Would-be entrepreneurs often ignore the risk of inaction

Risk. It seems to be at the heart of entrepreneurship. Whenever I ask a group to describe entrepreneurship, the word risk is always one of the first things people mention.

Most often people associate risk with failure. This is commonly called "sinking-the-boat risk." It is the risk of putting your money, your time and your reputation into a new business only to have it fail.

We know that only about half of entrepreneurial ventures survive five years. It should be noted that there is an urban myth that only 10 percent to 20 percent of new businesses last that long. However, this myth has never been supported in any study on business survival.

The complex and uncertain economic times that we now face only heighten the perception of the risk of failure. The thought of starting a new business in such a weak economy with high inflation is giving pause to many aspiring entrepreneurs.

However, there is another type of risk that is not always given its due. It is the corresponding risk associated with not pursuing an opportunity in the market — we call this "missing-the-boat risk."

Middle Tennessee entrepreneur Charles Hagood, co-founder of The Access Group and Healthcare Performance Partners, describes this type of risk in my book, Bringing Your Business to Life (co-authored with Michael Naughton, a professor at the University of St. Thomas in St. Paul, Minn.)

Hagood says: "We weren't as aggressive in the very early days as we probably could have been. I think we didn't realize all we had to offer. I think we lost a lot of opportunities in the very early days, not recognizing what was there."

Aspiring entrepreneurs should keep in mind that just as the risk of failure can increase during tough times so can the risk of missing a viable opportunity. Entrepreneurs can actually get too cautious during tough economic times like those we are experiencing today.

A slow economy and inflation do not shut down new opportunities. Many markets do not feel the effects of an economic turndown. In recent conversations with entrepreneurs here in Middle Tennessee, fewer than half report a slowdown in sales.

Understand the economy

When looking at a new opportunity, it is critical to understand how the current economy affects, or does not affect, its viability. There are still many great markets that are untapped or underserved and probably fewer competitors willing to take the risk to serve them.

A weak economy can actually create opportunities. Many new businesses are taking advantage of new niches being created in this down economy. For example, when banks foreclose on houses those properties are often left in disrepair. People take light fixtures, appliances and even carpeting out of the house before they vacate it. New businesses are popping up that restore foreclosed houses for the banks so that the properties are marketable.

Clearly we need to be more vigilant in assessing opportunities due to the enhanced risk that can be a result of tougher economic times.

But remember, there are still many opportunities out there, and people who pursue them prudently can still find great success.

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Hatch Show Print steps into spotlight

Sandwiched between a store selling Jack Daniel's branded black cowboy boots and American Apparel in downtown Nashville is the 129-year-old Hatch Show Print, one of the few commercial letterpress printers in the country that have survived decades of obscurity and are now enjoying a revival in the midst of a digital age.

While many downtown businesses thrive on tourists looking for a country experience, Hatch Show Print keeps a low profile.

"There's no mannequins, no costumes, love ya, but I've got to get back to work,'' said the shop's longtime manager, Jim Sherraden.

After years of financial struggle,Hatch Show Print is booming.

CNN hired the business — whose designers handcraft posters using wood or metal blocks in much the same way printers did for hundreds of years— to design and create nearly all of its promotional materials for its presidential election coverage. Belmont University will hand out Hatch Show Print posters to everyone who attends the upcoming presidential debate on the college campus.

Clients from Nike to Neil Young have been ordering posters from the shop. The Ryman Auditorium continues to offer a Hatch Show poster to all its artists to go with each show and be sold to concertgoers. Hatch Show has been doing the Ryman's posters since at least the 1920s, and its vintage designs have become an integral part of Nashville's image.

Some 16 to 20 interns, mostly college students, will put in stints at the shop this year, as university art departments across the country have begun buying antique letterpress printing machines and encouraging students to learn the almost forgotten art.

"We're providing a graphic design look you can't get with digital design,'' Sherraden said. "The computer is the best thing that ever happened to us."

On a recent afternoon, employee Mary Louise Sullivan carefully spread red ink on a metal CNN logo and the word "tonight," which she had arranged from individual wooden letters. Then she pressed a piece of tracing paper on them to capture the image and dabbed the wet ink in cornstarch — all so she could show the proofs to CNN before the materials are made.

Sullivan had to walk down the block to FedEx Kinko's to digitally send photos of the proofs to CNN. There is no computer on Sherraden's wooden desk, which is covered with letters and paperwork. Anyone who wants to order something needs to send a fax, not an e-mail.

"I always wanted to do something more creative than sitting at a computer typing buttons,'' Sullivan said. "It feels more real to me, to be able to touch them and get ink on your clothes."

Later, Sullivan would paint ink on finished CNN blocks and hand press the poster onto paper using one of several antique machines that are no longer being manufactured. The newest printing press in the shop was made in the 1960s.

The walls are covered with wood shelving made decades ago out of discarded wood blocks. Piles of images are stacked to the ceiling — with labels like pine tree, pair of lips and baseball boy.

Old fluorescent light rods dangle from the ceiling.

This is the same shop that made Elvis Presley's posters, Hank Williams' and Bill Monroe's. It has created posters for Pearl Jam and the Beastie Boys. It supplied traveling circuses and vaudeville acts with the posters that advertised shows in the earlier part of the last century.

"We're huge fans of their work and their approach,'' said CNN's marketing director, Scot Safon. "Anyone who cares about design knows what they do and loves what they do."

Safon and Sherraden didn't want to divulge the value of their contract, but Safon said the TV airtime was worth north of $5 million and Sherraden said the contract "keeps the lights on Thursday, Friday, Monday and Tuesday."

Shop struggles

It hasn't always been this way.

In fact, since the Country Music Foundation acquired the shop from Gaylord Entertainment Co. in 1992, Hatch Show Print managed to make a profit only during the past four years. Last year, the shop grossed $700,000 in revenues and a profit of $191,000. The surplus is being used to support the nonprofit mission of the foundation, which also operates the Country Music Hall of Fame and Museum, said museum Director Kyle Young.

Hatch Show Print struggled to break even for decades.

Sherraden, in his book Hatch Show Print: The History of a Great American Poster Shop, remembers: "The phone didn't ring much in the late 80s, but occasionally some voice out there would order copies of our most famous poster, Elvis Presley 1956, in Jacksonville, Florida."

Bill Denny, who bought the business on two separate occasions in the 1960s and 1980s, said it "had some tough days where it really didn't carry its own weight." He said he bought the business because he saw other owners selling off some of the historic wood blocks and wanted to keep them together.

Later, he sold the business to Opryland USA, which would become Gaylord Entertainment. For two summers in 1986 and 1987, Opryland officials tried making posters for tourists at their theme park, but that didn't take off.

Revival begins in 1990s

Sherraden was happy to keep the business going, though. If it wasn't hugely profitable, it was preserving an enormous archive.

Gaylord Entertainment finally unloaded the business in 1992 by giving it to the Country Music Foundation. That same year, the business moved from a spot next to the Ryman to Broadway, making room for the looming AT&T Building.

That generated more tourist traffic into the shop, plus letterpress printing experienced a revival of sorts in the 1990s. People were rediscovering historic printing techniques, according to Michael Phillips, the editor of the industry newspaper The Printer.

Just when digital typesetting became the standard, the old-fashioned way became much cooler.

People who 15 years ago could salvage a Vandercook hand-operated proof press for $200 now would have to pay $5,000 or $6,000, Phillips said.

Shops began opening in garages to print wedding invitations and posters. Nowadays, some printers are charging more than $1,000 for 50 wedding invitations hand-crafted on letterpress.

"Everything in this age is so digital,'' said Brian Wagner, marketing manager for the Ryman Auditorium, which buys all its concert posters from Hatch Show.

"People are craving authenticity. They want to get to the roots of this artistry. When you look at a Hatch poster, it's authentic. It's one of a kind. It doesn't have that slick glossy feel that computer-animated printing has."

At Hatch Show, 100 posters cost roughly $300. Restrikes of old posters can cost as little as $10 or as much as $400.

The growing interest in historic printing has led the Smithsonian Institution to sponsor a traveling art exhibit of Hatch Show Print pieces, a show that will open Oct. 11 at the Experience Music Project|Science Fiction Museum and Hall of Fame in Seattle.

"It has history and heritage,'' said Jason Skinner, off-air art director for Country Music Television, a customer of Hatch Show Print. "That's the root of graphic design. The history of typography is all right there."

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Gustav has Gulf hotels on edge

As Hurricane Gustav gained force Friday, the Gulf Coast's tourism industry was gearing up for the key holiday weekend while keeping a wary eye on the storm and preparing for the mixed bag it may bring next week.

The weekend's Southern Decadence gay pride festival in New Orleans, which drew 120,000 people last year, was expected to go on as planned, and Louisiana State University's football team still aimed to kick off against Appalachian State in Baton Rouge today.

