News in brief
The Michigan DailyOctober 25th, 2001
Low sales, layoffs indicate recession
WASHINGTON
Home sales and orders to factories for big-ticket items plunged in September, and the number of Americans drawing unemployment benefits now stands at an 18-year-high the strongest evidence to date that the country has entered a recession.
"The bad news just keeps on coming," said Melani Jani, an economist at Salomon Smith Barney in New York. "The economy was already weak before Sept. 11, and these figures show the deterioration has become much more intense."
The Commerce Department reported yesterday that orders to factories for big-ticket durable goods fell for a fourth consecutive month in September, a decline of 8.5 percent that was six times larger than economists expected. It pushed orders for durable goods down to $165.4 billion, the lowest level since August 1996.
Sales of existing homes, one of the economy"s few bright spots, fell by 11.7 percent, the biggest one-month drop in six years, the National Association of Realtors reported. The association said the shock of the terrorist attacks caused housing sales, along with a lot of other economic activity, to come to a standstill.
The Labor Department said the number of newly laid-off workers filing for unemployment benefits rose to 504,000 last week, a level usually associated with recessions, while the total number of unemployed collecting benefits rose to an 18-year-high of 3.65 million people, 66 percent above the level of a year ago.
"These numbers leave no doubt that we are in a recession," said Michael Evans, chief economist at American Economics Group, a Washington-based consulting firm.
A final report showed that Americans" wages and benefits rose by 4.1 percent in the 12 months ending in September, compared to a 4.3 percent increase for the previous 12 months. Analysts said that figure will decline even more sharply in coming months as rising layoffs further depress employees" bargaining power.
Wall Street posted sharp declines for most of the day on the bad economic data, but then staged a late session rebound as investors swooped in to grab bargains. The Dow Jones industrial average closed up 117.28 points at 9,462.90.
A recession is traditionally defined as two consecutive quarters of declining economic output. The gross domestic product grew at a barely discernible annual rate of 0.3 percent in the April-June quarter.
Many analysts believe when the GDP figure for July-September quarter is released Wednesday, it will show GDP falling at a rate of around 1 percent with the decline expected to accelerate to a 2 percent drop in the current quarter.
While economists had been expecting a rebound early next year, many said they are revising those forecasts down, in part because of the new uncertainties raised by threats of anthrax and other bioterror attacks.
"Clearly, anything that hits consumer confidence is bad for the economy. The real question is how bad will it be," said David Wyss, chief economist at Standard & Poor"s Co. in New York. "With all of the developments on the terrorist front, our crystal balls have gotten cracked."
Wyss said he still believes economic activity will begin to rebound in the first quarter, helped by an aggressive credit easing on the part of the Federal Reserve and sizable tax cuts and government spending increases. The Fed is expected to cut rates for a 10th time this year at its next meeting, Nov. 6.
Nigerian soldiers wipe out rural villages
ZAKI-BIAM, Nigeria
The smell of death lingered yesterday over the deserted streets of this burned out village one of seven where state officials say soldiers bent on revenge destroyed homes and killed at least 130 people in eastern Nigeria.
State officials say the raids were in reprisal for the abduction and killing of 19 soldiers by Tiv tribal fighters earlier this month in Benue state, where villagers have been waging a decade-long ethnic feud.
Uniformed soldiers traveling in armored personnel carriers destroyed seven settlements, killing 130 people in just one village, state Gov. George Akume said yesterday. The figures could not be independently verified. Defense officials deny they ordered any revenge attacks.
The soldiers who arrived in Zaki-Biam on Tuesday told residents they were peacekeepers and instructed people to stay in their homes, according to the few residents who started straggling back yesterday.
"We thought they were coming here to protect us, but suddenly they took up positions and started firing at us," said Titus Madugu, a nurse, hovering nervously in the garden next to his burned house.
Madugu"s uncle was killed his five children and one of his two wives disappeared in the mayhem, as villagers fled into the forest. Also missing were 12 patients he had been caring for at a clinic when the rampage began, and Madugu said he had no idea of their fate.
