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Month: November 2005
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Google On Overdrive

November 18, 2005
Market Place
Rapid Rise: Google Passes $400 a Share
By FLOYD NORRIS
Google became a verb before it became a public company. Now it has also become a $400 stock.
Just 15 months after the company went public in an unusual auction at $85 a share, which was less than the company had hoped and was widely viewed as disappointing, Google traded yesterday above $400 for the first time, closing at $403.45, up $5.30. The gain helped lift the Nasdaq composite index, which rose 1.5 percent, to 2,220.46, to its highest close since June 2001.
Just five weeks ago, Google shares were trading below $300, but a surprisingly strong profit report sent bullish analysts back to their calculators to come up with even more optimistic forecasts, and investors swarmed in.
"It is more psychological than anything," said John Tinker, an analyst with ThinkEquity Partners in New York. "There aren't too many $400 stocks out there."
But Mr. Tinker noted that one explanation for the auction when the company went public was to give every individual investor a chance to get in, and not splitting the stock now may not serve that purpose. "The perception is that it is hard for individual investors to buy $400 stocks."
At the close, Google was valued at $119 billion, and the stock is now up 302 percent from $100.33, where it closed the first day of trading in August 2004. It is nearly double the value of its rival Yahoo, which has a value of $59.9 billion.
Google is valued higher than Coca-Cola, Cisco Systems or Amgen, and is deemed to be worth more than the combined value of McDonald's, DuPont and Anheuser-Busch. Its founders, Sergey Brin and Larry Page, and its chief executive, Eric E. Schmidt, have sold billions of dollars of their shareholdings.
Not bad for a company whose revenues over the last four quarters totaled $5.3 billion, well below Disney's revenue for any single quarter in the last seven years.
By one standard - that of price per share - Google is the most successful initial public offering since the Internet bubble burst in 2000.
But that reflects both the fact that it came out at a very high price, while most new offers are priced under $40, and the fact that Google, like Warren E. Buffett's Berkshire Hathaway, eschews stock splits. Google is in no danger of replacing Berkshire as the highest-priced stock in the United States. Berkshire closed yesterday at $89,700.
High prices were a feature of the Internet bubble, but many did not end well. Henry Blodget, then an analyst with CIBC Oppenheimer, gained fame in late 1998 for forecasting that Amazon.com, then trading around $240, would hit $400.
It never did, but that was because a stock split intervened. Adjusted for the split, the stock took just three weeks to get to the equivalent of $400, and it kept rising from there. The shares peaked in late 1999 at $113, or the equivalent of $678 when Mr. Blodget made his forecast. They later fell to under $10, but now are back to about $46, a little above the level when Mr. Blodget spoke up.
A company called Commerce One, which was supposed to be a pioneer in business-to-business Internet, was one of the hottest new offerings of 1999, nearly tripling on the first day of trading, closing at $61 on July 1. It went above $400 on Dec. 8 and peaked on Dec. 23 at $625.50, a gain of more than 900 percent from the first-day close.
Last month the company went into liquidation, with shareholders getting a few pennies per share.
When Google put out its earnings on Oct. 21, the stock leaped $36.70, to $339.90, and analysts from Piper Jaffray, UBS, RBC Capital Markets and First Albany raised their price targets to more than $400, and other analysts raised the targets to $400.
Of all the offerings since the end of 2000, Google ranks No. 10 in terms of appreciation from the first-day close, according to calculations by Thomson Financial.
The leader is the Chicago Mercantile Exchange, which almost made it to $400 before Google did. Last week it traded as high as $394.80, but it slipped back and closed at $378.25 yesterday, up 782 percent from its first-day close of $42.90 in 2002.
Eric Dash contributed reporting for this article.
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Valentino Rossi

World champ on possible switch from two wheels to four
(ANSA) - Monza, November 21 - MotoGP world champion Valentino Rossi has made it plain that he will only abandon motorbikes for Formula 1 cars if he thinks he can win .
Speaking after an impressive performance at the wheel of a rally car at the weekend, Rossi indicated that he is still weighing his options, aware that success in F1 would require more experience than he now has .
The 26-year-old champ implicitly dismissed the notion that he might dive into F1 either just for the thrill or because his presence would generate millions of dollars even without victories .
"If I were to take this big step, I would do it to win," he said, when quizzed by reporters who turned out in droves to watch him race in a rally event in Monza .
Rossi has tried his hand at the wheel of a Ferrari F1 car several times now, most recently 10 days ago, when he put in three days of testing at the Italian team's two tracks .
Pushed for a hint of whether those days on the track had helped him make up his mind, the popular young star remained tight-lipped. "I have nothing to say for the moment. I had a go, it went well, but Formula 1 is a long road that requires proper preparation." Rossi stressed he was not going to be rushed into making a switch which F1 promoters, ever struggling to boost audiences, would be thrilled about. Clearly weary of the continual questions about his intentions, he repeated that he was going to take his time. "It's the only way I know how to do things." On his experiences at the Monza Rally, where he won an exhibition event and drove his 200-hp Subaru Impreza to second place in the race itself, the motorcycling legend was much more talkative .
"This is the fourth time I've taken part in this race and I must say I've got much better. I'd like to race in a real rally, although not in a World Cup race. That would put too much pressure on me." His opponents in Monza included several established, professional rally car drivers. Among them was former World Rally champion Colin McRae. Rossi, now enjoying his winter break from the MotoGP circuit, reportedly performed well at the Ferrari-owned Mugello track earlier this month, at the wheel of Michael Schumacher's 2004 car .
There has been persistent speculation in the media that Rossi, who has now won five successive titles in motorcycling's top class, could some day race Formula 1 cars for Ferrari .
Ferrari Chairman Luca Cordero di Montezemolo has frequently said the door is open for Rossi, leaving Italian sports fans licking their lips at the idea that an Italian might once again win a F1 title in a Ferrari .
The last person to do this was Alberto Ascari in 1953 .
Rossi, who has little left to prove in MotoGP, is believed to be attracted by the challenge of successfully making a switch which only one man, Britain's John Surtees, has ever done before .
Surtees won four world motorcycling titles before switching to cars in 1960. In 1964, at the age of 30, he won a world title driving a Ferrari .
Rossi recently signed a contract to race another year with his current team, Yamaha, but after that his future is uncertain .
© Copyright ANSA. All rights reserved 2005-11-21 16:03- 12:28 am
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Health Care Crisis

Mike Mergen for The New York Times
A surgeon at Harrisburg Hospital in Pennsylvania, one of a small group of hospitals forging ties with doctors to save money.
November 18, 2005
To Fight Rising Costs, Hospitals Seek Allies in the Operating Room
By REED ABELSON
It is a war on rising hospital costs, being fought one tiny balloon at a time. And as with most wars, some of the tactics are controversial.
Until recently, some cardiologists at the PinnacleHealth System hospital group in Pennsylvania would inflate a new artery-opening balloon each time they inserted a stent into a patient's clogged arteries. Now, if they can, these doctors will use a single balloon throughout a patient's procedure.
That simple step, which the doctors say poses no additional risk to patients, saves at least a couple of hundred dollars a procedure. And - here lies the controversy - the doctors share in any money they save the hospital. While the new approach gives them a financial incentive to be more cost- conscious, it also fundamentally recasts the traditional arm's-length relationship between a hospital and the doctors who practice there.
Without the special approval that PinnacleHealth has received from federal health regulators, such an arrangement would run afoul of longstanding rules meant to prevent hospitals from paying doctors to skimp on care or to steer patients their way. Similar experiments have been allowed at a handful of other hospitals around the country, but regulators are evaluating each plan case by case. HCA, the nation's biggest hospital chain, has proposed its own version of a savings program that has met resistance from some surgeons, and regulators have not yet weighed in.