"As a tourism community at this point, we are operating business as usual," said Kelly Schulz, a spokeswoman for the New Orleans Convention and Visitors Bureau. "We've not seen any mass cancellations."

A hurricane obviously can damage hotels in its path, but those in surrounding areas can see a boost as relief and construction workers move into the area, said Susquehanna Financial Group analyst Robert LaFleur.

In the wake of Hurricane Katrina, which hit New Orleans three years ago Friday, hotels also were used as long-term housing for people who had lost their homes.

"In a very sort of counter intuitive way, it was a net benefit for the hotels in the area because of storm displacement and temporary housing," LaFleur said. "It's not the way you want to boost your business, but unfortunately it's the reality."

All rooms booked

Baton Rouge, which is one hour inland from New Orleans, is virtually sold out, said Theresa Overby, a spokeswoman for the Baton Rouge Area Convention and Visitors Bureau. First responders, government agencies and contractors have booked nearly all the available rooms not already taken by people involved in and watching the LSU game.

A tennis tournament planned for this weekend was rescheduled, freeing up a couple of hundred rooms that were snapped up within minutes, Overby said. She said the city has secured some furnished condominiums for journalists in need of space.

Coastal residents evacuating their homes are being directed farther north.

"We just don't have the inventory," Overby said of hotels in her area.

The Sheraton New Orleans, one of very few hotels that stayed open during Hurricanes Katrina and Rita and their aftermath in 2005, is prepared to house first-responders and emergency personnel in roughly 200 of its 1,100 rooms.

Tommy Morel, director of sales and marketing of the New Orleans region for Starwood Hotels & Resorts Worldwide, said he is amazed at how many of the hotel's staff have volunteered to stay and ride out the storm in the event of an evacuation order in New Orleans.

"In general, everybody's really taking this seriously," Morel said. He noted that the hotel has only had a few small cancellations so far. "We gladly let them cancel," he said.

Olivier House Hotel Manager Bobby Danner said cancellations at his small family-owned hotel in the city's French Quarter jumped Friday to roughly 25 percent of his 42 rooms.

"It hasn't completely devastated the weekend," Danner said of the storm. "But it's had an effect."

Rebooking may be tricky

Travel booking site Orbitz has e-mailed 650 travelers warning them about Gustav, and expects to contact more over the weekend.

Spokeswoman Jeanenne Diefendorf said threatening storms often prompt travelers to shift bookings elsewhere, though overall bookings don't generally drop.

"When we see something like this happen earlier in the week, people will tend to look at other places, other destinations that aren't going to be affected," Diefendorf said.

With airlines now routinely filling more than 80 percent of seats on average — and many flights full — rebooking an alternate flight will be trickier, said Ed Perkins, a contributing editor to smartertravel.com.

But many in the industry hope Gulf Coast vacationers will stick with their plans this weekend.

"With a sunny and clear forecast for the weekend, we hope to have a normal Labor Day as people arrive on Friday evening, stay through the weekend and depart on Monday morning," said Herb Malone, president and chief executive of the Alabama Gulf Coast Convention and Visitors Bureau.

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GM promotion may lift vehicle sales for August

NEW YORK — With gas prices still near record highs, the overall economy in a slump and continued trouble in the credit markets, just about everybody expects August vehicle sales to be down significantly from a year ago.

But analysts say August's numbers probably won't be as bad as July's record lows, mainly because of General Motors Corp.'s late-month employee pricing offer.

Jeff Schuster, executive director of global forecasting for J.D. Power and Associates, said he expects August's seasonally adjusted annual sales rate to be a little over 13 million when automakers release their monthly sales data Wednesday. That compares with 16.2 million in August 2007.

The rate, known as SAAR, indicates what sales would be for the full year if they remained at the month's pace all year, with adjustments for seasonal fluctuations.

"Sales could be even closer to 13 million if it weren't for the GM anniversary sale, which could provide a lift," Schuster said. "But sales will still be substantially below a year ago."

GM said earlier this month that it would extend employee discounts to everyone on almost all of its 2008 and some of its 2009 models. Employee discounts generally are 10 percent below the invoice price but vary by model.

While the promotion, which runs through Tuesday, is expected to boost the Detroit automaker's sales numbers, analysts have said that these kinds of moves tend to take away from sales in future months and cut deeply into profits.

U.S. sales hit a 16-year low in July, falling to a SAAR of 12.5 million vehicles. Most of the major automakers posted double-digit sales declines, with Nissan Motor Co. the only one to report an increase.

Automakers have seen their sales tumble as weak consumer confidence and high gas prices have steered many buyers away from dealer lots and pushed the ones who remain toward smaller, more fuel-efficient vehicles.

At the same time, the tightening of credit markets and higher leasing costs have made it harder for many Americans to obtain the kinds of automotive financing they desire.

The U.S. automakers have been the most hurt by the drop in demand, as a result of their focus on trucks and SUVs, and they have had to scramble to shift capacity to meet the new demand for cars.

Cheaper gas may help

George Pipas, Ford Motor Co.'s top sales analyst, said the negative factors that combined to result in July's sales drop haven't gone away, and he doesn't expect them to for the next year to 18 months.

Another bright spot in this August's figures could be the decline in gas prices during the month.

After steep increases in June and July sent the national average price at the pump as high as $4.11, prices retreated in August, hitting $3.66 Thursday, according to auto club AAA, the Oil Price Information Service and Wright Express.

But average gas prices still remain 32 percent higher than a year ago, the group said.

Jesse Toprak, executive director of industry analysis for automotive information site Edmunds.com, said the steady drop in gas prices along with hefty incentive offers should keep August's sales from falling to July's lows.

Toprak said that while July's record high gas prices may have permanently driven some consumers away from trucks and SUVs, the recent drop in prices may lure others back to dealer lots.

"What that means is automakers have to be flexible enough to respond to swings in demand in the most effective manner," Toprak said.

Truck, SUV rebound?

Bob Carter, general manager of Toyota Motor Corp.'s U.S. Toyota division, said this month that it appeared that some truck and SUV shoppers were returning to dealer lots.

"August seems like it's coming along pretty good, but it's versus where the market was in May and June, not comparable to where it was a year ago," Carter said.

Carter cautioned that it may be too early to tell if overall consumer demand may be swinging back toward trucks and SUVs. "But on a longer-term basis, the core buyer today is deferring purchases, and we're fully confident that they're coming back to the market," he said. "It's just a matter of when."

Pipas disagreed, saying that short-term changes in gas prices don't have much
effect on vehicle purchase decisions.

He said that when drivers take gas prices into consideration, they aren't comparing them to what they were a few weeks ago, they're comparing them to what they were when they bought their last vehicle a few years ago.

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Music Row land case delayed

The first hearing in a Music Row property seizure case was postponed Thursday when a city agency decided instead to ask a Nashville judge to consider its proposal to settle the dispute.

The Metropolitan Development and Housing Agency asked to delay a hearing scheduled for Friday morning so it could formally introduce a proposal to divide Music Row business owner Joy Ford's property in half.

"We would really like to work this matter out," Phil Ryan, the agency's executive director, said in a statement. "We believe this compromise would do that, and we believe in the offer so much, we are willing to amend our court pleadings to incorporate it."

The proposal is meant to end a dispute that has halted a $100 million plan from a Houston firm, Lionstone Group, to redevelop a three-acre plot on the Music Row roundabout.

This morning, the agency's lawyers will meet with Scott Bullock, a senior attorney at the Institute for Justice, a nonprofit firm that has been advising Ford, to discuss the compromise.

A resolution isn't likely to result immediately from that meeting.

Ford has not received a copy of the settlement proposal, which was faxed to Bullock's office in Arlington, Va., two weeks ago, and she probably will have questions about it before responding, Bullock said.

The first hearing in the case is now scheduled for Sept. 12.

The city's court filing was made less than a day before lawyers for the MDHA were scheduled to ask Circuit Judge Barbara Haynes to approve a petition that would have let the agency seize Ford's building at 23 Music Circle E., and its 9,000-square-foot lot, for $900,000 in compensation.

Earlier this year, the MDHA agreed to acquire the property for Lionstone and resell it to the firm at cost. Now, the agency says Lionstone would need the parking lot in the rear of Ford's property only. Ford would receive $455,000 for the lot and be given lifetime parking, free of charge, in a garage planned as part of the new development.

Ford has fought the petition, saying she has no interest in leaving the property.

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FCC considers licensing proposal for unused TV channels

WASHINGTON — The Federal Communications Commission has spent nearly a year testing devices de signed to use empty television channels, known as white spaces, for high-speed Internet service. As those tests near conclusion, the agency is evaluating yet another proposal about the best use of the airwaves.

