Kurt Cobain's Smashed Guitar Sold For 100 Large

Kurt Cobain, Nirvana, Rock and Roll

nirvana

SEATTLE (AP) – A smashed guitar from the late grunge rocker Kurt Cobain has been sold to an unidentified private collector for $100,000.

Helen Hall, a broker in England, says it’s the second-highest known price for an item of Cobain memorabilia. The seller was punk rocker Sluggo of The Grannies and Hullabaloo.

The sale was confirmed Tuesday by Jacob McMurray, senior curator at the Experience Music Project in Seattle, where the taped-up Fender Mustang guitar in sunburst finish was displayed for a time.

“It’s a really cool-looking guitar because it’s smashed and held together with duct tape and Kurt Cobain wrote on it,” McMurray said.

Sluggo said he traded a working guitar for the smashed one during the first U.S. tour of Cobain’s band, Nirvana.

McMurray said Nirvana, living hand-to-mouth, was on a tour in New Jersey when Cobain smashed the guitar on stage and went looking for one to play at his next gig.

The swap was made while Cobain was staying at the apartment of Sluggo, who goes only by that name, and Sluggo’s girlfriend, McMurray said.

He said he hoped the buyer would allow the instrument to return to Seattle for a Cobain exhibit he is preparing for 2010.

“There’s not a huge amount of broken Nirvana guitars out there,” McMurray said, adding that most amount to “little slivers and fragments.”

A news release from Hall said the highest price paid for a piece of Cobain memorabilia was $131,000 at a 2006 auction for his Mosrite Gospel Mark IV guitar.


Propping Up a House of Cards

AIG, Bear Stearns, BofA, Citi, Credit Default Swaps, Derivatives, Financial Instruments, Lehman, Merrill
February 28, 2009
Talking Business

vegas

By JOE NOCERA
THE NEW YORK TIMES

Next week, perhaps as early as Monday, the American International Group is going to report the largest quarterly loss in history. Rumors suggest it will be around $60 billion, which will affirm, yet again, A.I.G.’s sorry status as the most crippled of all the nation’s wounded financial institutions. The recent quarterly losses suffered by Merrill Lynch and Citigroup — “only” $15.4 billion and $8.3 billion, respectively — pale by comparison.

At the same time A.I.G. reveals its loss, the federal government is also likely to announce — yet again! — a new plan to save A.I.G., the third since September. So far the government has thrown $150 billion at the company, in loans, investments and equity injections, to keep it afloat. It has softened the terms it set for the original $85 billion loan it made back in September. To ease the pressure even more, the Federal Reserve actually runs a facility that buys toxic assets that A.I.G. had insured. A.I.G. effectively has been nationalized, with the government owning a hair under 80 percent of the stock. Not that it’s worth very much; A.I.G. shares closed Friday at 42 cents.

Donn Vickrey, who runs the independent research firm Gradient Analytics, predicts that A.I.G. is going to cost taxpayers at least $100 billion more before it finally stabilizes, by which time the company will almost surely have been broken into pieces, with the government owning large chunks of it. A quarter of a trillion dollars, if it comes to that, is an astounding amount of money to hand over to one company to prevent it from going bust. Yet the government feels it has no choice: because of A.I.G.’s dubious business practices during the housing bubble it pretty much has the world’s financial system by the throat.

If we let A.I.G. fail, said Seamus P. McMahon, a banking expert at Booz & Company, other institutions, including pension funds and American and European banks “will face their own capital and liquidity crisis, and we could have a domino effect.” A bailout of A.I.G. is really a bailout of its trading partners — which essentially constitutes the entire Western banking system.

I don’t doubt this bit of conventional wisdom; after the calamity that followed the fall of Lehman Brothers, which was far less enmeshed in the global financial system than A.I.G., who would dare allow the world’s biggest insurer to fail? Who would want to take that risk? But that doesn’t mean we should feel resigned about what is happening at A.I.G. In fact, we should be furious. More than even Citi or Merrill, A.I.G. is ground zero for the practices that led the financial system to ruin.

“They were the worst of them all,” said Frank Partnoy, a law professor at the University of San Diego and a derivatives expert. Mr. Vickrey of Gradient Analytics said, “It was extreme hubris, fueled by greed.” Other firms used many of the same shady techniques as A.I.G., but none did them on such a broad scale and with such utter recklessness. And yet — and this is the part that should make your blood boil — the company is being kept alive precisely because it behaved so badly.

•

When you start asking around about how A.I.G. made money during the housing bubble, you hear the same two phrases again and again: “regulatory arbitrage” and “ratings arbitrage.” The word “arbitrage” usually means taking advantage of a price differential between two securities — a bond and stock of the same company, for instance — that are related in some way. When the word is used to describe A.I.G.’s actions, however, it means something entirely different. It means taking advantage of a loophole in the rules. A less polite but perhaps more accurate term would be “scam.”

