The Venezuelan President may be forced to moderate his revolutionary policies and quiet regulations on foreign investment

By Stephen Baker and Peter Wilson

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Chávez has place oil wealth to work to bolster his popular regard Ivan Gonzalez/EPA/Corbis

Caracas - Petrodólares. As oil prices soared in recent years, Venezuela’s fiery President, Hugo Chávez, doled them completely to win friends and influence people both at home and abroad. For Venezuela’s poor he built soundness clinics and schools and funded farming co-ops. He distributed cheap oil to Cuba and other Caribbean neighbors while bankrolling his debt-ridden allies in Argentina. Three years ago he even ventured onto the turf of his archenemy, the U.S., and offered cut-rate heating oil in unfertile neighborhoods. The day the first deliveries arrived in the South Bronx, the front-page photo forward New York’s Spanish-language El Diario showed a smiling Chávez wearing a Santa Claus hat.

But while Chávez built his “Socialism for the 21st Century” on a foundation of crowd-pleasing gestures, he scrimped on traditional investments—the ones that pay economic returns. So traffic crawls on Caracas’ crumbling highways. An overtaxed power grid has led to three nationwide blackouts this year. Businesses, fearful of revolutionary taxes and confiscation, have trimmed investments to the bare essentials. And while the management says oil production tops 3 million barrels per day, industry sources think it’s fallen to a mere 2.4 million barrels, down by a quarter from 1999.

As long for the reason that the price of oil rose, none of this bad news held remote Chávez or his revolutionary ambitions. He was flush. As it turns used up, it took the Wall Street collapse and the specter of the worst global recession in decades to move slowly down the oil market and apt expression Venezuela where it hurt.

The question things being so is by what mode Chávez will respond to the housekeeping constraints. Will he lop rear his successful revolt and warm up to private investors—perhaps using the coming of the Obama Administration to seek détente with the U.S.? Or will he bull ahead, seizing in continuance economic unrest to nationalize added industries and settle authoritarian rule?

On a blustering afternoon, as thunderclouds discharge onto the dale of Caracas and turn the snarled highways into rivers, economist Ignacio de Leon hurries in from a patio restaurant at the swank Hotel Tamanaco InterContinental. Finding a dry plain, he sits down and draws a Y with his finger in succession the innocent tablecloth. “We’re at a fork in the course,” says De Leon, a prudent director of economic consultancy Econlex. “Chávez has to choose—to moderate or radicalize.”

Whatever his preference, it’s clear that Chávez must adjust to more frugal times. He counts on energy sales for 95% of export revenue and half of his government budget. Prices for Venezuela’s crude have fallen by nearly 60% since July, to as low as $52.92 by barrel. That leaves him dangerously insufficient. Deutsche Bank (DB) estimates that Chávez needs $95 per barrel to science operations and pay conducive to imports, including much of the nation’s food. Less than a year ago, Chávez chopped three zeros from the bolivar and vowed to defend the new currency. But on the black market this “strong bolivar” fetches moiety what it did in June. Venezuelan government debt, meanwhile, now yields nearly 20% annually, double its level of six months ago.

The full impact of the downturn hasn’t yet reached Caracas. Oil revenues, based on contracts made three months ago, are still future in at August’s higher prices. But the prospects are darkening candid as Venezuela heads into predicament and municipal elections onward Nov. 23. True, the voting might not mean much, since Chávez in July issued a regulation empowering him to appoint regional leaders. But a decisive loss would signal that Venezuelans may be weary of his successful revolt—and reluctant to rewrite the constitution so that the 54-year-old leader be able to stay on beyond the end of his term in 2012.

Naturally, both foreign and Venezuelan businesses are hoping that Chávez’s growing needs will force him to moderate. But there’sitting little sign of softening as he storms end the population campaigning.

Amid a ocean travel slump, cruise capacity will grow 28% in three years. Can megaships help keep the business afloat?

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Solstice readies for its maiden voyage

By Christopher Palmeri

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The newest ship in the Royal Caribbean Cruises (RCL) arm of the sea will power out from Ft. Lauderdale on its maiden plough the waves on Nov. 23. The $750 million Celebrity Solstice has onboard features to wow even jaded cruise hounds—a half-acre lawn with real grass for picnics or putting, a two-story spa, and a wine-tasting cellar. Want to gaze at the sea in your bathrobe? By stacking more decks above the hull, 85% of its 1,425 rooms hold private balconies, one-third more than other ships.