PinnacleHealth says it saved 5 percent last year in cardiology supplies by conserving on balloons and getting cardiologists to agree, when feasible, to use stents, pacemakers and other cardiac devices that it pays at a negotiated volume discount. Those savings equaled about $1 million, which the hospital split with the participating doctors.
"A lot of it is just common sense," said Dr. Ken May, whose 17-doctor cardiology practice is among the groups involved.
But hospital administrators and consultants say getting doctors to agree to use certain brands or waste fewer supplies can be difficult. The only way to make doctors cost-sensitive, the hospitals say, is to pay them to pay attention.
The experiments are known as gainsharing in the industry, and while no one expects that alone to bring health care inflation to heel, it is gaining momentum. There is talk in Congress of relaxing some of the current prohibitions.
Regulators and others still worry that such programs, if not designed properly, could induce doctors to put money matters ahead of the interests of patients. Representative Pete Stark, a California Democrat, has described Congressional enthusiasm for gainsharing as "not only misguided" but "potentially dangerous."
But many economists and health care experts say something needs to change. The soaring cost of medical devices - and major advances like drug-coated stents designed to keep arteries open better than stents without such coating - is a big reason that hospital care has become the largest component of the nation's nearly $2 trillion annual health bill.
"There's so much pressure to reduce costs across the board in health care, I would be surprised if this doesn't get traction," said Dara A. Corrigan, a former official in the inspector general's office of the federal Department of Health and Human Services. She is now a lawyer representing drug companies and device makers at Arnold & Porter in Washington.
As relations between doctors and hospitals have grown increasingly strained in recent years, many doctors now have closer ties to device makers, who sometimes pay them consulting fees, than to the hospitals, which must purchase the devices and swallow any portion of the price they cannot pass along to patients and insurers.
Often, hospitals say, they cannot negotiate better deals with device makers because too many doctors refuse to switch brands or to consider using anything but the most sophisticated models, even when a less expensive device might work as well. Without new approaches like PinnacleHealth's, the doctors, paid separately for their services, typically have no reason to care about prices.
"There has to be some way a hospital can get physicians involved," said Joane H. Goodroe, a consultant who has worked with all seven of the hospitals that have received regulatory approval to conduct the experiments to share savings. Besides PinnacleHealth Systems, the other hospitals include St. Joseph's Hospital in Atlanta and Sisters of Charity Providence Hospitals in Columbia, S.C.
Gainsharing's critics include device makers, whose profits are threatened if hospitals are able to demand better prices.
"We believe that gainsharing would have an immediate and significant negative effect on public health by encouraging the use of the least expensive option without consideration of long-term effects or overall health economics," said Martin J. Emerson, chief executive of American Medical Systems, a maker of pelvic devices based in Minnetonka, Minn.
He was speaking last month at a Congressional hearing convened by Representative Nancy L. Johnson, a Connecticut Republican. Not persuaded, Ms. Johnson plans to introduce legislation making it easier for hospitals and doctors to cooperate.
Federal officials do remain concerned, though, that doctors might reduce care to increase their own share of the savings. Regulators now carefully evaluate each hospital's plan, and many hospitals shy away from gainsharing because of the legal thicket, even when they think the idea makes sense.
"It's taking money from the manufacturers and giving it to the attorneys and consultants," said Kathleen Killeen, an administrator for HealthEast Care System in St. Paul.
For PinnacleHealth, the experiment is in its second year at the system's flagship, Harrisburg Hospital, in Pennsylvania's state capital. Doctors still have the ability to choose any device, but the hospital has worked with them to focus on a handful of companies that provide the bulk of the products used. The discounts are negotiated with that core group of manufacturers, and any savings from using less expensive devices are shared with doctors.
"We pick out vendors that have very good products and very good history," said Dr. May, the cardiologist. Doctors are still able to try new devices, he said, and because the contracts run for only a year, the physicians can change their minds.
Under its agreements with the device makers, PinnacleHealth cannot disclose which companies it uses or the prices it pays for devices. But the hospital said it was able to negotiate lower prices on many devices, saving about $370 for a pacemaker system, for example.
The eventual goal of these new cooperative programs with doctors is to develop certain standards of care, said Dr. Roger Longenderfer, the chief executive of PinnacleHealth. In one case, he said, doctors were able to identify patients suitable for smaller incisions when inserting a catheter, avoiding the need for a special vascular clamp costing a couple of hundred dollars. The hospital reduced the number of patients getting those devices to 30 percent from 40 percent, Dr. Longenderfer said.
To deter doctors from using cheaper devices simply to improve the overall savings, regulators have required PinnacleHealth and other pilot programs to develop guidelines indicating when more sophisticated and expensive devices are necessary, said Ms. Goodroe, the consultant. Doctors are not paid, for example, if they save money by implanting single-chamber defibrillators in patients who should be getting the costlier dual-chamber models.
And to reduce the likelihood of any one doctor's becoming a cost-cutting zealot to amass large individual savings, the hospitals dispense the payouts to the medical practices - not directly to individual doctors.
Dr. Longenderfer estimates that participating cardiologists earned an additional $10,000 to $15,000 each last year through gainsharing payouts from their group practices, although the practices decided how to allocate the money.
But not all plans are alike. The HCA approach rewards doctors individually, according to documents that outline the program to the orthopedic surgeons who practice at HCA's hospitals.
And unlike the gainsharing plans already approved by regulators, the HCA program strictly limits the doctors' choices to three manufacturers: Stryker, DePuy and Zimmer. "Your surgeon or doctor cannot use what he thinks is best for you," said one surgeon, who spoke on the condition he not be identified because he practices at an HCA hospital. He argued that devices made by other companies might be better for some patients.
But HCA says that its three chosen manufacturers, the largest in the industry, make a full range of devices, and that doctors who are doing repair work on a patient who has already undergone surgery are free to use whatever brand device the task requires. The company says it needs to limit its pool of suppliers to negotiate better prices.
"If you try to go out and contract with all vendors, you're going to get list price" with no discounts, said James A. Fitzgerald, a senior purchasing executive for HCA. Doctors who insist on using another brand can also petition HCA for an exception, he said.
Under the HCA plan, an orthopedic surgeon stands to get 20 percent of any savings, if the doctor had been using a different brand but switched to a preferred device. If the surgeon was already using a preferred device, the doctor earns 15 percent of those savings. A physician who performs 30 hip implants a year, for example, saving $1,200 per surgery, stands to make $7,200 through gainsharing, the documents show.
Such incentives make some surgeons uncomfortable, and the surgeon at the HCA hospital said he would prefer the money go to charity. HCA says it designed its program to motivate doctors but would work with federal regulators if they had concerns. So far, more than 200 surgeons at its hospitals have agreed to participate, and about 40 surgeons have switched brands. (Pending the plan's regulatory approval, HCA will not distribute any of the money to the doctors.)
It is debatable whether doctors can generate enough savings year after year to make it worth continuing gainsharing programs, even if they do catch on. To make sure the payments are only for gainsharing, regulators are requiring that savings be recalculated annually - meaning doctors would need to find new ways to reduce costs each year to generate new money for the hospitals to share.
With costs soaring, savings are fairly easy to achieve in the early going. But Dr. Longenderfer acknowledges that savings at PinnacleHealth are likely to be lower in the second year. He adds, though, that there is still ample opportunity to come up with more efficient ways of practicing medicine. "We're just beginning to scratch the surface," he said.
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The Sexual Revolution Online

Story location: http://www.wired.com/news/culture/0,1284,69600,00.html
02:00 AM Nov. 18, 2005 PT
Researching last week's column about adult webcam chat made me nostalgic for the online community I used to belong to. The conversations in the webAffairs book could have taken place in my chat room, and I examined the screenshots closely to see if I recognized any faces or other body parts.
