Dispatches > The Buzz

The Buzz

Issue: "The $10 billion gamble," April 6, 2002

Survey records largest two-week jump in gasoline prices in history
Fuel on fire
It was a good ride while it lasted. Gasoline prices dropped below a dollar per gallon in some areas last year, but an industry survey found prices at the pump jumping a record 14 cents per gallon in just two weeks during March. Analysts blame increased demand for gasoline and lower supplies. Meanwhile, OPEC production cuts may keep prices up for the near future. The spike was the largest in the half-century of the Lundberg Survey, which measures prices from 8,000 gas stations nationwide. The $1.38 average on March 22 was still lower than $1.56 per gallon motorists were paying Sept. 9, according to Lundberg, and about 9 cents lower than the year before. Analyst Trilby Lundberg said this might be one side effect of the economic recovery. Demand is up, fueled by recent price drops. Other reasons may be seasonal: U.S. oil inventories dropped as refineries perform seasonal maintenance, and those serving many urban areas must change their fuel every March to meet federal emissions requirements, she said. Russia's rise as a non-OPEC oil power had helped keep prices down in recent months. Officials there boosted output, but agreed to hold back earlier this year. Those restrictions are set to last through the second quarter of this year. Meanwhile, OPEC has boosted crude oil prices by promising to maintain production cuts through June. Officials from the cartel noted "encouraging signs" of a global economic recovery, but decided not to change their plans until they meet again this summer. USPS RATES ON THE RISE AGAIN
Steep stamps
The price of a first-class postage stamp will jump 3 cents to 37 cents this summer, the largest increase since 1995. The postal service's rate of increase has quickened over the last quarter-century. From 1885 to 1968-more than 80 years-the price of a first-class stamp rose from 2 cents to 6 cents. But it's taken only 25 years to nearly triple it again, from 13 cents in 1974 to the coming summer rate of 37 cents. Fund manager defrauds clients
Ponzi returns
Mansion, yachts, luxury cars-a man can buy a lot with other people's money. Michael J. Fanghella, the former head of PinnFund, a Carlsbad, Calif.-based mortgage firm, pleaded guilty in late March to running a $300 million investment scam between 1996 and 2001. At least 166 individuals and small groups invested in the Ponzi-type scheme, which boasted 17 percent returns. To maintain the earnings illusion, Mr. Fanghella paid long-standing investors $200 million using contributions from new investments. When the fraud was exposed, investors lost $159 million. Mr. Fanghella pleaded guilty to three counts of tax evasion and conspiracy to commit both fraud and money laundering. PUBLIC TV'S RUKEYSER DUMPED AS EXECUTIVES SEEK YOUNGER VIEWERS
Washing away the gray
Following a controversy over ABC's seeking younger viewers by courting David Letterman to replace the aging Nightline franchise, Maryland Public Television is reaching for the Grecian Formula. MPT sacked Louis Rukeyser, the 69-year-old star of Wall Street Week, which he had hosted for 32 years. Network executives had asked Mr. Rukeyser to step aside and accept "senior commentator" status on their new show, Wall Street Week with Fortune, a joint venture with the AOL-TimeWarner finance magazine, but he rejected the offer. MPT officials pointed to the gap between the average age of the Wall Street Week viewer (62) compared to that of Fortune magazine readers (49). PBS officials have been on a youth kick lately, saying they are not serving the public if they are only reaching older Americans, who make up a large part of that segment of viewers who do not subscribe to cable or satellite TV. PBS is submitting a slate of its most well-known programs to market research by the California-based firm ASI Entertainment, with results expected by summer. Researchers will ask not just PBS fans, but also infrequent viewers for their opinions on PBS programs like Nova and The NewsHour with Jim Lehrer, using auditorium tests as well as smaller focus groups. Critics wondered why a supposedly noncommercial network was using market research just like the commercial networks. But PBS (as well as its stars) has realized the lucrative commercial opportunities of its 348 stations nationwide. Despite hopes to keep him temporarily, MPT quickly dismissed Mr. Rukeyser after he began his broadcast with a 10-minute broadside against the network, claiming his show was "a major cash cow" for MPT and PBS, costing only $2 million a year to produce, but attracting "six million a year in national underwriting. And that doesn't include massive local underwriting!" Public broadcasting has been kind to Mr. Rukeyser, too: The Baltimore Sun estimated his investment newsletters take in $20 million a year. LOADED QUESTIONS: TV pushes as it polls
Poll position
