Today's ordinary clothing has the untapped power to become tomorrow's wearable electronics. A Canadian lab has tested special fibers that can help make soft, flexible touch screens and batteries woven directly into the fabrics of modern life.
Turning rigid electronic parts into stretchy, smart clothing material has not proven easy. But early ideas have already hinted at practical uses beyond just wearing glowing "Tron" jumpsuits as fashion accessories. People may swipe a finger across a car's upholstery to turn down the heat or brush at their coat sleeves to adjust the volume of a connected music player ? experiences that seamlessly blend "hard" gadget functions with "soft" objects.
"We don't want humans to be aware of what they are wearing," said Maksim Skorobogatiy, a physicist at Ecole Polytechnique de Montreal in Canada. "It has to be self-contained piece that can charge itself, store energy and perform useful functions. Otherwise, it's an extra burden that nobody needs in our lives."
That philosophy has driven Skorobogatiy to assemble a diverse team of researchers focused on making the soft versions of electronic gadget parts, including multitouch screens, batteries and even microchip transistors. Those technologies could lead to smart clothing that monitors a person's health signs, or even acts as a wearable computer.
"The problem with most of the soft electronics ? the few examples that exist nowadays ? is that people mostly just put chips or widgets onto textiles and try to enable interesting textile functions," Skorobogatiy told InnovationNewsDaily. "Most of the electronics are not designed for soft interfaces."
Some labs have tried embedding tiny nanoparticles inside ordinary cotton thread so that they can conduct electricity. But they must wrestle with problems in making the material last a long time, as well as needing to use chemicals to bind the nanoparticles to the cotton.
By contrast, Skorobogatiy's lab turned to the manufacturing process used to create the optical fibers that carry TV and Internet signals. The technique allowed the Canadian team to make new polymer-based fibers based on melting the preformed material to pull out a long, thin fiber shape. Such fibers can conduct electric signals.
The researchers wove the fibers into an experimental touchpad that showed off partial multitouch capability similar to what smartphones or tablets possess. That work appeared in the January issue of the journal Smart Materials and Structures.
Next, they made flat sheets of batteries by combining typical lithium battery materials with thermoplastic binder material. Skorobogatiy's lab cut the battery sheets into thin strips and wove the strips into typical clothing textiles ? an achievement detailed in the January issue of the Journal of the Electrochemical Society.
The technology of smart clothing may seem imminent, but psychological barriers remain because textile manufacturers are hesitant to work with completely new fibers. The Canadian researchers have begun working on toppling such barriers by providing fibers for designers to try out.
One big challenge remains ? creating the soft textile version of the transistors at the heart of all modern devices. If Skorobogatiy's lab can pull off that trick, they could enable extraordinary pieces of smart clothing that act like gadgets but easily fit in with ordinary wardrobes.
"We're moving toward a self-contained textile battery, electronics and sensors ? all made with textile thread," Skorobogatiy said. "At this point, we're only missing the electronics."
You can follow InnovationNewsDaily Senior Writer Jeremy Hsu on Twitter @ScienceHsu. Follow InnovationNewsDaily on Twitter @News_Innovation, or on Facebook.
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Miami's Club Amnesia filled with hip-hop royalty Sunday night in honor of Maybach Music MC. By Rahman Dukes
Rick Ross and Dr. Dre at Ross' 36th birthday in Miami on Sunday Photo: MTV News
MIAMI — Rick Ross cemented a weekend of jet-set partying for his 36th birthday in ultimate style Sunday night at his home base in Miami, surrounded by some of his closest friends and thousands of fans. Club Amnesia was packed wall to wall with almost no wiggle room, filled with hip-hop heavyweights and club revelers watching closely, competing to get a shot of the action.
Ross ascended from a chauffeur-driven black Maybach shortly after 1 a.m. with companion DJ Khaled by his side. Decked out in his signature coconut-colored silk threads, the hefty MC was swiftly ushered by his Maybach Music entourage inside the venue.
Fans cheered, "Happy birthday, boss," as an elated Ross made his way to Amnesia's top-level VIP area, where dozens of music celebrities — including producer/singer Sean Garrett, actor Evan Ross and powerhouse producer Dr. Dre — were waiting in the wings for his arrival. Dre was easily the night's most-talked-about guest, as the sight of him and Ross together confirmed their union after being spotted hanging out together in Miami recently.
Soon after Ross, the celebrity arrivals began to flow in sync with the hundreds of bottles of Moet Rose champagne and Ciroc vodka that were delivered to his seating area. Party host Diddy showed up soon after with an entourage consisting of new Bad Boy artist French Montana, Cassie and his son Justin. Minutes later, Wiz Khalifa and girlfriend Amber Rose joined the party.
"This is your night!" Diddy shouted at Ross, alongside a grinning Khalifa by his side. Ross, with Dre directly behind him, raised a glass filled with pink bubbly.
As the night continued full steam, other hip-hop artists including the LOX, upstart Chicago crew L.E.P. and singer the Dream separately made their way to greet the Bawse. At one point, there were whispers that Young Money superstar Drake was also present in the building, but the Canadian MC was nowhere to be seen.
One of the most-touching moments of the night was a snapshot of Ross and former business manager and Poe Boy head E-Class exchanging hugs and pounds. Class had been a longtime associate of Rozay since his earlier days, until the two had a recent falling out that ended their business relationship.
Wrapping up the night in traditional fashion, Ross and his MMG family exited the empty-bottle-strewn VIP area and made their way to the stage for an impromptu performance. Ross gave the audience their money's worth, performing hit after hit from his war chest of club anthems.
"They say I'm getting money, must be Illuminati/ Talking to the Holy Ghost, in my Bugatti," Ross rapped on the track "Holy Ghost" off his Rich Forever mixtape. "He knockin' on the door, don't let the devil iiiinnn."
On this night, the larger-than-life MC had his way, no doubt to be blessed with another banner year.
KANO, Nigeria ? Police say suspected members of a radical sect have attacked two more police stations, leaving two people dead in a north Nigerian city where 185 people were killed just over a week ago.
Kano State police chief Ibrahim Idris said two civilians died in crossfire between suspected Boko Haram gunmen and police officers Sunday evening in Kano.
Idris said parts of the police station collapsed under the impact of bombs hurled by the attackers.
He said a new attack Monday morning targeted another police station where a policeman was killed last week.
He said the latest strikes occurred just outside curfew hours imposed after coordinated Jan. 20 attacks claimed by Boko Haram left at least 185 dead.
Those were the group's bloodiest attacks against Nigeria's weak central government.
BRUSSELS ? Investors participating in a deal to slash Greece's massive debt would face an overall loss on their bond holdings of around 70 percent, a person familiar with the negotiations said Monday.
European leaders at a summit in Brussels said a final debt deal could be signed off in the coming days, together with a second multibillion euro bailout packaged designed to save the country from a potentially disastrous bankruptcy.
