Spanish police say that for the first time they have broken up a human-trafficking gang that brought men to the country to work as prostitutes.
Police say they arrested 14 people on suspicion of running the organization and another 17 alleged prostitutes for being in Spain illegally.
A police statement Tuesday says the men were recruited in Brazil and saddled with …
Many homeowners facing foreclosure are reluctant to alert their lender, or are unaware of their options. Here, foreclosure prevention experts give you strategies to avoid losing your home.
Educate yourself.
"Our typical client is uneducated about mortgage financing, and sometimes unscrupulous lenders prey on them. Education is the key to everything. We do more than foreclosure prevention; we also offer free homeownership education classes and individual consultations on credit, budget and home purchase. seek out information before taking out a loan. Call us."
-Christopher Smith, Neighborhood Director of Neighborhood Housing Services, Roseland Division, (773) 568-1020, …
Lead Actress: Marion Cotillard, "La Vie en Rose."
Supporting Actor: Javier Bardem, "No Country for Old Men."
Supporting Actress: Tilda Swinton, "Michael Clayton."
Foreign Language Film: "The Counterfeiters," Austria.
Adapted Screenplay: Joel Coen and Ethan Coen, "No Country for Old Men."
Original Screenplay: Diablo Cody, "Juno."
Animated Feature Film: "Ratatouille."
Art Direction: "Sweeney Todd the Demon Barber of Fleet Street."
Cinematography: "There Will Be Blood."
Sound Mixing: "The …
While her recent performances have been something of a bust, AnnaKournikova will try to improve her status by competing in atournament in Croatia …
Can a refugee from his family's glass business, a creator ofcommercial jingles and the veteran bassist from Britain's Supertrampforge a musical empire together in Chicago? Poised to become thehighest-profile management team on the local music scene, JackKellman, Jim Tullio and Dougie Thomson are determined to cover allthe bases as they await their first hit.
"Between the three of us, there's nobody we can't get to in themusic business, from record-company presidents to publishing to headsof agencies to promoters around the country," insisted Jack Kellman,who managed Minnie Riperton to chart-topping success during his firstgo-'round in the music industry. After a …
WASHINGTON (AP) — Companies ordered more autos, …
The dollar mostly rose Tuesday as major bank restructurings in Europe and worries over slow growth made the currency more attractive to investors seeking safety amid central bank meetings in the U.S. and Europe this week.
Signs of economic trouble burnish the allure of the dollar and the safe-haven U.S. Treasuries it can buy.
In morning trading in New York Tuesday, the 16-nation euro fell to $1.4657 from $1.4753 late Monday. Meanwhile, the British pound dropped to $1.6378 from $1.6383. The dollar dipped to 90.24 Japanese yen from 90.35 yen.
On Tuesday, two British banks announced huge capital raises, and their stocks dropped. Lloyd Banking Group …
WASHINGTON The White House offered Friday night to drop most ofthe conditions it set on turning over disputed Whitewater documentsto the Senate, including its insistence that the meeting in which thenotes were taken was protected by President Clinton's attorney-clientprivilege.
The proposal was made hours after the Senate WhitewaterCommittee voted to ask the full Senate to go to court to enforce asubpoena for the notes taken by a former White House lawyer at aconfidential 1993 meeting. The compromise proposed by the WhiteHouse was an effort to head off what could be a protracted andpolitically costly court battle. Senate Republicans were trying toportray the records …
TOKYO (AP) — The Japanese government needs to do more to stem the yen's rise to protect the nation's export-driven economy as manufacturers increasingly shift production overseas, Sharp's president said Friday.
Mikio Katayama, who heads the Japanese electronics company, said keeping all production in Japan was growing too risky, and it was moving some flat-panel TV production to China, with a plant in Nanjing set to be running by next year.
Speaking to reporters at a Tokyo hotel, Katayama expressed frustration over the surging yen, coming at a time when Sharp's production of liquid crystal displays had been finally recovering from the battering it took a year earlier from the …
Serena and Venus Williams have advanced to the semifinals of the doubles tournament at the French Open.
The siblings defeated Maria Kirilenko and Agnieszka Radwanska 6-2, 6-3 on Monday.
The …
Schwabe-May's principal owner hopes to stay in business eventhough the store has filed for bankruptcy.
The store at 221 Capitol St. sought Chapter 11 protection fromcreditors on Thursday in federal bankruptcy court in Charleston,claiming $1.1 million in liabilities and $217,482 in assets. Chapter11 refers to a part of the U.S. bankruptcy code dealing with businessreorganizations, as opposed to Chapter 7, which involves theliquidation of business operations.
"We're really confident we're going to be fine," said LynneSchwabe, the biggest shareholder in Schwabe-May of Charleston LLC,the store's owner. "We're committed to seeing this through."
Schwabe said the …
NAPLES, Italy (AP) — Italian media is reporting that four Bayern Munich fans were briefly hospitalized with stab wounds before Tuesday's Champions League match against Napoli.
The ANSA news agency reports that two men were admitted to hospital after being stabbed near the San Paolo Stadium Tuesday afternoon. One had suffered a knife injury to his …
CITY OF INDUSTRY, Calif. (AP) — Teen retailer Hot Topic Inc. said Friday that its CEO, Lisa Harper, has also been named its board chairwoman.
Former chairman Bruce Quinnell will stay on as chairman of Hot Topic's audit committee, but he will not seek re-election to the board when his term ends in June, the company said.
The company also said Matthew Drapkin was named lead director. A call to the company for further details was not immediately returned.
A Swedish journalist and blogger specializing in Egyptian labor issues was stopped by security at Cairo airport early Tuesday and was ordered deported from the country, his girlfriend and the Swedish embassy said.
Per Bjorklund, 30, who spent the last year covering labor strikes in Egypt, was returning to Cairo with his girlfriend from their native Sweden via Prague, when he was detained.
Earlier in September, an American resident of Cairo who participated in a pro-Palestinian demonstration with Bjorklund was also prevented from entering the country.
"They held his passport and they said I had to go on," Bjorklund's girlfriend Anna Sicking told The Associated Press. "They said something came up and they held him."
Egyptian blogger and journalist Hossam el-Hamalawy spoke to Bjorklund at about 4:30 a.m. while he was in detention shortly before his mobile phone went silent.
"He was told his name was on a computer and he was to be returned to Prague," he said.
Sicking waited six hours at the airport for Bjorklund until she was told he had been sent back to Prague.
The Swedish Embassy in Cairo told The Associated Press they were working on the case and trying to learn from the Egyptians why Bjorklund was being expelled.
"We haven't been able to get in touch with him," said Joakim Vaverka, embassy press counselor, adding that it was unclear whether he was still in Egypt. "If he hasn't left he will be asked to leave but we don't know if that decision has been executed yet."
A security official at the airport told AP that Bjorklund was detained by order of State Security, the nation's plainclothes security force, but was still in custody awaiting deportation.
The next flight from Cairo Airport to Prague is early Thursday.
The official spoke on condition of anonymity because he was not authorized to speak to the press.
Sicking said the embassy told her that that Bjorklund had probably written something the government didn't like.
"He's Swedish, he writes in Swedish, there are 9 million people there, I don't think it's his writings that have got him in trouble," she said.
Bjorklund writes for Swedish publications on Egyptian labor issues, including a wave of strikes that has been taking place for the last two years. He also has a blog, "Egypt and beyond," in English.
He has been living in Egypt for the last three years. The last time he entered the country was in September 2008, also when returning from spending the summer in Sweden.
On Sept. 3, U.S. citizen Travis Randall was also stopped at Cairo airport and deported from the country.
Both Randall and Bjorklund participated in a small demonstration showing solidarity with Palestinians trapped in Gaza last February. After marching for a few hours, the demonstrators were briefly detained by police.
A German-Egyptian activist, Philip Rizk, who participated in the same demonstration was held for four days in solitary confinement, apparently due to the government sensitivity over any criticism of its Palestinian policy.