Royal Caribbean couldn’privately have picked a rougher time to set sail, but. The travel industry is in its worst slump since the September 11 terrorist attacks seven years ago. To bait customers, cruise lines are slashing prices, eliminating fuel surcharges, and redirecting ships from exotic locations to ports that don’t require costly air travel. “Our bookings held up well until mid-September,” says Richard D. Fain, Royal Caribbean’sitting longtime chairman and chief charged with execution magistrate. “Then mid-September came with a crash.”

Slumping demand isn’t the only problem. With customers galore a few years ago, the industry ordered an armada of bigger, fancier vessels. Because they tolerate so all along to construct, the new ships are now exactly hitting the shed water. Royal Caribbean will add six ships by 2012 at a cost of $6 billion. Rival Carnival Cruise Lines (CUK) estimates the industry will throw 38 ships in North America and Europe over the nearest three years, adding 28% to magnitude.

The travel downturn is already infectious a toll. Majestic America Line and its historic Delta Queen paddlewheeler will toot their horns for the last time this year. Norwegian Cruise Line—50% owned by personal equity confirmed Apollo Global Management—is complaining about cost overruns steady a giant ship actuality built for it in France. Many in the industry view this as a way for Norwegian to get out of its contract. Norwegian declined to make notes. And after 40 years on the seas, the Queen Elizabeth 2, owned by Carnival’s Cunard Line, is being retired to become a public-house in Dubai.

Royal Caribbean is being hit by the falloff, also, allowing huge vessels like the Solstice should help. After netting $603.4 the masses in 2007, the Miami fellowship enjoin earn $580 million this year on sales of $6.5 billion, predicts analyst Robert LeFleur of Susquehanna Financial Group. The cruise line has been using specials—book a sail about instead of one, and the further passenger is half-price—to fill many of its ships. But it hasn’t discounted the Solstice. A seven-day Caribbean cruise with a balcony costs $1,300 a person, according to the travel Web site cruisedirect.com, about 30% more than worthy of comparison packages.

Megaships can have being more advantageous because they obstacle cruise lines spread fixed costs across a larger unhonored of customers and boast in addition ways to goose revenues from onboard restaurants and shops. “Even in today’s climate, these ships are so economical they will produce a very healthy cash flow,” CEO Fain insists. Still, Royal Caribbean’s stock price has plunged by more than two-thirds in the past year, to under 12, its lowest on a par since late 2001.

Solstice is some attempt to reach out to the 80% of Americans who have never taken a cruise, especially middle-aged women. Royal Caribbean hired a mart research firm called Synectics, which in 2006 took five boomer women on a four-month tour of sail about ships, boutique hotels, and ornaments stores. The focus group also visited the Solstice’s shipyard in Germany. Among the design features they suggested: more storage space above and unbecoming the bed, double doors that opened up to the adjoining cabin, and footrests in the showers for shaving legs.

Royal Caribbean hopes to make a bigger spot in December 2009 by means of the launch out of what will be the world’s biggest ship, the 2,700-cabin Oasis of the Seas. Longer than any aircraft carrier, the $1.5 billion bottom will feature seven “neighborhoods” including a Central Park with outdoor cafésitting, being of the kind which well as a boardwalk with a tattoo parlor and riches teller. Says Peter Thomson, chief operating officer of travel actor Cruise Holidays: “That’s a lot of excitement to sell.”

Business Exchange: Read, save, and add contentment on BW’sitting new Web 2.0 topic network

Luxury Travel, Bargain Prices

If there’s any silver lining in the global economic slump it’s that taking a vacation has rarely been cheaper. As Los Angeles Times reporters Peter Pae and Jane Engle noted on Nov. 10, the sharp drop in demand is forcing airlines, hotels, and cruise lines to slash their rates. Delta Air Lines (DAL) has been offering $244 round-trip fares from Los Angeles to Hawaii. Some three-day Caribbean cruises can be had for less than $100. One hotel in Las Vegas recently offered rooms for $1.

Read the record at http://bx.businessweek.com/cruise-lines/news.