And yet, the most familiar theme in the book was the author's personal experience. She started modestly, became a cybersex diva, then found a balance point between those two extremes. She's still a regular in her community, but spends less time online, and her chat buddies are integrated into her life like any other friends.
It's almost exactly what happened to me when I delved into adult chat. Some of you can relate, I'm sure.

Sex Drive
You're a newbie for about a week. Then you become a "reg" and you spend as much time as you can in the room, bonding with people and flirting and cybering.
And then you level off. Maybe it's that you've slaked the need that brought you there in the first place. But you balance yourself between virtual space and physical space, and you find ways to fit everything and everyone into your life without making yourself crazy.
It might take some people two months and others two years or longer, but eventually, most of us get there. (If you can find your balance before you rip your existing relationship apart, so much the better. Unless of course the relationship is in sore need of ripping. But that's another column.)
My old chat room no longer exists, so I know I literally cannot go back. My life is not where it was back then, either.
Last time, a 12-year relationship was coming to an end. I had just started freelance writing full-time, paying my dues with high-volume, low-profit gigs like writing horoscopes and website descriptions for human-edited search engines.
It wasn't hard to keep IRC open in the bottom right corner of my screen and still produce quality content. (Honestly, having company helped me get through some of the more mind-numbing aspects of the daily word churn.)
Now, I have writing assignments that challenge me and a relationship that suits me well. I'm active in a dozen online discussion groups -- including the Sex Drive forum -- and I have 100 people on my Trillian contact list, 41 of whom are online right now.
And yet, I really miss the group energy of the chat room. I miss the freedom to say whatever's on my mind, no matter how ridiculous or how sexual. And I wondered whether a new online community could give me those things -- and whether it would be worth the black hole it could become on my time.
I reactivated myself in Second Life to find out. And even as I write this column, I'm dancing with a group of other folks in a virtual saloon in another window. (If I suddenly lose my train of thought and shout "Oh yeah!" you now know why.)
A quick primer for the newbies: Second Life is not so much a game as it is a place, although it has games in it. (Some would argue with me on this; see this explanation.) You represent yourself with a 3-D avatar and can pretty much build yourself a complete life in this online world.
And unlike plain vanilla webcam chat -- or the ancient medium of text chat -- you have lots of things to view, build, buy, sell and otherwise interact with that may or may not involve interacting with other people.
I chose Second Life because it represents the modern incarnation of the chat room I frequented. What you can build visually in Second Life, we created with text and imagination in IRC.
I met a nice woman who gave me cool clothes to keep in my inventory, so I can change outfits whenever I want without going through the hassle of shopping. Another woman gave me a winged horse (a "flyable Pegasus," in Second Life parlance), to make traveling more fun. A few people have added me to their Friends lists, and two have granted me a "positive" rating.
I'm chatting, I'm joking, I'm flirting. And while I have yet to engage in cybersex, I'm having a great time.
What I'm not doing is walking around all stunned by a new realm of possibility, opportunity, novelty. The realities of online community and virtual space are not new to me, although the graphics and individual people are.
What I find in Second Life is that I'm comfortable. I know how to make friends. I enjoy talking with people. I'll slip easily into the adult content when I have time to do it right.
I might even choose to decline a physical world invitation now and then in order to spend time online. But it's not going to take over my life, and it's not going to threaten my relationship.
I can't go back to the innocent times when everything was new. But now I realize that I don't want to.
By now I've not only "been there, done that" in cyberspace, I've folded those experiences into the rest of my life. I'm a better lover, a better friend and a better writer because of it.
Because, of course, the one thing virtual space and physical place have in common are you. And you can't undo an experience, like it or not. What's that old saying -- wherever you go, there you are?
So in that sense, no, I don't think you can go back after you leave adult chat. Just like you can't go back to being a virgin, or to being 17 (thank goodness).
But you can return to adult community with the maturity gained through experience and bring a deeper appreciation -- and hopefully, well-honed skills -- to the new neighborhood. Which, now that this column is written, I'm going to do right now.
Oh yeah.
See you next Friday,
Regina Lynn
Regina Lynn is the author of The Sexual Revolution 2.0. You can e-mail her at ginalynn@gmail.com if you promise to be patient about getting a reply.

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Today's Blogs
Searching for Zarqawi
By David Wallace-Wells
Posted Monday, Nov. 21, 2005, at 4:50 PM ET
Bloggers discuss rumors that terrorist Abu Musab al-Zarqawi is dead, as well as news that Ariel Sharon is leaving his Likud Party to forge a new, liberal party. At the Huffington Post, Arianna Huffington mobilizes anti-Wal-Mart sentiment.
Searching for Zarqawi: The Jerusalem Post reports that Abu Musab al-Zarqawi, the senior al-Qaida leader in Iraq, might have died in a group suicide Sunday, when eight terrorists surrounded by coalition forces performing a raid purportedly blew themselves up in Mosul. U.S. officials downplayed the possibility, but the military is conducting DNA tests nonetheless.
"I'm not even religious," writes Andy O'Reilly at The World Wide Rant. "But I'm almost willing to pray this is true. … I generally don't wish death upon anyone, but I'll make an exception for al-Zarqawi. Here's hoping it's good riddance."
Conservative Kevin Aylward is also ready to believe. "One fact in support of the theory that al-Zarqawi's luck may have finally run out is the vow from Jordan's King Abdullah II to 'take the fight' to … the Jordanian born al-Zarqawi," he writes at Wizbang. "With active engagement from Jordan's security and intelligence forces it's not hard to believe that al-Zarqawi's location could have been pinpointed."
"It would be great if this rumor turned out to be true, but at this time it remains unconfirmed and it seems that rumors like this are rarely confirmed," cautions conservative homemaker PoliPundit Lorie Byrd. Others harbor more substantive doubts. At the Counterterrorism Blog, Evan Kohlman reports that an al-Qaida supporter, claiming to know the identities of those killed, denies that Zarqawi was among the dead. "Certainly, Al-Qaida doesn't seem to have been at all fazed by the reported Mosul raid," he observes.
Attorney John Hinderaker of conservative coterie Power Line is also skeptical. "The larger point, however, is that this is one more in a long series of successes against the terrorists: eight more of them have bitten the dust, probably based on intelligence received from the local population"
Some on the American left caution against what they see as premature, and overly militaristic, triumphalism. "The death if Zarqawi would be a positive step in fighting terrorism and, one hopes, suppressing the violence in Iraq," suggests prominent contributor Armando at liberal war room Daily Kos. "What it will not be however, is a solution for our troubles in Iraq, whose roots are political in nature," he says. "Zarqawi is not and has not been the source of our troubles in Iraq. It is the intractable political problems of the sectarian power struggle between Shia, Sunni and Kurd."
At Informed Comment, Middle East academic Juan Cole agrees, describing Zarqawi as merely a functionary. "If al-Zarqawi died or were captured, there would be many increasinlgy experienced guerrilla fighters to take his place," he writes. "Guerrilla movements … are social movements, and do not typically depend on one man."
Many bloggers are cheering a related story. Dr. Rusty Shackleford of My Pet Jawa, libertarian Glenn Reynolds of InstaPundit, and many more point to heartening news that, in half-page newspaper advertisements Sunday, Zarqawi's family publicly disowned him.
Read more about Abu Musab al-Zarqawi.
Sharon's third way: Israeli Prime Minister Ariel Sharon announced today that he was leaving the ruling Likud Party to establish a new, liberal party dedicated to the pursuit of "peace and tranquility" in the region. Sharon asked Israeli President Moshe Katsov to dissolve Parliament so that new elections could be held.