Police have detained hundreds of members of the opposition Muslim Brotherhood and a number of bloggers following their criticism of Egypt's involvement in the closure of the Gaza Strip, especially during the Israeli attacks there in late December and January.
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On the Net:
MAZAR-E-SHARIF, Afghan-istan - Warlord factions whose control ofnorthern Afghanistan challenges central government authority havepledged to withdraw from the volatile region's main city andeventually demobilize their soldiers, a spokesman for one of theparties said.
A pullout by warlords from Mazar-e-Sharif would be an importantstep in Afghanistan's efforts to restore stability after 23 years ofwar. In the capital, Kabul, the commander of the internationalpeacekeeping force said security there was already improving.
In Mazar-e-Sharif, envoys for Atta Mohammed and Gen. RashidDostum, a longtime rival, made plans Monday to withdraw from the cityand forge a new security force, said Wasiqullah, one of AttaMohammad's top aides.
They also pledged to eventually demobilize tens of thousands offighters who have protected the warlords' interests for years, saidWasiqullah, who like many Afghans uses one name. The pact wasmediated by a third faction led by Muhammad Mohaqqeq.
"If we all stick by the accord, what we are planning is veryeasy," Wasiqullah told The Associated Press. "If one group doesn'tfulfill their end, then it will be very, very hard."
Without a national army and with international peacekeepersrestricted to Kabul, the interim government of Prime Minister HamidKarzai is battling to expand its authority to regions where localwarlords with a tradition of shifting loyalties and their ownmilitias wield and vie for control.
Karzai's government has appealed for peacekeepers to be expandedto cities other than Kabul - so far without success.
In Washington, the chairman of the Senate Foreign RelationsCommittee urged President Bush to allow U.S. troops to participate inthe force, warning that Afghanistan's fragile peace may be at stake.
"Like it or not, our leadership role must include soldiers on theground. If others step forward, fine, but whatever it takes, weshould do it," said Sen. Joseph Biden, a Delaware Democrat whovisited Kabul in January.
"History will judge us harshly if we allow the hope of a liberatedAfghanistan to evaporate because we failed to stay the course."
Bush has ruled out participation by U.S. troops in the British-led force, although Washington says its troops will stay inAfghanistan hunting al-Qaida and Taliban fugitives.
Fighting last week between rival factions in the eastern Afghanprovincial capital of Gardez killed at least 61 people. Talks onending the tensions continued today.
There also have been sporadic deadly clashes in the north.
Dostum, in particular, has demanded a greater voice for his ethnicUzbek minority when a new government is formed. The others' militiasin the north also represent distinct interests with links toneighboring nations vying for influence.
Under the accord laying out the warlords' planned withdrawal fromMazar-e-Sharfif, each militia leader would be left with only about 50private gunmen, and fewer for sub-commanders, said Wasiqullah.
He claimed all sides would welcome intervention by internationalpeacekeepers.
In Kabul, the commander of the international peacekeeping forceand Afghanistan's interior minister told a joint news conference thatsecurity there is improving despite pockets of lawlessness.
"There are of course difficulties, and there remain difficulties,"said British Gen. John McColl.
But he pointed to growing commercial vitality in the city andincreased traffic in and out of Kabul's international airport assigns that stability was taking hold.
The peacekeeping force - whose strength now stands at 3,200 -patrols 24 hours a day but only in Kabul. McColl deflected questionsabout whether peacekeepers were needed nationwide, saying Karzai mustwork that out with the international community.
The U.N. Security Council would have to approve any change in theforce's mandate.
Interior Minister Younis Qanooni spoke of Afghanistan's wish tobecome "self-sufficient" in security matters. He said the countryhoped to have a 70,000-member national police force trained withinthe year.
Qanooni also said efforts to get armed men off the streets wereslowly succeeding, and that authorities confiscated 700 illegalweapons in recent weeks.
"This doesn't mean we are satisfied with security - we have to domore," Qanooni said.
The minister also said the situation in Gardez, where rivalwarlords fought artillery duels for two days last week, was "undercontrol." A government delegation has been mediating between the twosides, and both agreed to a cease-fire at least until Friday.
Meanwhile, in other developments:
* Defense Secretary Donald H. Rumsfeld said Monday that Americanforces have returned to investigate claims they killed the wrongpeople in a raid two weeks ago. Fifteen or 16 people died and 27 werearrested in the raid. He said the military should apologize on thespot if the claims prove true.
* The Bush administration's proposed 2003 Pentagon budget includes$27 billion for fighting terrorism. The Pentagon says it has spentabout $7 billion so far on its campaign in Afghanistan, which beganOct. 7.
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UNIONDALE, New York (AP) — The likelihood of the New York Islanders relocating to another city increased Monday when voters in Long Island rejected a referendum to borrow $400 million to fund a new arena for the NHL team.
With about 71 percent of the vote counted, unofficial returns from the Nassau County Board of Elections showed no votes outstripped yes votes by 57-to-42 percent on a proposal to use public funds to build a new hockey arena and minor-league baseball park.
Supporters of the referendum called it a last-ditch effort to keep the Islanders playing in the Nassau Coliseum. The team's lease expires in 2015 and the team's owner, Charles Wang, has hinted he may have to move the team from Long Island unless a new facility is built to replace the 39-year-old building.
He made no predictions about the future in brief comments before hockey fans and supporters at a gathering at the coliseum after the vote. "I'm disappointed, I'm heartbroken," the millionaire founder of software maker Computer Associates said. He promised the team would remain on Long Island until the lease expires.
Proponents, including labor unions, tourism officials and many business groups, supported the construction project, citing the new jobs it would bring to the community just east of New York City.
Voters were clearly concerned, however, with the prospect of higher taxes to pay off the borrowed amount plus interest.
"If it was so good why didn't the owner pay for it himself?" said Mary Beth Molloy after voting no.
Anita Abbenda said she voted no "because the taxes are high enough."
PEORIA, Ariz. (AP) — San Diego Padres general manager Jed Hoyer says ace Mat Latos will begin the season on the 15-day disabled list with a sore right shoulder.
Hoyer said Monday that the move would be backdated to March 22, meaning Latos would be eligible to come off the DL on April 6. The Padres are scheduled to host the defending World Series champion San Francisco Giants that day.
Manager Bud Black said Latos "has turned the corner on this" and would play catch on Tuesday.
Latos, who was 14-10 with a 2.92 ERA last year, developed an inflamed bursa sac last week. Tim Stauffer is scheduled to start in Latos' place on opening day at St. Louis on Thursday.
O.J. Simpson's fate is in the hands of nine women and three men in a Nevada court.
Thirteen years to the day after he was acquitted of killing his ex-wife and her friend, a Clark County jury was to begin deliberating Friday whether the 61-year-old former football star and golfing buddy Clarence "C.J." Stewart are guilty of the armed robbery and kidnapping of two sports memorabilia dealers.
Each faces five years to life in prison if convicted of kidnapping, or mandatory prison time if convicted of armed robbery.
On Thursday, prosecutors told the jury that Simpson planned _ and Stewart helped carry out _ a plan to retrieve personal items that Simpson lost after squirreling them away after his Oct. 3, 1995, acquittal in Los Angeles of slaying Nicole Brown Simpson and Ronald Goldman.
Prosecutor Chris Owens said Simpson brought a gang of men together to the Palace Station on Sept. 13, 2007, to retrieve items he lost while trying to hide it from the family of Ronald Goldman and the California court that levied a $33.5 million civil wrongful death judgment against Simpson.
Owens told told the jury to convict Simpson, denouncing him for "arrogance" of thinking he could commit a crime "against the dignity and the peace of the state of Nevada."
"The kind of arrogance ... that would make them think they could come in and get away with this kind of crime and that nobody would report it and they thought they could spin it that, 'It's all OK; It was my stuff.'"
Simpson's lawyer, Yale Galanter, told the jury the prosecution didn't prove Simpson was guilty in the criminal case that he said "has taken on a life of its own because of Mr. Simpson's involvement."
"Every cooperator, every person who had a gun, every person who had an ulterior motive, every person who signed a book deal, every person who got paid money _ the police, the district attorney's office, is only interested in one thing: Mr. Simpson," Galanter said. "He has always been the target of this investigation, and nothing else mattered."