As a huge multinational insurance company, with a storied history and a reputation for being extremely well run, A.I.G. had one of the most precious prizes in all of business: an AAA rating, held by no more than a dozen or so companies in the United States. That meant ratings agencies believed its chance of defaulting was just about zero. It also meant it could borrow more cheaply than other companies with lower ratings.

To be sure, most of A.I.G. operated the way it always had, like a normal, regulated insurance company. (Its insurance divisions remain profitable today.) But one division, its “financial practices” unit in London, was filled with go-go financial wizards who devised new and clever ways of taking advantage of Wall Street’s insatiable appetite for mortgage-backed securities. Unlike many of the Wall Street investment banks, A.I.G. didn’t specialize in pooling subprime mortgages into securities. Instead, it sold credit-default swaps.

These exotic instruments acted as a form of insurance for the securities. In effect, A.I.G. was saying if, by some remote chance (ha!) those mortgage-backed securities suffered losses, the company would be on the hook for the losses. And because A.I.G. had that AAA rating, when it sprinkled its holy water over those mortgage-backed securities, suddenly they had AAA ratings too. That was the ratings arbitrage. “It was a way to exploit the triple A rating,” said Robert J. Arvanitis, a former A.I.G. executive who has since become a leading A.I.G. critic.

Why would Wall Street and the banks go for this? Because it shifted the risk of default from themselves to A.I.G., and the AAA rating made the securities much easier to market. What was in it for A.I.G.? Lucrative fees, naturally. But it also saw the fees as risk-free money; surely it would never have to actually pay up. Like everyone else on Wall Street, A.I.G. operated on the belief that the underlying assets — housing — could only go up in price.

That foolhardy belief, in turn, led A.I.G. to commit several other stupid mistakes. When a company insures against, say, floods or earthquakes, it has to put money in reserve in case a flood happens. That’s why, as a rule, insurance companies are usually overcapitalized, with low debt ratios. But because credit-default swaps were not regulated, and were not even categorized as a traditional insurance product, A.I.G. didn’t have to put anything aside for losses. And it didn’t. Its leverage was more akin to an investment bank than an insurance company. So when housing prices started falling, and losses started piling up, it had no way to pay them off. Not understanding the real risk, the company grievously mispriced it.

Second, in many of its derivative contracts, A.I.G. included a provision that has since come back to haunt it. It agreed to something called “collateral triggers,” meaning that if certain events took place, like a ratings downgrade for either A.I.G. or the securities it was insuring, it would have to put up collateral against those securities. Again, the reasons it agreed to the collateral triggers was pure greed: it could get higher fees by including them. And again, it assumed that the triggers would never actually kick in and the provisions were therefore meaningless. Those collateral triggers have since cost A.I.G. many, many billions of dollars. Or, rather, they’ve cost American taxpayers billions.

The regulatory arbitrage was even seamier. A huge part of the company’s credit-default swap business was devised, quite simply, to allow banks to make their balance sheets look safer than they really were. Under a misguided set of international rules that took hold toward the end of the 1990s, banks were allowed use their own internal risk measurements to set their capital requirements. The less risky the assets, obviously, the lower the regulatory capital requirement.

How did banks get their risk measures low? It certainly wasn’t by owning less risky assets. Instead, they simply bought A.I.G.’s credit-default swaps. The swaps meant that the risk of loss was transferred to A.I.G., and the collateral triggers made the bank portfolios look absolutely risk-free. Which meant minimal capital requirements, which the banks all wanted so they could increase their leverage and buy yet more “risk-free” assets. This practice became especially rampant in Europe. That lack of capital is one of the reasons the European banks have been in such trouble since the crisis began.

•

At its peak, the A.I.G. credit-default business had a “notional value” of $450 billion, and as recently as September, it was still over $300 billion. (Notional value is the amount A.I.G. would owe if every one of its bets went to zero.) And unlike most Wall Street firms, it didn’t hedge its credit-default swaps; it bore the risk, which is what insurance companies do.

It’s not as if this was some Enron-esque secret, either. Everybody knew the capital requirements were being gamed, including the regulators. Indeed, A.I.G. openly labeled that part of the business as “regulatory capital.” That is how they, and their customers, thought of it.

There’s more, believe it or not. A.I.G. sold something called 2a-7 puts, which allowed money market funds to invest in risky bonds even though they are supposed to be holding only the safest commercial paper. How could they do this? A.I.G. agreed to buy back the bonds if they went bad. (Incredibly, the Securities and Exchange Commission went along with this.) A.I.G. had a securities lending program, in which it would lend securities to investors, like short-sellers, in return for cash collateral. What did it do with the money it received? Incredibly, it bought mortgage-backed securities. When the firms wanted their collateral back, it had sunk in value, thanks to A.I.G.’s foolish investment strategy. The practice has cost A.I.G. — oops, I mean American taxpayers — billions.

Here’s what is most infuriating: Here we are now, fully aware of how these scams worked. Yet for all practical purposes, the government has to keep them going. Indeed, that may be the single most important reason it can’t let A.I.G. fail. If the company defaulted, hundreds of billions of dollars’ worth of credit-default swaps would “blow up,” and all those European banks whose toxic assets are supposedly insured by A.I.G. would suddenly be sitting on immense losses. Their already shaky capital structures would be destroyed. A.I.G. helped create the illusion of regulatory capital with its swaps, and now the government has to actually back up those contracts with taxpayer money to keep the banks from collapsing. It would be funny if it weren’t so awful.