In nearby Sankara, local government offices were gutted when soldiers returned Wednesday with rocket-propelled grenades and fuel to set the town on fire.
"This is an insult to the people of this community," said Nancy Ijih, a local government employee, as she surveyed the charred remains of the building, its roof collapsed and windows shattered.
"How can Nigerian soldiers destroy a government building in Nigeria?"
Earlier yesterday, state officials showed journalists a grainy video showing 10 bodies including women and an elderly man riddled with bullet holes, lying in deserted village streets.
The video, which was shot by state government employees, also included an unidentified woman describing soldiers "surrounding houses, shooting everywhere."
"They started burning. They made some of us lie down (on the ground) and they killed an old man," the woman says.
Benue state legislators described the attacks as a "gruesome act of ethnic cleansing against the Tivs," in a statement released Wednesday.
Military officials acknowledged troops were deployed Monday with instructions to disarm ethnic militia fighters and arrest those responsible for the soldiers" deaths. But they said the troops were under strict orders not to shoot unless fired upon.
"The Nigerian army will for no reason engage in any vengeance mission during internal security operations, as this is against our rules of engagement and code of conduct," army chief of staff Alexandre Ogomudia said at a news conference in the capital, Abuja.
President Olusegun Obasanjo ordered the military operation to continue until those responsible for soldiers" deaths were apprehended, spokesman Tunji Oseni said. If soldiers were found to have committed excesses, he said, the army would take steps to ensure more restraint.
The attacks started Monday after Obasanjo vowed at a funeral for the soldiers in Abuja to punish those responsible for their deaths.
As word of the violence spread, tens of thousands of frightened villagers most of them Tivs grabbed what they could and fled into the bush.
Groups of people with bundles of possessions balanced on their heads traveled by foot on the road south from Zaki-Biam to the state capital, Makurdi, where a camp has been set up for the displaced.
On Wednesday, Tiv students from two universities rioted in Makurdi, about 125 miles southeast of Abuja, in protest against the attacks.
Armed with sticks, knives and iron bars, they stoned passing vehicles and started bonfires. Calm was restored when soldiers were deployed to enforce a dawn-to-dusk curfew that remained in force yesterday.
Red Cross workers counted 10 bodies yesterday on the streets of Makurdi. Journalists saw two corpses both of them burned and decapitated.
Nigeria, Africa"s most populous nation, is riven with ethnic, religious and political divides that frequently flare into violence. Clashes can rage for days before subsiding.
Tiv and Jukun tribal fighters have been battling often over land issues since the early 1990s in Benue and neighboring Taraba states. Fulanis recently have been drawn into the conflict.
Akume said the 19 dead soldiers were mistaken for ethnic combatants, who frequently wear military uniforms.
Settlement reached in suit against Ford
HAYWARD, Calif.
Ford Motor Co. agreed yesterday to pay for repairs on millions of cars and trucks prone to stall because of a flawed ignition system, settling one of the industry"s most costly defects cases.
The deal approved by a California judge could cost the automaker $2.7 billion, the plaintiffs said. Ford attorney Richard Warmer disputed that estimate, without offering specifics.
"This will not be something that will have a material effect on the company"s financial position," Warmer said.
As many as 11 deaths and 31 injuries have been linked to stalling Ford vehicles.
Ford has maintained that its ignition devices and vehicles are safe and admitted no wrongdoing in the settlement.
The deal comes amid a series of setbacks for the Dearborn, Mich., automaker, including a 15 percent erosion in vehicle sales and accidents involving its sport utility vehicles. Ford is already spending $3 billion to replace 13 million Firestone tires it blames for the rollovers.
The deal ends years of litigation, avoids a recall threat and will allow millions of current and former Ford owners nationwide to be reimbursed for repairs and related expenses, such as towing fees. Wrongful injury and death suits are not affected by the accord.