Athens and representatives of investors holding Greek government bonds over the weekend came close to a final agreement designed to bring Greece's debt down to a more manageable level. Without a restructuring, those debts would swell to around double the country's economic output by the end of the year.
If the agreement works as planned, it will help Greece remain solvent and help Europe avoid a blow to its already weak financial system, even though banks and other bond investors will have to accept big losses.
The person briefed on the talks said Monday that the 70 percent loss was the result of cutting the bonds' face value in half, reducing the average interest rate to between 3.5 per cent and 4 percent and pushing repayment of the bonds decades into the future.
The person spoke on condition of anonymity because the talks are confidential.
The deal, which would reduce the country's debt by about euro100 billion and save it billions of euros in interest payments, needs to be finalized quickly. Greece runs the risk of a disorderly default on March 20, when it faces a euro14.5 billion bond repayment it cannot afford without additional help.
Many investors ? banks, insurance companies and hedge funds ? who hold Greek bonds also hold debt from other countries that use the euro, which could lose value if there is a fully fledged Greek default. This is the scenario the eurozone fears most and why the currency union hopes investors will voluntarily accept a partial loss on their Greek bonds.
The agreement taking shape is a key step before Greece can get a second, euro130 billion bailout. The country has been surviving since May 2010 on an initial euro110 billion package of rescue loans from other countries using the euro and the International Monetary Fund.
Besides restructuring its debt with private investors, Greece must also take other steps to secure further aid. It must cut its deficit and boost the competitiveness of its economy through layoffs of public sector workers and the sale of several state companies, among other moves.
But Greece's partners in the eurozone have grown frustrated with the country's slow implementation of austerity measures and economic reforms promised almost two years ago. In recent days, they have discussed ways of monitoring Athens' efforts even more closely, including giving the European Commission, the power to block spending decisions that threaten the country's ability to repay its debts.
Earlier Monday, Greek lenders Eurobank and Alpha Bank said a planned merger to create the country's largest bank by assets could be put on hold because of the negotiations over the bond swap.
The banks said that "an accurate timeline cannot be given" to complete the deal announced last August because of the negotiations.
Greece's finance ministry expressed surprise at the announcement, arguing that the negotiations had produced "nothing new or different" to factors already taken into account by both banks.
The fighting in Syria risks being defined less as a popular uprising against a secular democracy and more as an armed sectarian conflict.
The sectarian fault line in Syria is growing more apparent as the conflict steadily intensifies between the Alawite-dominated regime of Syrian President Bashar al-Assad and the mainly Sunni rebel Free Syrian Army.
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The regime?s reliance on Alawite militiamen, known as the Shabiha, to help suppress the 10-month uprising is mirrored by elements of the armed rebel forces rallying around their Sunni identity through religious and sectarian motifs and language. The minority Alawite sect draws upon some Shiite traditions and is considered heretical by conservative Sunnis.
With the Assad regime showing no sign of caving to domestic and international pressure, the confrontation risks becoming defined less as a popular uprising against a secular autocracy and more as an armed sectarian conflict pitting Sunnis against Alawites and their Shiite allies: Iran and Lebanon?s Hezbollah.
?I think there?s more and more evidence of that and it?s almost unavoidable given how things have developed around the entire region,? says Rami Khouri, director of the Issam Fares Institute of Public Policy and International Affairs at the American University of Beirut. ?Iran, Hezbollah, and the Syrian regime have been rolled into one? as an enemy of the mainly Sunni Syrian opposition.
Syria's neighbors: How 5 border nations are reacting to Assad's crackdown
Symbols of Sunni affirmation and religious observance?are easily found within the ranks of the FSA from examples as mundane as headbands inscribed with quotes from the Koran to heated anti-Hezbollah and Iran rhetoric. Some of the battalions that comprise the FSA are named after prominent historical Sunni leaders. They include Hamza al-Khatib, a companion of the prophet Mohammed who was a noted military strategist, and Muawiyah bin abi Sufyan, the founder of the Damascus-based Ummayyad dynasty and a figure reviled by Shiites.
"In Syria [sectarian identity] is there. All you have to do is scratch the surface," says Andrew Tabler, a Syria specialist with the Washington Institute for Near East Policy and author of a book on Syria under the presidency of Mr. Assad. "Until now, I don't think you have seen a tremendous amount of organizing along sectarian lines.... But it is natural that the main divide is going to be between Alawites and other Shiite off-shoots versus Sunnis."
The FSA is composed of deserters from the regular Syrian army and is commanded by Col. Riad al-Assad who defected last summer and lives in a refugee camp in Turkey. Its strength is unknown although FSA leaders and Syrian opposition figures have claimed numbers as high as 40,000. Others say the figure is much lower.
In November, Colonel Assad told Turkey?s Millyet newspaper that the FSA sought to make Syria a ?Muslim country and a secular democracy? like Turkey. He admitted that all his fighters were Sunnis but denied regime allegations that the FSA was allied to the Muslim Brotherhood, the outlawed main Islamist force in Syria.
Still, there was no mistaking the staunchly Sunni identity and religious convictions of the six Syrians, five of whom were serving FSA officers and soldiers, sheltering last week in the home of a radical cleric in a dilapidated apartment block in the impoverished Sunni neighborhood of Bab Tebbaneh in Tripoli, a city in northern Lebanon. Two of them claimed to be sheikhs and all but one were from Homs, the flashpoint city lying 20 miles north of the border with Lebanon.
?We?re deserting because the regime makes us kill civilians. The Alawite officers stand behind us and they shoot anyone they see not firing at protestors,? says Ahmad, who said he deserted six months ago from a military intelligence unit in Damascus.
His dad, rapper Peter Gunz, confirms report to MTV News: 'To go to a precinct and see your son in handcuffs, it's heartbreaking.' By Nadeska Alexis
Cory Gunz Photo: Oluwaseye Olusa/MTV
Veteran Bronx MC Peter Gunz confirmed to MTV News early Sunday (January 29) that his son, rapper Cory Gunz, was arrested for gun possession in the Bronx, New York, on Saturday afternoon.
"The details are still sketchy, but I can confirm that he was arrested with a firearm yesterday in the Bronx," Gunz told MTV News. "They caught him around 2p.m. in the afternoon with a loaded gun in his knapsack.
"It was definitely an illegal search," Peter added.
Gunz was unable to disclose full details on the incident just yet, but he explained the events leading up to his son's arrest. "I spoke to the arresting officer, and so far, what I'm hearing from him is that they got a phone call at the station saying they should 'look out,' " Gunz said. "According to [the officer], they didn't know he was Cory Gunz. They just saw a bunch of kids following him around.
"What I will say is that the officer that arrested Cory, actually happened to be a cool dude," Gunz continued. "After arresting Cory, sitting down with him and talking, he felt bad about the situation."
The 24-year-old rapper was brought to the 43rd Precinct in the Bronx on Saturday, but officials there say he has since been transported to Central Booking, on E. 161st Street in the Bronx.
While this is Cory Gunz's first brush with the law, his father is still worried about the potential fallout from a firearm charge.