Galanter reminded the jury of a surreptitious recording of police investigators in the hotel room after the incident. "They're making jokes. They're saying things like, 'We're gonna get him,'" he said.
In rebuttal, Owens downplayed that recording, saying it could have been worse. "Anytime you involve something with celebrity like this, it's typical for anybody to start talking about jokes and things of that nature, but you got to hear all of that," he said.
Owens said that rather than police and prosecutors being out to get Simpson, they were careful and waited to get facts.
"Mr. O.J. Simpson as a victim?" Owens scoffed. "He tends to think of himself as a victim."
Stewart's lawyer, Brent Bryson, presented his 54-year-old client as the trial's forgotten man.
"I want to take an opportunity to introduce you to the other defendant in this case, Mr. Clarence Stewart," Bryson said in closing arguments.
In 12 days of testimony Sept. 15, the jury has heard 22 often colorful witnesses _ including seven of the nine people who were in the cramped hotel room. They've listened to numerous replays of secret recordings of Simpson before, during and after the alleged robbery.
Neither Simpson nor Stewart testified, and jurors were instructed not to consider that when judging the case.
Clark County District Court Judge Jackie Glass, who rejected several mistrial motions and kept a tight rein on the proceedings, read 41 legal instructions to the jurors and six alternates before lawyers began closing arguments.
In his closing, District Attorney David Roger focused on Simpson as the leader of a conspiracy, and said none of the men with him cared about the memorabilia he was after.
"But there was one person, and that was defendant Simpson," Roger said, raising his voice. "He is the person who put these crimes together. He is the one who recruited these individuals to help him commit the crimes."
Two witnesses who said they brought guns testified.
Galanter argued that Simpson never intended to commit a robbery but wanted to reclaim personal mementos of his career and family life that were being peddled by memorabilia dealers Bruce Fromong and Alfred Beardsley.
Witnesses told of Simpson's repeated declarations that he did not see any guns and did not know guns were to be present in the hotel room.
Galanter told the jury that the incident got out of hand because of former co-defendant Michael McClinton, who has admitted displaying a gun during the confrontation.
"For whatever reason, Michael McClinton takes over," Galanter said, "and when McClinton takes over, he starts yelling and screaming and giving people orders and telling people to bag stuff up. And O.J.'s saying, 'Don't take anything that's not mine.'"
___
AP Special Correspondent Linda Deutsch contributed to this report.
Abstract:
"Bubble" is the excessive growth of the fictitious capital in brief. "The real estate bubble" is one kind of the bubble, and the bubble economy taking real estate as carrier. This paper begin with concept of the bubble of the real estate, analyses the reason which can arouse the real estate bubble, from psychology of investor and speculation, etc. The paper summarize kinds of danger that it will be brought to economy once real estate foam evaporate, and has put forward some effective precautionary measures at the end of the article.
Key words: The real estate bubble, Forming reason, The damage, The precaution
R�sum�: La � bulle � d�signe de mani�re g�n�rale la croissance excessive du capital virtuel. La propri�t� immobili�re est une sorte de bulle, et l'�conomie en bulle prend pour vecteur l'immobilier. L'article pr�sent, d�butant par le concept de la bulle dans l'immobilier, analyse les raisons qui provoquent la bulle de la prori�t� immobili�re sous les perspectives de la psychologie des investisseurs et de la sp�culation, etc. L'article r�sume toutes sortes de dangers qui seront entra�n�s une fois la bulle �vanouie, et avance finalement des pr�cautions effectives.
Mots-Cl�s: bulle de la propri�t� immobi�re, raison, dommage, pr�caution
1. THE MEANINGS OF "BUBBLE" AND "REAL ESTATE BUBBLE"
Bubble is explained briefly that it is excessive growth of the fictitious capital. There have one comparatively accurate explanation in "Ci hai" (1999 edition) " fictitious capital is excessive to increase with relevant trade expanding day by day, they are breaking away from the increase of the real capital and the growth of the real department, it is a phenomenon that the price of the financial securities and the real estate are skyrocketing, the speculative transaction active extremely. The bubble economy resides in monetary speculation, arouse the bubble boom of social economy, certainly the foam evaporates finally, cause the society to shake, even economic crash." The so-called fictitious capital here, mean that exists in the form of marketable securities, and can bring some gain to holder, for instance enterprise's stock or the bond which the country issue, etc. The fictitious capital is a foundation of forming economic bubble, when the constant lasting growth of the fictitious capital until develop into expanding excessively, the fictitious capital deviate from value of the actual capital farther and farther, form the bubble economy, causing the stock price to slump finally, the foam to evaporate, and the social economic turbulence.
"The real estate bubble" is one kind of the bubble, and the bubble economy taking real estate as carrier. The bubble phenomenon in the development of real estate, mean mainly the price of land and house is extremely high, it does not accord with the use value (the basic value of market), though value increases very high on book, but it is very difficult to be realized in fact, form a kind of bubble boom on the surface. Because the real estate is made up of the land and the appendiculate building, and the building is the products of human labor, its value is basically fixed, so the real estate bubble that we talked about usually refers to the bubble of the land price in fact. This is because the land is scarce resources, its characteristic is that elasticity of supply is small, the demand elasticity is large, when the land has a great demand, it can't make supply and demand reach the balance within some time, will cause the skyrocketing of the price of land. When the use value of the land breaks away from its real value farther and farther, will form the bubble economy, once the foam evaporates, the price of land slumps will bring enormous harm to social economy.
In modern market economy, economic bubble will exist in the economic activity for a long time, have its objective cause, it is mainly determined by dual character on its function. On one hand, because of the existence of economic bubble, make people produce optimistic expectancy to the market, help capital to be centralized, promote the competition, enliven the market, and bring about a prosperous economy. On the other hand, we must realize that unreal factor and speculative factor existing in economic bubble have a negative consequence on economic development.
2. THE REAL ESTATE BUBBLE'S FORM
In the course of development of the real estate, we should admit that there really have some economic bubble, it behave mainly2:
2.1 The bubble of the expanding of land price.
The price of land is determined by the limited of the supply and the limitlessly of the demand, furthermore, it is not overall in regulations about land market for the government, make the land market present a large amount of speculation propagation, will present the rising emptily of the price of land, such rising emptily is the economic bubble. If land price break away from its real value, at double, even dozens of times in a short time skyrocket, there will develop into the bubble economy. It is a distinct illustration like as the real estate price of Japan booms. The indexes of price of land of six major cities in Japan, have gone up by 5 times during 10 years in the eighties of last century, the total value of market value of the price of land is up to 4,000,000 billion Japanese yen, is equivalent to 4 times of the total value of the American price of land, the land unit price is 100 times of U.S.A. The price of land slumped after 1991, the bubble evaporated, caused the enormous economic losses. The rising emptily of the land price is a bubble boom, price of land doesn't support a long time, the bubble can evaporate when it develop into certain stage.
2.2 The bubble of the vacant house
In the supply-demand relationship of real estate market, the supply of commodity apartment exceeds market demand, that part which the supply exceeds the department increases belongs to the rising emptily, it can produce a large amount of sinking cost, thus the bubble is produced. According to the international experience data in common use, the vacancy rate of commodity apartment is in less than 10%, such economic bubble is normal. If it is too many to surmount, cause the serious supply surplus, form the bubble economy, causing the price of house to fall sharply, the developer is given enormous losses and even gone bankrupt, the rate of unemployment rises, economy confusion, and social turbulence.
2.3 The bubble of real estate investment
Generalization, the increase rate of investment of the real estate should be suitable for the consumption rate of increase of the real estate, strive to make the balance of the supply-demand relationship. The real estate plays a role in promoting the economy development as the engine driving; it has a very important function. As developing country being at economic growth stage, the all trades wait to revitalize, the increase rate of investment of the real estate is slightly bigger than consumption rate of increase is to form the market situation supply exceeds demand slightly, it is favorable to promoting the development of real estate and stimulating the economic growth. Only when real estate investment expands excessively, the commodity apartment is unsold seriously; it is difficult to return the loan, causing the financial crisis, just form the bubble economy evaporates. Thailand was one in the Southeast Asian financial crisis in 1997.