I asked Mr. Arvanitis, the former A.I.G. executive, if the company viewed what it had done during the bubble as a form of gaming the system. “Oh no,” he said, “they never thought of it as abuse. They thought of themselves as satisfying their customers.”

That’s either a remarkable example of the power of rationalization, or they were lying to themselves, figuring that when the house of cards finally fell, somebody else would have to clean it up.

That would be us, the taxpayers.

AP Picks Top 10 'Pop Culture' Moments of 2008

Stories

“Yes We Can”

dowThe Associated Press

NEW YORK–

In any normal year, it would be impossible to discern a coherent theme from a year of American pop culture, try as we journalists might. This year was different.

The presidential campaign seeped into our culture everywhere it could: into our music, our television, our street art, our Internet habits. And it was a symbiotic relationship, for pop culture seeped back into our politics, too. Remember the bizarre moment Paris Hilton and Britney Spears became part of the campaign, courtesy of a John McCain ad likening Barack Obama to a vapid Hollywood celebrity?

Or try this: Tina Fey and Sarah Palin, walking by each other at a fake news conference on “Saturday Night Live,” indistinguishable from each other in matching red blazers and Palin hairdos. Even Fey’s toddler daughter had trouble telling them apart that night.

Now Palin’s back in Alaska, Fey’s back on “30 Rock” and, oh yes, Obama’s on his way to the White House. But they weren’t the only big names in the 2008 pop culture firmament. A chronological journey back:

JANUARY

How can we begin without BRITNEY SPEARS still, amazingly, the most-searched term on Yahoo. A few days into 2008, she melts down spectacularly, ending up in a hospital after locking herself in a room with her young son. We don’t need Dr. Phil to tell us this girl needs help, though he does. Celeb magazines freely diagnose her as bipolar. (But more on Britney later.)

In politics, HILLARY RODHAM CLINTON has her first real pop-culture moment of the year when she chokes up talking to voters in a New Hampshire diner, a scene to be replayed endlessly on YouTube.

And true tragedy strikes when actor HEATH LEDGER dies of an accidental prescription drug overdose in a New York apartment, cutting short a brilliant career.

FEBRUARY

The Obama slogan “Yes We Can” ricochets across the Web in rapper and songwriter WILL.I.AM’s viral video hit, starring a host of celebrities. It’s not the only good news for Obama: His campaign raises a staggering $55 million this month, a success attributed to small donations gathered on the Internet.

And “SATURDAY NIGHT LIVE” spoofs the media’s fondness for Obama later, Clinton will refer to the skit in a real debate.

HOLLYWOOD WRITERS, meanwhile, end their 100-day strike. Days later, the OSCARS air to dismal ratings.

MARCH

Politics continues to enthrall, and this time it’s New York Gov. ELIOT SPITZER who’s on everyone’s mind. The most striking visual: the ashen-faced misery of his wife, Silda, standing next to him at the podium as he resigns over a prostitution scandal. The blogosphere and the airwaves buzz with the question: Why did she stand by him? Would you?

Obama may be the Internet candidate, but here’s an Internet sensation he’d prefer disappear: video of his former pastor JEREMIAH WRIGHT, making incendiary comments that will give Obama a major political headache.

APRIL

MILEY CYRUS is a genuine superstar at age 15, a role model to countless girls. So what’s the problem? A few pesky photos shot by Annie Leibovitz for Vanity Fair. They show the Disney princess, aka Hannah Montana of course, in a come-hither pose, with a bare back and shoulders. A rare bump in the road for this teen phenom.

In one of his many pop-culture moments, OBAMA displays true hip-hop cred, channeling Jay-Z with a “Dirt Off Your Shoulders” reference at a North Carolina rally. Mashups spread across the Web.

MAY

After four years and endless buildup, the “SEX AND THE CITY” gals return in a feature-length film. Will Carrie find happiness with Mr. Big? Yes, but even happier are the producers, after a $55.7 million opening weekend unprecedented for a chick flick. And this IS a chick flick. Men flock to root canal appointments.

HARRISON FORD returns as Indiana Jones at age 65! We doubt Hollywood would be so kind to a 65-year-old actress. And speaking of older women, they’re said to be behind the “American Idol” victory of 25-year-old DAVID COOK, who beats the baby-faced 17-year-old, DAVID ARCHULETA, breaking the hearts of countless tween girls.

Los Angeles street artist SHEPARD FAIREY creates his wildly popular poster of Obama, a red-white-and-blue hued image of the candidate gazing ahead, underlined by the word “HOPE.”

JUNE

TIM RUSSERT dies at 58 of a sudden heart attack, after more than 16 years in one of the most influential jobs in TV news moderator of NBC’s “Meet The Press.” The death causes some baby boomers to start to wonder about their own health.