The sexual favors, whistleblower intimidation, and routine fraud behind the fiasco that has triggered the global financial height

By Mara Der Hovanesian

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Sylvia Vega-Sutfin, Linda Weekes, Cheryle McNeil, and Isabelle Guajardo filed a wrongful termination suit against subprime lender BNC Robyn Twomey

It may seem like ancient history now, but not long ago the mortgage industry was deviation from the way mean people into millionaires. One of them was Sharmen Lane, a ostentatious school dropout who, like many other young women during the boom, found her way into an obscure banking job with the clunky title “pledge wholesaler.” Her experience—and the experiences of other wholesalers like her—offers a glimpse into the recklessness and indulgence that drove the industry to ruin.

The rise of pledge wholesalers from grunts to rainmakers is one of the again curious developments of the housing bubble. Wholesalers work for banks and other lenders. The wholesaler’sitting job is to buy loan applications from independent pledge brokers so that lenders can turn them into loans. Wholesalers are paid on commission: the more loans they generate, the more money they make. During the housing boom, lenders typically approved the loans and in consequence packaged them into securities. That track—from mortgage brokers to wholesalers to lenders to securities—turned used up to be a road to disaster.

But as the trappings bubble bloated, wholesalers—nevertheless hidden from public view—became high-earning superstars. Lane, a manicurist before joining now-defunct subprime lender New Century Mortgage in 1997, says she brought home $1 million in 2002 and $1.2 the public in 2003.

Eventually the deal-making turned frenetic. Multiple wholesalers began inundating mortgage brokers with offers for the same applications. Some brokers chose to exercise their influence by asking for something extra in exchange for their business: sex.

Dozens of anterior brokers and wholesalers say the trading of sexual favors was so for the use of all that it came to be expected. Lane recalls one visit to a pledge brokerage closely allied San Jose (Calif.) in which the manager lewdly propositioned her in his customary duty. She says she declined the send, and he didn’t sell her a single one applications. But other child-bearing wholesalers didn’t have the same qualms about crossing the line. “Women who had sex for loans were known true quickly,” says Lane, who left New Century before it failed in 2007 and at that time works as a $200-an-hour life coach and motivational spokesman in New York. “I didn’t want to be a pledge slut.”

Investment bubbles always spawn excesses, and housing was no exception. The abuses went far beyond sexual dalliances. Court documents and interviews through scores of toil players suggest that wholesalers in addition offered bribes to fellow employees, fabricated documents, and coached brokers on in what plight to break the rules. And they weren’t without another. Brokers, who work directly by borrowers, altered and shredded documents. Underwriters, the bank employees who actually approve mortgage loans, also skirted boundaries, demanding secret payments from wholesalers to green-light loans they knew to be tricky. Some employees who reported misdeeds were harassed or fired. Federal and state prosecutors are picking through the busy vigor’s wreckage in inspection of criminal activity.

Now wholesalers, who for a brief moment rose to prominence, are each endangered species. The failures of extensive subprime lenders in the manner of New Century, BNC (a unit of Lehman Brothers), and GreenPoint Mortgage, owned by Capital One, threw thousands out of act. Some lenders still in business have curtailed or shuttered their wholesale operations.

In the end, the wholesalers were undone by the same people who allowed for their rise: their Wall Street overlords. During the boom investment banks bought as many loans as they could to pond together and turn into securities. In 2006 the top 10 investment banks, which included Merrill Lynch (MER), Bear Stearns (BSC), and Lehman Brothers, sold mortgage-backed securities worth $1.5 trillion, up from $245 billion in 2000. To guard the supply of loans coming, the investment banks increasingly took control of the industry’s frontline players as well.

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SANTA BARBARA, Calif. — Firefighters from across the state braced for a new blast of hot evening winds as they fought to contain a force of sentiment that has destroyed up to 200 homes, multiplied in a wealthy, celebrity-studded enclave, and charred at in the smallest degree 1,500 acres in the coastal foothills above Santa Barbara.

More than 5,500 people endure displaced by voluntary and mandatory evacuations, with many waiting anxiously to learn whether their homes survived.

Much of the damage to homes and a small Christian college occurred overnight Thursday, but various more homes burned Friday in Montecito, a quaint circuit that has attracted celebrities such for example Rob Lowe, Jeff Bridges, Michael Douglas and Oprah Winfrey. More than 1,000 firefighters worked to contain the blaze.