2.4 The bubble of the rising emptily of the house price.
The price of the land nearly accounted for 1/3 in the development of real estate; so there have a close relationship between the bubble of the house price and bubble of land price. In addition, the developer is in order to seek exorbitant profit during developing the real estate, adopt some unethical means, for example "fix the price jointly", "fry property under construction", etc. drive up the house price artificially, these can will form economic bubble too. If price of house exceed solvency of consumer farther, the price-income ratio of the house is too high, it also can arise the bubble economy of the real estate. In 1991-1993, real estate price of Hainan rose violently in China. The price of each square meter of the apartment was more than 1000 yuan in 1991, can sell to more than 3000 yuan by 1992. Some prices of commodity apartment even top 10000 yuan. The rising emptily of house price will cause the outburst of the real estate bubble finally.
3. REASONS OF THE REAL ESTATE BUBBLE
3.1 Psychology anticipation
Anticipation is a kind of judgment on the future while people participating in the economic activity, it is a prediction about future value of economic variable that is related about decision-making, is a complicated psychology activity. Anticipation is prediction about the assets price in the future, but the future is not confirmed, and that it is different to investor's attitude towards risk, so when investors carry on the economic behavior, the result produced is different too. On the real estate market, consumers' expectancy is the expectancy to the price in fact. From bubble forming, inflation to evaporating, investor has two obviously same characteristics to expectancy on price of the estate. One is anticipated homogeneity. Namely the view of investor's trend on the assets price is the same, they have the same anticipation. When real estate investors hold the upward view to the price of the real estate in a regular period, and this attitude on the price can become the whole market faith quickly, this is the foundation that the real estate bubble produces. The other is the positive feedback of the demand and price. When the bubble have shaped, the higher the people expect on the price of the real estate, the bigger the speculator anticipate on the capital earning ratio, so increase people's purchase to the house and even hoard, in order to shoot off when the price is higher. While the price is running up, the demand of the real estate increases. The increase of such demand caused by expectancy of the psychology, has caused the bubble boom of the market, thus cause the expectancy of rising in price further, make the price of the real estate expand for the bubble finally.
3.2 Excessive speculations
The demands for the real estate of people can generally be summed up in the consumption demand of life, investment demand and speculation demand. 3 Consumption demand and investment demand are true demands; the speculation demand is the falsity demand. True demand take place in material economic field, this demand arouse by the life and reproduce. Its change will cause the change of the relative price, and then cause the reallocation of resources. And the false demand is a demand that is only in order to seek the price difference; it can't create value by itself. To speculator, they are not interested in the use and the payoff of real estate itself, just hope to obtain the income of price difference as many as possible while the house price is surging. Real estate market is easy to produce speculation because the land is rare. There is a word in the real estate: gaining the land means making the money. The investment on the real estate turns into depositing the land in a certain degree. The more the speculation is, the faster the bubble form.
3.3 Herding behavior.
The herding behavior is determined by broker's incomplete rational expectation and speculation behavior. Herding behavior theory think that there are always a group of immature participants in the financial market, they do not have enough information source, and can't observe accurate information too, the formation which they make the expectation on the future are mainly relay on the other people's behavior and expectation at the market, thus through imitating behavior of others to choose own behavior. The herding behavior is a market unconscious at the same time. The speculator buy the financial asset doesn't mean that they think the price of the asset is high but they expect that one people will buy the asset at higher price. A famous Japanese economist, while describing the sharp rising in the price of land and stock, which began in 1988 in the Japan, wrote, "If we do not consider the production of ' the bubble', it is unable to explain. Namely 'the cart of the motorcade' begins to walk in the street; a lot of people follow closely. Since there are so many people with behind, namely people are participating in buying the land and stock constantly.
3.4 The land market out of balance
The land resource is rare resources, with the development of economy of our country; the increasing of population, the demands of people for the land will be greater and greater. In real estate market, with the constant growth of investment and purchase house demand, the land for development area of the building being more and more in short supply. On one hand, land market demand is expanding constantly, and on the other hand, because the land is scarce resource, the market is unable to offer enough supply in a short time, thus supply and demand is unable to reach the balance. When supply and demand is imbalance, the price of land will rise. And at this moment, driven by the profit-making demand, there will present the hoarding of land, people regard land obtained as the profit-making means, carry on speculating, and this phenomenon has aggravated the imbalance of supply and demand of the land market further, enabled the price of land to break away from the use value of the land, produce bubble.
3.5 banking systems not perfect
The real estate is a dense trade of the fund; the development of real estate must need rich fund. The capital sources of real estate enterprises are generally made up of own fund, bank loan and other capital sources, etc., but because real estate investment has the characteristics that the long turn over time, and the slow returns, it certainly will be difficult to be bear by the real estate developer alone, so to a great extent, the fund used at the development of real estate is coming from the bank loan for the most part. Generally speaking, the fund of development of real estate is counted in millions, even hundreds of millions yuan, and because of the characteristic of its own fund circulation, the policy of various countries governments have a certain degree restrict in the loan of development of real estate. However, in a situation that the banking system is imperfect, because the financial enterprise's blind pursuit market shares scale of credit, they will neglect the examination of the borrowing enterprise or the personal credit, following and investigating; will underestimate the potential risk of the investment project of the real estate. The statistics show, the rates in debt of real estate enterprises of our country have exceeded 60% at present, in addition, the mortgage that individual lends money, the rate in debt of the whole bank has exceeded 67%, this kind of debt risk is often difficult to be perceived when the price of the real estate raises up, and the market value of mortgage is soaring constantly, but once go wrong, the risk of the real estate will be transformed into a risk of the bank. The involving of a large amount of bank fund has accelerated the inflation of the assets price and production of the bubble.
3.6 The misplay of the government intervening
Because the real estate has very great pulling functions to the national economy, government's intervention to the real estate has always been much more than other industries. From urban planning to the writing replay of the land, from interest rate change to the tax policy, from direct investing to the indirect investment in the form of transferring, government influence the development of the real estate market all the time. Like function of the market mechanism, the government's intervention is not omnipotent; he will be producing two kinds of different effects too. The real estate is regarded as the basic industry, have high dependence with a great deal of industries, and this means not only its own scale of investment is great in real estate, but also its multiplier effect is very great. If the government adjusts and controls aptly, will drive the development of the whole industry chain that related to real estate, promote the economic prosperity. However, when the government utilizes one's own right in the hand, serve for realizing its own short-term political goal, will present the government interference fault unavoidably. The local government often gets involved in the real estate market directly, intervene the decision of the responsible institution, absorb investment with land allocating and expenses of taxation; transfer the Examine, approve and plan right of land to a lower place excessively, break the plan unprincipled, not the develop according to planning, but the plan walks after the develop. Like this very apt to cause real estate market to be confused, such negative effects as overexploitation, etc. when the development in real estate violate law of value and market rule, there will be bubble, while the bubble evaporated, because of its negative effects, it can involve other relevant trades too.
In addition, a lot of foams relate to swindle too, in addition in the last few years, a lot of hot money and overseas idle fund gets involved to the real estate has become one form factor of the bubble.