"At the end of the day, there's a reason for everything, but at the same time, in New York, it's mandatory jail time," he said. "To go to a precinct and see your son, your junior, in handcuffs, it's heartbreaking. Anytime you see your child in jail, in the cell, in handcuffs, it's very hard. He's walked down some of the same paths that I walked down, but you never want to see your kids go through what you went through.
"This is Cory's first offense, but sometimes they like to make an example out of rappers and people with any kind of celebrity to them."
In April 2011, Cory Gunz and his father starred in the six-part MTV docu-series "Son of a Gun," which charted the young rapper's rise to fame. The younger Gunz is signed to Lil Wayne's Young Money label.
LOS ANGELES ? Hundreds of Etta James' friends, fans and family gathered Saturday at a Los Angeles-area church to remember the legendary rhythm and blues singer, who died this month.
Mourners at James' funeral included entertainment luminaries, with both Stevie Wonder and Christina Aguilera performing. Aguilera sang the song that James made famous, "At Last," while Wonder performed with the church's choir.
The Rev. Al Sharpton was to deliver the eulogy.
James died Jan. 20 at age 73 after battling leukemia and other ailments. She was most famous for her rendition of "At Last," and in her decades-long career, she became revered for her passionate, soulful singing voice. Her version of the song has become an enduring anthem for weddings and commercials.
Perhaps most famously, President Barack Obama and the first lady danced to a version of the song at his inauguration ball.
"Etta James was a pioneer. Her ever-changing sound has influenced rock and roll, rhythm and blues, pop, soul and jazz artists, marking her place as one of the most important female artists of our time," Rock and Roll Hall of Fame President and CEO Terry Stewart said after her death.
James won four Grammy Awards, including a lifetime achievement honor and was inducted in the Rock and Roll Hall of Fame in 1993.
She scored her first hit when she was just a teenager with the suggestive "Roll With Me, Henry," which had to be changed to "The Wallflower" in order to get airplay. Her 1967 album, "Tell Mama," became one of the most highly regarded soul albums of all time, a mix of rock and gospel music.
Over her lifetime, James battled adversity, including a turbulent upbringing and drug addiction.
She rebounded from a heroin addiction to see her career surge after performing the national anthem at the 1984 Olympics in Los Angeles. She won her first Grammy Award a decade later, and two more in 2003 and 2004.
She is also an inductee into the Rock and Roll Hall of Fame.
ST. LOUIS (Reuters) ? Thousands of people lined the streets of downtown St. Louis on Saturday cheering on marchers in a parade honoring veterans of America's wars in Iraq and Afghanistan, the nation's first major welcome to soldiers since the end of the Iraq War.
Crowds of parade-goers stretched a mile through the center of the city on a crisp winter's day, many waving American flags, with the metallic Gateway Arch glistening in the background in an event reminiscent of parades following World War One and World War Two.
"I'm just loving it," said Staff Sergeant Chris Green, 35, who volunteered for the Missouri National Guard two months after the September 11, 2001, attacks on New York and Washington and was part of the 2003 U.S.-led invasion of Iraq.
"When I heard this was happening I was choked up to say the least," Green said. "With the president cutting back (on the military), for Missouri to pull this together despite everything is just outstanding, absolutely outstanding."
While the invasion of Iraq quickly toppled Saddam Hussein, the country descended into sectarian violence and an occupation that dragged on for nearly nine years before the last U.S. forces pulled out in December.
For President Barack Obama, the military pullout fulfilled an election promise to bring troops home from a conflict he inherited from his predecessor that evolved into the most unpopular U.S. war since Vietnam.
There have been no major pomp-and-circumstance homecoming events for the returning veterans save for scattered small events since the last U.S. troops left Iraq, including a speech by Obama at Fort Bragg, North Carolina, thanking veterans for their service.
Some have been hesitant to hold parades while troops remain in Afghanistan.
OUTPOURING OF VOLUNTEERS
Saturday's parade was organized through social media by a coalition of veteran groups, private citizens and local officials.
"We got an outpouring of volunteers who wanted to do something for all the vets," organizer Chris Kuban said.
St. Louis police did not provide a crowd estimate, but the streets appeared crowded with thousands of marchers and spectators.
Thousands of marchers participated in the parade itself, which had 93 floats, 500 motorcycles, veterans from the most recent Iraq and Afghanistan wars, the 1991 invasion of Iraq, and Vietnam, as well as family members, high school bands and the hometown Budweiser Clydesdales.
Along the parade route, the crowd clapped and cheered, standing eight or more deep in spots, shouting "Welcome home," "Thank you" and "We love you."
About 4,500 U.S. troops were killed in Iraq, and the occupation was marred by the Abu Ghraib prison scandal and the killing of civilians by troops or private security contractors.
Thousands of Iraqi troops also died in the war as did thousands of Iraqi security forces in the chaotic years following the invasion, along with more than 100,000 civilians.
Many of the spectators on Saturday were Vietnam vets, including James Beaumont, 61, of St. Louis, who said he would have liked to have had a parade when he returned home.
"A parade would have been nice but right now I'm a Vietnam vet who needs a job," he said. "The VA ( U.S. Veterans Administration) is no good and I'm living with my damn uncle until I can get on Social Security."
Richard Pfeifer, 62, of Ballwin, Missouri, said that while not a veteran, he wanted to show his appreciation of the Iraq War vets.
"I'm very proud of what we have accomplished and I know how hard it was for the Vietnam vets," he said.
The ceremonies began Friday night at the Soldiers' Memorial near the Gateway Arch. There, volunteers read through the cold night the names of more than 6,000 U.S. service men and women killed in the wars since the September 11 attacks.
Supporters of the Iraq invasion cited in part a threat that Iraq possessed weapons of mass destruction. But none were recovered, leading to increasing criticism of the war.
OAKLAND (Reuters) ? Riot police fought running clashes with anti-Wall street protesters in Oakland on Saturday, firing tear gas and arresting 120 people in scuffles that injured three officers and at least one demonstrator.
The confrontations erupted in the mid-afternoon as Occupy protesters sought to take over a shuttered convention center, trying to regain momentum in their movement against economic inequality after authorities cleared protest camps across the country late last year.
Hundreds of people filled the downtown Oakland streets well into the evening, turning their anger toward authorities in a city that has seen simmering tensions between police and protesters boil over repeatedly.
"Occupy Oakland has got to stop using Oakland as its playground," Mayor Jean Quan said at a late evening press conference as officers in riot gear were still lined up against demonstrators in parts of downtown.
Quan blamed a core group of agitators for the violence, saying they had damaged City Hall and a children's art exhibit on recycling, among other things.
City officials said three police officers and one protester were injured during repeated altercations throughout downtown. There was no immediate word on their condition. Streaming Internet broadcasts by activists showed several demonstrators being treated by paramedics or loaded into ambulances.
Occupy Oakland organizers had earlier vowed to take over the apparently empty convention center to establish a new headquarters for their movement and draw attention to homelessness in a move seen as a challenge to authorities who have blocked similar efforts before.