Technology giants such as Google, Microsoft and Motorola want the FCC to let them use vacant channels without licensing to provide cheap wireless broadband. But TV broadcasters, wireless microphone makers, the Grand Ole Opry and other users of the devices are opposed, saying multiple companies using the same white space could mean more interference for their broadcasts.

Qualcomm, a wireless chip maker, and CTIA, the wireless industry's lobbying association in Washington, are calling for the airwaves to be auctioned off and licensed.

Qualcomm said licensing the airwaves will ensure wider coverage and protection from interference, and auctioning the spectrum would raise money for the government as well. "Unlicensed spectrum is great for short-range coverage, like WiFi in a house," said Dean Brenner, Qualcomm's vice president for government affairs. But for citywide or regional range, "you need licensed spectrum in order to make sure a transmitter is protected from interference."

The spectrum in question can carry signals across long distances and can penetrate walls, making it ideal for providing wireless broadband service, particularly in rural areas.

An alliance of tech firms, including Philips and Dell, is pushing for the spectrum to be unlicensed, hoping it will spur development of new wireless devices. But unlicensed spectrum is getting crowded, as it has been used to power WiFi hotspots, cordless phones, garage-door openers and Bluetooth technology.

Licensing the spectrum would give a company, or a group of companies, the rights to control the airwaves, prohibiting other firms from tapping in. CTIA said licensing would ensure signals are not interrupted as they cross long distances.

"There's high demand for licensed spectrum," said Paul Garnett, CTIA's assistant vice president of regulatory affairs. Two of the group's members, AT&T and Verizon Wireless, spent billions for licenses to airwaves at a recent FCC auction, which raised $19 billion.

The National Association of Broadcasters, the most vocal opponent of the plan offered by the tech companies, said licensing the airwaves may protect broadcasts from static.

"It's certainly something worth exploring, rather than introducing potentially millions of TV viewers to unlicensed interference," said Dennis Wharton, NAB's executive vice president.

The plan is getting attention from some lawmakers. This month, Rep. John Dingell, D-Mich., chairman of the House Committee on Energy and Commerce, sent a letter to FCC Chairman Kevin Martin asking him to consider licensing some or all of the spectrum.

Martin said the agency is analyzing Qualcomm's proposal to be sure the spectrum is used efficiently without affecting technologies already in use.

The FCC is also testing "beacon" technology designed to provide interference protection for are wireless microphones, which are used without licensing to put on concerts and sports events.

The tech companies pushing for no licensing say assigning licenses would limit the use of a service to customers of a single company, rather than being available to a variety of devices, such as those that connect to WiFi networks.

"The pro of licensing is that it would bring money to the Treasury," said Carol Mattey, managing director of Deloitte & Touche's telecommunications group. "The con is that it potentially stifles the creativity that may occur more freely in an unlicensed environment."

Broadcasters already have licenses to use the airwaves, and Martin said licensing the adjacent airwaves may not be practical. "Our engineers may decide we might not be able to fit another license between those stations," he said. "But I'm interested in hearing more about the proposal."

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Ram hangs tough

Dodge's redesigned Ram pickup is on its way to dealers, facing a tough market that has seen a sharp reduction in truck sales since gasoline prices began climbing earlier this year.

But there still is a demand for pickups, which account for 11 percent of new-vehicle sales, the automaker says.

Mostly gone from the market, though, are the "casual truckers," Dodge brand manager Mike Accavitti said.

"Those are the buyers who are the greatest risk in troubled times because they have no need for a pickup," he said.

But there are four other groups of consumers who still buy pickups, and it's primarily to those people that Dodge will market the 2009 Ram, Accavitti said.

They include "new-fabric families" who can afford only one new vehicle and find a pickup to be the best choice for their everyday needs; "recreational riders," who use their trucks to pull horse or boat trailers, or to haul recreational equipment; "traditional truckers," the people who have always owned pickups for personal use, "the Marlboro men of trucks"; and the "work-first" buyers, who use their pickups almost exclusively to earn their incomes, Accavitti said.

To keep Dodge competitive, the new Ram is "the most well-crafted vehicle we've ever produced," said Accavitti, who visited Nashville recently to show off the vehicle.

"This truck is a game-changer," he said. "We've re-invented the pickup truck segment again.

"Are these tough times? Yes, but the truck market is still alive and well, and we want to compete."

Launch stays on target

Accavitti said Dodge is going ahead with the Ram launch even though Ford Motor Co. has delayed until November the rollout of its redesigned F-150, which was scheduled for a September debut.

Ford decided to hold off until it could clear some of the large backlog of unsold 2008
F-150s from inventory.

Other Ram competitors are having problems, as well.

Toyota has shut down its two Tundra pickup plants, in Indiana and Texas for three months because of a backlog of inventory.

Nissan North America has said that it will end production of its Titan pickup in Canton, Miss., in 2010, and replace it with a rebadged version of the Ram that will be built in a Chrysler plant.

The new Ram starts at $22,170 for the base single-cab ST work truck. Other models include the SLT, which Accavitti calls the "value truck"; the Laramie, which comes with "all the bells and whistles"; the Sport, designed for on-road driving; the TRX, accessorized for off-road use; and the performance-oriented R/T regular cab, which can accelerate from zero to 60 miles per hour in 6.1 seconds.

For 2009, the Ram also comes in its first crew-cab model, which will have more backseat space than the Quad Cab version.

The Quad Cab, with four doors and a back seat, isn't as roomy and functional as other manufacturers' crew-cab models but is comparable to the extended-cab version of the Chevrolet Silverado.

The Quad Cab's doors, however, open to the rear from the outside.

The new Ram crew cab has full-size rear doors and a back seat that is designed for three full-size adults.

"The crew cab pickup was virtually non-existent seven years ago but now is 50 percent of the market," Accavitti said.

Choice of three engines

Three engines are available in the new Ram, including a 3.7-liter V-6. Standard on the two-wheel-drive regular and Quad Cab models, this engine is rated at 210 horsepower and 235 foot-pounds of torque.

With the standard six-speed manual gearbox, the V-6 has EPA ratings of 15 miles per gallon in the city and 20 on the highway; with the optional four-speed automatic, the mileage is 14 in city and 20 on the highway.

Next is a 4.7-liter V-8, with 310 horsepower and 330 foot-pounds of torque. With a five-speed automatic, this engine is EPA rated at 13 mpg in the city/19 highway with two-wheel drive, and 13/18 with four-wheel drive.

The top engine is the 5.7-liter Hemi V-8, with 380 horsepower and 404 foot-pounds of torque. Also connected to the five-speed automatic, this engine has the same EPA ratings as the 4.7-liter.

That's in part because it has a cylinder-deactivation system that cuts out four of the cylinders during level cruising to increase highway mileage. An indicator on the dash shows the driver when the engine is operating in four-cylinder mode.

A new feature is the optional Ram Box, built into each side of the cargo bed. These built-in storage compartments have locking, flip-up tops, and are designed to securely hold tools, supplies, golf bags, and even beverages in a place with quick, convenient access. They are waterproof, so they can even double as coolers, filled with ice.

Although the boxes take away some of the width of the truck's bed, it still can accommodate standard sheets of plywood, Accavitti said. Inside the bed, a cargo-management system has adjustable tie-downs.

Dodge kept the signature Ram grille, but it now leans forward at the top to give it an in-your-face "drill sergeant" look, similar to that of the new Challenger coupe, Accavitti said.

Unlike the current generation of the Ram, the grille remains in place when the hood is lifted. This makes the hood lighter and easier to handle.

The Ram's-head logo is larger and more prominent in the center of the grille. Chrome is featured prominently on the exterior. Standard are 17-inch wheels, but 20-inch chrome wheels are optional.

While only the three gasoline engines will be offered initially, the Ram will be available with a gasoline-electric hybrid drive system and a Cummins clean-diesel engine next year.

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Tenn.'s bankruptcy filings per capita still lead

Tennessee continued its streak of having the highest per-capita rate of bankruptcy filings in the U.S. during fiscal year 2008, as numbers re leased Wednesday showed 6.92 filings per 1,000 people.

Experts said the increase might have as much to do with recent changes in federal bankruptcy statutes as with a weakening economy.

The total number of bankruptcy filings in the state, which included those made in personal and business cases, rose to 42,893, an increase of 18.6 percent compared with 2007. The eastern district of the state led the uptick, showing 30.8 percent more filings than a year earlier.

Henry E. Hildebrand III, a bankruptcy trustee for the Middle District of Tennessee, said there's no clear reason why the state has persistently led the nation in bankruptcy filings, but he pointed to the fact that the bulk of those were for Chapter 13, a court filing under which a person's debts are restructured.