4. DANGERS OF THE REAL ESTATE BUBBLE
4.1 The bubble of the real estate has suppressed the development of other industries
Though the existence of the bubble of the real estate is a kind of bubble boom, but it means there is higher investment repayment in a short time. During bubble economy, a large amount of fund is gathered to the real estate, speculative activities are rampant.4 Under the attraction of the great amount of profit, Enterprises expand the investment in the real estate market through loan money from such financial institutions as the bank, etc. A large number of funds flow into real estate trades, will make other productive trades lack enough capital source; have contained the fast development of other industries to a certain extent. In addition, as the leading industry, the real estates have driven the fast development of the relevant trades such as steel, cement. The real estate is in close relation with construction industry, the relation between real estate and other trades can be reflected from the relation between construction and other trades directly. The development of the real estate has driven the development of the construction directly, 70% of fabrication cost of the building products is the value that the construction material shift, main material consumption of the construction accounts for the annual total consumption of various kinds of main material is: 25% of steel, 40% of timber, 70% of glass, 70% of cement, 25% of plastic products, 80% of traffic volume. During the course of bubble expanding, the price of the real estate goes up, the building construction amount runs up, the demand for such raw materials as the steel, cement, etc. is heightened, this cause the price of these materials to go up sharply, and have brought the negative effect on the development of other industries. The amount of the increase of the price of steel is up to 28% in 2003; the main reason is that the increase of steel for building is too fast. This, to needing steel as a lot of manufacturing companies of the raw materials too, steel price's rising cause very great losses for many industries, especially exporting type-manufacturing company, because the foreign steel has not risen in price. Once the real estate bubble evaporates, bring the deadly blow on the relevant industries.
4.2 Real estate bubble bring heavy negative effects to economy
When the bubble of the real estate broken, the price of land and room slump, people's assets will shrink, private consumption fall rapidly, the whole economy will sink into the state of declining, bring the heavy negative wealth effect to the economy. After the Hong Kong real estate bubble of 1997, Hong Kong economy presented the negative growth, which is the only one of its kind for decades, in 1998; The rate of unemployment rose to 5% of 1998 from 2.5% of 1997; Total volume of retail sales and consumption drop by a wide margin; The value-added of the real estate dropped from 135,650 million Hong Kong dollars in 1997 to 81,130 million Hong Kong dollars in 2002, the fall was up to 40%; The proportion of value-added of the real estate to GDP drops from 10.7% of 1997 to 6.13% in 2002; The price of the building begins to drop from the highest peak of 1999 continuously, the amount of decrease has been up to 65% totally for the past 6 years, Hong Kong people's wealth evaporates 2,200 billion yuan.
4.3 The real estate bubble's break gives the great impact to the financial system
Because the fund of the real estate was offered by such financial institutions as the bank, etc., so after bubble broken, the bank fund that invest to the real estate will face danger that can not get back. In addition, business of the loan for purchasing house has all been leading by the bank all the time, but because financial mechanism of our country is imperfect, they have no restrict examining system to personal credit and refund ability, etc., when the bubble of the real estate breaks, it will cause the non-performing loan of the bank to increase sharply. Most house purchasers are the mortgage of high price, once the bubble breaks, the house becomes the assets of shouldering, a lot of people will get out the house, what the bank received is the house devalued After the bubble of the real estate breaks, some loans of the bank will become bad debt, dormant account, all these will impact the whole financial system directly and rapidly. 1992-1993, in the" real estate tide" and the "hoarding land tide", in the financial institution's more than 3000 billion non-performing assets, the real estate accounted for 35.4%, have caused a large number of bad accounts, dormant account to the bank. And for example, in the 1990s among the real estate bubble of Malaysia, bank fund got involved in the real estate trade in a large amount too, before financial crisis erupt, the loan that financial institution bring to the real estate is 30% of their total loan, the real estate has played the function of adding fuel to the Malaysian financial crisis.
5. PRECAUTIONS AGAINST THE RISK OF THE REAL ESTATE BUBBLE
5.1 Strengthens land management, improve the land tax
The land is the foundation of real estate; through the rational planning of land utilization, scale and structure of real estate market can be controlled effectively. The government should control the unreasonable rise of the price of commercial apartment through the adjustment of land resource supply, keep rational supply and the proportion of all kinds of land supplying according to the situation of markets of the real estate, implement the land sell competitive bidding system, control the too high price of land of some cities. Land biding not simply means the person who give the higher price will win, government can diced the real estate enterprise according a synthesis index, which including the qualification of enterprises, past development achievement, land service orientation, the market prospects and so on. To the development of the top-grade house, the government should examine and approve the land strictly, control the building of the top-grade room in the rational range of the urbanization process, so as not to lead to the new overstock, the bubble that cause by the unbalance structure.
In addition, while the real estate developer carried on development of real estate, the use of land should be supervised. Government should monitor the develop progress, tax the unit or individual who hasn't develop or delay the develop progress on purpose within prescribed time-limit, for example the tax of vacant, land retain tax etc.; Strengthen levy of the land value-added tax at the same time, should levy tax strictly to the value-added part in the land trade that is transferred many times over a period. Besides levy the land value-added tax, should also restrain the land transfer frequency strictly; reduce the land speculation behavior in the real estate market. Evade the behavior of speculating at each stage, for example, occupying, using, transferring, incoming and so on, let tax play the role of resource distribution, guarantee the sound development of the real estate market.
5.2 Standardize government's function; strengthen the regulation and control of the real estate market
The government can play the regulating action when the market does not work; it is a leading department that guarantees economic sound development. But the government is influenced by external cause and internal cause; it is apt not to work, too. The real estate market as leading industry of economic development, in the controlling of the development of the real estate market, sometimes because of the driving of one's own interests, the government often only pay attention to the total GDP amount for the moment, and make the structure of the whole industry unbalance, produce the hidden danger of economic development, so should standardize the government's behavior. The government should strengthen the power of control on land market at first, proceed from angle of whole development of the city, on the basis of fully considering the relation of the supply and demand of the real estate market and land resource, using the scientific means, make a advance measure on the land quantity that used for developing every year, then set up long-term, reasonable land supply plan, on this basis, thus suppress the emergence of the bubble of the real estate from source. The government should be according to the "inviting", "auctioning", "hanging" form strictly in the course of auction of the land, carry on market operation, stop "dark case" operate firmly.
In addition, in order to adjust the structure of real estate market, government can also require the use of the land, stipulate clearly which are used in the construction of top-grade villa, which must be used in the construction of low-cost housing, and use some financial measures, such as, improve the loan interest rate of the top-grade housing, offer the preferential policy of reducing or remitting the taxes etc. to enterprises building economic house for poor people, to reach the equilibrium of supply and demand of the real estate market, and to avoid the phenomenon which appears: the vacancy rate of commercial apartment is high because of unreasonable development, but at the same time mostly ordinary people still can not afford room.
5.3 Strengthen financial supervision, widen the financing channel
The most part fund which promoting the bubble of the real estate to produce, flow out from the bank definitely. So, should strengthen the supervision of the bank and control the venture capital from source. At present, because the banking system of our country is still imperfect, we have not set up one whole financial institution system, which includes the real estate financial institution of the policy and the real estate financial institution of the commercial, loan creating institution and investment institution, guarantee institution or guaranteeing institution. Because of the shortage of supervision to the real estate financial, it's very apt to cause a large number of credit funds flow into the unproductive department and cause bubble. The bank should take the scrupulous attitude on the loan, stipulate the proportion of the loan of the real estate and secured loan financing of the real estate strictly, and examine the condition of the secured loan of the real estate strictly. For the real estate developers whose own fund is lower than 30%, bank should reduce its amount of loan, even should refuse the borrowed money. In secured loan of purchasing house, should examine their house-purchase purpose strictly, for the speculator who already have own houses, still want to purchase second or even more house, bank should proper to raise the borrowed money interest, too.
The real estate is one industry of high risk; once its fund chain ruptured it may cause a lot of economic questions, so should adopt multi-channel financing in the aspect of the real estate fund, to disperse the risk of the fund, and should adopt the market-base financing which impel investors to undertake industry's risk directly. The key of widening enterprise's financing channel of the real estate lies in developing market-based direct financing.5 By the look of international experience, there can be various forms to develop capital market-base financing. Besides that real estate enterprises issue the corporate bond and financing through the stock market, still including house purchaser and developer build the room in partnership which with nature of the stock, the real estate investment funds which allow the housing loan of the bank to transfer and circulate at the debt market and the real estate investment with entrust.