Ford will reimburse owners nationwide who paid or will pay to repair the ignition system if it fails, so long as their vehicle has less than 100,000 miles.
Critics note that it does nothing to remove from the road the estimated 12 million Fords nationwide equipped with the ignition system originally installed in 20 million vehicles. These cars and trucks, including the popular Taurus, Mustang, Escort and Ranger models, remain prone to stall without warning, according to Ford"s internal documents.
"I think it"s as good as they could have possibly gotten, short of a recall," said Jeff Fazio, the lead attorney suing Ford.
Industry analysts said whatever its final cost, the settlement is not good news for Ford.
"Unfortunately it"s a hit to their balance sheet which is Ford"s last remaining strength," said David Littmann, Chief economist at Comerica bank.
Shares of Ford were up 46 cents, or 2.9 percent, to $16.52 in afternoon trading on the New York Stock Exchange.
Alameda Superior Court Judge Michael E. Ballachey, who said earlier that the automaker was living in an "Alice in Wonderland" dream by denying the ignition modules were defective, signed the settlement yesterday after weeks of closed-door negotiations.
"I thought this wasn"t going to happen," Ballachey said.
The out-of-court agreement came two months after The Associated Press reported that at least 11 deaths and 31 injuries were blamed on stalling in the vehicles. The AP also obtained internal Ford memos that show the automaker had evidence its ignition design could make engines suddenly fail on the road.
Ballachey ruled that Ford knew as early as 1982 that the vehicles were prone to stalling, especially when engines grew hot, and that Ford failed to alert consumers and repeatedly deceived federal regulators by claiming the modules weren"t flawed.
A trial was expected to begin later this year and could have exposed Ford to billions of dollars in damages under California consumer laws.
The suit challenged Ford"s placement of the thick film ignition (TFI) module, which regulates electric current to the spark plugs.
From 1983 to 1995, in 29 models, the module was mounted on the distributor near the engine block, where it was exposed to high temperatures. According to internal documents obtained by the AP, Ford had designed it this way to save up to $2 per vehicle and increase fuel economy.
One document indicates Ford knew the ignition devices should not be exposed to temperatures above 257 degrees. Another indicates Ford warned its engineers that many engines ran at temperatures higher than this, potentially resulting in "rapid catastrophic failure."
A former National Highway Traffic Safety Administration investigator told the AP that Ford concealed this information from federal safety regulators, who were studying hundreds of complaints about Ford vehicles stalling. Michael B. Brownlee, who oversaw the defects investigations, said the government might not have closed its four investigations if Ford had provided these and other key documents.
Pentagon postpones missile defense tests
WASHINGTON
The Pentagon announced yesterday it has put off several missile defense tests this fall in order to avoid being accused of violating the Anti-Ballistic Missile Treaty that prohibits nationwide missile defenses.
Defense Secretary Donald H. Rumsfeld made the announcement at a Pentagon news conference.
"We will not violate the treaty while it remains in force," Rumsfeld said. "In recent days, to keep from having it suggested that we might not be keeping that commitment, we have voluntarily restrained our ballistic missile defense test program."
Rumsfeld described the decision as providing an impetus for further discussions. President Bush is scheduled to discuss it with Russian President Vladimir Putin in Texas in mid-November.
He cited three planned tests that have been put off:
On Oct. 24, an Aegis radar on a surface ship had been scheduled to track a strategic ballistic missile launched as a target for a missile interceptor.
During the Oct. 24 test, the Aegis radar was scheduled to have tracked the interceptor missile. And during the same test, a tracking radar at Vandenberg Air Force Base, Calif., was to have tracked the target missile.
An Aegis radar was to have tracked a Titan 2 missile scheduled for launch Nov. 14.
Although Rumsfeld and Bush have maintained that the 1972 ABM treaty is outdated and an unnecessary impediment to developing an effective defense against long-range missiles, they have not yet withdrawn from the treaty.