A computer-animated science fiction romance? Leave it to Pixar. After “The Incredibles,” “Ratatouille” and “Cars,” another triumph for the studio comes in the form of “WALL-E,” a futuristic film about love between two robots.

JULY

Bonjour to the new JOLIE-PITT twins, who emerge in France, where parents ANGELINA JOLIE and BRAD PITT are hunkered down on their enormous estate. And BATMANIA reigns, thanks to LEDGER’S stunning (and posthumous) portrayal of the Joker in “The Dark Knight.”

BRITNEY and PARIS make their unwitting entrance into the campaign, fodder for McCain’s commercial mocking Obama as “the biggest celebrity in the world.” Hilton, though, gets the last laugh: The doe-eyed hotel heiress, lounging in a leopard-print swimsuit, offers up a much cleverer video riposte.

AUGUST

Call this the anti-celebrity month: Wary after that Britney-Paris spot, the DEMOCRATIC PARTY does its very best to de-emphasize the celeb factor at its convention in Denver. Meanwhile, McCain’s anti-celebrity campaign unveils its own, well, celebrity: the telegenic PALIN, who bursts onto the scene with a speech that galvanizes the GOP convention.

MADONNA turns 50! And the chiseled superstar is hardly alone. Also hitting the half-century mark this year: MICHAEL JACKSON, PRINCE, ELLEN DEGENERES, MICHELLE PFEIFFER, VIGGO MORTENSEN. Let’s imagine an amazing party at the royal palace in Monaco, where PRINCE ALBERT also hits the big 5-0, perhaps covered for CNN by CHRISTIANE AMANPOUR (yup, 50 too.)

SEPTEMBER

“I can see Russia from my house!” FEY debuts her impersonation of PALIN on “Saturday Night Live.” Kudos to the “SNL” writers, but you can’t say Palin doesn’t give them plenty of material including verbatim chunks of her rambling exchanges with KATIE COURIC. The CBS anchor, long plagued by low ratings and high expectations, makes a welcome comeback.

Also making a comeback: the ’60s, with all that guilt-free smoking, thanks to “MAD MEN,” the evocative drama on cable’s AMC. “Mad Men” wins an Emmy this month, thrilling its small but hugely loyal audience.

OCTOBER

Shall we just call it “HSM3”? And if you don’t know what that means, you probably won’t be seeing the movie. “High School Musical 3: Senior Year,” the big-screen sequel to the two Disney TV movies, sings and dances its fresh-faced way to the top of the box office, thanks to the durable appeal of Zac Efron, Vanessa Hudgens, Ashley Tisdale and the other “HSM” alums.

“SNL” scores its highest ratings in 14 years when it snags the ultimate prize: Palin herself. The VP candidate proves a game cast member, obliging happily when Amy Poehler shouts out: “All the mavericks in the house, put your hands up!” ”

And JOE THE PLUMBER makes his debut, as a constant reference in the third presidential debate. Later, Joe, aka Samuel Joseph Wurzelbacher, 34, campaigns for McCain and Palin.

NOVEMBER

Yeah yeah, Obama is elected, but we’ll reserve the pop culture prize this month for OPRAH WINFREY. Weeping on the shoulder of a stranger at Obama’s victory rally, and gushing uncontrollably on her postelection show, the talk-show queen can surely claim a little credit for the triumph of her “favorite guy.” Maybe MOST celebrity endorsements don’t mean much, but this is Oprah. Two economists even claim she brought Obama a million votes in the primaries.

DECEMBER

Any true pop culture story must end as we started: with BRITNEY for, after a year in which she seemed to reach the depths, this famously durable young woman is in the midst of an astonishing comeback, with “Circus,” her latest CD, reaching No.1 on the album charts, according to her label, Jive. At 27, she seems to be not only “the world’s pop princess,” as her manager says. She’s the world’s pop culture princess, too.

"We've Got a Terrible Situation With This Great Patriot, He's Out of Control and We Must Save Him From Himself"

CIA, George Patton, Wild Bill Donovan, World War Two

By Tim Shipman in Washington

The Telegraph UK

general-george

George S. Patton, America’s greatest combat general of the Second World War, was assassinated after the conflict with the connivance of US leaders, according to a new book.

“We’ve got a terrible situation with this great patriot, he’s out of control and we must save him from   himself'”

-WILD BILL DONOVAN


The newly unearthed diaries of a colourful assassin for the wartime Office of Strategic Services (OSS), the forerunner of the CIA, reveal that American spy chiefs wanted Patton dead because he was threatening to expose allied collusion with the Russians that cost American lives.

The death of General Patton in December 1945, is one of the enduring mysteries of the war era. Although he had suffered serious injuries in a car crash in Manheim, he was thought to be recovering and was on the verge of flying home.

But after a decade-long investigation, military historian Robert Wilcox claims that OSS head General “Wild Bill” Donovan ordered a highly decorated marksman called Douglas Bazata to silence Patton, who gloried in the nickname “Old Blood and Guts”.