"These are people who are actually paying off their debt," Hildebrand said. Each year, Tennesseans repay about $160 million to creditors, out of about $6 billion paid annually in the U.S.

Hildebrand said a federal bankruptcy reform package that went into effect in 2005 was meant to steer more people toward Chapter 13, so they'd pay at least some of what they owe. But he said that because of loopholes and special interest provisions in the new law — such as the fact that car loans take precedence over hospital and doctor payments — the changes might be having the opposite effect.

In fiscal year 2008, for example, Chapter 7 bankruptcy filings (in which a person's assets are sold to pay off debts) increased 28.6 percent over the previous year, compared with a rise of 11.5 percent in Chapter 13 filings in Tennessee's Middle District, which includes Nashville.

Figures may be skewed

Robert Gonzales, a bankruptcy lawyer with MGLaw PLLC in Nashville, said that while part of the increase in bankruptcy filings has to do with the slower economy, the 2005 change in the law may have skewed the figures for the past two years.

He said that after a rush of filings that showed up in the 2006 numbers, there was a dearth of bankruptcy filings in 2007.

In the U.S., nearly 1 million individuals and businesses filed bankruptcy in the 12 months ended June 30.

There were 967,831 bankruptcy cases filed since July 1, 2007, up 28.9 percent from the prior 12 months. Non-business filings made up 96.5 percent of those cases, totaling 934,009.

On the business side, a total of 33,822 cases were filed in the 12-month period, including 23,372 under Chapter 7, which allows for an orderly shutdown of a small business. There were 6,513 Chapter 11 filings, which let a business continue to operate while it comes up with a plan of reorganization to pay some of its debts.

By region, the highest number of combined filings was in the U.S. Bankruptcy Court's 6th District, which encompasses Kentucky, Michigan, Ohio and Tennessee. The total came to 167,561, up 21.2 percent in the past year.

The largest percentage increase, 60.9 percent, was in the court's 9th District, which includes California, Arizona and Nevada, which are among the states hardest hit by the housing meltdown.

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Housing market may be near bottom

NEW YORK — Americans felt better about the economy in August, as a barometer of sentiment posted the biggest boost in two years amid falling gas prices. Two reports suggested that a bottom could be nearing for the housing market, but economists caution it's too early to proclaim that the worst is over.

The Conference Board, a private research group, said Tuesday that its consumer confidence index rose to 56.9, up from a revised 51.9 in July. That's the largest gain since August 2006, and it is ahead of the 53 expected by economists surveyed by Thomson/IFR.

It's also the second month in a row that sentiment improved, after a six-month slide — but it remains about half of what it was a year ago, and worries about the job market persisted.

"It's still too early to call a bottom" on confidence and housing, said Gary Thayer, senior economist at Wachovia Securities.

The Standard & Poor's/Case-Shiller U.S. National Home Price Index released Tuesday showed that home prices dropped a record 15.4 percent during the second quarter. However, the rate of single-family home price declines slowed from May to June, a possible silver lining.

Sales of new homes rose in July but still fell short of economists' expectations, and home prices continued to sink. Still, the July increase followed a sharp downward revision to June's sales.

"Consumer confidence readings suggest that the economy remains stuck in neutral but may be showing signs of improvement by early next year," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. However, "overall readings are still quite low by historical standards, and it is still too early to tell if the worst is behind us."

Economists and investors closely monitor consumer sentiment as consumer spending represents about two-thirds of all economic activity.

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Executive agrees to 14 years in prison

Federal prosecutors say they have reached a deal with Dickson retirement plan manager Barry Stokes that would put him in prison for at least 14 years on charges of embezzlement.

Under the tentative deal, Stokes would plead guilty to embezzling more than
$16 million from more than 1,000 participants in retirement and other employee benefit accounts that he managed, including some investors who say they've lost their life savings.

"That is a huge sentence,'' said Nashville criminal defense lawyer David Raybin, who is not involved in the case. "These are the kinds of terms you see for big drug dealers and violent criminals. When you go over 10 years for a white-collar crime, you're talking about a significant conviction."

Stokes signed up clients such as Metro Nashville government, a local law firm and the state of Louisiana retirement fund, and even handled the retirement accounts for employees working for the Tennessee Democratic Party, to which he contributed nearly $50,000.

Over time, his business flourished, he became known for his technological savvy, and he amassed an impressive art collection of Japanese woodprints, some of which have been sold to pay creditors.

Metro Nashville moved its money out of Stokes' control when lawsuits began piling up against his firm, 1Point Solutions.

Stokes has been in jail since 2006, awaiting trial. After a series of delays, his trial had been set for Sept. 9.

Stacy Williams, an office manager for a law firm in Nashville who said she lost all of her retirement savings with Stokes, isn't happy with the proposed plea agreement.

"In my opinion, I don't think any plea agreement should be made until he tells where the money went and where it's hidden,'' she said.

Williams, who said she began saving for retirement in her 20s, is now 50 years old. "Now, I have nothing,'' she said.

Bobby Garfinkle, an attorney who works for the bankruptcy trustee handling Stokes' case, said the trustee has found no hidden money or offshore bank accounts.

Instead, Stokes appears to have spent much of the money, mostly on the outsized expenses of his business, which at one point had about 70 employees, Garfinkle said.

Stokes also had an extensive art collection of Japanese woodblock prints, which are in the process of being sold. Federal prosecutors have uncovered another 200 pieces of art belonging to Stokes in addition to the original collection, U.S. attorney Ed Yarbrough said.

He said he didn't know the value of the art. Garfinkle said the 200 art pieces uncovered by the FBI at his second home in Austin, Texas, also were Japanese woodblock prints. They will be sold in order to distribute the money to alleged victims, according to Yarbrough.

Deal must be reviewed

Under terms of the agreement, Stokes would plead guilty to 29 counts of embezzlement of retirement funds, in addition to several counts of wire fraud, mail fraud, money laundering and criminal contempt, according to a letter from the U.S. attorney to victims.

A federal judge must still review the deal, and alleged victims of Stokes' mishandling of funds will be asked what they think of the agreement at a town hall-style meeting later this week.

The U.S. attorney's office has invited victims to an 11 a.m. meeting Friday at the Nashville Public Library, 615 Church St.

They will be able to speak with prosecutors about the proposed sentence.

Stokes also would owe restitution of about $20 million, although the exact amount would be determined at sentencing. Although federal prosecutors say Stokes has agreed to at least 14 years in prison, they still may ask a judge for as much as 21 years behind bars.

Investors also may comment on the proposal on the U.S. Attorney's Web site at www.usdoj.gov/usao/tnm by sending an e-mail, and they will have a chance to give what is known as a victim impact statement to the court before sentencing.

Some victims wonder what will happen to Stokes, who has complained of ill health in recent months.

"I don't think that poor man will survive five years (in jail)," said Sonja Waters, an office manager in Seattle who said she lost $9,000 of her retirement funds with Stokes. "He's too delicate."

Waters said she remembers him visiting her office to encourage employees to contribute more of their paychecks to their retirement accounts, and that "he had terrible indigestion" and insisted he could eat only noodles in broth.

She also remembers that he was overweight and didn't want to walk anywhere.

"Being in jail for any length of time seems like it would be really hard for him,'' she said. "I just don't see him surviving."

Stokes filed a motion in court last month asking a judge to let him out of jail pending his trial, saying he probably has lymphoma, a type of cancer, and that his various medical problems are not being treated adequately at the Metro Criminal Justice Center. The judge has not made a decision on the motion.

His attorneys could not be reached for comment Tuesday.

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Existing-home sales rise in July

WASHINGTON — Sales of existing homes rose in July, surpassing expectations, as buyers snapped up deeply discounted properties in parts of the country hit hardest by the housing bust.

However, the number of unsold properties hit an all-time high, the latest indication that the worst housing slump in decades is far from over. Prices nationwide are not expected to hit bottom until early next year.

The National Association of Realtors reported Monday that sales rose 3.1 percent to a seasonally adjusted annual rate of 5 million units, up from June's downwardly revised rate of 4.85 million units. Sales had been expected to rise by only 1.6 percent, according to economists surveyed by Thomson/IFR.

"The process of a recovery has begun," said Joel Naroff, president of Naroff Economic Advisors. "It's not going to be short and swift, but it's begun nonetheless."

Home sales were about 13 percent lower than a year ago, and prices were down dramatically. The median price for a home sold in July dropped to $212,000, down by 7.1 percent from a year ago.

Despite the third monthly sales increase this year, the number of unsold single-family homes and condominiums rose to 4.67 million, the highest number since 1968, when the Realtors group started tracking the data.

That represented an 11.2-month supply at the July sales pace, matching the all-time high set in April.

Until the inventory level is reduced to more normal levels, analysts say, the housing slump is likely to persist. The inventory level is being driven higher by a massive wave of mortgage foreclosures.