Police and protesters first scuffled after activists tried to tear down a chain-link fence surrounding the Henry J. Kaiser Convention Center in downtown Oakland.
"The one percent have all these empty buildings, and meanwhile there are all these homeless people," protester Omar Yassin told Reuters at the scene.
Police in riot gear moved in, firing smoke grenades and tear gas to drive the crowd back, ultimately arresting 20 people.
"Officers were pelted with bottles, metal pipe, rocks, spray cans, improvised explosive devices and burning flares," the Oakland Police Department said in a statement. "Oakland Police Department deployed smoke and tear gas."
CORRUGATED METAL SHIELDS
Some activists, carrying shields made of plastic garbage cans and corrugated metal, tried to circumvent the police line, and surged toward police on another side of the building as more smoke canisters were fired.
"The City of Oakland welcomes peaceful forms of assembly and freedom of speech, but acts of violence, property destruction and overnight lodging will not be tolerated," police said in a statement.
Another 100 people were arrested in late afternoon after they were corralled by officers outside a YMCA in downtown Oakland. Oakland police said two journalists were detained near the YMCA but released at the scene.
Later, hundreds of demonstrators regrouped and marched through downtown Oakland, where they were repeatedly confronted by police in riot gear. Police at several points fired flash-bang grenades into the crowd and swung batons at protesters.
A group of demonstrators ultimately made their way to City Hall, where they brought out a U.S. flag and set it on fire before scattering ahead of advancing officers.
Several hundred people remained in the streets well after dark, facing off against lines of riot police holding batons who demonstrators sometimes taunted as "pigs".
Protesters in Oakland loosely affiliated with the Occupy Wall Street movement that began in New York last year have repeatedly clashed with police during a series of marches and demonstrations.
In October, former U.S. Marine Scott Olsen was left in critical condition with a head injury following a confrontation with police on the streets of Oakland in which tear gas was deployed.
Organizers said Olsen was struck in the head by a tear gas canister. Authorities opened an investigation into that incident but have not said how they believe he was hurt.
Elsewhere, the National Park Service said on Friday it would bar Occupy protesters in the nation's capital, one of the few big cities where Occupy encampments survive, from camping in two parks where they have been living since October.
That order, which takes effect on Monday, was seen as a blow to one of the highest-profile chapters of the movement.
(Additional reporting by Dan Whitcomb and Mary Slosson; Writing by Dan Whitcomb; Editing by Cynthia Johnston)
WASHINGTON (Reuters) ? The U.S. economy grew at its fastest pace in 1-1/2 years in the fourth quarter of 2011, but a strong rebuilding of stocks by businesses and a slower pace of business spending hinted at softer growth early this year.
U.S. gross domestic product expanded at a 2.8 percent annual rate, the Commerce Department said on Friday, a sharp acceleration from the 1.8 percent clip of the prior three months and the quickest pace since the second quarter of 2010.
It was, however, a touch below economists expectations in a Reuters poll for a 3 percent rate, and two-thirds of rise in output was due to the build-up in business inventories.
Soft underlying demand and a sharp slowing in core inflation supported the Federal Reserve's decision to keep in place an ultra easy monetary policy to nurse the recovery.
"We do not expect growth to accelerate meaningfully from its current pace," said Michelle Girard, a senior economist at RBS in Stamford, Connecticut. She said Fed officials would focused on slack in the economy.
Stocks on Wall Street opened lower as investors worried about the composition of growth, while Treasury debt prices were little changed. The dollar fell against a basket of currencies.
INVENTORIES REBOUND
The economy in the fourth quarter got a temporary boost from the rebuilding of business inventories, which logged the biggest increase since the third quarter of 2010. The buildup followed a third quarter decline that was the first since late 2009.
Excluding inventories, the economy grew at a tepid 0.8 percent rate, a sharp step-down from the prior period's 3.2 percent pace and a sign of weak domestic demand.
The robust stock accumulation suggests the recovery will lose a step in early 2012 as businesses are unlikely to keep building inventories at the same rate.
Growth in business spending on capital goods was the slowest since 2009, a sign the debt crisis in Europe was starting to take its toll and another hint of weakness ahead.
The Fed on Wednesday said it expected to keep interest rates at rock bottom levels at least through late 2014, and Chairman Ben Bernanke said the central bank was mulling further asset purchases to speed the recovery.
The central bank warned the economy still faced big risks, a suggestion the euro zone debt crisis could still hit hard.
"We're still repairing the damage done by the financial crisis. On top of that we face a more challenging world. We have a lot of challenges ahead in the United States," U.S. Treasury Secretary Timothy Geithner said at the World Economic Forum in Davos.
Prospects of sluggish growth could hurt President Barack Obama's chances of re-election in November.
The economy grew 1.7 percent in 2011 after expanding 3 percent the prior year, and the unemployment stood at a still-high 8.5 percent in December.
AUTOS PROP UP CONSUMER SPENDING
Consumer spending, which accounts for about 70 percent of U.S. economic activity, stepped up to a 2 percent rate from the third-quarter's 1.7 percent pace - largely driven by pent-up demand for motor vehicles.
The Japanese earthquake and tsunami had disrupted supplies early last year, leaving showrooms bereft of popular models.
Consumers also benefited from a moderation in inflation.
A price index for personal spending rose at a 0.7 percent rate in the fourth-quarter, the slowest increase in 1-1/2 years, after rising at a 2.3 percent pace in the July-September period.
A core inflation measure, which strips out food and energy costs, increased at a 1.1 percent rate after rising 2.1 percent in the third quarter. The slowdown could concern the Fed, which wants the measure closer to their 2 percent inflation target.
"Clearly, much work remains to achieve the Fed's dual mandate of maximum sustainable employment in the context of price stability," New York Federal Reserve Bank President William Dudley told reporters.
SLUGGISH INCOME GROWTH
High unemployment has led to sluggish income growth, which in turn has prompted households to tap savings and credit cards to fund their purchases.
Still, spending is unlikely to be a drag on growth, given that consumer sentiment is on the mend, as indicated by another report on Friday.
"Though the unemployment rate has improved, the jobs market remains a major challenge. Part of the decline in the unemployment rate is due to the fact that ... people have stopped looking for work," said Adolfo Laurenti, deputy chief economist at Mesirow Financial in Chicago.
"The high level of people out of the workforce and underemployed people show there isn't really much income generation to contribute to a better spending pattern."
A sustained growth pace of at least 3 percent would likely be needed to make noticeable headway in absorbing the unemployed and those who have given up the search for work.
Business spending grew at a sluggish 1.7 percent rate in the fourth quarter, pulling back sharply from the third-quarter's 15.7 percent pace.
Though exports held up, an increase in imports left a trade gap that chipped growth.
Unseasonably mild winter weather helped home construction post its fastest growth pace since the second quarter of 2010, with much of the increase going to meet rising demand for rental apartments.
