
Since last fall, as fears of recession have grown along with the financial turmoil resulting from falling home prices, the Fed has cut interest rates to encourage investment and spur economic activity. A chorus of economists has warned that the Fed has unleashed too much easy money, feeding inflation and driving down the dollar. Some have suggested the Fed might have to reverse course and raise rates. Not anymore, as the labor market continues to offer up evidence of enduring trouble.
“There’s a greater chance of peace breaking out in the Middle East,” said Mr. Barbera, the ITG economist.
Pakistanis despise or lionise 9/11 mastermind
A day after al Qaeda's Sept. 11 mastermind made his first appearance in a U.S. military court, Pakistanis were divided between admiration and revulsion for their countryman, Khalid Sheikh Mohammed.
"He deserves to be hanged," spat Mazhar Awais, an observant Muslim who runs a pharmacy in the northwestern city of Peshawar.
"Islam doesn't allow the killing of innocent people. If you're against the U.S. government, it doesn't mean kill Americans."
Many Pakistanis believe al Qaeda and its cohorts have brought dishonour on Islam by killing civilians and fellow Muslims.
But anti-American sentiment runs deep in Pakistan, where President Pervez Musharraf is often cursed for caving in to pressure to join a "war on terrorism" many Pakistanis see as America's, not theirs.
Mohammed, widely known by his initials KSM, has no shortage of admirers.
"What's happening in Guantanamo Bay? What's happening in Iraq and Afghanistan? We believe the U.S. is an aggressor and he's a hero," said Syed Sajjad Ali Shah, a retired government school principal in Peshawar.
Mohammed is on trial with four al Qaeda comrades for conspiring to murder civilians in the 2001 attacks.
They also face 2,973 counts on murder, one for each person killed when hijacked passenger planes slammed into the World Trade Centre, the Pentagon and a Pennsylvania field.
On his first appearance, Mohammed asserted his right to act as his own attorney, declared his wish to be a martyr, and chanted an Islamic verse in Arabic, before pausing to cheerfully translate its meaning into English.
His bravado resonated among Pakistanis looking for a hero to stand up against U.S. hegemony and Muslim rulers dependent on American support.
"He's a beacon of light for Muslims. It's the time to say no to the U.S. and the West. Otherwise history won't forgive us," said Dr. Tariq bin Wahab in the southern central city of Multan.
"We have to get rid of U.S. agents like General Musharraf who have sold our country for his vested interests."
Others were sickened by Mohammed's posturing in court.
"He's a killer; he's not a martyr," said Sameena Gul, a human rights activist in Islamabad.
Mobeen Ansari, a college student in Karachi, struck a similar note.
"I think he's a criminal and the 9/11 incident has just caused hatred," he said.
More dispassionately, some saw the U.S. military trial becoming a public relations disaster for Washington, as few people will believe it could be fair.
"He's been charged (with) a global terror act, so they should hold a global level trial. It cannot be a military trial," said Muhammad Akram, a 45-year-old lawyer in the southern city of Karachi.
Others clung to conspiracy theories that the events of Sept. 11 had nothing to do with Muslims or Pakistanis.
"I don't think this was done (by anyone) from our part of the world," said Nosheen Razzak, a radio jockey, from Karachi.
"I don't think it was done by Muslims." (Additional reporting by Asim Tanveer, Aftab Borka and Sahar Ahmed; Writing by Simon Cameron-Moore; Editing by Jerry Norton)
"He deserves to be hanged," spat Mazhar Awais, an observant Muslim who runs a pharmacy in the northwestern city of Peshawar.
"Islam doesn't allow the killing of innocent people. If you're against the U.S. government, it doesn't mean kill Americans."
Many Pakistanis believe al Qaeda and its cohorts have brought dishonour on Islam by killing civilians and fellow Muslims.
But anti-American sentiment runs deep in Pakistan, where President Pervez Musharraf is often cursed for caving in to pressure to join a "war on terrorism" many Pakistanis see as America's, not theirs.
Mohammed, widely known by his initials KSM, has no shortage of admirers.
"What's happening in Guantanamo Bay? What's happening in Iraq and Afghanistan? We believe the U.S. is an aggressor and he's a hero," said Syed Sajjad Ali Shah, a retired government school principal in Peshawar.
Mohammed is on trial with four al Qaeda comrades for conspiring to murder civilians in the 2001 attacks.
They also face 2,973 counts on murder, one for each person killed when hijacked passenger planes slammed into the World Trade Centre, the Pentagon and a Pennsylvania field.
On his first appearance, Mohammed asserted his right to act as his own attorney, declared his wish to be a martyr, and chanted an Islamic verse in Arabic, before pausing to cheerfully translate its meaning into English.
His bravado resonated among Pakistanis looking for a hero to stand up against U.S. hegemony and Muslim rulers dependent on American support.
"He's a beacon of light for Muslims. It's the time to say no to the U.S. and the West. Otherwise history won't forgive us," said Dr. Tariq bin Wahab in the southern central city of Multan.
"We have to get rid of U.S. agents like General Musharraf who have sold our country for his vested interests."
Others were sickened by Mohammed's posturing in court.
"He's a killer; he's not a martyr," said Sameena Gul, a human rights activist in Islamabad.
Mobeen Ansari, a college student in Karachi, struck a similar note.
"I think he's a criminal and the 9/11 incident has just caused hatred," he said.
More dispassionately, some saw the U.S. military trial becoming a public relations disaster for Washington, as few people will believe it could be fair.
"He's been charged (with) a global terror act, so they should hold a global level trial. It cannot be a military trial," said Muhammad Akram, a 45-year-old lawyer in the southern city of Karachi.
Others clung to conspiracy theories that the events of Sept. 11 had nothing to do with Muslims or Pakistanis.
"I don't think this was done (by anyone) from our part of the world," said Nosheen Razzak, a radio jockey, from Karachi.
"I don't think it was done by Muslims." (Additional reporting by Asim Tanveer, Aftab Borka and Sahar Ahmed; Writing by Simon Cameron-Moore; Editing by Jerry Norton)
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