Between 33 percent and 40 percent of sales activity is coming from foreclosures or other distressed properties, estimated Lawrence Yun, chief economist at the Realtors group.

While buyers are pouncing on lower prices — especially in places like California, Florida and Nevada — sales are sluggish in formerly stable states like Texas.

"People are responding to lower prices," Yun said, but there is "too much uncertainty" about the housing market's future to mark a definite bottom.

Owner relieved to sell

In Las Vegas, sales were up 96 percent in July, after prices fell more than 25 percent to a median of $220,000, according to The Associated Press-Re/Max Monthly Housing Report, which analyzed home sales recorded by all real estate agents in 55 cities, regardless of company affiliation.

Sales in Los Angeles jumped 31 percent after prices fell 35 percent over the past year to a median of $335,000, according to the AP-Re/Max report.

In Miami, sales were up 9 percent while prices dropped nearly 10 percent to a median of $280,000. One of those sellers last month was Jennifer Del Pino, who unloaded her 3,600 square-foot Miami home to a buyer from Germany for $490,000.

She cut her asking price by $60,000, but sold her house in about a month. "It's kind of a relief for me," she said.

One key unknown for the U.S. housing market is the future ability of mortgage finance companies Fannie Mae and Freddie Mac to supply money for loans. The two government-sponsored companies have dramatically cut back the availability of mortgages as they cope with mounting losses from foreclosures.

President Bush last month signed sweeping housing legislation that aims to prevent foreclosures by allowing an estimated 400,000 homeowners to swap their mortgages for more affordable loans, but only if their lender agrees to take a loss on the initial loan.

Even with government help, nearly 2.8 million U.S. households will either face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage's value by the end of next year, predicts Moody's Economy.com.

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Employers should heed worker complaints about retaliation

Virtually all of the laws that regulate employers prohibit retaliation, which means companies can't take action against an employee who exercises certain rights, opposes unlawful activity or participates as a witness in another employee's claim.

Employees who report illegal activities (the so-called whistle-blowers) and those who file for workers' compensation, serve on juries, complain of violations of the new anti-smoking law, or complain of federal safety violations are all protected from retaliation.

Retaliation claims are especially common in the context of discrimination cases. From 1992 to 2005, the number of retaliation-based charges per year before the U.S. Equal Employment Opportunity Commission more than doubled.

Almost 30 percent of all charges include a claim of retaliation.

An employee doesn't have to be right about the claim of discrimination. He must simply have a good faith belief that he is opposing some illegal action. Opposition to alleged discrimination, however, must be legal and cannot interfere with the work of other employees or the company's business.

Some recent developments make these provisions particularly troublesome for employers.

Before 2006, most courts had held that retaliation was limited to materially adverse changes in the terms and conditions of employment.

In that year, however, the United States Supreme Court broadened the definition of retaliation to include any action by a company that might dissuade an employee from complaining about discrimination.

This year the U.S. Sixth Circuit, which includes federal courts in Tennessee, ruled that relatives and associates of employees who file workplace claims are protected from retaliation. In that case, a man alleged that he was fired after his fiancée filed a gender discrimination claim.

Extreme case is warning

In another particularly dramatic 2008 decision, the Sixth Circuit found that a company could be liable for co-worker retaliation. In that case, a male employee with Anheuser-Busch sexually harassed several female employees over several years. The first woman to complain was transferred to another brewery line.

The next employee who reported sexual harassment had her car set on fire. The employee reported her suspicions to the company about who was responsible for the fire, but the company did not investigate.

The company then received an anonymous letter reporting that the culprit was harassing employees. The letter also reported acts of retaliation, such as slashing the tires of a female worker who threatened to report him for harassment. Finally, a third woman complained of harassment that was witnessed by another worker.

The company finally investigated and fired the offending employee. The man burned down the house of the complaining woman, then shot his girlfriend and himself.

The court held that the company could be liable for a co-worker's acts of retaliation if (1) the conduct is severe enough to dissuade a worker from complaining of discrimination, (2) supervisors or members of management have actual or constructive knowledge of the retaliatory behavior, and (3) supervisors or members of management have condoned retaliation or have responded to complaints of retaliation so inadequately as to show indifference under the circumstances.

Although the Anheuser-Busch case was extreme, it illustrates the proposition that companies must respond appropriately to complaints by employees, especially complaints of retaliation.

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Internet has become reliable source for targeted sales leads

What business doesn't need some new prospects? Some need just a few, others need hundreds and some need thousands a year to fuel the sales cycle.

So how do you produce leads? Advertising is a tried-and-true lead generator, so you should be sure all your communications give prospects the information they need to reach you.

Very often in today's marketing world, advertising steers prospects to a company Web site, where that prospect will learn more about you and have a direct way to contact you.

A rapidly growing trend is the use of online lead generation, sometimes known as lead-gen or co-registration. This permission-based matching system pairs companies with targeted customers who have expressed an interest in a product or service.

According to the Internet Advertising Bureau, spending for online lead generation grew to more than $1.3 billion in 2006. That's a 73 percent jump in one year, making it the fastest-growing segment of online advertising spending.

So who should use online lead generation?

Hannah Paramore, president of Nashville's Paramore Redd Online Marketing, says almost any company selling a consumer product can benefit.

Lead-gen is especially effective for building a database of potential customers to whom you then can market through e-mail or direct mail.

"To impact sales directly, lead-gen works best if your product or service costs $1,000 or more. We have used lead-gen successfully in the travel/tourism, durable medical equipment, medical services and the publishing industry to name a few," Paramore said.

"It's important to note that while lead-gen involves an intentional response from the consumer, it actually is low involvement. Therefore, a company must respond to a lead immediately in order to get the best return on investment," Paramore said.

Because of abuses during the early days of online lead generation, the industry came under scrutiny. Not only are marketers questioning the effectiveness of leads obtained through deceptive offers, the Federal Trade Commission raised concerns about privacy violations and false advertising claims.

4 things to think about

Leah Hoffman writing for Inc. magazine suggests four points to consider before conducting an online lead generation campaign:

• First, learn how leads are being gathered; make sure your provider shows you how leads are collected. Make sure the leads you received were not tricked into providing information by the promise of prizes.

• Look beyond the cost per lead; the lowest price is not always the best lead. The price might be low because the lead is also being sold to your two largest competitors. The best leads come from companies that use only opt-in offers. This means the customer is specifically checking a box that says he or she would like to hear from you.

• Analyze your results; from accuracy of information, to conversion rates to revenue analysis, make sure your investment in leads produces the appropriate results.

• Work fast; the quality of leads diminishes each day. Make sure both your lead generation provider and your organization can react quickly.

I will add this admonition to Hoffman's list: Know your lead generation partner. Check out its business practices to insure its ethical standards live up to yours.

Happy prospecting.

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In medical office market, tenants are able to call shots

From Mt. Juliet to Smyrna, suburban areas near Nashville have seen a boom in construction of medical office buildings in recent years, a trend fueled largely by doctors and hospitals hoping to set up shop closer to where patients live.

Now, the nation's economic downturn and higher building costs have slowed demand among doctors for new digs. That has left pockets of available space in parts of Middle Tennessee, prompting some property owners to offer sweeter incentives to attract medical tenants.

The slowdown in leasing activity hasn't affected overall rental rates, said Rob Gage, a broker with Colliers Turley Martin Tucker, a commercial real estate firm. But some developers say doctors are increasingly timid about making a move, and they want a building's owner to shoulder more of the costs of finishing space to suit their needs.

Some would-be tenants are reluctant to sign leases because of what they see as high costs.

"It comes down to: There's a need for my specialty services, but am I willing to gamble with my personal possessions in a volatile economic situation?" said Dr. David J. Sables, owner of the Hickory Hollow Foot & Ankle Center in Antioch.

For two years, the podiatrist has hunted for space in the faster-growing areas around Nashville where he could expand. But he has held off striking a deal, in part because he'd have to spend as much as $100,000 in move-in costs, he said.

In the past three years, 40 buildings with a total of more than 1.3 million square feet have been added or are under construction, mostly in Nashville's suburbs, Gage estimated. That doesn't count the redevelopment of about 400,000 square feet of space inside 100 Oaks Mall for use as Vanderbilt University Medical Center offices.

"Typically, we see rooftops first, then retail, then medical offices typically follow," Gage said, adding that providers such as primary care doctors and dentists generally tag along after residential development to stay close to patients.

Other medical offices have followed construction or expansion of hospitals in cities such as Murfreesboro and Clarksville.

Many developers offer doctors part ownership in their buildings to give the physicians another source of income in addition to what they earn from medical practices. Rental rates have been rising 3 percent to 5 percent annually by Gage's estimate.

