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49 die after plane crashes into house in suburban Buffalo

Continental Airlines Flight 3407 crashed into a house in suburban Buffalo, New York, late Thursday.
A Continental Airlines plane crashed in suburban Buffalo, New York, late Thursday, killing 49 people. There were 44 passengers and four crew members killed on board and one on the ground, according to authorities.

Continental Connection Flight 3407, operated by Colgan Air, was en route from Newark, New Jersey, when it went down, said Bill Peat with New York State Emergency Management in Albany. The crash took place about seven miles from Buffalo Niagara International Airport in Clarence Center, New York. “At this time, the full resources of Colgan Air’s accident response team are being mobilized and will be devoted to cooperating with all authorities responding to the accident and to contacting family members and providing assistance to them,” a statement from the airline said. The plane crashed about 10:20 p.m., hitting a home and bursting into a fireball, according to New York State Trooper John Manthey. Twelve residents were evacuated from the area. Watch crash video from CNN affiliate WGRZ » Area resident Keith Burtis said he was driving to the store about a mile from the crash site when he heard the plane go down. “It was a high-pitched sound,” Burtis said. “It felt like a mini-earthquake.” Watch officials on the scene: ‘This is not a rescue mission’ » Shortly after the crash, Burtis said he saw a steady stream of fire trucks rush by him as smoke billowed into the sky. “Our thoughts and prayers are with the families of the crew, the passengers and our residents on Long Street,” said Clarence Supervisor Scott Blylewski. Are you on the scene Let us know at iReport “This is clearly a tragedy,” said Dave Bissonette, the town’s natural disaster services coordinator. A command post has been set up at the scene by the Erie County Medical Examiners office and has investigators and doctors on the scene. Watch what iReporter captured on film Continental Airlines confirmed that the Bombardier Dash 8 Q400, a 74-seat turboprop, was operating between Newark Liberty International Airport and Buffalo. The National Transportation Safety Board said early Friday that is was preparing a “go team” to head to Buffalo to investigate the crash. There was a wintry mix at the time of the crash, officials said. Witnesses told CNN the house that was hit was flattened. Officials said relatives of passengers aboard the flight should call 1-800-621-3263 for information. Watch more on the plane crash » At this time, officials said they are not concerned about a hazardous materials situation on the ground. Rep. Chris Lee, R-New York, issued a statement: “We are deeply shocked and saddened by the tragic accident that occurred tonight in Clarence. Our focus right now is on supporting the first responders on the ground and their efforts to ensure the health and safety of people in the area. “I will do my best to provide helpful information as we learn more. Our thoughts and prayers are with the victims’ families at this difficult hour.”

Senate confirms Panetta as CIA director

Leon Panetta, 70, will become the oldest person to head the CIA.
The Senate on Thursday night confirmed Leon Panetta as CIA director by unanimous consent.

Panetta, 70, will become the oldest person to head the spy agency. Sen. Dianne Feinstein, chairwoman of the Senate Intelligence Committee, which passed Panetta’s nomination on to the full Senate on Wednesday, said at that time that Panetta would mark a “new beginning” for the CIA. “He has the integrity, the drive and the judgment to ensure that the CIA fulfills its mission of producing information critical to our national security without sacrificing our national values,” the California Democrat said. Sen. Kit Bond, the ranking Republican on the committee, said he supported Panetta after receiving assurances from him that he will “use all appropriate and lawful means” to keep the nation safe. Panetta was an eight-term congressman from central California who chaired the powerful House Budget Committee before moving over to the Clinton White House as the budget director. He later became President Clinton’s chief of staff. He left government in 1997 and returned to California, where he and his wife created the Leon and Sylvia Panetta Institute for Public Policy, a nonprofit foundation. During his confirmation hearing last week, Panetta was peppered with questions about the Bush administration’s controversial interrogation, detention and rendition program and President Barack Obama’s efforts to change the policy.