Add another author's name to the list of TV news critics who won't be making the interview rounds at ABC, CBS, and NBC. Before joining the conservative newspaper Human Events recently as managing editor, Matthew Robinson wrote Mobocracy, which argues that network pollsters twist the news and undermine democracy with often-loaded poll questions. Mr. Robinson began by noting a Jan. 13, 2000, magazine headline: "Newsweek Poll: Reject John Ashcroft." The story suggested that Americans, by a 41 percent to 37 percent margin, opposed Mr. Ashcroft's nomination to be attorney general. But the magazine did not offer readers the loaded language of the poll question: "Do you think Congress should approve Bush's choice of John Ashcroft for attorney general, or reject Ashcroft as too far to the right on issues like abortion, drugs, and gun control to be an effective attorney general?" Also at issue is whether the public often knows enough to have an opinion. On the Ashcroft nomination, Mr. Robinson suggests Newsweek knew that earlier in the week, a Time-CNN poll found 51 percent were "not familiar" with Mr. Ashcroft, and another 7 percent were "not sure." He concluded the example "illustrates how the media manipulate ignorance, and how polls are employed to give a faulty sense of disgust (or occasionally support) to a controversial issue or figure on the public stage." USA TODAY: Forget hoops, Dwell on tragic history
Remembering Kent
The Golden Flashes of Kent State may have been the Cinderella story of the NCAA men's basketball tournament, but USA Today's sports page worried in a headline that the team's "Sweet 16 berth takes focus from 1970 tragedy." Sports reporter Andy Gardiner led into his review of the basketball team's surprising ascent by recalling May 4, 1970, when National Guardsmen fired into a crowd of student protesters, killing four. Like many Kent State reruns, the story highlighted the shootings, but didn't include what brought the Guard to campus: students burning down the ROTC building. Mr. Gardiner claimed: "The black remembrance of that day has receded over 32 years. Kent's 20,000 students are almost two generations removed from one of the seminal moments of the 20th century." With that surprising assessment-placing Kent State alongside two world wars, the Great Depression, the Holocaust, the atom bomb, and the Cold War-Mr. Gardiner implied that the rest of the Vietnam era paled by comparison. But aside from its tragic shock value, Kent State did not shake public support for President Nixon or speed the end of the war. In his history of the 1960s, leftist author Todd Gitlin acknowledged, "Activism never recovered from the summer of 1970." Perhaps sports reporters ought to leave the history to the front pages. Campaign-finance law allows citizens and groups to buy ads at election time-on the state's terms
Free speech, and how to pay for it
President Bush signed into law last week campaign-finance legislation, despite his concerns about the constitutionality of provisions that regulate citizens' free-speech rights (see "Courtroom coalition," page 22). But as the Senate began debating the measure, U.S. Rep. Zach Wamp (R-Tenn.) wrote as "an avid reader of WORLD magazine" to protest our Feb. 23 report on House passage of the bill. We said that the campaign-finance bill would "make it illegal" for corporations, unions, and nonprofit groups to run TV commercials that mention a federal candidate's name two months prior to an election. Rep. Wamp wrote: "It amazes me how big money and powerful groups can still manipulate and confuse even the purest of publications." Big money does not confuse or manipulate us, of course, but he's right about one thing: Political commercials would not necessarily be "illegal"-as long as they are paid for on the government's terms. Groups or individuals who want to buy commercial time would simply have to follow all the government's procedures to form a political action committee (PAC), then solicit "hard money" contributions (up to $5,000 per donor per election) to finance the ad purchases. Only unregulated political ads are illegal. Politicians, not liking criticism from citizens, have complained that "soft money" groups have run advertising campaigns against them without contribution limits and without having to publicly list their donors. Rep. Wamp told WORLD he wrote because he wanted to explain that "you can be an evangelical social conservative and support campaign finance reform ... it's not a bedrock issue like human life." (The National Right to Life Committee gave him a score of 95 for his 1999 and 2000 voting record-his only negative vote was for the campaign bill.) Internet banking faces difficult times
Virtually closed
Internet banks are falling like digital dominoes. Last month, the Office of the Comptroller of the Currency (OCC) closed Net 1st National Bank of Boca Raton, Fla., and directed depositors to the Federal Deposit Insurance Corporation (FDIC) to claim their funds. In February, the OCC shut down Phoenix-based NextBank, after finding that the bank was operating in "an unsafe and unsound manner and had experienced a substantial dissipation of assets and earnings." Internet banking posted a particularly splashy casualty last fall: Web bank "First-e" closed its virtual doors in September after spending more than $200 million to attract just 80,000 customers in the UK and Germany. Despite the cyber-carnage, analysts at Retail Banking International say Web banking isn't dead yet. It's just that Web-only banking's chief strength-the ability to offer higher interest rates due to lower overhead-didn't impress the banking public. Depositors weren't willing to abandon bricks-and-mortar institutions, even for FDIC-insured Internet banks. Appeals court upholds decision to keep music-swapping service offline
No more Napster?