His book, “Target Patton”, contains interviews with Mr Bazata, who died in 1999, and extracts from his diaries, detailing how he staged the car crash by getting a troop truck to plough into Patton’s Cadillac and then shot the general with a low-velocity projectile, which broke his neck while his fellow passengers escaped without a scratch.

Mr Bazata also suggested that when Patton began to recover from his injuries, US officials turned a blind eye as agents of the NKVD, the forerunner of the KGB, poisoned the general.

Mr Wilcox told The Sunday Telegraph that when he spoke to Mr Bazata: “He was struggling with himself, all these killings he had done. He confessed to me that he had caused the accident, that he was ordered to do so by Wild Bill Donovan.

“Donovan told him: ‘We’ve got a terrible situation with this great patriot, he’s out of control and we must save him from himself and from ruining everything the allies have done.’ I believe Douglas Bazata. He’s a sterling guy.”

Mr Bazata led an extraordinary life. He was a member of the Jedburghs, the elite unit who parachuted into France to help organise the Resistance in the run up to D-Day in 1944. He earned four purple hearts, a Distinguished Service Cross and the French Croix de Guerre three times over for his efforts.

After the war he became a celebrated artist who enjoyed the patronage of Princess Grace of Monaco and the Duke and Duchess of Windsor.

He was friends with Salvador Dali, who painted a portrait of Bazata as Don Quixote.

He ended his career as an aide to President Ronald Reagan’s Navy Secretary John Lehman, a member of the 9/11 Commission and adviser to John McCain’s presidential campaign.

Mr Wilcox also tracked down and interviewed Stephen Skubik, an officer in the Counter-Intelligence Corps of the US Army, who said he learnt that Patton was on Stalin’s death list. Skubik repeatedly alerted Donovan, who simply had him sent back to the US.

“You have two strong witnesses here,” Mr Wilcox said. “The evidence is that the Russians finished the job.”

The scenario sounds far fetched but Mr Wilcox has assembled a compelling case that US officials had something to hide. At least five documents relating to the car accident have been removed from US archives.

The driver of the truck was whisked away to London before he could be questioned and no autopsy was performed on Patton’s body.

With the help of a Cadillac expert from Detroit, Mr Wilcox has proved that the car on display in the Patton museum at Fort Knox is not the one Patton was driving.

“That is a cover-up,” Mr Wilcox said.

George Patton, a dynamic controversialist who wore ivory-handled revolvers on each hip and was the subject of an Oscar winning film starring George C. Scott, commanded the US 3rd Army, which cut a swathe through France after D-Day.

But his ambition to get to Berlin before Soviet forces was thwarted by supreme allied commander Dwight D. Eisenhower, who gave Patton’s petrol supplies to the more cautious British General Bernard Montgomery.

Patton, who distrusted the Russians, believed Eisenhower wrongly prevented him closing the so-called Falaise Gap in the autumn of 1944, allowing hundreds of thousands of German troops to escape to fight again,. This led to the deaths of thousands of Americans during their winter counter-offensive that became known as the Battle of the Bulge.

In order to placate Stalin, the 3rd Army was also ordered to a halt as it reached the German border and was prevented from seizing either Berlin or Prague, moves that could have prevented Soviet domination of Eastern Europe after the war.

Mr Wilcox told The Sunday Telegraph: “Patton was going to resign from the Army. He wanted to go to war with the Russians. The administration thought he was nuts.

“He also knew secrets of the war which would have ruined careers.

I don’t think Dwight Eisenhower would ever have been elected president if Patton had lived to say the things he wanted to say.” Mr Wilcox added: “I think there’s enough evidence here that if I were to go to a grand jury I could probably get an indictment, but perhaps not a conviction.”

Charles Province, President of the George S. Patton Historical Society, said he hopes the book will lead to definitive proof of the plot being uncovered. He said: “There were a lot of people who were pretty damn glad that Patton died. He was going to really open the door on a lot of things that they screwed up over there.”

Polaroid Declares Bankruptcy For Third Time

Stories

malkin-swastika_ad7d3

Dec. 19 (Bloomberg) — Polaroid Corp., the pioneer of instant photography, sought bankruptcy protection for the second time in seven years, blaming an alleged $2 billion fraud at its parent company Petters Group Worldwide LLC.

Petters Group, which acquired the 71-year-old company in 2005, has unsecured claims against Polaroid totaling $213.5 million, according to papers filed yesterday in U.S. Bankruptcy Court in Minneapolis. Polaroid, which is disputing the claims, didn’t estimate its total assets or debt.

The company and nine subsidiaries “entered bankruptcy with ample cash reserves, sufficient to finance the company’s reorganization under Chapter 11,” it said yesterday in a statement. “The company has not sought, nor does it expect to seek, additional debtor-in-possession financing.”

Petters Group’s founder, Thomas Petters, was arrested Oct. 3 on charges of mail fraud, wire fraud and money laundering. Prosecutors accused him of siphoning money from business ventures since 1995 to support an extravagant lifestyle.