Government spending shrank for a fifth consecutive quarter, reflecting a large decline in defense and still weak state and local government outlays. A bounceback could support growth at the start of the year.
(Reporting by Lucia Mutikani; Editing by Neil Stempleman and Tim Ahmann)
It's very cool that two 17-year-old Canadians sent a flag-toting Lego figurine into the sky on a weather balloon, as part of a weekend project that cost less than $500. It's cooler still that they got back some fantastic video of the toy silhouetted against the backdrop of a curving Earth beneath a black sky. But let's not call it putting a "Lego man in space." Even though the balloon ascended to around 80,000 feet, that's only a quarter of the way to the boundary of outer space.
That distinction doesn't take anything away from the feat that Toronto teens Mathew Ho and Asad Muhammad pulled off this month: The high-school students worked during four months' worth of free Saturdays to put together their balloon-borne experimental package, including four cameras, a cell phone with a GPS app, a home-sewn parachute and a Lego "minifig" holding a Canadian flag.
When the wind conditions were right, as determined by a website that calculates balloon trajectories, the teens headed out to a soccer? field in Newmarket and sent their rig up on an $85 weather balloon. The data suggest that the balloon rose to somewhere around 80,000 feet over the course of 65 minutes, then blew apart. The Lego man and the cameras came back down to Earth, buoyed by the parachute and protected within a plastic-foam box during the half-hour descent. Eventually, the cell phone guided the kids to a field about 75 miles away from the launch point.
The cameras recorded two videos and 1,500 photos, documenting the Lego man's amazing trip up through the clouds. "We never knew it would be this good," Ho told the Toronto Star.
But it got even better: After the Star published the teens' story, they were swamped with media attention. Canon, the company that made the cameras used on the Lego man's trip, said it would give Ho and Muhammad top-of-the-line cameras so they could continue their "creativity and inspiration." Lego sent its congratulations. A Toronto couple offered to reimburse the kids for their costs. Reports about the feat filtered out to The Guardian, the Daily Mail, the Huffington Post and elsewhere. The YouTube video has been viewed more than 600,000 times, and there's even a Facebook fan page.
Most of the reports refer to the Lego man as being "in space" ? which makes for a nice headline but is unfortunately wrong. The issue may not seem like a biggie, but over the past year there have been all sorts of things sent up on balloons to stratospheric heights ? including a chair, an iPad (sans parachute), a vibrator and iPhones galore. Heck, a 7-year-old and his dad sent up an iPhone a couple of years ago, and the Toronto teens said they took their inspiration from the MIT students who kicked off the craze with a $150 balloon mission in 2009.
This is all great, but it could give folks the impression that sending things into space is so easy a kid can do it ? so why are we spending millions or billions of dollars to put things into orbit?
Lofting payloads on suborbital trips beyond the internationally accepted boundary of outer space ? 100 kilometers or 62 miles or more than 328,000 feet in altitude ? is devilishly hard. Just ask Virgin Galactic. or XCOR Aerospace, or Blue Origin, or Armadillo Aerospace, or Masten Space Systems, or all the other ventures that are trying to open the suborbital frontier.
Putting payloads in orbit is much, much harder. Just ask SpaceX, which burned through three launches and millions of dollars before achieving its first success.
Ho and Muhammad haven't reached those heights ... yet. But someday, they may well be putting real men and women into space. The teens are off to a good start, and they deserve all the accolades they're receiving this week for their near-space adventure.
More about near space:
Alan Boyle is msnbc.com's science editor. Connect with the Cosmic Log community by "liking" the log's Facebook page, following @b0yle on Twitter or adding Cosmic Log's Google+ page to your circle. You can also check out "The Case for Pluto," my book about the controversial dwarf planet and the search for other worlds.
At Davos I managed to catch Juliana Rotich, Co-Founder of Ushahidi, the incredible crowd sourcing platform which came out of Kenya. Starting with just a handful of countries in 2009, it's main product, Crowdmap, is now used in hundreds of countries for crisis mapping and even crowd sourcing information about nuclear weapons in Iran. I got an update from her about their latest moves. These include news that the Omidyar Network, which put $1.4m towards Ushahidi, and which late last year put in another $1.9m.
On the call, someone called 'Ru' was asked to provide an address for emergency responders. By Kara Warner
Demi Moore with daughter Rumer Willis Photo: Getty Images
Ever since news of Demi Moore's hospitalization broke, more details have emerged each day to paint a clearer picture of the circumstances that led to the actress' ambulance ride to the ER on Monday night.
Some reports have claimed Moore was inhaling nitrous oxide from aerosol cans, also known as whip-its, the night the 911 call was placed from her home in Los Angeles, the recording and details of which were released Friday (January 27). Several people were heard on the call describing various symptoms the actress was experiencing at the time, as well as a few comments that seemed to indicate that Moore's friends were just learning of her alleged substance abuse.
One question that is causing a buzz online is whether Moore's 23-year-old daughter, Rumer Willis, was present during the ordeal. Careful listening of the 911 call reveals an exchange between one of the callers and someone named "Ru," who is asked for the specific address and instructions for how the paramedics can get to the house.
"Hey, Ru, what's the name at the gate so that we can buzz them in from here?" a man is heard asking on the call.
There has been no confirmation regarding Rumer's presence at the scene, but she reportedly goes by the "Ru" nickname and references it on her Twitter account.
Sources told E! News that Moore's three daughters are doing fine since their mom's health scare. Rumer reportedly visited her mother several times at the hospital before she was discharged earlier this week. Tallulah, 17, is with her dad, Bruce Willis. "She's doing great," the source said. "Her grandmother [Bruce's mom] is also there with her." Moore's other daughter, 20-year-old Scout, goes to Brown University in Rhode Island and reportedly hasn't been home since the incident.
Earlier this month, scientists made new discoveries of two new planets orbiting dual stars and suggested that such planets might be common. What's stranger still is that two suns might not be the limit.
In fact, scientists already know that there are solar systems containing many more stars out there. HD98800, a system about 150 light years from Earth, has two pairs of double stars with one set surrounded by a ring of space dust. And then there's Castor, located in the constellation Gemini. Although it appears in the sky as a single point of light, Castor is actually a system made of six stars: three sets of binary stars, all whirling around a common center of mass.
Astronomers haven't found planets in systems such as these?yet. "There's no reason you couldn't have planets around multiple stars," SETI astrophysicis Laurance Doyle says. But the pulls of many different orbits would make it difficult. "Everything would have to balance just right," he says.
A planet in a system like Castor's would be constantly tugged about by the gravity of its many stars. Imagine a rope pull in which you're on one side and six burly guys are on the other, says Doyle. They're yanking on the rope, but they're out of sequence, so you can hold your own. But if all six yank at the same time, you've had it, "and the planet goes zooming out of the system," he says.
Though this makes the existence of a planet in a system with many stars unlikely, it doesn't make it impossible. And if there were such a planet, its sunsets would be incredible.