Napster's court-ordered nap will continue. A federal appeals court ruled last month that the controversial file-swapping service may not resume operations. Meanwhile, many of its former users have moved on to other software. Redwood City-based Napster once boasted over 15 million users trading music files on its network. It became the defendant in one of history's largest copyright-infringement conflicts. The music industry sued the company, which protested that "noncommercial sharing" was legal. Last July, U.S. District Judge Marilyn Hall Patel ordered Napster to shut down unless it could block 100 percent of all unauthorized copyright material from its service. Company representatives said they could not. Even with Napster gone, song swapping still exists on numerous other sites, to the chagrin of the music industry. A Recording Industry Association of America survey found that 23 percent of music consumers bought less music in 2001 than the previous year because they found what they were looking for online-for free. Shipping newspaper drops feminine references to ships
Neutering the navy
Centuries of seafaring tradition have struck the iceberg of egalitarianism as Lloyd's List, a shipping industry newspaper founded in 1734, plans to drop the feminine pronoun for ships starting this month. "I decided that it was time to catch up with the rest of the world, and most other news organizations refer to ships as neuter," said editor Julian Bray. On the other hand, he added, "I don't think there is anything wrong with calling ships 'she' in conversation. It's a respectable maritime tradition." According to the American Heritage Book of English Usage, the practice of calling ships "she" dates back to the Middle Ages and may be the legacy of Latin and other languages, which distinguish between masculine and feminine nouns. While Mr. Bray said such a move is inevitable, the decision has its share of detractors. Pieter van der Merwe of London's Greenwich Maritime Museum opposes the decision, saying the tradition harkens back to sailors' affection for their vessels. "It is a chip out of the wall of a particular cultural sector," Mr. van der Merwe said. "You can say it's a small thing, but small things mount up. You actually lose the color of specialist areas if you destroy the language of them." Burger King goes veggie
Keeping up with Jared
Animal-rights activists are finally applauding a fast-food chain. Burger King last month began selling the BK Veggie, a meatless alternative to the Whopper, and staffers with People for the Ethical Treatment of Animals (PETA) were so pleased that they bought a hundred of them at a Miami Beach Burger King and handed them out to passersby. The no-soy patty in the BK Veggie is a flame-broiled blend of vegetables, grains, and spices on a sesame seed bun. The sandwich comes with reduced fat mayonnaise, lettuce, and tomatoes-and totals 10 grams of fat and 330 calories. The BK Veggie may be a response to criticism of fast food from nutritionists and animal-rights activists, as well as to the success of Subway, which boasts of its healthier sandwich fare. Burger King bills the sandwich as the first of its kind to appear nationally in the fast-food industry. But the BK Veggie won't be a hit with all animal-rights activists. The mayonnaise contains eggs and the sesame seed bun includes natural and artificial butter flavoring, which makes it off-limits for those who call themselves vegans and avoid all animal products ("Pets are people, too?" p. 16). Man knows not his time
Seller of soles
William Scholl was a sole man. "Dr. Scholl" died of pneumonia last month at a hospice on the Isle of Man, an island off the northwest coast of England. His contoured sandal became a huge hit during the 1960s and '70s and is still sold today. The inventor had taken over the shoe business started by his uncle, Dr. William Mathias Scholl, who started orthopedic footwear in the early 1900s. The younger Dr. Scholl took a wooden sandal from Germany and tinkered with it to make a new product. He carved it to fit the foot and added a leather strap across the toes. Millions of women have worn the resulting "Original Exercise Sandal." The shoes helped boost Dr. Scholl's as a business. The orthopedic specialist took the company public in 1971, and Schering-Plough Health Care Products absorbed it eight years later. Today, the sandals are made by Brown Shoe Company, which sells, in addition to the original model, "super" and "sassy" versions with higher heels that loudly evoke the days of stringy hair and bell-bottoms. While derided by some as ugly wooden flip-flops, they still boast a loyal following. Sold with the slogan, "Looking good and doing you good," Dr. Scholl's sandals ostensibly ward off foot problems by exercising the legs and toning muscles. The shoes became a standard item for young baby boomers. "The miniskirt was in and the sandal just appealed to them," his widow Susan said.

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