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He called waterboarding — the interrogation technique that simulates drowning — torture, but he said the intelligence officers who carried it out should not be prosecuted. Obama has signed an executive order limiting interrogation techniques to the 19 outlined in the Army Field Manual, but Panetta conceded those might not be enough. He said he would not hesitate to go to the president and ask for additional authority if there was “a ticking-bomb situation.” Panetta vowed not to send terrorism suspects to other countries where they could be tortured. But he insisted such renditions are an “appropriate tool” if the United States got assurances from the receiving country that the individuals would not be treated inhumanely. Regarding Obama’s plan to close the U.S. detention facility at Guantanamo Bay, Cuba, he said the task is a very difficult one. Although some prisoners will be tried and others transferred to other countries, he acknowledged there may be a group of prisoners who will have to be detained without trial for a long time. Panetta said he did not see the need for any wholesale changes at the agency. The CIA has the tools to deal with the threats, he said, but it needs to stress the training, language capabilities and diversity that will produce better intelligence. Panetta’s nomination initially created a stir among Democrats and Republicans, who questioned the advisability of appointing someone with his lack of experience in the intelligence community at a time when the United States is fighting two wars and battling terrorists. But his intelligence background was barely mentioned at his confirmation hearing. Senators seemed satisfied that he has the confidence of the president, would have a good working relationship with Congress and would retain the top leadership at the CIA. Panetta was not believed to be the first choice to head the spy agency. John Brennan, a career intelligence officer who last headed the National Counter Terrorism Center, was the leading candidate until liberal bloggers effectively torpedoed the nomination by linking Brennan to the CIA’s enhanced interrogation techniques and the pre-emptive war in Iraq. Brennan said he was not involved in the decision-making process for those policies, but he withdrew his name from consideration. Sources close to Brennan said he was pushed by the Obama transition team to step aside. Brennan was subsequently appointed by Obama to be his homeland security adviser at the White House, a position that does not need congressional approval.

China fire ignites debate over fireworks

Police suspect fireworks to be the cause of the blaze at the 40-story Mandarin Oriental.
Public debate over fireworks is taking over China’s online chatter, ignited by Monday’s tragic blaze in central Beijing which left one of China’s most treasured modern buildings in cinders, killing one fireman and injuring several bystanders.

Police on Thursday announced they had detained 12 people, including four employees of China’s state television station CCTV. They are being held as suspects for setting off large firecrackers next to the newly constructed Mandarin Oriental Hotel, a flagship property of the hotel chain. The blaze happened on Monday night in the final hours of the Lunar New Year festivities. Traditionally, the Chinese celebrate by lighting up the skies with fireworks. But Beijing officials are accusing CCTV employees of setting off heavy-duty fireworks, which are banned in densely populated areas such as central Beijing, CRI stated. The firefighter who was killed died of smoke inhalation and seven others were injured during Monday’s blaze. China –the birthplace of gunpowder and pyrotechnics — is questioning whether the ancient use of fireworks during traditional celebrations should be banned. Internet censors have tried to damp down public debate, unsuccessfully. In Beijing’s restaurants, bars and local media, discussions run amok on the fireworks debate, an issue which has stirred up emotions with some deep cultural roots. On Xinhuanet, Internet users are voting with their mouse. As of February 11, of 6,700 people who voiced their opinion online, 69 percent supported a ban.

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One voter complained that “fireworks polluted the environment, shook windows, set off alarms and scared children upstairs.” “Not all traditions are good,” said another voter. “Fireworks are among the bad ones because it brings pollution, waste of resources and causes injuries. For people with hypertension, festivals have become like horrible wars.” Still another proponent notes that “many enterprises and agencies are merely competing to show off who among them is the richest by setting off the most expensive fireworks, so fireworks is worth nothing more than bringing happiness to a few people.” Opponents of the ban are just as passionate. “Designate places for fireworks as we do for smoking,” argues one. “Don’t ban things randomly.” Argues another: “We can’t ban this Chinese tradition because of the CCTV fire, in the same way that we can’t stop raising chicken for fear of wolf, or turn highways into dirt road for fear of accidents or even stop drinking milk for fear of tainted milk.” Mike Furst, a longtime expatriate Beijing resident offers an alternative: “There are so many easier ways to do this other than an outright ban — permits, restricted sales, etc.” Even the state-run China Youth Daily weighed in with a commentary, arguing that imposing a ban would be a simplistic and crude administrative interference.