Guatemala's former dictator Efrain Rios Montt wipes sweat from his forehead in a courtroom in Guatemala City, Thursday Jan. 26, 2012. Rios Montt is refusing to testify in a genocide case involving crimes against indigenous communities during his dictatorship in the 1980s. He has been accused of being responsible for some of the worst massacres during the Central American country's 36 years of civil war. (AP Photo/Moises Castillo)
Guatemala's former dictator Efrain Rios Montt wipes sweat from his forehead in a courtroom in Guatemala City, Thursday Jan. 26, 2012. Rios Montt is refusing to testify in a genocide case involving crimes against indigenous communities during his dictatorship in the 1980s. He has been accused of being responsible for some of the worst massacres during the Central American country's 36 years of civil war. (AP Photo/Moises Castillo)
Relatives of genocide victims gather in the court room were Guatemala's former strongman Efrain Rios Montt (1980-1982) was linked to the process of genocide and crimes against humanity in Guatemala City, Thursday, Jan. 26, 2012. The judge decided that Rios Montt is under house arrest and can not move without permission of the court. On January 14, 2012, R?os Montt lost the immunity against prosecution that he had enjoyed as a member of the national legislature. As the commander in chief and alleged intellectual author of a military campaign that largely targeted civilians, R?os Montt?s prosecution has long been sought by human rights organizations in Guatemala and elsewhere. (AP Photo/Moises Castilo)
Guatemala's former strongman Efrain Rios Montt (1980-1982), center, listens to prosecutors next to his lawyers in the court in Guatemala City, Thursday, Jan. 26, 2012. The judge decided that Rios Montt is under house arrest and can not move without permission of the court after being linked to the process of genocide and crimes against humanity. On January 14, 2012, R?os Montt lost the immunity against prosecution that he had enjoyed as a member of the national legislature. As the commander in chief and alleged intellectual author of a military campaign that largely targeted civilians, R?os Montt?s prosecution has long been sought by human rights organizations in Guatemala and elsewhere. (AP Photo/Rodrigo Abd)
A relative of genocide victims gather in the court room were Guatemala's former strongman Efrain Rios Montt (1980-1982) was linked to the process of genocide and crimes against humanity in Guatemala City, Thursday, Jan. 26, 2012. The judge decided that Rios Montt is under house arrest and can not move without permission of the court. On Jan. 14, 2012, R?os Montt lost the immunity against prosecution that he had enjoyed as a member of the national legislature. As the commander in chief and alleged intellectual author of a military campaign that largely targeted civilians, R?os Montt?s prosecution has long been sought by human rights organizations in Guatemala and elsewhere. (AP Photo/Rodrigo Abd)
Guatemala's former strongman Efrain Rios Montt (1980-1982) gestures as listening a journalist's question outside the courtroom after being linked to the process of genocide and crimes against humanity in Guatemala City, Thursday, Jan. 26, 2012. The judge decided that Rios Montt is under house arrest and can not move without permission of the court. On January 14, 2012, R?os Montt lost the immunity against prosecution that he had enjoyed as a member of the national legislature. As the commander in chief and alleged intellectual author of a military campaign that largely targeted civilians, R?os Montt?s prosecution has long been sought by human rights organizations in Guatemala and elsewhere. (AP Photo/Rodrigo Abd)
GUATEMALA CITY (AP) ? The defense lawyer for former dictator Efrain Rios Montt said Friday that a judge violated due process when she issued unprecedented genocide charges against Rios Montt for conduct during Guatemala's bloody civil war.
Danilo Rodriguez Galvez said Judge Carol Patricia Flores was supposed to issue her decision only after hearing testimony on allegations that Rios Montt was involved in hundreds of murders, human violations and the displacement of 29,000 people during the three-decade war.
Flores charged Rios Montt with genocide and crimes against humanity late Thursday, hours after he appeared in court but refused to testify about the allegations.
It's the first time a Latin American court has charged former president with genocide.
Flores first lectured Rios Montt for an hour on the allegations, citing witness testimony, before issuing her decision, Rodriguez said. He said that her conduct resembled a conviction and that he would file a formal complaint next week.
"The judge's duty was to report the resolution. The fact is that she talked for an hour as if the case had already been prosecuted," Rodriguez said.
Flores said Friday she would not comment because the complaint had yet to be formally filed.
Rios Montt, who ruled Guatemala in 1982-83 after a military coup, is accused in 266 incidents that resulted in 1,771 deaths, 1,400 human rights violations and the displacement of 29,000 indigenous Guatemalans.
The war ended in 1996 with the signing of a peace accord between the government and leftist guerrillas. The conflict left more than 200,000 dead and missing, 93 percent of them by state forces and paramilitary groups, according to a U.N. report. Hundreds of Mayan villages were largely wiped away.
Thousands of people demanding prosecution packed the courthouse where Rios Montt appeared Thursday. There were also supporters in the crowd.
"I understand what the prosecution is saying and I won't respond," Rios Montt said before the judge, later adding: "The point is to do justice, not vengeance."
He had immunity from prosecution as a member of congress, but it expired Jan. 14.
After hearing daylong testimony, some by victims and witnesses of atrocities, Flores deliberated for three hours before issuing her decision. Rios Montt faces prosecution on charges he was the mastermind of the abuses in his roles as head of the military and Guatemala's equivalent of the secret service.
"Unfortunately there are cases like this where people have been waiting 29 years for justice," Flores said during the testimony.
The next step is for the prosecution to present the formal case against Rios Montt before the court.
He was ordered to be held under house arrest and to pay a $64,000 bond.
The former dictator was also told not to communicate with others accused in the case, which also involves country's first genocide charges against retired generals Mauricio Rodriguez Sanchez and Hector Mario Lopez Fuentes, the army chief of staff under Rios Montt.
Crimes against humanity charges were suspended earlier this month for retired Gen. Oscar Humberto Mejia, the defense minister for Rios Montt who later deposed him to take over the presidency. The court determined Mejia doesn't have the physical or mental faculties to go to trial.
Rodriguez and Lopez have also claimed health conditions have kept them from court proceedings. All are in their 80s.
Prosecutors argued Thursday that as de facto president, Rios Montt was responsible for the army's "scorched earth" policy in communities where there was potential support for the leftist rebels.
Prosecutor Manuel Vasquez also accused him of authorizing massacres of ethnic Ixil Maya as well as sexual assaults on the women.
"The politics that caused the massacres started in 1965 and continued throughout," Rodriguez argued on behalf of Rios Montt. "You can't ascribe authorship of that long-term political policy to Rios Montt."
Zury Rios, the former leader's daughter who heads the Guatemala Republican Front political party, said the case against her father came from outside interests.
It was first brought in 2000 by the Center for Legal Action for Human Rights based on testimony of victims and their families.
Guatemala's 1992 Nobel Peace Prize laureate, Rigoberta Menchu, also has accused Rios Montt of genocide in a Spanish court.
The country's recently inaugurated president, Otto Perez Molina, was a top military officer during the war and has long insisted there were no massacres, human rights violations or genocide in the conflict.