"It's about time," approves Zionist watchdog J. of Justify This! At Talking Points Memo, discriminating liberal Joshua Micah Marshall calls the developments "tectonic plates moving in Israeli politics…ones that seem likely to have deep repercussions throughout the region and even in the world."
Sharon is apparently hoping to further jettison the settler base he alienated earlier this year with his decision to pull out of Gaza, suggests Patrick al-Kafir, waging war on jihad at Clarity & Resolve. "I think he may win this coming March, and I think this current maneuver is pretty shrewd—ingenious, actually. He's got a vision to settle this Arab/Islamic terror issue once and for all, I think, and I wouldn't be surprised to see him transform that vision into reality." Meryl Yourish, a conservative Jewish teacher and techie living in Richmond, Va., agrees. "It is rather strange to be thinking of Ariel Sharon as a centrist, but the man is an incredibly astute politician. I'm saying right now that he's going to come through this crisis as Prime Minister, again"
Head Heeb Jonathan Edelstein, a lawyer in New York, predicts increasing party clarity as various political interests shuffle themselves out. "Instead of being several parties in one, the Likud will once again be the party of the nationalist right. The next election will see a fairly clear choice between three parties, each representing a different approach to the Israeli-Palestinian conflict," he writes.
Read more about Ariel Sharon and more about the Likud Party.
Arianna vs. Wal-Mart: Hoping to direct readers' attention to the muckraking Wal-Mart movie, The High Cost of Low Price, blogmonger Arianna Huffington has assembled a remarkable coalition of the willing to denounce the corporate giant at Huffington Post.
"Wal-Mart sells itself as the all-American company, but it violates American family values every single day," blogs iconic Sen. Ted Kennedy. Renaissance-man RJ Eskow seconds the charge of corporate hypocrisy. "A population deprived of once-promised opportunities - for income, job security, and benefits - can only afford the least expensive items to make ends meet," he writes. "Wal-Mart lowers your living standards, then sells you the cheap goods that are all you can afford." Byron York of the National Review points out some of the movie's inaccuracies.
Read more about The High Cost of Low Price, more Huffington Post commentary, and more blog posts about the Huffington Post commentary.
Got a question, comment, or suggestion? E-mail todaysblogs@slate.com.
David Wallace-Wells is a writer living in New York.

Today's Papers
The China Monologues
By Jay Dixit
Updated Monday, Nov. 21, 2005, at 6:56 AM ET
The New York Times' and Los Angeles Times' leads, the Washington Post's top nonlocal story, and the Wall Street Journal's top world-wide news item all report on President Bush's talks with the president of China, noting that the Chinese government was mostly unresponsive to Bush's appeals for economic and political reforms. USA Today leads with the CIA chief's denial that his agency uses torture.
Bush's trip to China "meets low expectations," snarks the WP headline, although everyone agrees that officials had specifically warned that progress would be slow. The NYT headline emphasizes China's promise to quicken the pace of economic reforms but goes on to talk about China's "quiet resistance" to Bush's requests, quoting an American official who says, "No Chinese leader was going to act immediately under the pressure" from a foreign leader. The WSJ is more skeptical from the outset, focusing on China's unresponsiveness with the headline "Beijing Brushes Off Bush's Plea" and noting that the Chinese president said China would address U.S. concerns "as it saw fit." The WP article emphasizes that the Bush administration had predicted no breakthroughs but is promising that this trip will lay the groundwork for future progress. The LAT article emphasizes questions about how forcefully Bush pushed the "freedom agenda," noting that although administration officials may have had low expectations, human rights advocates had high ones.
Among other things, Bush wants China to crack down on movie and video game piracy and allow the market to set its foreign exchange rate. The Chinese president indicated he was aware of Bush's concerns but said he would tackle them on his own timetable. Bush told reporters that the talks were "good" and "frank" but euphemistically added that America's relationship with China is "complex." China had not released any of the people the U.S. said were unjustly imprisoned and in fact apparently rounded up new political and religious dissidents before Bush arrived specifically so they wouldn't demonstrate during his visit. Bush also attended a Protestant church service near Tiananmen Square and urged Chinese leaders not to "fear Christians who gather to worship openly."
The CIA uses "unique and innovative" methods to extract information but does not torture, said Porter Goss, the agency's director. Goss said that officially, the CIA is neutral on John McCain's proposal to ban the use of "cruel, inhuman or degrading" treatment but that such methods have been valuable in the past. He said such methods are legal and do not include torture. McCain's proposal would restrict psychological techniques that some Republican representatives believe are necessary, such as isolating a detainee or calling him a coward. The White House has threatened to veto any bill including McCain's measure.
A related NYT front reports on the three Republican senators (including McCain) who are "making trouble for the Bush administration" by supporting the proposal.
The WP reports that money set aside so far for Hurricane Katrina relief is only "a drop in the bucket" compared with what the final tally will be. The money spent so far on removing debris, housing evacuees, and financially assisting victims already equals the money spent on Iraqi reconstruction. But the bulk of the Katrina cost will come when the government rebuilds infrastructure, including "roads, bridges, hospitals, schools, sewers, power lines, ports and levees." Estimates of the total price tag vary wildly, but everyone agrees it will be well over $100 billion.
In related news, USAT reports on post-Katrina donor fatigue, noting that people are feeling tapped out after having donated to Katrina relief. Food banks say they are seeing bare shelves as a "direct result of Katrina." Food donations are down 30 percent in New York and 50 percent in Milwaukee and Denver.
The NYT and LAT front the news that Israeli PM Ariel Sharon will leave the Likud Party to found a new centrist party with which to seek re-election. The NYT's sources are Israeli army radio and a senior Likud member, while the LAT gets a Sharon spokesman. The Israeli president will most likely dissolve the parliament and call for a new election within 90 days. Sharon has been battling dissenters within his own party who opposed his decision to withdraw from the Gaza Strip. But he has received "significant support" from President Bush, and early polls predict that Sharon's new party might win more seats than a Sharon-less Likud would.
Goats story … The LAT reports on the rising popularity of goat, "the other red meat." Demand for goat meat in the U.S. is growing, largely due to the millions of Americans who were born in "goat-eating nations." Even Whole Foods sells it, banking on Muslims, Latinos, and Asians, and on consumers who want to try "new and interesting meat choices."
Jay Dixit is a writer in New York. He has written for the New York Times and Rolling Stone

Newspapers, Google, Bob Woodward

Woodward? Google? A Plague Week
By DAVID CARR
LAST week's string of dismal headlines about the newspaper business eventually began to resemble a multivehicle pileup on the freeway. There was so much carnage it was difficult for even the most determined rubbernecker to know where to look.
On Wednesday, Bob Woodward, the man who built his career on protecting a single Watergate source, became impaled by his efforts to protect another. Who would have thought that one of the journalists responsible for the ubiquitous "gate" suffix denoting scandal would end up with it being attached to his name?
On the same day, Walter Pincus, one of Mr. Woodward's colleagues at The Washington Post, found himself held in contempt of court for his refusal to identify his sources in a lawsuit brought by Wen Ho Lee, a scientist who formerly worked at a government nuclear weapons lab.
And while other reporters may not face jail time or fines, their future seemed grim as well. The Los Angeles Times announced cuts of 85 newsroom employees, while The Chicago Tribune said it was cutting 100 jobs across all departments. Earlier in the week, Knight Ridder got shoved onto the auction block by investors who had tired of the company's dawdling share value.
And the worst of it? Those were not the worst of it.
The scariest development for the newspaper industry was the announcement (on that same Wednesday) that Google, the search engine company that wants to be the wallpaper of the future, was going live with Google Base, a user-generated database in which people can upload any old thing they feel like. Could be a poem about their cat, or their aunt's recipe for cod fritters with corn relish.