“As a time-honored Chinese tradition,” it opines, “burning fireworks can add festive atmosphere and is an essential part of Spring Festival celebration. The root cause for fire disasters is not simply the burning of fireworks, but the illegal and misguided conducts of human beings.” Fireworks were once banned in many Chinese cities by government edict. A few years ago, bans were lifted also by government edict.

The Math for 3.5 Million Jobs

Congress, well-fed and self-satisfied, can catch its wind now. It has put together a $789 billion stimulus package to get the economy on the road again. The most interesting and obtuse comment about the new plan came from Senator Harry Reid, who said the legislation would create 3.5 million jobs.

The 3.5 million jobs forecast has always been a mysterious subject. The language used in the original House stimulus bill indicated that the programs in the legislation would create or save 3 to 4 million jobs. The “save” part is an important distinction.

The bill will provide for aid to states, tax cuts for the “middle class”, and money for building infrastructure. No one in the Congressional leadership has argued that this will not create 3.4 million or 3.6 million jobs. The staff members in the House and Senate must be certain about the 3.5 million figure because no one has made an effort to discredit it.

The other alarming information that no one was discussing as part of the self-congratulatory announcement of a victory over the recession was what will happen if the economy continues to lose jobs at the rate it did in January. A total of 3.5 million people could be out of work between the beginning of this year and the end of June. The stimulus package will probably not have even kicked in by then. So, with the job losses from January 2009 through the end of June at 600,000 a month, the entire $789 billion will be spent filling this unemployment crater. What will it cost to add another 3.5 million jobs after the job losses from the first half of the year have been reversed Perhaps another $789 billion.

The trouble with the demented math behind the stimulus package is that it requires economists who believe that unemployment is moving toward 9% to subtract jobs from the economy faster than government programs create them. Most members of Congress and the Administration believe that the new legislation will take 18 to 24 months to have its full effect. An unimaginable downturn could cause the loss of six or seven million jobs by the end of 2010.

It is tragic that the stimulus program has been birthed, at last, but was stillborn. There are a number of other factors that could help reverse the drop in GDP, but none of these has a sure chance of success. It would be hard to find a large industry in America which is adding jobs. For that matter, it would be hard to find a large American company making net additions to its payroll.

There is a temptation to say that the stimulus package is simply a cruel trick, meant to give people some hope. Members of Congress will be able to take credit for its results two years from now if it works, or they can simply say the economy was too far gone to be saved if it fails. Either way, the issue is not creating 3.5 million jobs. It is creating 8 or 9 million.
— Douglas A. McIntyre

Find out 10 things to do with your money.
For constant business updates, go to 24/7wallst.com.

The Depression Hits Las Vegas

Casino gambling is part of the American Dream. “The World Series of Poker” gets better ratings than the Super Bowl. But, even the gaming industry is in trouble. The people who have visions of making millions on one roll of the dice are out of work

Dow Jones reports that the overall take on the Las Vegas Strip was down 23% to $474 million in December.

The madness of gambling is based on the belief that either the player will win or somehow come up with the money if he loses. Since gamblers frequenting casinos rarely win, the real issue is their ability to pay off debt. Las Vegas has become like the rest of America. Visitors to the city were just late coming around to the realization that borrowing has gone out of vogue. If most large American banks were based in Las Vegas they would still be buying toxic paper and lending money for leveraged buyouts.

Legalized gambling was set up in cities like Las Vegas so that the depravity of betting on cards and dice could be contained in one or two cities. The plan was not unlike Prohibition would have been if the only places to drink were Akron and Erie. Confining gambling turned out to be difficult once it became a staple on Indian reservations and on flat bottom boats anchored just beyond the jurisdiction of the local authorities in many river towns.

It would be too easy to say that the Las Vegas culture slipped out of the city and ended up at the lower tip of Manhattan. But, gambling on Wall St. predates the day in 1946 when Bugsy Siegel opened the Flamingo Hotel.

One of the things that happens in an especially sharp and unexpected economic downturn is that the gambling instinct gets kicked out of everyone. That goes from the man at the Black Jack table who has been up 48 hours drinking Scotch and trying to win a few hundred dollars back, to the person who is too afraid to bet a portion of his income on buy a house because it may lose some of its value.