But his close advisers have said he supports meeting the conditions set by various U.S. congressional appropriations acts for restoring aid that was first eliminated in 1978 halfway through the civil war. Among the required steps is reforming a weak justice system that has failed to bring those responsible for wartime abuses to justice.
The unprecedented genocide trial has continued since Perez took office earlier this month.
LONDON (AP) ? World stocks turned lower on Friday after official data showed the U.S. economic recovery was not as fast as many had hoped.
The Commerce Department said that the U.S. economy, the world's largest, grew at a modest 2.8 percent in the final three months of last year. While that is the fastest growth in 2011, economists had expected growth of 3 percent.
A cut in government spending was offset partly by a rise in inventories, which are expected to slow back down in the early months of 2012, hurting growth. After that, "growth will pick up again by late spring," said Harm Bandholz, chief U.S. economist at UniCredit Bank.
With the data suggesting the U.S. recovery would continue to be a slow process, investors sold off stocks to cash in on gains made so far this month.
Britain's FTSE 100 was down 1.1 percent to 5,733 while Germany's DAX fell 0.4 percent at 6,511.98 and France's CAC-40 lost 1.3 percent to 3,318.76. The euro was up 0.83 percent at $1.3189.
Wall Street edged lower on the open ? the Dow Jones industrial average fell 94 points to 12,639 and the S&P 500 5.8 points to 1,312.
Other economic and corporate news released Friday contributed to sour market sentiment.
Consumer products maker Procter & Gamble Co. cut its earnings outlook and Ford Motor Co. fell short of Wall Street expectations, while Japanese games and electronics companies Nintendo and NEC issued profit warnings.
In Europe, traders digested grim statistics from Spain showing more than 5 million people without jobs. The National Statistics Institute said the jobless rate shot up from 21.5 percent ? already the highest in the eurozone ? to 22.8 percent in the fourth quarter.
Attention was also focused on the resumption of talks to reach a deal on how Greece can avoid a catastrophic default on its debt. Greece and its bailout rescuers ? other countries that use the euro and the International Monetary Fund ? are asking private creditors to swap their Greek bonds for new ones with a lower value, interest rate and much longer maturity.
The two sides have so far disagreed over what interest rate the new bonds should take. Some negotiators have said they hope to have a deal this weekend, in time for a European leaders' meeting on Monday.
While investors appear to expect a deal at some point ? the euro was up and eurozone borrowing rates were down, suggesting a steady increase in confidence ? some worried that the crisis was far from over.
Portugal's markets have worsened in recent days on fears that its austerity efforts will not be enough to achieve its deficit-reduction targets and that it may end up like Greece, needing a second bailout effort and possibly a debt writedown.
Getting economies like Portugal to grow is fast becoming a priority and is expected to be one of the main topics of discussion at the European leaders' summit in Brussels on Monday.
Earlier in the day, Asian markets showed little momentum ahead of the weekend.
Japan's Nikkei 225 index fell 0.1 percent to close at 8,841.22 while South Korea's Kospi rose 0.4 percent to 1,964.83. Hong Kong's Hang Seng rose 0.3 percent to 20,501.67 and Australia's S&P/ASX 200 gained 0.4 percent to 4,288.40.
Japanese exporters continued to be hit by a strong yen, which reduces the value of repatriated profits. The dollar fell to 76.81 yen from 77.49 yen.
Nintendo Corp., the Japanese gaming giant behind the Super Mario and Pokemon games, plummeted 4.1 percent, a day after it lowered its annual earnings forecast to a 65 billion yen ($844 million) loss. The company blamed the strong yen for much of the loss.
Japanese electronics company NEC Corp. plummeted 7.1 percent after announcing Thursday that it was slashing 10,000 jobs worldwide and would slide into the red for the full year.
Benchmark oil for March delivery was up 5 cents at $99.75 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 30 cents to finish at $99.70 per barrel on the Nymex on Thursday.
___
Pamela Sampson in Bangkok contributed to this report.
>>>we're learning more about the navy s.e.a.l.s daring rescue of two people held in somalia. nbc news correspondent
jim miklaszewski
has more.
>>this mission was carried out by s.e.a.l. team 6 that took out
osama bin laden
last may. in this case, the lives of two hostages at stake, there was zero room for error. and in the end, the operation was flawless. the two hostages, seen in this video held at gun-point bier that kidnappers are free after three months in captivity. the navy s.e.a.l.s flew to the area by plane and took to the kidnappers by surprise, parachuted to the ground two miles from their target. in full combat gear they ran toward the encampment and encountered the heavily-armed somali. and in an exchange of gunfire, the s.e.a.l.s killed all nine of the kidnappers. the hostages were rescued and flown off in helicopters to a
u.s. military
base in nearby gentlemdjibout djibouti. there were signs that
jessica buchanan
's health had taken a turn for the worse. and that it was even life-threatening. monday night, with no time to lose, the president ordered the
u.s. military
to launch the
rescue operation
.
>>good job tonight.
>>only a day later as
president obama
delivered his
state of the union address
, the hostages were already on their flight to freedom. at 32 years old, buchanan had already devoted her life to the
african people
. teaching school and doing relief work for somali refugees. at the
valley forge christian college
in pennsylvania, where she earned a degree in teaching,
college president
dr.
don meyer
said africa was in her blood.
>>when she came back, she couldn't, she literally could not talk about africa without tears in her eyes. because of her burden to make a difference and help.
>>edward zoomy, a name, said her father, john, had been worried about jessica for months.
>>you could tell it was always on his mind. of course it was, it was his daughter. and you don't know what to say. you can't do anything, you can't help him. it was rough.
>>jessica has told her family she'll be fine. but you can only imagine how traumatic this was. her father and family members aren't going to wait for her to come home, they're flying to europe for a long-awaited and joyous reunion.
For those of you using two-step authentication for your Google account, a new update for the Google Authenticator app has just landed in the Android Market. Version 0.85 apparently fixes a few security bugs, and adds some UI improvements -- though we have to say, the app looks exactly the same to our untrained eyes.
Anyone with CyanogenMod 7.1 installed will want to stay clear of this Authenticator update, however, as users of the popular custom firmware are reporting that this new update force-closes at startup on their devices. Our own Chris Parsons has confirmed that the latest version doesn't work with CM 7.1 on his HTC Desire HD and Motorola Atrix, while the app is equally borked on Josh Munoz's CM'd HTC EVO 3D. Because two-step authentication users need the Authenticator app to sign in on a new computer, this could cause a few headaches for anyone affected. So if you're running CM, or a custom ROM based upon it, we'd recommend holding off updating until more is known, or an official fix is available.
In the meantime, if you find yourself unable to use the new version of Google Authenticator, you can always authenticate your account over the phone, or use one of your emergency sign-in codes (you remembered to write those down, right?) After you're signed in, you'll then be able to disable two-stage authentication until either Google or the CM team comes out with a fix.
If you're not running a custom ROM, however, you should be just fine. You'll find the usual QR code and Android Market links after the break.