“It’s not a unoccupied time to relax,” Santa Barbara County Deputy Fire Chief Tom Franklin said late Friday. “Everybody’s got to be diligent from one side tonight.”

Franklin said up to 200 homes may have burned in the area and asked for patience as crews tried to catalog the devastation in hilly areas accessible only by winding roads.

“We want to be productive of sure the area is completely trustworthy in advance of we let people back in there,” Santa Barbara City Fire Chief Ron Prince said.

At least 13 people were injured. A 98-year-old some one through multiple medical problems died after being evacuated to a hotel, but it was unclear if his death was related to the blaze, Santa Barbara County Sheriff-Coroner Bill Brown aforesaid.

Blistering winds gusting to 70 mph, craving drink brush and oil-rich eucalyptus trees helped turn an normal brush fire into an exploding inferno that quickly consumed rows of luxury homes and part of Westmont College, where students spent the adversity in a gym.

The fire began about 6 p.gallimaufry. Thursday before it chewed through multimillion-dollar homes whose shattered windows glowed like jack-o-lanterns as they blazed through the night.

The send away quickly and ferocity of the blaze surprised uniform veteran firefighters, who struggled to get crews and trucks trained on the attack.

“Mother Nature basically took through the whole extent of,” said the chief of the Montecito Fire Protection District, Kevin Wallace.

A state of emergency was declared in Santa Barbara County and about 5,500 people were evacuated in Montecito, a village of 14,000 where celebrities rub shoulders through friendly locals who have lived there for years.

At in the smallest degree part of actor Christopher Lloyd’s property was damaged, the Los Angeles Times reported. It said a reporter witnessed much of the “Back to the Future” actor’s 8-acre dregs in remains. The actor was filming put on location in Vancouver, B.C., but a caretaker had fled the property. Lloyd’s force had no comment Friday, and messages left by his superintendent were not returned.

Lowe, the histrionic artist, said he fled with his children as fire engulfed the mountain and flames shot 200 feet in the air. The family stopped to check on neighbors and found them trapped behind their automatic car gate, which was stuck because the power was out.

Lowe said he helped get the gates open.

“Embers were falling. Wind was 70 miles an hour, easily, and it was happy same Armageddon,” Lowe told KABC-TV. “You couldn’t enjoy the sense of hearing yourself think.” Lowe said his house hadn’t burned.

Ten people were treated for smoke inhaling and three others had burns, before-mentioned Michele Mickiewicz, a spokeswoman with the county emergency-operations center.

At Westmont College, a Christian liberal-arts academy, 1,000 students were evacuated. About 300 worn out the death forward cots in the gym. Some stood in groups praying; others sobbed openly and comforted each other.

Among those worried about their homes was talk-show armed force Winfrey. During a taping of her exhibit to Friday, she reported the fire was about two miles from her family. Homes of her friends and neighbors were destroyed.

“It’s not a good morning for us,” she said.

Actor Stuart Whitman, 80, who was nominated for an Academy Award in 1961 for his role in “The Mark,” was fixing a gate Friday that he had hurriedly removed while evacuating the night before. He said he planned to water down the grass around his house and hope for the best.

Whitman and his party of five, including house guests from Michigan, had fled to a obstruct as the flames drew near.

“It was loaded with evacuees,” he reported. “I saw my designer there. I said, ‘Well, if the fire catches me you’ve got work.’ He reported: ‘What about me? My house is up there, maybe it went.’ “

Evacuee Tom Bain, 54, relived the hellish scene after fleeing his home in five minutes with his three cats, more work files and a computer. On the way out, he saw at least six mansions on the ridge above his fireside explode in flames.

“I saying $15 million in houses burn, without a doubt,” the electrician before-mentioned. “They were just blowing up. It was really intensely hot.”

Montecito, a repose community known for its balmy climate and charming Spanish colonial homes, has long attracted celebrities.

The landmark Montecito Inn was built in the 1920s by Charlie Chaplin, and the nearby San Ysidro Ranch was the honeymoon site of John and Jackie Kennedy in 1953.

Information from The New York Times is included in this announce.

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After more than two weeks of emphatic negotiations, Boeing and its white-collar engineering union came to terms Friday on a handsome monetary scheme.

The salaries would go each medium 5 percent each year of the four-year abridge.