It is normal for a man who won’t buy a car because he is worried about his job is to stay out of casinos. But, when a man who stays up all night gambling won’t buy a car, the economy is in deep trouble.
— Douglas A. McIntyre

Find out 10 things to do with your money.
For constant business updates, go to 24/7wallst.com.

Study: Babies Who Gesture Learn Words Sooner

Child psychologists — and kindergarten teachers — have long known that when children first show up for school, some of them speak a lot more fluently than others. Psychologists also know that children’s socioeconomic status tends to correlate with their language facility. The better off and more educated a child’s parents are, the more verbal that child tends to be by school age — and vocabulary skill is a key predictor for success in school. Children from low-income families, who may often start school knowing significantly fewer words than their better-off peers, will struggle for years to make up that ground.

Previous studies have shown that wealthier, educated parents talk to their young children more, using more complex vocabulary and syntax, than parents of lesser means. And these differences may help explain why richer kids start school with richer vocabularies. But what goes on before children can talk, during that phase — familiar to any parent — when communication takes the form of pointing, waving, grabbing and other kinds of baby sign language Do well-off parents also gesture more to their kids

Indeed they do, say psychologists Susan Goldin-Meadow and Meredith Rowe of the University of Chicago, who published a study in the Feb. 13 issue of Science. The researchers found that at 14 months of age, babies already showed a wide range of “speaking” ability through gestures, and that those differences were correlated with their socioeconomic background and how frequently their parents used gestures to communicate. High-income, better-educated parents gestured more frequently to their children to convey meaning and new concepts, and in turn, their kids gestured more to them. When researchers tested the same children at 54 months of age, those early gesturers turned out to have better vocabulary ability than other students.

“At 14 months, you can’t see a difference with their speech, but you can already see a difference with their gestures,” says Goldin-Meadow, a leading expert on gesture. “And children’s gestures can be traced back to parents’ gestures.”

Goldin-Meadow and Rowe’s study involved children from 50 Chicago-area families of various ethnic and socioeconomic backgrounds. Annual incomes ranged from less than $15,000 to more than $100,000, and parents’ educational level ranged from high school dropout to advanced degree. The researchers videotaped each child at 14 months with his or her primary caregiver for 90 minutes while the pair engaged in everyday activities. Those tapes were then transcribed — all speech and gestures seen during the 90 minutes were noted and recorded in code.

Researchers were interested less in the number of gestures a child or parent made than in their variety — for example, pointing at a doll 10 times would count as only one gesture, but pointing at a doll and then a bed might count as two. During the 90-minute session, 14-month-olds from well-off families used an average of 24 meaningfully different gestures, researchers found, while children from lower-income families used an average of just 13.

“As early as 14 months of age, children in different socioeconomic-status groups may be socialized to communicate more or fewer meanings via gesture,” the authors wrote. And those early differences in gestures may help predict the later disparities in vocabulary ability when children show up for school. The current study found that at 54 months old, children from higher-income families understood about 117 words on a comprehension test, compared with 93 for children from lower-income families.

Although Goldin-Meadow is quick to point out that the study shows only an association, not a causation, among socioeconomic status, gestures and vocabulary ability, “we do think there is something going on here,” she says. “When parents gesture around their children, the kids might be picking up the gestures and doing it themselves.”

Here’s how: at 14 months of age, pointing toward an object is the way most kids use gestures. If a parent responds to that gesture by verbally identifying the object — by saying, “That’s a doll,” for example — children get a head start on growing their nascent vocabularies. “That’s a teachable moment, and mothers are teaching the kids the word for an object,” says Goldin-Meadow. She also believes that lively gesturing could allow kids to better understand new concepts simply by giving them a visceral way to express them.

That last theory offers the possibility that teachers may be able to use gesture to help school-age kids solidify old ideas and learn new ones. In separate research, Goldin-Meadow found that when children were asked to solve and explain a series of math problems, those who were asked to gesture while they did so were more likely to learn new problem-solving strategies and perform better on future math problems than were kids who did not use gestures. Goldin-Meadow believes that prompting children to gesture gives them the ability to express ideas they had never been able to express before. “I’d recommend teachers encourage their kids to gesture, because it makes them more receptive to teaching,” she says. “It allows teachers to have a better understanding of what their kids are understanding.”