Or, more ominously for the newspaper industry, people could start uploading advertisements to sell their '97 Toyota Corolla. Craigslist kicked off the trend, giving readers a free alternative to the local classified section. If Google Base accelerates the process, the journalism-school debates over anonymous sourcing and declining audience may end up seeming quaint.
Google Base reverses the polarity on the company's consumer model. Instead of simply sending automated crawlers out across the Web in search of relevant answers to search queries, Google has invited its huge constituency of users to send and tag information that will be organized and displayed in relevant categories, all of which sounds like a large toe into the water of the classified advertising business, estimated to be worth about $100 billion a year.
This could be a fine thing for consumers, but for newspapers, which owe about a third of their revenues to classified advertising, it could be more a spike to the heart than just another nail in the coffin.
LARGE national newspapers like USA Today, The Wall Street Journal and The New York Times have already absorbed a big hit as advertising categories like travel and automobiles have moved online. According to estimates cited by The Associated Press, newspaper advertising revenues will grow less than 3 percent in the current year while online revenue, much of it coming from search advertising, will jump by more than 25 percent.
Google Base could take a bigger toll on local and regional newspapers. So far, those papers have managed to maintain their connection between their readers and the goods and services in the same market. By allowing its audience to customize content and post it for free (all the while selling ads against the audience that information aggregates), Google could all but wipe out the middle man, which could be your friendly neighborhood daily paper.
"Many newspapers have had historic monopolies in their respective markets when it comes to classified ads," said Christa Quarles, an analyst at Thomas Weisel Partners, a merchant bank in San Francisco. "The local papers have been fairly insulated from major attack, and this could be the next big shoe to drop."
The growing competition will certainly be evident if and when Knight Ridder, with its host of regional and local newspapers, goes up for sale. Historically, newspapers are valued at 10 to 12 times earnings, which theoretically would make the company worth as much as $9 billion dollars. Given Knight Ridder's current market capitalization of $4.18 billion, Bruce S. Sherman, who heads Private Capital Management and who owns 19 percent of the company, thinks it might be time to sell.
But how liquid are newspapers? Even though they deliver profit margins of more than 20 percent on an industrywide average, they are viewed as bad bets for the future and may not bring the dear premium they have in the past.
Across the board, newspaper stocks are down approximately 20 percent, in part because the industry, accustomed to cyclical change in its 400-year history, is now confronted by secular change: audiences are moving online and taking advertising dollars with them. And they aren't coming back.
Happily, newspapers have been there to great them with Web sites of their own, but owning consumers online is not quite the same as dropping a product they pay for on their doorstep. Those eyeballs are worth less, at least so far, and will not support big local news staffs, let alone far-flung bureaus.
John Morton, an analyst who has been watching the newspaper industry since 1971, had a hard time remembering a worse period for the business.
"It was a very discouraging week by any measure in a year that has been discouraging as well," he said. He pointed out that the week before, the Audit Bureau of Circulations announced that the combined circulation for newspapers dropped 2.6 percent in the six months ending in September. If that trend continues, dailies could lose as many as 2.5 million subscribers next year.
A reader outside the newspaper business might be tempted to say, so what? New technologies are, by their nature, disruptive and the benefits generally accrue to consumers. Who can complain about reaching millions - or perhaps the one person you really need, a buyer - through placing a free ad?
But if you consider newspapers to be a social and civic good, then some things are at risk. Google gives consumers e-mail, maps and, in some locations, wireless service for free. But for Google's news aggregator to function, somebody has to do the reporting, to make the calls, to ensure that what we call news is more than a press release hung on the Web.
News robots can't meet with a secret source in an underground garage or pull back the blankets on a third-rate burglary to reveal a conspiracy at the highest reaches of government. Tactical and ethical blunders aside, actual journalists come in handy on occasion.
"Up to this point, the deck chairs have been rearranged," said Jane E. Kirtley, a professor of journalism at the University of Minnesota. "But the technology companies have been hustling and innovating in search of ad revenues. And all of the cutbacks in newspapers are bound to have an impact on the free flow of information."
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Today's Papers
Beaned By a Curveball
By Jesse Stanchak
Posted Sunday, Nov. 20, 2005, at 6:08 AM ET
The Los Angeles Times breaks the news that German intelligence officials are claiming the FBI and CIA misrepresented pre-war intelligence provided by "an Iraqi defector code-named Curveball," regarding Iraqi WMD programs. The New York Times leads with an assessment of President Bush's visit to China, concluding there's precious little he can do to exert pressure on the Chinese government, despite increasing urgent concerns over trade and human rights. The Washington Post leads with discrepancies between the number of crimes committed on the city's subway system as reported by system administrators and those figures released by local police.
German intelligence officials who handled the ironically codenamed "Curveball," claim that the CIA and FBI knew that Curveball's statements about Iraqi biological weapons programs were vague and impossible to verify, the LAT reports. The German officials, who handled Curveball over a period of six years, warned the U.S. agencies that Curveball was emotionally and psychologically unstable. Nevertheless, Curveball's unsubstantiated claims about Iraqi biological weapons programs formed the backbone of the Bush administration's case for war. The LAT story tells the story of an Iraqi who'd say anything to get a German visa and the intelligence community that ate it all up with a spoon.
The NYT is bearish on Bush's visit to China. Chinese President Hu declined to hold a joint press conference with Bush and the state-run media refused to cover much of Bush's visit. The NYT reports the administration has said it's not expecting to bring home any diplomatic trophies, which is good because the Chinese government isn't about to make concessions on monetary policy, releasing dissidents or any number of other issues. If there's a silver lining here, the NYT argues it's that the two leaders are seeing eye to eye more often than they used to: The two nations agree in principle about North Korean nukes and the Chinese have taken the yuan off its hard peg to the U.S. dollar, even if they won't allow it to float freely on the open market.
The WP reports that when the Washington Metropolitan Area Transit Authority says that there have been 10 muggings at a given metro stop in the last year, they really mean WMATA's own Transit Police have reported 10 muggings, ignoring any reports coming from D.C., Maryland, or Virginia police. The discrepancies can throw crime figures for individual stops off by as much as 60 percent, the WP finds. Officials up and down the line feign ignorance of the practice, with one going so far as to call the cooked statistics a misleading "kubuki dance," an unsavory Washington metaphor of the worst sort.
The NYT and WP each front (while the LAT runs inside with) analysis of what Friday's shouting match over the ongoing Iraq occupation means for both parties. The WP characterizes it as a long-avoided issue that has bubbled to the top of the national consciousness and which the GOP-led Congress will have to cope with if it wants to get anything else done. The NYT looks at how the issue has fractured the GOP's previously lockstep party mechanism, leaving it unable to move forward on any issue. Meanwhile the LAT reminds Democrats that it's not enough for the other guys to screw up: They'll need to come up with alternatives of their own if they want to make any political gains stick.
The NYT reports that in Jackson, Miss., the wind might not have blow that hard, but residents were only too happy to reap the windfall of Hurricane Katrina relief money. Residents who experienced sub-hurricane force winds and whose only loss during the storm was spoiled food from refrigerators that lost power still qualified for hundreds, even thousands of dollars in relief funds from FEMA and the Red Cross. The NYT reports that much of the money was spent on firearms, electronics, and other luxury items.
The LAT off-leads with a feature on the controversy over oil-shale development in Western Colorado. The procedure for pressing oil out of undeveloped shale is being touted by the White House as the answer to America's energy crisis; however, some experts think the extracting process could use up more energy than it produces. If the most bullish analysts turn out to be right, though, the region could produce more barrels of oil than the remaining reserves of Saudi Arabia, but, the LAT points out, that could be a mighty big "if."