"For sometime now, we"ve advised the Congress and the government of the Russian Federation that the planned missile defense testing program that we had was going to bump up against the ABM Treaty. That has now happened," Rumsfeld said.
By putting off these tests, the Bush administration is allowing more time for talks with Russia on how to move beyond the ABM treaty. Russia wants to keep the treaty in force, arguing that it is important for global security.
Bones of prehistoric crocodile discovered
WASHINGTON
Watchful and still, a monster crocodile waited in the waters of an African river for a large animal to lean over and drink. When the moment was right, the predator lashed out and grabbed the prey in his toothy jaws. The struggle was brief.
That"s a scene researchers believe was routine in a lush river valley some 110 million years ago. The prey could have been a large dinosaur, but the crocodile was immense longer than a school bus and weighing about 10 tons.
Dinosaur hunters led by Paul C. Sereno of the University of Chicago uncovered fossilized remains of the giant croc and for the first time assembled them into a replica of the ancient reptile.
"When this thing grew into an adult it was really a monster," Sereno said in an interview. "This thing could have easily pulled down a good-sized dinosaur."
The fossils were found last year in what is now a desert in Niger. In the age of the dinosaurs, the location was a verdant river valley, alive with dinosaurs and at least five types of crocodiles, including a monster species called Sarcosuchus imperator, or "flesh crocodile emperor."
Sarcosuchus was first discovered by French scientists in 1964, but the Sereno find is the most complete fossil skeleton known.
"This new material gives us a good look at hyper giant crocodiles," said Sereno in a statement. "No one had enough of the skull and skeleton to really nail any of the true croc giants until now."
A report on the discovery was to be published yesterday by the journal Science on its web site Science Express.
Sereno said that the elongated skull of the Sarcosuchus (pronounced SARK-oh-SOOK-us) is about six feet in length and dominated by narrow jaws studded with more than 100 teeth. The upper jaw, tipped with large, sharp and powerful incisors, overlaps the lower jaw, an ideal design to lock and hold onto flesh.
"The teeth are incredibly stout," he said. "They are crushing, penetrating teeth," which means the animal probably fed on land animals more than on fish and turtles, the most common food of modern crocodiles and alligators.
Sereno said the animal"s eye sockets are rotated upward, enabling it to remain submerged in water while watching the shoreline.
"This suggests it was an ambush predator, hiding under the water and then surging out to grab anything lounging on the shore," he said.
Modern crocodiles living in African rivers often grab large animals, such as wildebeest and zebras, and drag them into the water where they are drowned and then torn apart.
Sarcosuchus probably did the same thing, said Sereno, but because the ancient animal was so large, it could easily handle huge dinosaurs, including the massive long-necked, small-headed sauropods that were common in that African region.
"A small sauropod, 20 or 30 feet in length, would have been no problem," said Sereno. He said the giant crock probably remained still in the water until an animal came to drink and then it whipped its jaws out and sunk its teeth into its prey.
"And that would have been it," Sereno. "Once one of these clamped onto the leg or neck of an animal, there wasn"t a lot it (the victim) could do."
The head, body and part of the tail of the giant crocodile was covered with armor-like bony plates called scutes. Each of these scutes had 40 growth rings and Sereno estimated the animal was about 80 percent fully grown. Based on an analysis of these rings and other signs, Sereno said it probably took 50 to 60 years for the animal to reach full growth.
He said that unlike dinosaurs, which grew rapidly and lived a shorter time, the croc apparently achieved its giant size by living a long time with an extended growing period.
Michael Parrish, chairman of biology at Northern Illinois University and a noted dinosaur researcher, called the Sereno discovery "an important find."
Sarcosuchus was already known, said Parrish, "but this is a much more complete skeleton" and proves how big the animal was.
"A lot of people have not appreciated how big these crocodiles got," he said.
Parrish, however, noted that measuring age with growth rings in the these animals is an imperfect science and that Sereno"s interpretation may not be universally accepted.
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