5.4 Sets up the early warning system of real estate bubble
To avoid the production of the real estate bubble, the government must set up the complete early warning system of economy. The early warning system of economy finds out some basic indexes that can reflect the market trend through studying the fluctuation and law of the macro economy, and through the control of these indexes, to dispose the market resources reasonably. Because the real estate bubble of Japan is representative, it can achieve the purpose of pre-warning through comparing with some indexes of this country in actual operation.
1st. The ratio of the theory land price and the real land price. In the development of real estate of our country, the price of land occupies very large proportion in the development of real estate, if don't control, it's very easy to produce land price bubble. From 1985 to 1990, in the Tokyo area, the ratio of the reasonable house land price upward rate and the market price upward rate is 17.7%, at the same time, the ratio of the theory price of commercial land upward rate and the practice price upward rate of the commercial land is 20.9%, this two price upward rate's enormous deviation reflect the existence of the foam.
2nd. The Ratio of the real estate price upward rate and the GDP increase rate. 1987-1990, in the expanding stage of Japanese real estate bubble, the average of this index was 3.3, if this index of the real estate of our country is close to this number, should pay enough attention at it.
3rd. The ratio of the increase rate of the real estate loan and the increase rate of the GDP. One of the important reasons why Japanese real estate bubble produced is that credit is expanded excessively. From 1987 to 1990, the average account of the Japanese real estate loan that has not repaid is 177% of GDP Because there is the behavior of lending money to the real estate trade blindly exits in our countries present financial industry, should strengthen the control of this index.
5.5 Disclose the market information; make the real estate market run transparently
The origin of the real estate bubble is the asymmetric information after all. Asymmetric Information, not merely twist the normal response to the supply-demand relationship of the real estate of the market, and mislead consumers to make the wrong value choice, make gamble and propagandizing to prevail, the market order becomes confused. Should announce information of the real estate market regularly; enable consumers to have a roughly understanding to the trend of the market. The content of information should include some basic data related to real estate market, such as recent land quantity, vacancy rate of commercial apartment, house price, the real estate development item that has already sanctioned, etc. To the building that are already sold, real estate enterprises should disclose the sales situation truly, for the behavior of deceiving the buyer, once been found, should punish sternly, and corresponding, set some excellence real estate enterprise.
6. CONCLUSION
Though whether there is bubble in real estate market of our country has not a precise conclusion, but surely, the excessive real estate bubble is disadvantageous to the economic development, Japan has not totally resumed from the real estate bubble in the 1990s last century yet. As a developing country, China should watch out for the emergence of the bubble of the real estate, not only should study the theory of the real estate bubble, but also should combine the national conditions and development characteristic, to make out the rational measures of defending.
2 Tao ManDe, Ye QingHe, Huang Cheng. 'Thinking of bubble question of Jiangxi's real estate market'. Jiangxi social science 2003, 5.
3 Zhu YuLiang, Ma JianHong. 'The Analysis on the cause of the real estate bubble'. Chinese real estate, 1999, 9.
4 Liu YingHuang. 'The precaution of the real estate bubble'. Fujian Building, 2004, 4.
5 Li WeiQing. 'The question of the real estate of our country and the impact on real estate credit'. Transaction of University of Business & Economics of Hebei, 2004, 3.
[Reference]
REFERENCES
Tian ChuanHao , Wang FuLin , Jia ShengHua. 'The Danger of the real estate bubble- -International economy and enlightenment'. Chinese real estate finance , 2004 , 5.
Zhang SongFeng. 'Economic history of the Japanese real estate bubble'. Marco economic management , 2005, 6.
[Author Affiliation]
Wu Yanxia1
[Author Affiliation]
1 Business Administration School, Xi'an University of Technology, China.
* Received 25 October 2006 ; accepted 2 April 2007
[Author Affiliation]
THE AUTHOR
Wu Yanxia, female, born in 1964.11. Teaching in the business administration college, finance Department of Xi'an University of Technology. Headship: professor. Reading doctor, the research aspect is technology business and item management, area business and city prosecution management. Shannxi province, Xi'an city, Xi'an University of technology Administration College, 710048, P.R. China.
E-mail: wyanxia@netease.com
Richard Moriarty, president of Moriarty & Primack, Certified Public Accountants, in Springfield, was shocked to see his company's health insurance rates increase by 19% last June. But he knew he was in good company.
Mary Ellen Canavan, owner of United Personnel Services Inc., says her Springfield-based staffing agency has watched health insurance rate increases outpace sales increases in recent years. And Nancy Urbschat, a principal in TSM Design in
Springfield, laments that health insurance is claiming an increasingly larger part of her small advertising design firm's resources.
Like their counterparts across the state, local business people are feeling more than a bit queasy about soaring health insurance rates, particularly in the wake of a recent announcement by the state's major health insurers that premiums for private employers will climb an average of 7% to 17% in 2001. But business group leaders and insurers say that while more companies are looking into alternatives in health insurance coverage these days, most are reluctant to make major coverage changes for fear of upsetting valued employees.
"The economy is so hot and unemployment is less than 3% ... employers are feeling they have to offer good coverage," said Richard Lord, president of the Associated Industries of Massachusetts (A.I.M.) He said companies across the state have seen double-digit increases in health insurance rates this year and last, ranging from 10% to 20%. Most companies, he says, pay 50% to 80% of health insurance premiums for their workers.
"You would think people would drop coverage, but that's not happening," Lord said. "There's such a competition for workers out there." Still, Lord says he's surprised he hasn't gotten more complaints from A.I.M.'s 5,400 members. He theorizes that the economy is doing so well it is masking the effects of the climbing rates. Lord also predicts that if there is an economic slowdown, major changes in the health insurance benefits being offered by private employers should be expected.
All Well and Good
Russell Denver, president of the Affiliated Chambers of Commerce of Greater Springfield, says he's heard from many business owners who are frustrated over health insurance increases. For many companies, he says, health insurance has risen to become one of the top three expenses, following raw materials and salary costs.
Prior to the recent fairly dramatic increases, Denver says, health insurance costs were nowhere near the top of most companies' expenditure lists. But, he notes, small businesses have had to absorb rate increases of 10%, 15% and even 20% in the last two years.
Denver says he is seeing more chamber members opt for lower premium costs and higher employee deductibles by returning to traditional indemnity insurance plans like the one offered through the Chamber. The Chamber is also looking into setting up a health insurance trust through which members would contract with an entity to administer their group insurance plan, saving money on reduced administration costs, he says.
Richard LaBine, president of Health and Benefits Consultants in Springfield, is
seeing most of his clients take a wait-and-see attitude to rate increases, though
many are concerned about the upward path of rates. "Because of the low
unemployment rate, companies are very cautious about passing too much of the
costs on to employees," he said.
LaBine's company helps businesses determine which health insurance plans are best for them. He says clients with less than 100 employees are seeing rate increases of 10% to 30%. Most of those with more than 100 employees self insure, he notes, and have had less severe hikes of 8% to 12%. Last year, he says, increases ranged between 5% and 8%. And prior to that, increases were around 1% to 4%.
LaBine says some companies are seeking rate relief by upping employees' copayments for care and for prescription drugs. Companies that had HMO plans with copayments of $5 per visit and $5 and $10 per prescription three years ago are now choosing plans with $10 to $20 copayments, he says. The changes do pass along costs to employees, but do so as they use the coverage rather than hitting workers with reduced benefits or higher premium payments.
Only a few companies, LaBine notes, have chosen to make employees pay a higher percentage of health insurance premiums, and those companies tend to be in segments of the economy where employees are more plentiful. Like Lord, LaBine predicts that companies will decrease the percentage of health insurance premiums they pay if the economy were to slow down. He doesn't think a substantial number of companies will turn away from HMOs and return to indemnity plans, however. "That won't happen," he says, contending that such a move isn't financially beneficial for most companies.
At United Personnel Services, Canavan had LaBine evaluate her company's health insurance options in light of recent rate hikes. Her company chose to remain in an H90 plan with Health New England, she says, but did opt for a higher deductible and copayment structure. Canavan sees advancements in medical technology as an understandable factor in increasing insurance costs. "You have all these wonderful tests available, but they cost a lot of money," she says.