The WP off-leads with a reminder that for all the negative attention the Iraq occupation receives, Afghanistan isn't doing too hot, either. As the deadline for finishing a massive clinic- and school-building initiative draws to a close, contractors have built far fewer structures than they'd been ordered to complete and those that have been finished show signs of shoddy workmanship. The WP does a good job of breaking down the various factors impeding the building effort, stressing that a combination of security concerns, logical problems, corruption, and exaggerated expectations have combined to prevent the project from being completed. The story points out, however, that no amount of explanation will buy any goodwill from exasperated Afghanis who have been waiting for years for the schools and medical facilities they were promised.
A recently passed bill disguised as a routine modification of mining regulations would actually allow private developers to snatch up huge tracts of federal land, reports the NYT under the fold.
Venezuelan President Hugo Chavez is kicking about 200 U.S. missionaries out of the country, reports the LAT, on suspicions that they're committing acts of espionage and "imperialist penetration."
Nothing Says "Mazel Tov" Quite Like Ja Rule …
Instead of hiring Mordecai the Dancing Yiddish Clown, well-to-do parents are splurging on more opulent entertainment for their kids' bar mitzvahs or birthday parties, hiring top-tier performers like Beyonce or Christina Aguilera, reports the NYT. Even more venerable acts like the Rolling Stones and Elton John will play a wedding reception if the price is right—and the guests promise not to tell anyone.
Jesse Stanchak is an assistant documents editor at Congressional Quarterly.- 3:22 pm
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DARE TO DREAM - 17th November, 2005 http://twolostmoons.com/
Blessings, dearest ones, I AM Sadiyaa; I AM also Tikele, in this moment in time, as we converse with you, so beautifully, so Joyously, in our Love for You, the brave ones who are finding it somewhat difficult, as the energy for change continues to intensify within you.
Allow the energy of Love to flow through you in this Now moment, as you close your eyes, and simply place yourself into the flow of the Love that surrounds You at all times. Can you find within You, the awareness that Who You ARE is easily able to do this? For You ARE the Being of Light, trying so hard to organise the physical journey into a form that pleases you, or that simply allows you to not be solving one problem after another.
It is not about trying, dear ones; it is not about struggle; it is, instead, surrender, to the Joyousness that naturally resides within you. And how do you do that? You allow yourself the time, to be still, to rest, unashamedly, doing what you would consider to be nothing. What is it that happens during this time, that you consider so wasted, in your busy lives? It gives your biology a chance to rest, to restore itself to a level that is more beneficial to your well-being. It gives your mind a chance to catalogue all of the things that are worrying you, so that you might decide, what to do about them - be it to find a solution in some fashion, or to hand them over to us to resolve with you. When you choose to do either of these things, you are allowing the energy to flow once more - it is no longer stuck in the moment of intensity that builds up and is ultimately, stored in your body as blocks and toxicity, that can become the basis for disease, if you do not find ways to release them from within, by changing the focus of your thoughts.
Disease, no matter what its nature, has consciousness. It is an energy that insists that you pay attention, right now, to what is going on in your body, and ultimately, your life. For that reason, it is given much energy of a fearful nature, which amplifies the original toxicity to a new level of existence.
However, what is not well understood, is that it IS only a part of the whole, that has gone down this path of manifestation. There is so much more of you, of your consciousness, that remains in a "healthy" state. This other, major part of your consciousness, can be brought into a strong alignment towards well being, as you choose to have it be so. It is easy to have the part that is shouting loudly, yet is really, the minority, receive all the attention. Can you not instead, focus on all the parts that are doing so very well - the overall consciousness of the cells, the energy of the chakras that are still performing so beautifully, and the many many systems of the body that retain their full health and vigour? It is far more beneficial to you, no matter what the level of disease, to place the loud voice that is so fearful, outside the door of your consciousness, and bring yourself into a beautiful place of Peace and Love for You - for being willing to work on this journey you have designed for yourself, with such Love.
Now, this will create anger in those who do not understand the nature of life on the Earth plane, who persist in perceiving it as a finite, third dimensional reality, where actions create, and thoughts are just there, to provide ideas and ways of doing things.
Your thoughts DO create your reality. You are limitless Beings, who have been held in an energy of limitation for a very long time, and now, those who are willing, are able to move themselves out of the half asleep mode of functioning, into a wonderfully enriching, Joyous place, where all is abundant, in whatever way is desired.
We know that at times, it sounds like a fairy tale, that is like always aiming for that Holy Grail, and never quite reaching it. Yet, those of you who dare to dream in this way, to continue to release whatever is constraining you in any way, from the past - allowing yourself to move into a space where you find yourself in your Truth, in total integrity in all parts of your life; knowing, that you do not walk the path alone, for there is ALWAYS many a helping hand that reaches out to be of service, that you often do not see, both physical and non-physical.
Sometimes, when you cannot see a single helping hand around you, ask yourself, who is it, that I could call on, in my mind, for assistance, whose energy would be exactly what I need right now. The answer will always come to you, in that moment, for your Higher Self has been waiting for just such a request. A thought will find its way into your mind, and it is for you, in that moment, to allow yourself, in your mind, to hold a conversation with that one, speaking from your heart, about your needs. If it is not appropriate for that one to assist you, another will be found, who can do so. It is for you, in that moment of reaching out, to allow yourself to be held in the energy of Love, that is there for you - to allow yourself to receive, the energy of Love for Who You ARE.
You see, not a one of you is doing the journey solo: each and every one of you, is busily gathering up and organising, those whom you have previously arranged to assist you through your challenges, just as you, in turn, have agreed to help certain others at this time. Each time someone chooses to experience a deep issue that has been held within, to heal it from your system, there has always been a support system, waiting to move into assisting you in that journey. At times, it is true, that certain ones are not willing to take on this role in your 3D life, but this is rare indeed. Most often, you already have expectations about who you would call on, and these ones may not have this as part of their journey, so you perceive there to be closed doors all about you.
Remember, the power of your mind, of your awareness, to reach into the energy of others around you, to ask for whatever is needed. The need must come from your heart - it is not to be misused, and always must it be requested in the form of having that which is of service to the whole, for the highest good of all, be made apparent to you, NOW. As you choose to sit in stillness, allowing yourself to be bathed in the energy of Love, or to receive this healing energy from those who are able to facilitate this for you, you can more easily open your awareness to ask, "Who is it, that would be of service to me, for the highest good of all, to co-create (this situation) in my life, now?" And allow your awareness to simply receive, allowing your physical to be as deeply relaxed as it is possible to be, and focusing on your heart, your emotions, rather than the mind, that seeks constantly to find answers in ways that are often based in the old energy of limitation and lack. It is useful to place yourself into a meditative state, that you might be more aware of new thoughts that come to you in response to your request for assistance.
What we speak of, is to converse with your Higher Self energy to request assistance in this process, and to understand, that you can converse at any time with the energy of any Being whatsoever, be they on your or our side of the veil. All that it takes, is the willingness to accept that you can do this, easily. Some, who are already in a place of understanding the interconnectedness of all things, will find it in their awareness, that they have been asked for assistance in this way. Most often at this time, the one who answers, will not be fully, or even consciously, aware of their role in your journey in that moment. It matters not - what matters, is that you have had the courage to ask for help, from your heart, and this is never unanswered.
We ask you to hold the energy of Trust, as strongly as you might, that you have called on whoever it was that came forth, for assistance, and perhaps also, other Beings, the Creator Light, perhaps Gaia, and more.... and that each of these energy patterns is then placed immediately into a place of defining, what it is that they could co-create with you, to respond to your request. Oftentimes, you sink back into the morass of despair, and this adds to the difficulty you have in receiving.
It is for you to choose, to dare to dream, that help is at hand, no matter the level of difficulty you are in - all is a moment of time, in transition, and can be responded to in a multitude of ways. It is so much easier to perceive these possibilities, if you are able to connect your awareness to the Love of Gaia/Mother Earth, the Infinite Love of the Creator, who allows you the opportunity to experience in any way you are choosing to, and the many many Beings of Light, both seen and unseen, that are always, all around you, to support you in your Earth journey and beyond.