Polaroid’s owner, based in Minnetonka, Minnesota, filed for bankruptcy in October after its assets were frozen by a judge. Petters and his firm are accused of defrauding hedge funds using fake purchase orders to secure investments. He allegedly told investors their money would be used to buy merchandise that would be resold to retailers including Costco Wholesale Corp.

Polaroid was founded in 1937 by legendary inventor Edwin Land, a Harvard University dropout.

Goggles, Instant Cameras

The company made protective glasses and goggles for the U.S. military during World War II. It sold the first instant camera in 1948, making $5 million in sales in the first year, according to the company’s Web site.

Another Petters company, Sun Country Airlines Inc., sought bankruptcy Oct. 6 when it couldn’t secure a $7 million short-term loan from its owner. The St. Paul, Minnesota-based carrier, which also had an earlier bankruptcy in 2001, has debt of $108.2 million and assets of $55.2 million, court papers show.

Polaroid has an annual profit of about $400 million through sales at retailers including Best Buy Co., Wal-Mart Stores Inc., Target Corp. and Sears Holdings Corp., it said in court papers.

“Despite having one of the most recognized brand names in the world, Polaroid has seen a decline in net sales over the past several years, coupled with increasing operational and product development costs,” the company said in bankruptcy papers.

DVD Players, TVs

Polaroid makes DVD players, TVs and other electronics, bringing in about $1 billion in annual sales. It unveiled a line of Zink printers in January that can make wallet-sized photos from digital cameras in 60 seconds.

“We expect to continue our operations as normal during the reorganization and are planning for new product launches in 2009,” Chief Executive Officer Mary Jeffries said yesterday in the company statement.

Polaroid said in February it would exit the film business and close plants in the U.S., Mexico and the Netherlands to focus on digital photography and flat-panel televisions. The company stopped making instant cameras for commercial use in 2006 and halted production of consumer models last year.

Polaroid first sought bankruptcy protection from creditors in 2001 after digital cameras rendered obsolete the instant-film technology that made the company a household name.

The company plans to fire 16 workers the day after Christmas and another 31 during the first quarter of next year, court papers show.

Ownership Changes

JPMorgan Chase & Co.’s private-equity unit, One Equity Partners LLC, in 2002 purchased a 53 percent stake in Polaroid for $56 million, helping it come out of its earlier bankruptcy. Petters Group began licensing Polaroid’s brand name in 2002 and bought the company in 2005 for $426 million.

The maker of One Step, I-Zone and JoyCam cameras was among the U.S. stock market’s “Nifty Fifty” three decades ago. The Nifty Fifty, compiled in 1972 by Morgan Guaranty Trust, a predecessor of JPMorgan, consisted of stocks considered certain to reward investors, regardless of how much they cost or how well the market performed.

Petters resigned as Petters Group chief executive officer Sept. 29 after the FBI received information that at least 20 investors may have been victims of a lending scam and raided the company’s Minnetonka headquarters. Petters has been jailed since his arrest. Several hedge funds that invested with Petters have also sought bankruptcy protection.

A former Petters Group tax accountant linked to the alleged fraud pleaded guilty today to conspiring to evade taxes. James Carl Wehmhoff, 67, admitted one count of conspiracy and one count of assisting tax fraud in federal court in St. Paul, Minnesota.

Land’s Inventions

Land, who left Harvard just months before graduation in 1932 to establish the company, is named on 533 patents, including one for the first synthetic polarizer.

The inventor kept Polaroid innovative for decades with products including 3-D film. The Polaroid OneStep was the world’s best-selling camera in the 1970s.

Lorrie Parent, a Polaroid spokeswoman, didn’t return a call for comment. The company earlier said it isn’t a target of the federal investigation.

The case is In re Polaroid Corp., 08-46617, U.S. Bankruptcy Court, District of Minnesota (Minneapolis).

To contact the reporters on this story: Courtney Dentch in New York at cdentch1@bloomberg.net; Michael Bathon in Wilmington, Delaware, at mbathon@bloomberg.net.

Last Updated: December 19, 2008 15:45 EST

1 in 7 Owes More Than House is Worth

Stories

Owners find themselves trapped underwater

me-and-the-harlem-globetrotters

By Stephanie Armour, USA TODAY
Michael and Cynthia Russell wanted to move to New York City, where they both work. Jobs are more plentiful there than in their town of Poughkeepsie, N.Y. But like millions of Americans today, the couple are stuck. They owe about $80,000 more on the home they bought in 2004 than it is now worth.

So instead of selling their home, Cynthia is going to school to become a registered nurse and Michael is working from home.

“We have had to find opportunities closer to home,” Michael Russell says. “We actually began trying to refinance in June 2007, but absolutely no one would take us.”

It’s a problem that’s only expected to get worse for legions of homeowners across the USA. Nearly one in seven homeowners is underwater, owing more on their mortgages than their homes are worth. That’s about 12 million homeowners, nearly double the number underwater at the end of 2007, according to Moody’s Economy.com. Most are homeowners who bought between late 2003 and 2007.