Doubts linger on leasing

In Smyrna, where several medical office buildings were built amid a wave of construction linked to the opening of StoneCrest Medical Center, one building has 45 percent of its space available, officials said.

Some new buildings are in the works, even though leasing activity is a mixed bag overall.

In Mt. Juliet, Commercial Realty Services recently started building a second medical office building at Providence West, a multi-use development across the street from Providence Marketplace.

That 15,000-square-foot building is about 80 percent leased, said Kenneth Powers, the local company's manager.

The Stanton Group of Brentwood and Centennial Pediatrics of Nashville plan a development for Bellevue that they hope to have ready by next summer.

"We think that's a great spot, being right there in the middle of this booming population … with a lot of retail growth around that," said Debra Viol, president of Stanton Group, a commercial real estate and property management company.

In Williamson County, pediatrics group practice Brentwood Children's Clinic moved late last year into half of the space in a new 22,000-square-foot building that it built
with partner Solomon Development LLC, a Nashville-based developer of medical properties.

Gregg Turner, president of Solomon, said that in the last four weeks four new leases were signed for doctors or group practices to take up space in its medical properties, a sign that while some markets here may be overbuilt, others such as Cool Springs and Brentwood remain strong.

"Bottom line, it is taking a little longer to make a deal, but the deals are still there," Turner said, citing Hendersonville and Nolensville among the markets targeted by doctors.

Longer-term, developers say the outlook for their business remains strong.

They expect demand for medical offices to continue to increase as the nation's aging population requires more care, including in nontraditional locations.

"When grandma gets sick, she's going to go to the doctor whether the economy is good or bad," said Gage, of Colliers Turley Martin Tucker.

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Companies line up to pay millions to Phelps

It was one of the first questions fans started asking after Michael Phelps achieved the improbable feat of winning eight gold medals in one Olympics: What will he be worth?

Companies already lining up to hand Phelps millions of dollars to associate himself with their products. Some have even suggested that Hollywood snap him up to star as an aquatic superhero.

Phelps has secured his status as the star of the 2008 Olympics, but he has gone beyond that, said Bob Dorfman, who studies the marketing potential of Olympians for Baker Street Partners of San Francisco.

"I can't see any other story surpassing his," Dorfman said. "People just can't believe what he's been doing. There is a superhuman aspect to it. From that standpoint, he's hard to top."

Some marketing experts wonder if Phelps will remain hot during the long downtime between Olympics but for now, they say he has doubled his earning potential to at least $10 million a year and could become one of the richest Olympic endorsers in history.

Companies such as Visa, Speedo, Omega, Hilton and AT&T agree and have signed deals with the all-time leading gold medal winner. Visa had a new commercial, narrated by actor Morgan Freeman, ready to roll as soon as Phelps won his last race.

AT&T's commercials, featuring a young woman as an obsessed "Phelps Phan," have been ubiquitous throughout the games.

Kellogg's will put Phelps' mug on Corn Flakes and Frosted Flakes, according to Access Hollywood. The swimmer's longtime agent, Peter Carlisle, told The Wall Street Journal that Phelps' Beijing performance will double his endorsement income and be worth an extra $100 million over his lifetime.

Phelps could certainly pull in eight figures over the next year, said Ryan Schinman, founder of New York City-based Platinum Rye Entertainment, which matches celebrity endorsers with Fortune 500 companies.

"Right now, the guy's got the world on a string," he said. "He's in that upper realm, not in terms of income but in terms of profile, with Tiger Woods and LeBron James and Lance Armstrong."

Persona intrigues marketers

Phelps would be wise not to jump at every deal that comes his way, Schinman said.

Instead, the swimmer should expand and lengthen his existing deals with high-end companies. Those companies must in turn come up with campaigns that burn Phelps into customers' minds for a long time to come.

He should capitalize now, Schinman said, because given the low profile of swimming, Phelps' feats could be out of the spotlight come football season.

One person who doesn't seem very interested in marketing questions is Phelps.

"If (Coach) Bob (Bowman) and I were in it for the money, I think we'd be in a different sport," he said in Beijing. "I'm having fun at what I do, and I do it because I love it."

Marketers are taken with Phelps' regular-guy persona. In post-race interviews, he sounded confident and driven, yet a little taken aback by his achievements. People can imagine talking to him on the sidewalk, but place this aw-shucks character in the right context, and he's capable of otherworldly feats.

Great as he is, however, his sport rarely engages the
American public between Olympics.

Swimming has also never offered a wide launching pad for apparel sales.

Kids could walk around in Michael Jordan's Nikes. Well-paid adults can put on Woods' golf shirts and swing his clubs on the weekend.

But it's hard to imagine regular folks throwing on Phelps' skin-tight LZR Racer suit to swim laps at the neighborhood pool.

Sport has downside

In these respects, Phelps faces similar challenges to past Olympic giants such as Mary Lou Retton and Carl Lewis.

"His biggest downfall is that he's excelling in a sport that's not on the tip of everybody's tongue," Schinman said.

Retton was an endorsement darling coming out of the 1984 games, but with her competitive career essentially over and no sports apparel to hawk to a wide audience, her stardom could not endure.

She is still a recognizable name who can earn good money from speaking engagements, but you don't often see her in commercials.

That's not exactly bad news for Phelps, who will be able to stow millions now and earn a sizable income from his athletics fame for decades to come, marketers said.

"I think in the worst case, he's able to make a very nice income from speaking engagements 20 to 25 years down the line," Dorfman said, "but the nature of his sport will always be a challenge."

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Few in China see Olympics windfall

BEIJING — Li Qiang can't wait for the Olympics to end today.

He had expected his Sichuan restaurant, located a couple of miles from the Olympic village, to be packed with tourists during the Games. But it's been unusually quiet. One day this week, business was so slow that Li let two of his seven staff members go home in the middle of the lunch hour. Three others sat in the corner watching tele vision.

"Everybody thought the Olympics would be great for business," he said. "It turned out differently."

Many owners of small restaurants, hotels and shops in Beijing are wearing long faces this summer — especially those who poured their life savings into buying businesses or sprucing up their shops ahead of the Olympics.

About a half-million foreign visitors were expected in Beijing this month. But with stricter visa restrictions and other hassles, many businesspeople think there are no more here now than there were last August, when 420,000 visitors from abroad came to the capital. In July, Air China, the nation's flagship carrier, saw its international passenger traffic fall by 19 percent from a year earlier.

The number of domestic tourists has been lower than expected, too. Fearing inflated prices for hotels and airline tickets, many Chinese apparently decided to watch the Olympics at home.

Wang Zhenghui, director of China's Hotel Association in Beijing, reckons that occupancy during the Olympics has been running about 50 percent to 60 percent. That's a far cry from the 70 percent to 80 percent hoteliers were projecting.

The 120 or so larger facilities designated as Olympic hotels are doing better, Wang said, as many had locked in bookings months in advance. But some of them have had to reduce their rates to fill rooms.

Apartment owners, too, had hoped to cash in on the Olympic bonanza, with some jacking up rents to five times normal levels, according to the official New China News Agency. But of more than 20,000 apartments posted for short-term rent, only 8,000 were leased during the Olympics, the report said.

In a traditional Beijing neighborhood near the centuries-old Drum Tower, a popular tourist attraction, the new owner of the Shuangsi or Double Temple Hotel had the Olympics in mind when he borrowed about $140,000 from the bank to buy the two-story building at the end of last year.

Even at a discounted rate of less than $20 for a single, only half of the 27 rooms are now occupied, said the 32-year-old, who would only give his surname, Li.

Tourists screened

Besides the lower-than-expected number of visitors, Li complained that tighter security checks on his industry were hurting. Hotels in China have long submitted daily guest lists to local police, but until this summer, he says, it was just a formality. Now officials are going through them carefully. Not wanting any trouble, Li says he's been turning away Chinese guests without proper ID cards. He doesn't even bother with foreigners, whose registrations receive extra scrutiny.

For the Olympics, Beijing authorities have temporarily closed many karaoke rooms and other bars and erotic entertainment places deemed unfit, along with scores of factories, construction projects and other businesses that might dirty the air or the city's image. Many of these establishments are counting on life going back to normal after the Olympics are over.

"Otherwise, it would be too inconvenient for people … and will largely decrease the efficiency of the city," said Hu Xingdou, professor of economics at Beijing Institute of Technology.

"Actually, nowadays, many ordinary people sincerely hope that the Games could finish sooner."

Even at the Silk Street Market, notorious for its wide selection of counterfeit goods, merchants and salespeople weren't ruing the end of the Olympics.

"Business is a little better because of the Olympics, but not a whole lot," Zhang Yanjuan, a saleswoman at a shop selling fake Polo and Abercrombie & Fitch shirts, said Wednesday afternoon when the six-story mall on the city's east end was jammed with crowds of foreigners, including athletes. "Everybody said that when the Olympics come, we would make a small fortune. But everybody was wrong."