How the Big Three forgot Accounting 101Public release date: 25-Jan-2012 [ | E-mail | Share ]
Contact: Andy Henion henion@msu.edu 517-355-3294 Michigan State University
EAST LANSING, Mich. The Big Three were so driven by short-term profits that they forgot or ignored basic accounting practices that could have helped guard against production decisions with long-term damage, according to an award-winning study by Michigan State University and Maastricht University in the Netherlands.
Essentially, the domestic automakers built far more vehicles than they needed while failing to appropriately account for the costs of excess capacity or the damage the overproduction would have on their reputations.
"I was surprised they were not following fundamental accounting practices like we teach in our introductory accounting classes," said Karen Sedatole, MSU associate professor of accounting. "They were basically fooling themselves into thinking that, by making more cars, the true cost of one car goes down. For the most part, it doesn't."
Sedatole co-authored the study with Ranjani Krishnan, MSU professor of accounting, and Alexander Bruggen, associate professor at Maastricht.
From 2005 to 2006 several years before the auto bailouts the researchers did field interviews with managers from one of the domestic automakers and collected a wealth of production data on the entire North American auto industry.
What they found was a culture of emphasizing short-term gain over long-term brand stability at General Motors Co., Ford Motor Co. and Chrysler Group LLC.
By building more cars than the market demanded, domestic automakers could better compete with their foreign counterparts on the hours-per-vehicle metric used in the influential Harbour Report and widely considered an indicator of automotive efficiency. Increasing production also allowed them to keep significant and rising costs of excess capacity off the Income Statement and on the Balance Sheet in the form of inventory. This practice, although acceptable for financial reporting purposes, is contrary to good accounting practices from a management decision-making perspective.
By doing this, the automakers made it appear as though their costs-per-vehicle were lower and their profits higher. Such behaviors are not uncommon for firms facing pressure from stockholders to boost operating profit and pressure from the public to justify large bonuses to executives. Sedatole characterized all these factors coming together as the "perfect storm."
Krishnan said the problem was worsened by high turnover in the management ranks. "The fact is, five years from now a certain manager may not be working here, so he needs to make his production numbers today so his analysts are happy, his investors are happy, his customers are happy and he makes his bonus," Krishnan said.
In the field interviews, many managers indicated they knew the short-term strategy would hurt their company's brand image, or reputation, in the long-term, but could not alter the culture. "It was something they had an intuition about, but it was like a big moving train that no one could stop," Sedatole said.
As a result, the automakers were left with an excess supply of vehicles they had to sell by offering huge incentives to consumers, a costly endeavor that also exacerbated the decline in brand image.
Since the industry crisis of 2008-2010, which led to the bailouts, the automakers have reduced some excess capacity, the researchers said. But as long as the automakers still can exceed market demand for short-term gain, Krishnan believes they will continue to do so.
"The point is, they can stop doing this it's just a question of wanting to stop doing it," Krishnan said.
To the extent that other industries show the same "perfect storm" characteristics excess capacity, internal and external incentives to overproduce, and the willingness to offer customer concessions to absorb the unwanted inventory they could fall into the same trap of harmful overproduction, Sedatole said.
The study, which appears in the journal Contemporary Accounting Research, was recently named the paper with the greatest potential impact on practice by the Management Accounting Section of the American Accounting Association.
###
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?
AAAS and EurekAlert! are not responsible for the accuracy of news releases posted to EurekAlert! by contributing institutions or for the use of any information through the EurekAlert! system.
How the Big Three forgot Accounting 101Public release date: 25-Jan-2012 [ | E-mail | Share ]
Contact: Andy Henion henion@msu.edu 517-355-3294 Michigan State University
EAST LANSING, Mich. The Big Three were so driven by short-term profits that they forgot or ignored basic accounting practices that could have helped guard against production decisions with long-term damage, according to an award-winning study by Michigan State University and Maastricht University in the Netherlands.
Essentially, the domestic automakers built far more vehicles than they needed while failing to appropriately account for the costs of excess capacity or the damage the overproduction would have on their reputations.
"I was surprised they were not following fundamental accounting practices like we teach in our introductory accounting classes," said Karen Sedatole, MSU associate professor of accounting. "They were basically fooling themselves into thinking that, by making more cars, the true cost of one car goes down. For the most part, it doesn't."
Sedatole co-authored the study with Ranjani Krishnan, MSU professor of accounting, and Alexander Bruggen, associate professor at Maastricht.
From 2005 to 2006 several years before the auto bailouts the researchers did field interviews with managers from one of the domestic automakers and collected a wealth of production data on the entire North American auto industry.
What they found was a culture of emphasizing short-term gain over long-term brand stability at General Motors Co., Ford Motor Co. and Chrysler Group LLC.
By building more cars than the market demanded, domestic automakers could better compete with their foreign counterparts on the hours-per-vehicle metric used in the influential Harbour Report and widely considered an indicator of automotive efficiency. Increasing production also allowed them to keep significant and rising costs of excess capacity off the Income Statement and on the Balance Sheet in the form of inventory. This practice, although acceptable for financial reporting purposes, is contrary to good accounting practices from a management decision-making perspective.
By doing this, the automakers made it appear as though their costs-per-vehicle were lower and their profits higher. Such behaviors are not uncommon for firms facing pressure from stockholders to boost operating profit and pressure from the public to justify large bonuses to executives. Sedatole characterized all these factors coming together as the "perfect storm."
Krishnan said the problem was worsened by high turnover in the management ranks. "The fact is, five years from now a certain manager may not be working here, so he needs to make his production numbers today so his analysts are happy, his investors are happy, his customers are happy and he makes his bonus," Krishnan said.
In the field interviews, many managers indicated they knew the short-term strategy would hurt their company's brand image, or reputation, in the long-term, but could not alter the culture. "It was something they had an intuition about, but it was like a big moving train that no one could stop," Sedatole said.
As a result, the automakers were left with an excess supply of vehicles they had to sell by offering huge incentives to consumers, a costly endeavor that also exacerbated the decline in brand image.
Since the industry crisis of 2008-2010, which led to the bailouts, the automakers have reduced some excess capacity, the researchers said. But as long as the automakers still can exceed market demand for short-term gain, Krishnan believes they will continue to do so.
"The point is, they can stop doing this it's just a question of wanting to stop doing it," Krishnan said.
To the extent that other industries show the same "perfect storm" characteristics excess capacity, internal and external incentives to overproduce, and the willingness to offer customer concessions to absorb the unwanted inventory they could fall into the same trap of harmful overproduction, Sedatole said.
The study, which appears in the journal Contemporary Accounting Research, was recently named the paper with the greatest potential impact on practice by the Management Accounting Section of the American Accounting Association.
###
[ | E-mail | Share ]
?
AAAS and EurekAlert! are not responsible for the accuracy of news releases posted to EurekAlert! by contributing institutions or for the use of any information through the EurekAlert! system.
At Davos I managed to catch 
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Public release date: 25-Jan-2012
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