Home prices are projected to drop on average another 10%, bringing to about 14.6 million the number of homeowners who will be underwater on their mortgages by fall 2009, says Mark Zandi, chief economist at Moody’s Economy.com. By contrast, about 2.5 million homeowners had negative equity in their homes in 2006.

Increasingly, job seekers find that their homes are albatrosses imperiling their ability to relocate for higher incomes or more secure job opportunities. In fact, the greatest drop in home prices, in many cases, is in areas with the sharpest rise in unemployment.

“It’s a pretty alarming trend,” says Alan Steel, general manager of AOL Real Estate.

In California, about 18% of homeowners owe more on their first mortgages than their homes are worth. In Florida, it’s nearly one in four. Half of homeowners in Louisiana are underwater on their first mortgages.

Paying on ‘a lost cause’

Ken Schimpf, 61, a retired carpenter in Lancaster, Calif., briefly toyed with the idea of moving to Wyoming so he could be closer to his oldest son and live in an area where he could find work more easily. But he’s trapped by his house.

In August 2005, Ken and his wife, Juli, bought their home in Lancaster for $330,000. It seemed ideal at the time. The 1,900-square-foot, three-bedroom house includes an expansive master suite with a Jacuzzi, a pool, and 2.5-car garage where he keeps a 1923 T-Bucket hot rod that he and his wife worked on.

They got an interest-only loan at 5.25%, with the rate locked in for five years.

But in January 2006, Juli was diagnosed with leukemia. She spent months in and out of the hospital. Ken eventually took a leave of absence from work to help care for her. She died last March. Now Ken is trying to make his mortgage payment of $2,600 a month by relying on his retirement pension of $1,900 a month and savings. He doesn’t want to lose the house because it’s also home to two adult children: a son who was laid off and a daughter who is working temporary jobs. In September, his mortgage payments will increase by almost $500 a month when the interest-only teaser runs out.

He’s selling his hot rod collection, looking for work and fast depleting his savings to make ends meet. Plans to sell the house were thwarted when he discovered the property is worth about $90,000 less than he paid for it. He doesn’t want to just walk away from the home because he fears that would devastate his credit.

“I really hate putting the money out each month into what appears to be a lost cause,” Schimpf says. “I just hope the economy turns around before too long so people can once again realize that owning a home is the American dream and not the American nightmare.”

The inability to relocate because of negative home equity isn’t just hurting workers who want to move for better jobs. It’s also straining employers. Employees and new hires are increasingly turning down relocation opportunities because of the housing market. A 2008 corporate relocation survey by Atlas Van Lines found that “family ties” was the top reason (62%) cited by companies for workers declining relocations. That was a sharp drop from 84% last year. By contrast, 50% of companies said employees cited “housing and mortgages concerns” as the reason for turning down relocation offers, vs. 30% in 2007.

The dramatic shift is forcing businesses to offer more generous relocation assistance at the same time they’re facing significant pressures to curtail costs because of the lackluster economy. In fact, the number of firms offering lump sum payments to transferees and new hires is at the highest in six years.

Some homeowners are so certain that their homes won’t appreciate anytime soon that they have pondered simply walking away. Accountant Jason Khan, 33, owes about $80,000 more on his Phoenix home than it’s worth in today’s market.

“I am not in danger of losing my house. I have no problem paying my mortgage payments,” he says in an e-mail. “However, I have considered walking away from my house and buying another … or making late payments to see if my mortgage company will renegotiate my principal with me.”

For the most part, lenders will only ease loan terms for homeowners who are at risk of default or foreclosure.

Home prices keep on falling

Economists say a rebound in the housing market is still months away. The drop in home prices has shown no signs of letting up. And at least $500 billion worth of option-ARM loans are expected to reset from mid-2009 through 2012, driving up monthly mortgage payments for homeowners.

That could lead to a wave of new foreclosures that “could drive down home prices and leave more people underwater,” Zandi says.

Jim Fawcett of Houston says the 6% decline in his home’s value is just enough of a drop to keep him from retiring and moving inland from the coast.

“There’s probably no way I could even sell my house in this market — short of giving it away,” says Fawcett, 70. “Homes in my area, a newer development, sit on the market for six months, don’t sell, then are taken off.”

Mara Stefan’s house is an unwanted reminder of her life before divorce. “As part of the settlement, I’m stuck in a house I don’t want to live in,” says Stefan, 42, who works in consumer technology and whose suburban Boston home is $60,000 underwater. She would love to move with her sons, Eric, 15, and Ethan, 6. “But it looks like I’ll have to be here awhile.”

Burger King Launches Men's Body Spray

Bad Ideas, Burger King Cologne, Whopper

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(AP) Looking to beef up your mojo this holiday season?

Burger King Corp. may have just the thing. The home of the Whopper has launched a new men’s body spray called “Flame.” The company describes the spray as “the scent of seduction with a hint of flame-broiled meat.”

The fragrance is on sale at New York City retailer Ricky’s NYC in stores and online for a limited time for $3.99.