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Layoffs hurt rural areas most

Just days after losing their jobs at the Whirlpool plant in La Vergne, a crowd of laid-off workers gathered in the lobby Thursday of the Tennessee Career Center in Murfreesboro, where they were greeted by a billboard advertising classes such as "resume writing" and "job search hints."

Some of them had worked for more than a decade at the plant and were wondering how they could ever find jobs making as much money as they had at Whirlpool.

"I feel like a dog that's been kicked out on the street,'' said 43-year-old Donna Garcia, who has a high school diploma and was making nearly $15 per hour.

Garcia, who lives in rural Christiana, south of Murfreesboro, with her 16-year-old son, doubts that she will be able to get another manufacturing job making her previous pay.

She isn't alone.

Figures released Thursday by the Tennessee Department of Labor and Workforce Development show that layoffs, driven primarily by a loss of manufacturing jobs, are disproportionately hurting rural areas.

In the past year alone, the state has lost close to 10,000 manufacturing jobs. Just one big plant closing in a rural area can lead to high rates of unemployment.

Seasonally adjusted figures for July show that Tennessee had a 6.9 percent unemployment rate, compared to the U.S. rate of 5.7 percent.

County-by-county numbers released Thursday show that in Middle Tennessee, locations such as Perry, Wayne, and Lawrence counties, all of which had double-digit unemployment rates in July, showed some of the worst job numbers in the state. Fifteen counties showed double-digit unemployment rates in July, all of them in rural areas.

By comparison, unemployment rates in metropolitan areas such as Nashville and Knoxville mostly held steady.

In the Nashville-Murfreesboro MSA, unemployment rates stayed the same between June and July at 5.8 percent, though that is up 2 percentage points compared to July 2007.

And Williamson County showed a monthly decline in its unemployment rate of
4.6 percent, the lowest in the state.

Skilled jobs move away

"A lot of what has happened is we have gotten out of low wage, low skilled manufacturing, and that has gone overseas,'' University of Tennessee economist Bill Fox said. He said manufacturing output actually has grown in the state, but that jobs are being lost as operations become more efficient.

In Perry County, for example, which has a population of 7,600 people southwest of Nashville, the July unemployment rate rose 5.5 percentage points to 20.3 percent, which was the highest in the state.

The county is losing a major employer, automotive parts supplier Fisher & Company, said the county mayor, John Carroll. The plant will have shed about 400 jobs by the time it closes at the end of this month as operations move to Mexico, Carroll said.

"We've been working hard trying to find replacements," he said. "So far, we have not been successful. We've had luck with small businesses that will employ 10 or 12 employees, but we haven't had luck finding someone that would replace this many jobs."

Carroll said many workers at the plant were well-trained and made $12 to $14 per hour.

Nearby Wayne County had an unemployment rate of 10.7 percent in July, and Lawrence had a rate of 10.5 percent. When it comes to looking for work, employees like Garcia are becoming frustrated after months of applying for jobs online.

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U.S.-Russia tension raises oil cost

NEW YORK — Oil prices shot up more than $5 a barrel Thursday, rising to the highest level in over two weeks as escalating tensions with Russia stoked fears of supply disruptions to the West.

Crude's rally mimicked the wild price swings seen last month and at least temporarily halted oil's slide back toward $100 a barrel. A weaker U.S. dollar and worries about tightening output from OPEC countries are also supporting prices.

After days of brushing off geopolitical flare-ups and a tropical storm, oil spiked above $122 a barrel as traders became rattled over increasingly hostile Russian rhetoric toward a U.S.-Poland deal to install a missile defense system in Eastern Europe, a move Moscow views as a threat.

The continued presence of Russian troops in Georgia, a key conduit for Western-bound oil shipments, injected even more bullish sentiment into a market that had appeared to be losing momentum on the idea that high energy prices were curbing demand.

Oil watchers said the market's sudden reaction to the standoff reflects a growing acknowledgment of Russia's bear-like influence over world energy supplies.

"People are finally realizing that this Russian situation has the potential to be bad for a very long time," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn. "The Russians have shown evidence that they're willing to cut off energy supplies to advance their aims. There is concern that they are now going to be much more assertive in that area."

Light, sweet crude for October delivery jumped $5.62 to settle at $121.18 a barrel on the New York Mercantile Exchange after earlier rising as high as $122.04, crude's highest trading level since Aug. 4. Crude prices have settled higher for three straight sessions. In after-market trading, prices rose $6.17 to $121.72 a barrel.

Crude's rally lifted other commodities, with everything from gold to copper to heating oil trading sharply higher.

Russia is the world's second largest oil exporter after Saudi Arabia.

It supplies a quarter of the European Union's oil and half of its natural gas.

If those shipments were cut off, EU countries would be forced to seek supplies elsewhere at a time when spare crude capacity is stretched to an extremely thin margin of about 2 million barrels per day, analysts say.

"If military activity heats up again, pipeline flows into Europe could be disrupted and that would affect the United States as well," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

The price jump came as retail gas prices continued to fall, shedding more than a penny overnight to a new national average of $3.702, according to auto club AAA, the Oil Price Information Service and Wright Express.

Prices have fallen 10 percent from record highs above $4 a gallon set July 17, but the
pace of the drop off could slow if oil holds onto Thursday's gains.

"This is probably about it in terms of a retail gas drop.

"We may be a few cents away from the August bottom," said Tom Kloza, publisher and chief analyst at the Oil Price Information Service in Wall, N.J.

Prices were supported Thursday by a weaker dollar compared with the euro.

The 15-nation currency rose to $1.4874 in afternoon trading in New York from $1.4768 late Wednesday.

Oil prices rebound

A falling greenback encourages investors to seek commodities such as oil as a hedge against inflation and a weaker dollar.

Oil prices have rebounded after falling about $35, or nearly a quarter, from their all-time trading record $147.27 on July 11.

Many investors expect that high gasoline prices and slowing economic growth in the U.S., Europe and Japan will undermine global energy demand.

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Oil markets: Topped out or just taking a breather?

Fannie, Freddie rescue plans leave investors anxious

WASHINGTON — A government rescue of Fannie Mae and Freddie Mac could be costly for scores of investment, banking and insurance companies that hold billions of dollars in preferred shares in the mortgage finance giants.

Speculation has been building on Wall Street that a government investment to rescue Fannie and Freddie would come in the form of a cash infusion through the acquisition of preferred shares in the companies.

Preferred shares usually pay a fixed dividend and have priority over common stock when it comes to dividends and bankruptcy liquidation. While slightly riskier than bonds, which have the highest priority in times of trouble, companies often invest in preferred shares for certain tax advantages.

Investors appear to believe existing common stockholders could be wiped out if there is a government bailout. Fannie and Freddie's shares have lost more than 90 percent of their value this year. But what happens to preferred stockholders is less certain.

"That depends on how big Fannie and Freddie blow up," said Michael Shedlock, an investment adviser for SitkaPacific Capital Management.

Preferred shares are risky

On Wall Street, investors think it could be big. Fannie and Freddie's existing preferred shares are trading like junk bonds: yielding around 17 percent to 19 percent instead of around their 6 percent dividend levels. The higher yield is an inducement to investors to accept the higher level of risk that the companies won't be able to pay their dividends.

"There's enormous investor concern," said Bert Ely, an Alexandria, Va. banking industry consultant.

Fannie Mae has 17 classes of preferred stock, with more than 600 million shares outstanding. Freddie Mac has 24 classes of preferred stock, with about 460 million shares outstanding.

Congressional analysts estimate a government rescue of the mortgage giants could cost taxpayers $25 billion, with the exact amount based on how far the U.S. housing market falls and how severe their financial situation turns out to be in the long run.

Another uncertainty is political: The final resolution of Fannie and Freddie's future is likely to be determined after the Bush administration leaves office in January.

It remains unclear how much in taxpayer resources the next administration and Congress would be willing to commit.

"The problem is: We've got questions. We don't have answers," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors in Albany N.Y.

Stocks are widely held

The entire financial industry is trying to figure out what will happen to Fannie and Freddie because their stocks and bonds are so widely held, said Tony Plath, an associate professor of finance at the University of North Carolina at Charlotte.

"There's not protection for shareholders of common or preferred shares," he said.

But some believe that a rescue of Fannie and Freddie could be good for preferred shareholders.

"Even if (any) rescue effort gives a priority to the federal government...that still makes Fannie and Freddie more solvent," said James Cox, a Duke University securities law professor. So, preferred shareholders could see the value of their investments rise, he explained.

Among the biggest holders of Fannie and Freddie's preferred stock are U.S. insurance companies — a total of $4 billion worth, according to A.M. Best Co. Inc. That still represents less than 1 percent of reserves the industry holds against losses.