So once more, we ask you to spend time in idleness, in daydreaming, in creativity in your mind, playing with possibilities; to allow yourself to hold imaginary conversations with those who come into your awareness, holding yourself in your own Truth as you do so, for the highest good of all. Allow yourself to experiment and play, with whatever thoughts come to you, leaving your judgements outside the door of your awareness, in that moment.
You may also choose to place yourself in a space of receiving the energy of Love - to permeate and fill each and every cell of your physical body with the energy of Love, Peace, and Joyousness, expanding into your emotional and mental bodies as well, and moving into the spiritual, where Love resides more easily. By doing this, you are aligning your four-body system with the vibration of Love itself. This will assist you in holding the frequency that is most beneficial to you, your journey, and the many that you are connected to, co-creating the New Earth all around you.
As we say to you so often, BE at Peace, GO in Love, and ENJOY your wonderful life here on the Earth plane, for it is truly a tremendous gift, and most especially so, when it seems to you, to be the most difficult, for in that moment, you are Loved so completely, you have the power to create whatever you would create in your life, to take you to the next level of your journey.
The energy of the old is gone in that moment; the new is calling to you strongly, and it is time to hear that call, and to begin to work with the energy of the cells, the awareness of your interconnectedness to one another, and to those of us in other realms of thought focus - all of us, connecting our energy to co-create the most glorious, beautiful of visions, for a Peaceful, Loving, Harmonious and Joyous New Earth, as you focus on these energies within Who You ARE.
Blessings always, as we hold YOU, in the Love of the Creator Light, the Goddess Love, and the Christ Consciousness.
And so it is.
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The Great Global Buyout Bubble

The Great Global Buyout Bubble
A YEAR ago this week, Henry R. Kravis, the legendary buyout mogul who invented the modern-day private equity industry, gave a rare speech to a group of investors in a ballroom of the Waldorf-Astoria. In describing how far the business had come, Mr. Kravis, a slight man with a dry wit, recounted how difficult it had been for him to raise $355 million to buy one of his first companies, Houdaille Industries, in 1979.
"The availability of financing was our biggest challenge," he said. "Literally, we had to add up the potential capital sources at that time, which consisted of several banks and insurance companies, and one by one go out and raise the money."
Today, he has the opposite problem. Investors have been throwing money at the red-hot leveraged-buyout industry - so much so that Mr. Kravis now has to turn away some of them, rejecting their cash as a mere "commodity."
Private equity firms, it seems, now own everything: Hertz, Neiman Marcus, Metro-Goldwyn-Mayer, Toys "R" Us and Warner Music, to name a few. So far this year, buyout firms have spent more than $130 billion gobbling up parts of corporate America. And with more than another $100 billion in unspent money this year still swirling around the industry, there is a lot more buying to be done. The boom isn't limited to America: in Britain buyout firms own so many companies that they now employ 18 percent of the private sector, according to the British Venture Capital Association.
The trillion-dollar question is whether these shopaholics are setting themselves up for a giant fall. If the market begins to show even the faintest signs of strain, this bubble may pop, say many financial analysts as well as private equity players themselves. If that happens, the leveraged-buyout boom and bust that Michael Milken led in the 1980's could end up looking like a dress rehearsal for the mess to come. As Mr. Kravis said during his speech: "Unfortunately, there is a flip side to having access to plentiful capital. It means that too many people without experience in building businesses have too much money."
The numbers tell the story. Over the last three years, private equity firms have had record returns through a series of quick flips, spurred in part by superlow interest rates that allowed them to borrow huge sums of money. As a result, big institutional investors like pension funds have poured $491 billion into the business, according to Thomson Venture Economics, a firm that tracks data for the industry. If you figure that the firms can borrow three to five times that amount - a conservative assumption - the industry has more than $2 trillion in purchasing power.
But here's the rub: In the next three years, to reap returns on all those big-name investments they have been making, private equity firms are going to have to sell $500 billion worth of assets. The question is, to whom? Even in the last three years, in as big a bull market as they come, private equity has never sold more than $153.2 billion in a year, according to Freeman & Company. At the same time, the investment firms will have to keep spending. And the low-hanging fruit has already been taken.
"There's no question this is going to end badly for some," said Colin C. Blaydon, a professor at the Tuck School of Management at Dartmouth and the dean emeritus of its Center for Private Equity and Entrepreneurship. "It's almost a classic boom-bust cycle. When you see a big boom, people see the returns, go rushing in, stuff more money in than can be dealt with. Suddenly, something will happen that makes people say: 'Oh, my God! Look at the leverage we've got on these things. Isn't this way too risky? Shouldn't we pull back?' And then the question becomes: Does it crash like a rock or is there an adjustment down over time?"
ALREADY, there are reminders that the business can turn ugly overnight. Thomas H. Lee Partners, the Boston private equity firm famed for buying Snapple for $135 million in 1992 and selling it two years later to Quaker Oats for $1.7 billion, recently was badly burned on its investment in Refco, the commodities trader that filed for bankruptcy protection last month. While the setback has hardly sunk the Lee firm, it is an illustration of how risky these investments can be.
Firms may have a particularly tough time exiting some of their investments because investors are taking a more skeptical view of initial public offerings backed by private equity. In recent months, several high-profile quick flips have left critics wondering whether buyout firms were using such offerings simply to line their pockets, rather than using the proceeds to support companies.
Earlier this year, the Blackstone Group sold a German chemicals company, the Celanese Corporation, to the public after owning it for less than 12 months. The firm quadrupled its money and all of the proceeds from the offering were used to pay out a special dividend to Blackstone. Mr. Kravis's firm, Kohlberg Kravis Roberts & Company, also quadrupled its money by flipping PanAmSat, the satellite company it owned for less than a year.
Investor scrutiny of private equity-backed I.P.O.'s forced Warner Music, which is owned by a consortium of buyout firms led by Thomas H. Lee Partners, to scale back its offering significantly: the firms made several last-minute adjustments that kept them from cashing out as much as they had hoped, in part as a way to inspire confidence in the offering.
According to Dealogic, which tracks the industry, initial public offerings backed by private equity firms have performed worse than other offerings; the average first-day return for a private-equity-backed I.P.O. this year is 8.3 percent, compared with 13.9 percent for other offerings. Analysts ascribe some of that discrepancy to concern by investors that private equity firms will later cash out of their position, depressing the stock price. Over time, though, that gap often narrows and some private equity offerings have outperformed other offerings.
Then there is the issue of sky-high prices that some private equity firms have been willing to pay for acquisitions. According to Standard & Poor's, buyout firms now pay, on average, about eight times a company's earnings before interest, taxes, depreciation and amortization - or Ebitda, a common measure of cash flow - for companies worth more than $1 billion. That is a significant increase from a multiple of about 6.5 only several years ago. Private equity firms have felt comfortable paying more because debt remains so cheap and banks have been willing to allow the firms to add ever-larger amounts of leverage to transactions.
But if the debt market turns against them - and it is bound to do so at some point - potential buyers or public investors may not be willing to pay the same prices. In the consumer retail sector, where private equity firms have paid prices of more than 12 times Ebitda during frenzied auctions, selling may be especially tough. Tommy Hilfiger and Dunkin' Brands are both for sale, and some bidders have already left the auction, a sign that the price may be moving too high.
"I'm pessimistic about the economy, interest rates, credit markets, and all that," said Hamilton E. James, president of the Blackstone Group. "I feel people are paying prices that are too full. I think some mistakes will be made. We've pulled in our horns a little. We've become more conservative about the types of companies we buy, the prices we pay, the exit multiple assumptions and so on and so forth."