Read “Mother’s Obesity Raises Risk of Birth Defects.”

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How Maine’s GOP Senators Are Key to Obama’s Agenda

How Maines GOP Senators Are Key to Obamas Agenda

The courtship of Senator Olympia Snowe started in December with a phone call from Joe Biden. The Vice President-elect made sure Snowe had his home telephone number in Delaware so she would know how to reach him on weekends. In the weeks that followed, the two traded memos back and forth about how an economic stimulus package should work. “I had an infinite number of ideas, because they had been stored up,” says Snowe, a Maine Republican who never got that kind of treatment when her party controlled the White House. “Now somebody was listening.”

Snowe isn’t the only GOP Senator — or even the only one from Maine — who is getting room service from the other end of Pennsylvania Avenue. After working around the clock for a week with 20 of her Senate colleagues on a compromise stimulus measure, Susan Collins had all but given up. But early on the evening of Feb. 6, Senate majority leader Harry Reid invited her to his office. “I debated whether it was worth going,” Collins recalls. “I figured they were just going to put pressure on us to accept their previous offer,” which didn’t shrink the spending in the package as much as she had demanded. When she got there, however, she was surprised to discover White House chief of staff Rahm Emanuel, who had come to make a deal. “It was as if all of a sudden they had decided to get serious with the negotiations,” she says. “They agreed on the bottom line of our proposal, which was $780 billion.”
In the weeks and months to come, Snowe and Collins can expect to be lavished with even more attention from the White House. Those two Maine moderates, plus Pennsylvania Republican Senator Arlen Specter, provided the margin that prevented Republicans from holding Barack Obama’s stimulus package hostage to a filibuster. They also represent the sum total to date of Obama’s claim of bipartisan support for his economic plans in Congress.
This is not the first time Collins and Snowe have broken ranks with their party. They have often found themselves at odds with the GOP leadership on taxes, budgets, the environment and social issues. They have both voted for stem-cell research, against a constitutional ban on same-sex marriage, for giving illegal immigrants a path to citizenship and against a ban on partial-birth abortion. They also both voted to acquit Bill Clinton after he was impeached in 1998.

But what makes Snowe and Collins more powerful now is that they, along with Specter, are nearly the last survivors of a once common species of moderate Northeastern Republican. As the GOP’s center of gravity moves to the right, the Democratic majority has fewer and fewer potential crossovers to choose from. That gives each woman enormous leverage in a Senate Republican caucus whose leaders cannot afford any defections if they are to sustain a filibuster. Both sides know that the math on any close vote is likely to come down to Snowe and Collins.

Which is just what their constituents in Maine like and expect from their Senators. The state has a tradition of flinty Yankee independence that dates back to another Republican Senator, Margaret Chase Smith, who in 1950 issued her famous Declaration of Conscience against McCarthyism — with Senator Joe McCarthy sitting only three seats behind her in the chamber. Maine doesn’t bend easily to the prevailing political winds. Locals take a perverse pride in the fact that no other state has voted more consistently for the loser in modern presidential elections. And while they voted for Obama last fall and for the Democrat in every presidential election since 1988, Collins won her re-election race in 2008 with a margin 6 points larger than Obama’s in Maine.

For all their similarities, the two women are not personally close and hail from very different backgrounds. Snowe, who turns 62 later this month, was orphaned at the age of 9 when her father, a Greek immigrant cook, died of a heart attack a year after her mother died of cancer. Another tragedy brought her to elective office in 1973, when she filled the seat in Maine’s house of representatives that was left vacant by the death of her husband in a car accident. Her second husband, John McKernan, was a colleague of hers in both the legislature and U.S. House; he later became Maine’s governor. Snowe replaced George Mitchell when he retired from the Senate in 1994. Collins, 56, was one of six children in a politically active family in Caribou, a town of 8,300 at the nation’s northeastern tip, 15 miles from Canada. Her father was a state senator; her mother, a mayor; and an uncle, a state supreme court justice. She learned her way around Capitol Hill working as an aide to Senator William Cohen for 12 years. After losing a bid for governor in 1994, she made a run for Cohen’s seat when he left it in 1996. One of the things that helped her win was her resemblance to the popular Snowe.