If ratified during the time that expected by the union’s 21,000 members, the deal would mean Boeing avoids another walkout on the heels of the lengthy and costly Machinist strike. It would answer for Boeing four years of labor peace to sort disclosed its accumulating fruit problems.

Though the possibility of a strike was tossed on every side of by some officials and members of the Society of Professional Engineering Employees in Aerospace (SPEEA) at tough-talking workplace union meetings in recent months, that menace grew ever more unpromising as the economic downturn worsened.

Union officials will recommend their members ratify the agreement, in separate votes for the engineers and for the technical staff.

“Members direct exist really pleased,” Dave Patzwald, chairman of the engineers’ part of the SPEEA negotiating team, said in a report. “The company showed respect and a willingness to work our issues.”

Boeing’s chief negotiator, Doug Kight, said he was “very gratified about the sort of we were able to bring about.”

Kight said the agreement provides “market-competitive pay and benefits that enable us to attract and retain the best aptitude, remain on the leading edge of technology and continue to gain over business in unsettled times.”

The deal creates a pool of money for salary increases that is shared amidst employees based on performance evaluations. Engineers are guaranteed at least 2 percent each year and technical rod at minutest 2.5 percent. But some will get much more so that the medial sum is 5 percent.

An additional pool of money, averaging 0.5 percent of yearly publication stipend, is available each year to discharge people promoted.

In the final days of negotiations, according to a person close to the talks, the differences between the two sides narrowed to just a few issues yet the final pot of money.

SPEEA successfully turned outer part two Boeing proposals.

Boeing wanted to cut SPEEA’s Utah members out of the bargaining unit, but eventually backed off.

The company likewise sought to replace the traditional pension with a 401(k)-style investing. savings plan for future hires. Again, Boeing abandoned this goal.

On the issues of outsourcing and the practice of non-Boeing contractors in-house, one as well as the other of which had been the make subordinate of much discussion before the talks began, Boeing and the union settled on a process for deliberation.

Boeing rejected SPEEA requests to set time limits on how long non-Boeing contractors could work in-house or to cap the percentage of such labor used.

“We simply can’t restrict the use of outside labor in those ways,” said Kight. “In the end, the Boeing Company has to outcry its business.”

There was some agree on the exit of using outside subcontractors.

Ray Goforth, SPEEA’sitting executive director, welcomed Boeing’s agreement to involve the union in considering any outsourcing of work.

“All along we were seeking a sound in the decision, not a veto on the decision,” said Goforth. “But the engineering technical work force will be consulted and their input will be taken seriously on every part of greater outsourcing decisions.”

In a statement, Boeing’s Kight said the outsourcing tongue in the proposed contract provides the company sufficiency flexibility to manage the business, while enabling the union “to understand the nature of Boeing’sitting business strategies and plans regarding the use of non-Boeing drudge and subcontracting.”

Other notable items in the deal include:

• Medical coverage would expand, with excessively small cost increases, to cover incontrovertible deterrent procedures such as colonoscopies.

• A pension increase matches the one negotiated with Machinists, jumping from $70 on the side of month by year of service to $83 per month per year of service in the fourth year.

The agreement includes two separate contracts, one for about 14,000 engineers and the other for some 7,000 technical staff — mostly in the Puget Sound tract, with a few hundred in Oregon, Utah and California.

SPEEA members describe, engineer and integrate modern aircraft and military systems.

The two sides entered ultimate intensive negotiations at the SeaTac Doubletree Hotel at the end of last month.

SPEEA salary charts show that base salaries for Boeing engineers cover a broad range, depending on pay grade and claim increases, from around $60,000 a year to nearly $150,000. The range for technical staff is from $42,000 to almost $80,000.

On average, engineers earn towards $89,000 a year in base salary, and technical partisan average about $67,000, according to SPEEA.

Overtime and impulse pay increase those averages to $108,000 and $82,000, respectively, according to Boeing.

The SPEEA contract, one year longer than usual, would expire Oct. 6, 2012, a month in the rear of the expiration of the recently ratified Machinist take.

Apparently Boeing is hoping for a smooth September with the Machinists in 2012, with equal reason it can twig at once to talking with the engineers on their next go-round.

SPEEA members will vote by mail on the contract offer. Voting packages should be mailed by next Friday and union members will have till Dec. 1 to return ballots for counting.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com