Urbschat says TSM Design continues to pay 100% of health insurance coverage for its five employees and hasn't looked into coverage alternatives despite the increases. TSM is covered by Blue Cross and Blue Shield. "It's a big number every month for 100% coverage," Urbschat said, "but our employees are satisfied. They've got good coverage."
Urbschat says she would probably change insurance plans if she could find an alternative that would offer the same coverage for less money. But like most small companies, she says TSM doesn't have anyone who has time to shop around for plans.
Like Canavan and Urbschat, Moriarty has chosen to stay with the same plan his company has been using through Tufts Healthcare. His company also continues to pay 100% of workers' health insurance premiums, he says. Employees are reluctant to change plans, according to Moriarty, and feel Tufts has done a good job. Last year, his company did opt for a higher copayment in order to cut costs.
Moriarty said some of his accounting clients are asking employees to pay a larger percentage of their health insurance costs, but added that most have maintained funding the majority of the monthly premium but added a provision where employees would pay a larger percentage of future premium increases. He says his clients are very aware of the fierce competition for employees.
According to Moriarty, insurance and benefits, including pensions, now amount to 20% to 30% of a company's salary expenses. He estimates that health insurance makes up 40% of a company's benefit expenses. Health insurance averages about $500 for a family plan these days, compared with $350 just two years ago, he estimates."
No Quick Cures
If local business people are frustrated by the health insurance rate increases, they also are aware of the demands and sweeping changes that the health care system has been undergoing. Moriarty and LaBine point to a time five or six years ago when skyrocketing health insurance rates were a huge issue for businesses. Then came the HMOs which, they note, brought new efficiencies and lower rates.
LaBine says he has been expecting substantial rate hikes because insurance carriers had not been adjusting their rates in recent years to keep pace with the inflation going on in the medical field. "There was a point when HMOs just wanted to get as many members into their organization as they could without taking into consideration the finances," he said.
Lord said companies were able to save some 25% on health insurance costs with the emergence of HMOs in the early to mid-1990s as competing HMOs squeezed excess capacity out of the health care system. "it appears we've reached a point where there isn't much excess to squeeze out." At the same time, increased prescription drug costs are raising havoc with medical expenses.
Indeed, insurers finger prescription drug costs, as well as increasing demands by regulators and providers, for their rate increases.
James Kessler, vice president and general counsel for Health New England Inc. of Springfield, which has the second largest HMO membership in the region, cites a combination of soaring drug prices and increasing cost demand from providers for its expected 7% to 10% rate hike for 2001. He notes a general upward trend in health care costs as well.
"Manufacturers have been continuing to develop new drugs and new drugs tend to be very expensive," Kessler says. What's more, he and other insurers note that prescription drug companies are now spending millions of dollars to market new drugs directly to consumers. When consumers seek out name-brand drugs they've seen on television rather than using cheaper generic drugs, costs soar, he said.
There are other factors that have also contributed to higher health insurance costs, according to Kessler. In the past, he says, there were very few mental illnesses that could be treated. Now, he says, millions of people are on anti-depressants, contributing to the increased cost for prescription drugs.
Kessler says prescription drug costs have been increasing by 15% to 20% a year in recent years. This year, he noted, Health New England spent as much on prescription drugs as it did on inpatient care. "That's pretty remarkable," he observed.
Barbara Tierney, retention sales leader for the Central and Western Mass. Region for Blue Cross and Blue Shield (BCBS), says her company has retained nearly 100% of its customers despite recent rate increases. BCBS will raise rates for its HMO customers by 10% to 12% on average in 2001, with jumps of 12% to 14% for preferred provider organizations (PPOs). BCBS's indemnity plan will go up 14% to 17% in 2001, according to Susan Leahy, the company's director of media relations.
According to Tierney, prescription drug costs are escalating at rates far ahead of anything else in health care. She too noted the trend of drug companies launching ads aimed directly at consumers. Tierney says some newly mandated state requirements, such as the Mental Health Parody provision, are also adding to health care costs. That measure, she notes, expanded benefits for mental health treatment.
Kessler and Tierney say they are not losing customers due to rate hikes. "I think people realize that the pressure for these increases has been everywhere," Kessler says.
Tierney, meanwhile, says BCBS is right in fine with its competitors in terms of rates and gets good grades from customers on its service.
Both Kessler and Tierney note that more customers are looking for ways to cut costs through higher deductibles. "Employers are looking for fewer rich options but we haven't seen a big march toward indemnity plans," Kessler said. Self insurance, he says, continues to be popular.
A Wait and See Attitude
At least for now, area companies seem to be in a holding pattern on health insurance as debates on rising costs play out in the medical field and the political arena. Christopher Geehern, executive vice president at the AIM office in Holyoke, notes that most member companies in his group are paying health insurance increases themselves without passing costs on to their employees. "So in a lot of ways this is going right to the bottom line," he says.
All that could change, he warns, not only if the economy slows but also if a statewide November ballot initiative Question 5 - is passed. A.I.M. is focusing its energy on opposing Question 5, which Geehern says will prohibit managed care organizations from using provider networks; will require universal access to health care without mapping out how it will be paid for; and will prevent nonprofit health care insurers from converting to forprofit status. Geehern contends that if Question 5 passes, everybody's health insurance costs will increase by 45%.
"If this question passes, it will make the increases we're facing now look like chump change," he warned.
Memorial services for Francis Lloyd Jr., a former director of theUniversity of Chicago's Laboratory Schools, will be held at noontoday in St. David's Episcopal Church, Main Street, South Yarmouth,Mass.
Formerly of the Hyde Park area, Mr. Lloyd, 84, died Friday atSt. John's of God Hospital, Boston.
He served as head of the Laboratory Schools from 1963 to 1970.Founded in 1896, the private institution has a student body rangingfrom nursery to high school age. It was originally created by theuniversity for the purpose of testing new teaching methods.
Among his major accomplishments during his tenure as directorwas developing the institution's first middle school. He also wasinstrumental in acquiring funds for studies such as: stimulatingcuriosity among first- to fifth-grade students and examining tutoringwith audio-visual teaching techniques.
"He was very gracious, very articulate," said Raymond Lubway,who served as first principal of the middle school. "His writings,even his memos, were gracious, well-worded and positive. He had asense of humor and an interest in a wide variety of things."
Mr. Lloyd left the University of Chicago to co-found AssociatedEducational Consultants Inc. of South Yarmouth, where he took upresidence. He retired in 1978.
He was the author of Forward to Teach, a book based on his ownteaching experiences.
A native of York Harbor, Maine, he graduated from StanfordUniversity in 1933 and studied at Oxford University in England from1934 to 1935. Mr. Lloyd subsequently taught English and served asvice rector of St. Paul's school in Concord, N.H., until 1957. In1949, he received a master's degree in education from HarvardUniversity. From 1957 to 1963, he was superintendent of schools inClayton, Mo.
During World War II, he was in the Coast Guard Reserves.
He leaves his wife, Elisabeth; three sons, Francis, Malcolm andBoardman; a daughter, Mary Zaragoza; a sister, Nancy Kittles, and 12grandchildren.
Burial was private.
BELGRADE, Serbia - A Serbian ultranationalist resigned as parliament speaker Sunday after only five days in the post, averting immediate fears that the country was returning to its warmongering past.
Tomislav Nikolic stepped down following a last-minute deal between pro-democracy parties to form Serbia's next government.
Nikolic was elected to the No. 2 position in Serbia last Tuesday, triggering fears in the West that allies of late President Slobodan Milosevic were returning to power after their ouster in a popular revolt in 2000.
"I resign from the post ... but be sure that I will watch closely what your new government will do," Nikolic told the parliament in an emotional speech following long, acrimonious debate on whether Serbia should keep striving for closer ties with the West or stick to its traditional ally, Russia.
Nikolic warned the new government that if it "peacefully accepts" independence for Kosovo, his Radicals "won't sit calmly and wait."
He has previously called for military intervention in the breakaway province if it splits from Serbia. A Western-backed plan, which envisages Kosovo's independence, will be debated in the U.N. Security Council this month.