"While some companies will probably have some writedowns, I don't think there's a widespread effect on the whole industry," said Edward Keane, senior financial analyst with A.M. Best Co.

Fannie and Freddie together hold about half of U.S. mortgage debt and are the largest source of funding for home mortgages.

But they are seeing too many of those mortgages go into default. Losses between April and June for the two companies totaled $3.1 billion, and investors fear the losses will continue to grow.

The Bush administration last month unveiled a plan to provide unlimited government loans to the two mortgage giants and to purchase stock in the two companies if needed for a period covering the next 18 months.

Investors believe that Treasury Secretary Henry Paulson is not interested in protecting common shareholders, only in Fannie and Freddie's ability to support the battered mortgage market.

That means a government rescue might not occur until there is evidence the mortgage companies' are unable to sell short-term debt — an indication they would no longer be able to operate normally.

Fannie Mae's stock re bound ed Thursday, rising 45 cents, closing at $4.85. Freddie Mac fell 9 cents, to $3.16.

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High food prices won't drop soon

NEW YORK — As prices for crude oil and other commodities ease, consumers have gotten a small dose of relief at the gas pump. But don't expect less pain at the grocery counter.

Food inflation is here to stay — and will probably get worse for some things.

That's because retail prices for cereal, eggs, cheese and meat generally lag by several months or longer world prices for wheat, corn and soybeans — the raw ingredients of so much of our food. Some food items may come down modestly as commodities prices cool off; others might not budge a cent, and some may actually increase.

"Food prices tend to go up pretty quickly, and they tend to stick on the way down," said Jim Sartwelle, an economist with the American Farm Bureau, which tracks retail food prices on a quarterly basis.

That's bad news for Americans still struggling with high costs for fuel and household goods, and worse for people in impoverished countries like Haiti and Senegal, where violent food riots broke out earlier this year as world food prices peaked.

"It's really hurting our budget," said Heather Nelson, 28, who went grocery shopping at Harris Teeter on 21st Avenue in Nashville with her two young children on Wednesday. "You can't do as many fun things as a family because we're spending it on groceries."

In the U.S., retail food prices have jumped on average 6 percent this year — triple the normal inflation rate of around 2 percent — as soaring demand for grains coupled with severe weather around the globe battered crops and sent world prices for rice, flour and other staples soaring.

Food manufacturers have dealt with the higher input costs in a variety of ways, from raising retail prices to shrinking boxes of cereal and bags of potato chips so they can sell less product for the same price.

But while easing prices for crude and other commodities have allowed retail gas prices to come down almost 10 percent from July highs, food prices have been more stubborn.

"Whatever you save on gas will go to groceries," Nelson said.

Economics are to blame

The economics of the food business are partly to blame. Although crude oil is the main ingredient of gasoline, processed foods like cereal or cookies use only a small amount of corn, wheat and other grains, limiting manufacturers' pricing power.

"Basically, there's only a few cents worth of corn in a box of corn flakes, so food prices are much slower to react to the downside than energy prices," said Richard Feltes, senior vice president and director of commodity research for MF Global in Chicago.

Another factor keeping food prices high: Though commodities prices have fallen from record levels, they're still well above historical levels. Corn and soybeans have dropped 24 percent and 17 percent, respectively, in the past two months but are still about double where they were two years ago.

"As long as we're in this world of expensive oil and commodities, the prices that you're seeing now in the grocery shelves are not going away," said Ephraim Leibtag, an economist with the U.S. Department of Agriculture who tracks retail food prices.

Others, like 62-year-old Sam Herbert, a general contractor in Nashville, have accepted the fact that prices on food generally increase over time. "We have to live with it and see what happens," he said.

It's a similar story in poor countries around the globe. While the price of rice — a staple consumed by half of the world's population — has fallen 32 percent from record levels reached in April, the savings there and for other foods have yet to come down to year-ago levels.

Looking ahead to next year, economists see a mixed bag for American consumers.

While falling grain prices should slow the rate of increases for baked goods, the USDA's Leibtag says people can expect to pay more for other items like beef, pork and chicken.

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Downtown condo sales weaken

Two pools, one on them on a rooftop. Two fitness centers. A concierge and a view of Nashville's skyline.

Living in the Icon condo tower in the Gulch is like living in a resort, says Allison Flores after becoming one of the high-rise's first residents more than two months ago.

There's just one thing missing. People.

"We have no neighbors," Flores said. "No one above or below."

Living alone on a small wing of the Icon's fourth floor, Flores and her husband, Leo, are surrounded by condos whose expected owners have not shown up, at least not yet.

Three months after the Icon's developers, Franklin-based Bristol Development Group, began taking final payments, a total of 48 units, or roughly 12 percent of the building's 418 units, have closed on sales, according to deeds filed in Davidson County.

That slow pace reflects some unusual circumstances — construction is being wrapped up on the Icon's top floors even as residents move into the lower part of the building — but it also shows that the economic forces dragging down condo sales nationally are casting a pall over Nashville's condo market, too.

"We're in an environment where people are concerned," said Dan Daniel, a Bristol principal. "Am I going to pay too much? Is it a good time to buy?"

Sales are slow enough that Bristol is considering litigation to keep recalcitrant buyers from reneging on contracts. Elsewhere, in downtown's Encore and Midtown's Adelicia, both of which have sold many more of their units, more time may be needed to sell out the rest of their units.

It's a sharp contrast to two years ago, when the downtown's first condo tower, the 307-unit Viridian on Church Street, closed more than 80 percent of its units within the first three months. The building was entirely sold out after a little more than a year.

Each successive building to open since then has seen closings grow harder to come by. After three months, the Adelicia, a tower near Vanderbilt that opened last December, closed not quite 70 percent of its units in three months. It is now 88 percent sold, with just over 20 units remaining.

Next was the Encore, a tower next to the Schermerhorn Symphony Center that started closings in late February. After three months, it had closed just over 40 percent of its units. It has since pushed closings up past 50 percent.

Icon, meanwhile, closed just over 10 percent of its units within three months, a pace that Daniel said pleased his firm, given the economic climate and the fact that only 17 of the tower's 22 floors have units ready for occupancy.

"It's a tough market right now," Daniel said.

The developers of all three high-rises with units on the market — the Adelicia, the Encore and the Icon — say sales have been slow this summer. The Encore, for instance, was selling 45 units to 60 units a month in the spring. Now, it's selling about 15.

Time is expensive

"Obviously, we're not pleased with it," said Tony Giar ratana, the building's lead developer.

The slowdown comes even though developers remain eager to close out their buildings quickly.

It typically takes developers two years or more to build a condominium, from the time they sign contracts to the time they start cashing out and turning units over to buyers. And until the last unit is sold, they remain on the hook for the interest on construction loans, staff salaries and other expenses associated with a building, with each day that units remain on the market reducing profit margins all the more.

Bristol, for instance, started the Icon's pre-sales period in April 2006, 28 months ago. The firm does not expect to finish the building entirely until the early fall.

The slower economy, tight lending standards and bad publicity for the real estate market — the same factors cited by countless real estate agents, homebuilders and homeowners for depressing sales — are blamed for the slowdown in Nashville's condo market.

Shoppers are wary

But in a large condominium, psychology can also be an important factor. If buyers sense that sales are slow, they could worry that developers will cut sales prices so they can unload units at a discount to trim their expenses.

"Even if you want to live in it, you don't want to pay $12 for something that's worth $9," said Ray Hensler, president of Corner Realty Partners, the Adelicia's developer. "A lot of people are just trying to figure out what they got."

That has made it harder for developers to hold onto all the buyers who were committed to a project at the outset.

When construction started on the Icon, all of its units were committed to buyers. Several of those anticipated buyers — Bristol Development will not disclose how many — have asked to pull out of the project.

That has prompted the firm to send out warning letters threatening legal action against people reluctant to close on sales, even if buyers forfeit their deposits.

"We don't have the option," Daniel said. "The bank has to approve any contract that is reworked, and they're not in the mood to let anybody out of their contracts."

Giarratana, meanwhile, says the Encore has suffered a net loss of 13 buyers. It began construction with 80 percent of the building committed, and with sales to new buyers it now has 76 percent of the building under contract or closed.

"We're optimistic that we'll be able to accelerate the pace of closings through the balance of the year," Giarratana said.

On Flores' floor at the Icon, four other buyers have closed on the purchase of their condos in the last three months. Two have put their units up for rent. That leaves just two more potential residents on a floor with 38 units.

That falls short of the vibrant community Flores had hoped for when she moved from Franklin to the emerging Gulch neighborhood.

"They (residents) will bring energy, which I like, when it's full," Flores said, "but it's not full."

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