Of course, many people in the industry disagree with the premise that there is a bubble ready to pop. They note that private equity is still only a small part of the mergers-and-acquisitions and I.P.O. market, and they say that if they've done their homework, they will have made the right bet.
Even Mr. James, the economic bear, is still bullish on the overall leveraged-buyout market. "I have no concern about the markets being big enough to accommodate L.B.O. sponsors getting liquidity for their successful, good-quality portfolio companies," he said. "The very growth of private equity, don't forget, adds a whole other option: the secondary buyout," referring to a trend in which private equity firms buy and sell businesses to one another.
YOU can't argue with that. But not everyone can make a brilliant bet, and headwinds can make things more difficult.
The advent of supersized deals also lurks below the surface. For years, buyout firms focused on businesses worth several billions of dollars at most. Today, flush with cash and under pressure to spend it, private equity firms are splurging on huge businesses like Hertz ($15 billion) or SunGard ($11.3 billion). The Computer Sciences Corporation is being eyed for a $12 billion takeover. But selling those businesses or putting them back in the public markets could be even more difficult because of their size.
How will this shake out? Will the bubble pop? For some, absolutely. There will be bankruptcies, restructurings and fire sales. Others, who made the right bets, may be luckier and be able to ride out the bad years.
"In hot markets, you can sell crummy companies," Mr. James said. "In less ebullient markets, the really marginal companies take more than their disproportionate share of the pain. That's where you'll see it."
DealBook also covers the news of deals daily by e-mail. A free subscription is available at nytimes.com/dealbook.
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Are men necessary? Maureen Dowd

'Are Men Necessary?': See the Girl With the Red Dress On
By KATHRYN HARRISON
LET'S, for a moment, judge a book by its cover. One need not read Maureen Dowd's "Are Men Necessary?" to answer the question. The retro pulp-fiction jacket features a bombshell in a clingy red dress strap-hanging under the leering gaze of her fellow subway riders, all male. For the use of this illustration, Dowd enthusiastically thanks the artist, Owen Smith, adding, "The girl in the red dress will always be my red badge of courage." Below such an image, the subtitle, "When Sexes Collide," seems both wish and prediction.
Crack open "Are Men Necessary?" and the author's first words are flirtatious: "For men. Friends and more, past, present and future. You know who you are." Those of us left out of the innuendo can assume that, beyond her dedicatees, men make up a hefty portion of her readership. Dowd, whose dead-clever aim and feisty delight in skewering politicians juiced up her reporting from The New York Times's Washington bureau, has produced a twice-weekly column for The Times's Op-Ed page for the last 10 years. Having published those pertaining to G. W. and company as "Bushworld: Enter at Your Own Risk," she has now collected and expanded on her opinions about a topic that would appear to interest her at least as much as presidential shenanigans: the never-to-be-resolved sexual contest between men and women.
The title, "Are Men Necessary?," refers nominally to scientific speculation that the Y chromosome, which has been shedding genes over evolutionary time, may disappear entirely within the next ten million years, a hypothesis countered by newer studies showing that the Y of the human species has been stable for the past six million years. Neither development, of course, has any bearing on the coupling opportunities for humankind as we know it. But it is exactly this kind of "news" that offers Dowd a provocative snag, tweaked to advantage in her columns. Her Cuisinart style of info processing and her embrace of popular culture invite all manner of unexpected applications, allowing, for example, a "Seinfeld" character to help us understand the relative simplicity of males, whose sex is determined by only one Y, as opposed to the female's two X's. "Maybe that 'Seinfeld' episode is right," she muses, "where George Costanza tries to prove that man's passions can all be fulfilled at the same time if he can watch a hand-held TV while 'pleasuring' a woman while eating a pastrami on rye with spicy mustard."
Beyond science, "Are Men Necessary?" addresses the confusion of postfeminist dating, gender conflicts in the workplace, the media's disparate treatment of men and women, American culture's saturation with sexual imagery, our collective obsession with youth and appearances, the objectification of women by men and, finally, sex as "a tripwire in American history." For Dowd, who won a Pulitzer Prize in 1999 for her commentary on Monica-gate and who has covered the fate of women politicians from Geraldine Ferraro to Hillary Clinton, this last topic has been more high wire than tripwire - one on which she's cartwheeled through many a career, fashioning herself an attention-grabbing costume of sparkling jabs.
But what makes Dowd an exceptionally good columnist on the Op-Ed page - her ability to compress and juxtapose, her incisiveness, her ear for hypocrisy and eye for the absurd - does not enable her to produce a book-length exploration of a topic as complex as the relations between the sexes. Consumed over a cup of coffee, 800 words provide Dowd the ideal length to call her readers' attention to the ephemera at hand that may reveal larger trends and developments. But smart remarks are reductive and anti-ruminative; not only do they not encourage deeper analysis, they stymie it.
Producing one of her trademark staccato repetitions - for example, on cosmetic surgery: "We no longer have natural selection. We have unnatural selection. Survival of the fittest has been replaced by survival of the fakest. Biology used to be destiny. Now biology's a masquerade party" - Dowd effectively dismisses a subject by virtue of proclamation. Does she let loose three arrows instead of one because she can't choose the cleverest among them? Typically, her formula is to articulate a thesis, punch it up with humor and then follow with anecdotal support or examples taken from TV shows, advertisements, overheard conversations - all cultural detritus is fair game. Often she quotes from reputable sources, CNN or The Times or a professional journal like Science; more often she applies witty asides, snippy comparisons ("Arabs put their women in veils. We put ours in the stocks") and tabloid-style alliteration (e.g., "dazzling dames" and "He mused that men are in a muddle").
When a few hundred pages' worth of these observations are published in one book, they suffer the opposite of synergy, adding up to less than the sum of their parts. Energizing in small morning doses, the author's fast-talking spins on the spin can rear-end one another until the pileup exhausts a reader's patience. Polemics tend to ignore subtleties and contradictions, so one may be reluctant to grant Dowd the authority of a responsible guide to a territory as fraught as sexual politics. Her habit of deploying her mother as a narrative device - in the attempt to give credence to the idea that she has affection and respect for someone, if not for the people she's undercutting in adjacent sentences? - is reminiscent of Lieutenant Columbo's invoking his wife with the ulterior purpose of distracting and confusing the murderer he's trying to catch. When Dowd claims she's "shy and oversensitive," amid numerous references to her hobnobbing with the powers that be, both political and cultural, it seems manipulative.
LIKE most people who work hard at seeming to be naturally funny, Maureen Dowd comes across as someone who very much wants to be liked, even though she has problematically joined forces with those women who are "sabotaging their chances in the bedroom" by having high-powered careers. "A friend of mine called nearly in tears the day she won a Pulitzer," Dowd reports in a passage about men threatened by successful women. " 'Now,' she moaned, 'I'll never get a date!' " Reading this, I can't help wondering if Dowd is that self-same "friend." After all, it's rare that she resists naming her friends, most of whom have names worth dropping: "my witty friend Frank Bruni, the New York Times restaurant critic"; "my friend Leon Wieseltier"; "the current Cosmo editor, my friend Kate White"; "my late friend Art Cooper, the editor of GQ for 20 years"; "my pal Craig Bierko"; et al.
Dowd's gift for memorably buoyant attacks ensures that she's quoted not only en route to work and around the water cooler but well into the dinner hour; they tend to bob to the mind's surface through the daily tide of minutiae, providing ready conversational flotsam. But for a woman who says, quoting Carole Lombard, "I never forget that a woman's first job is to choose the right shade of lipstick," an award-winning acid tongue just may be a tragic flaw.
Kathryn Harrison is the author of the memoir "The Kiss" and, most recently, "Envy," a novel.
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