Burger King is marketing the product through a Web site featuring a photo of its King character reclining fireside and naked but for an animal fur strategically placed to not offend.

The marketing ploy is the latest in a string of viral ad campaigns by the company. Burger King is also in the midst of its Whopper Virgins campaign that features an taste test with fast-food “virgins” pitting the Whopper against McDonald’s Corp.’s Big Mac.

Burger King Holdings Inc. shares rose 15 cents to close at $20.53.

Where'd The Bailout Money Go? Shhhh, It's a Secret

Stories

warren2WASHINGTON (AP)

Dec 22

By MATT APUZZO– It’s something any bank would demand to know before handing out a loan: Where’s the money going?

But after receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it.

“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,'” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”

The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest?

None of the banks provided specific answers.

“We’re not providing dollar-in, dollar-out tracking,” said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars.

Some banks said they simply didn’t know where the money was going.

“We manage our capital in its aggregate,” said Regions Financial Corp. (RF) spokesman Tim Deighton, who said the Birmingham, Ala.-based company is not tracking how it is spending the $3.5 billion it received as part of the financial bailout.

The answers highlight the secrecy surrounding the Troubled Assets Relief Program, which earmarked $700 billion – about the size of the Netherlands’ economy – to help rescue the financial industry. The Treasury Department has been using the money to buy stock in U.S. banks, hoping that the sudden inflow of cash will get banks to start lending money.

There has been no accounting of how banks spend that money. Lawmakers summoned bank executives to Capitol Hill last month and implored them to lend the money – not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no process in place to make sure that’s happening and there are no consequences for banks who don’t comply.

“It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry,” said Elizabeth Warren, the top congressional watchdog overseeing the financial bailout.

But, at least for now, there’s no way for taxpayers to find that out.

Pressured by the Bush administration to approve the money quickly, Congress attached nearly no strings on the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent.

“Those are legitimate questions that should have been asked on Day One,” said Rep. Scott Garrett, R-N.J., a House Financial Services Committee member who opposed the bailout as it was rushed through Congress. “Where is the money going to go to? How is it going to be spent? When are we going to get a record on it?”

Nearly every bank AP questioned – including Citibank and Bank of America, two of the largest recipients of bailout money – responded with generic public relations statements explaining that the money was being used to strengthen balance sheets and continue making loans to ease the credit crisis.

A few banks described company-specific programs, such as JPMorgan Chase’s plan to lend $5 billion to nonprofit and health care companies next year. Richard Becker, senior vice president of Wisconsin-based Marshall & Ilsley Corp. (MI) (MI), said the $1.75 billion in bailout money allowed the bank to temporarily stop foreclosing on homes.

But no bank provided even the most basic accounting for the federal money.

“We’re choosing not to disclose that,” said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.

Others said the money couldn’t be tracked. Bob Denham, a spokesman for North Carolina-based BB&T Corp., said the bailout money “doesn’t have its own bucket.” But he said taxpayer money wasn’t used in the bank’s recent purchase of a Florida insurance company. Asked how he could be sure, since the money wasn’t being tracked, Denham said the bank would have made that deal regardless.

Others, such as Morgan Stanley (MS) spokeswoman Carissa Ramirez, offered to discuss the matter with reporters on condition of anonymity. When AP refused, Ramirez sent an e-mail saying: “We are going to decline to comment on your story.”

Most banks wouldn’t say why they were keeping the details secret.

“We’re not sharing any other details. We’re just not at this time,” said Wendy Walker, a spokeswoman for Dallas-based Comerica Inc., which received $2.25 billion from the government.

Heine, the New York Mellon Corp. spokesman who said he wouldn’t share spending specifics, added: “I just would prefer if you wouldn’t say that we’re not going to discuss those details.”

The banks which came closest to answering the questions were those, such as U.S. Bancorp and Huntington Bancshares Inc., that only recently received the money and have yet to spend it. But neither provided anything more than a generic summary of how the money would be spent.

Lawmakers say they want to tighten restrictions on the remaining, yet-to-be-released $350 billion block of bailout money before more cash is handed out. Treasury Secretary Henry Paulson said the department is trying to step up its monitoring of bank spending.

“What we’ve been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we’re doing this,” Paulson said at a recent forum in New York. “So we’re building this organization as we’re going.”

Warren, the congressional watchdog appointed by Democrats, said her oversight panel will try to force the banks to say where they’ve spent the money.

“It would take a lot of nerve not to give answers,” she said.

But Warren said she’s surprised she even has to ask.

“If the appropriate restrictions were put on the money to begin with, if the appropriate transparency was in place, then we wouldn’t be in a position where you’re trying to call every recipient and get the basic information that should already be in public documents,” she said.

Garrett, the New Jersey congressman, said the nation might never get a clear answer on where hundreds of billions of dollars went.

“A year or two ago, when we talked about spending $100 million for a bridge to nowhere, that was considered a scandal,” he said.

—

Associated Press writers Stevenson Jacobs in New York and Christopher S. Rugaber and Daniel Wagner in Washington contributed to this report.