Nikolic's resignation opens the way for a parliamentary vote on the new coalition Cabinet, which consists of pro-Western Democrats led by President Boris Tadic, and the conservative Democratic Party of Serbia, headed by moderately nationalist Vojislav Kostunica.
The expected partners face a Tuesday deadline to finally form the government - nearly four months after parliamentary elections in January - or hold new elections.
The formal approval of a new Cabinet is expected Tuesday in the assembly.
The European Union and the United States have repeatedly urged pro-democracy groups to forge a coalition and ensure that the increasingly popular Radicals remain at bay.
The January elections produced no clear winner - the Radicals won 81 seats in the 250-seat assembly, but did not garner a sufficient majority to govern alone.
During months of fruitless talks between Tadic's and Kostunica's camps, Nikolic managed to secure a parliamentary majority last week to clinch the post of speaker - largely thanks to deputies loyal to Kostunica.
However, a Friday breakthrough in the talks among the democrats meant that Nikolic was forced to resign.
"I am an honorable man and therefore I resign," Nikolic said as he criticized Kostunica for allegedly "betraying" an alleged deal the two had when Nikolic was elected parliament speaker.
MOBY-DICK IN PICTURES: ONE DRAWING FOR EVERY PAGE BY MATT KISH PORTLAND, OR: TIN HOUSE BOOKS. 600 PAGES. $70.
MOBY-DICK IS ONE OF THOSE WORKS of literature more honored than fully read. Many a bold reader has sailed into its opening pages only to leap overboard in the midst of some lengthy, minutiae-rich account of the whaling business. Melville's action-adventure scenes, harpooning rather than sperm milking, have certainly inspired visual artists - from the Rockwell Kent expressionist woodcuts published in a 1930 edition of the novel, to the '40s Classics Illustrated comicbook versions, to Will Eisner's recent graphic retelling. Kent's copious illustrations - nearly 280 images - kick-started interest in what was then a largely forgotten book. Now midwestern artist Matt Kish ups the ante by producing an image for each of the Signet Classics paperback's 552 pages. Kish references Kent's iconic figuration; the intricate pen work of contemporary Zak Smith, who gave Thomas Pynchon's Gravity's Rainbow the same completist treatment; and a wide range of other artists, including Philip Guston. Still, Kish marks this project as very much his own - his vivid colors and crowded designs command an attention that is often playfully ironized by narrative cartooning and the welcome intrusion of obliquely related nonMelvillean texts. In this illustration (left), Kish takes one of those pedantic pages, one where Melville critiques a scientist's comparison of the sperm whale's shape to a squash, and challenges the novelist with a credible rendering of what might be called "squale." The palimpsestic gardening text in the background, a domestic note amid this tale of hunters on the high seas, furthers the joke. Not so much honored as reimagined, Moby-Dick in Kish's hands is the vertiginous, immersive experience Melville intended.
-ALBERT MOBILIO
MEKELE, Ethiopia - Several Ethiopians who were kidnapped along with five Britons touring the African country's remote northeast have been found, state media reported, and neighboring Eritrea on Sunday denied accusations that it was behind the group's disappearance.
The state-run Ethiopian News Agency said late Saturday that five of the 13 Ethiopians in the tour group were found near the border with Eritrea, but it was not clear whether they had escaped or were released.
Eritrean Information Minister Ali Abdu on Sunday denied claims by senior Ethiopian officials that Eritrean commandoes seized the group Thursday.
Relations between Ethiopia and Eritrea have been consistently strained since Eritrea gained independence from the Addis Ababa government in 1993 following a 30-year guerrilla war.
The tour group disappeared Thursday while traveling in Ethiopia's Afar region, a barren expanse of ancient salt mines and volcanoes some 500 miles northeast of the capital, Addis Ababa. Communications to Afar are extremely difficult, but the otherworldly, moonlike landscape draws adventure travelers.
The British Broadcasting Corp., quoting unidentified government sources, said there was a "national security dimension" to the disappearance of the Britons, all of whom are employees of the British Embassy in Addis Ababa or their relatives. The British Foreign Office and the British Defense Ministry would not comment on the BBC report.
Esmal Ali Sero, head of the Afar administrative region, said about 25 Eritrean "commandoes" kidnapped the British citizens along with their Ethiopian drivers and translators Thursday night. He cited local investigators.
A senior Ethiopian official in the ruling party, who asked not to be named, also said Eritreans were behind the kidnapping. He said a herder saw the British group at the Ara-ta military camp in Eritrea and reported it to the Ethiopians. Herders in Afar frequently travel between the two countries.
Tour operators in the area also said they were told by police that Eritreans in military uniforms kidnapped the Britons and burned down the house where they were staying, along with several vehicles.
A spokeswoman for the British Embassy in Addis Ababa, speaking on customary condition of anonymity, said she had no information on the kidnappers: "We do not know where they are or who is holding them. We are not prepared to speculate."
Also Sunday, a group of French tourists who had also been missing since Thursday arrived in Mekele, the Afar region's capital, and said they had not been kidnapped, as was previously believed.
"Not at any time were we unsafe," said one of the tourists, who refused to give his name. He said the group simply did not have a satellite phone and so could not check in with Origins Ethiopia tour group. Samson Teshome, head of Origins Ethiopia, also said the group had not been kidnapped.
Bandits and a small rebel group operate in Afar, where the famous Ethiopian fossil of Lucy, the earliest known hominid, was discovered in 1974. The Ethiopian government requires tourists to travel in Afar with armed guards; the British and French groups were believed to have complied.
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Associated Press writers Tom Maliti in Addis Ababa and Anthony Mitchell in Djibouti contributed to this report.
Indonesia's geological agency has lifted a tsunami alert issued after a powerful earthquake rattled the country's northeast.
The U.S. Geological Survey said Thursday's quake had a preliminary magnitude of 6.6 and struck 55 miles beneath the Molucca Sea.
Indonesia's seismological agency put the magnitude at 7.6.
A tsunami alert issued immediately after the 7 a.m. temblor was lifted because the feared wave never came.
The mayor of Manado, a city on Sulawesi island close to the epicenter, said there were no immediate reports of casualties or damage from the quake.
Cigarette maker Philip Morris International said Thursday its second-quarter profit fell 9 percent as the stronger dollar shrunk profit earned in other currencies. Still, it beat Wall Street expectations and raised its 2009 profit estimate.
The seller of Marlboro and other brands overseas earned $1.55 billion, or 79 cents per share, in the three months that ended in June. That is down from $1.69 billion, or 80 cents per share, a year earlier.
Excluding one-time charges, the company earned 83 cents per share. That beat analyst expectations for 77 cents per share.
The stronger dollar dragged down per-share profit by 19 cents. Companies that do business overseas are hurt by the stronger dollar as profits earned in local currencies are converted into fewer dollars.
Revenue fell 9 percent to $15.21 billion from $16.7 billion. Excluding excise taxes, revenue was $6.13 billion, falling short of analysts' forecast of $6.18 billion.
In Europe, consumers bought fewer cigarettes, leading Philip Morris' shipment volume to fall by 3 percent. The declines were particularly bad in Italy, Poland and Spain.
Still, the company raised its forecast for 2009 profit to a range of $3.10 to $3.20 per share from a range of $2.85 to $3 per share.
Philip Morris International Inc. is the world's largest non-governmental cigarette seller, smaller only than state-controlled China National Tobacco Corp. It has offices in Lausanne, Switzerland, and in New York. It was spun off from Richmond, Virginia-based Altria Group Inc. _ owner of Philip Morris USA _ in 2008. The spin-off was widely seen as freeing Philip Morris International to more aggressively pursue growth in emerging markets.
Like its competitors, the company also is pursuing sales of smokeless products. Earlier in July, it said it would buy Swedish Match South Africa Ltd.
Philip Morris International and Swedish Match are already partners in a joint venture to sell Swedish snus and other smokeless tobacco products in markets outside the U.S. and Scandinavia.
Snus are small teabag-like pouches that users stick between their cheek and gum.