The two women share the quiet competitiveness that often exists between two Senators of the same state and party. Collins is more comfortable in front of television cameras than is Snowe, who often looks for a side staircase where she can sneak away from the klieg lights. Though they typically work in tandem for their state, they do so in very different ways, just as they have on the stimulus negotiations. Snowe, a senior member of the Finance Committee, worked on the tax provisions; Collins, recently named to the Appropriations Committee, focused on spending. Collins, who voted for the George W. Bush tax cuts, is a half-turn more conservative than senior Senator Snowe, who did not. Both women are accomplished fund-raisers — and widely popular at home.

All this Down East independence does not exactly thrill their colleagues on the GOP side of the Senate chamber. South Carolina Senator Lindsey Graham noted that Collins’ negotiating skills helped turn an $819 billion House bill into an $838 billion version in the Senate. “I like them both,” he told the New York Times, “but I wouldn’t want them to buy me a car.”
The White House is still wooing them. Obama has already met in the Oval Office with both. He will have to keep the courtship going if he hopes to match his success on the stimulus with measures to recapitalize the banking system and reform entitlements, energy and health care. On those issues, Snowe and Collins would tend to be supportive, but neither will go along automatically. Snowe, for one, thinks Obama could have done a better job of reaching out to House Republicans and making them as much a part of the negotiations in that chamber as they were in the Senate. “I’m sure he’s learned from this one,” says Snowe. Adds Collins: “The elections are over, and now the American people want us to solve problems and stop fighting. That’s certainly my goal. I love legislating.” That’s good. She’s going to be doing a lot of it.

Read “Reading the Stimulus”

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In Defense of the Recession Blame Game

Vengeance is mine, saith the Lord, except that right now everyone wants a little piece of it. The mob has been chanting for months, ever since former Treasury Secretary Henry Paulson arrived in late September on Capitol Hill to warn of disaster, pass around his three-page plan and demand $700 billion to fix the problem. Most members of Congress were so spooked they were ready to write a check, until their phone lines started melting with the angry voices of taxpayers demanding details about the likely return on the investment. But even the minimal strings attached did not prevent the first $350 billion from vanishing, with the government overpaying about $78 billion for the assets it bought. The banks told pesky reporters and congressional watchdogs that how they spent the bailout cash was really none of their business. And now, Tim Geithner informs us, the financial system needs $2 trillion more.

The crowd has gotten crankier in the face of the brash indifference to its fury. It seems that the mighty have been hit with some virulent strain of arrogance common to those told that they are Too Big to Fail. First the auto executives swooped into town in their Gulfstream IVs to ask for $25 billion; then Merrill Lynch superman John Thain spent $1,405 on a trash can and suggested he deserved a $40 million bonus for losing $15 billion in the fourth quarter. Even Tom Daschle, whose loyal Senate brethren were set to confirm him to the Cabinet, discovered the radioactivity of the phrase “unpaid taxes on his chauffeured limousine.”

The modern civilized state claims a monopoly on punishment. Mobs with pitchforks, vigilantism, frontier justice — all seem sweaty and coarse compared with the men in powdered wigs duly processing the law. But as this crisis makes clear, we are in a new frontier now, the financial badlands created by technology and globalization, with no maps and few rules, and the law has not caught up to us. Until it does, we are left with the old sanctions: symbols and shame. That still leaves the problem of knowing whom precisely to scorn. “Capitalism,” John Maynard Keynes once argued, “is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” It is tempting to blame the whole political-industrial complex, starting with whoever first had the idea of lending $750,000 to someone making $17,000 a year; the regulators who said that was O.K. and the politicians who encouraged them; the financial geniuses who rolled up all those mistakes into a big ball of bad loans, chopped them up and sold them; and above all, the presiding executives who got performance bonuses whether they performed or not — buying and selling things whose value they could not possibly know, finding ways to reduce risk that instead greatly increased it, unleashing on the markets what Warren Buffett called “financial weapons of mass destruction.”

The problem with smashing the whole system, however, is that it’s a lazy answer to a fierce challenge. Modern capitalism has created unprecedented wealth in our lifetime, shown its power to lift people out of poverty and spread a culture of competitive genius. So in the pages that follow, we make a case for who got us here, and who might have saved us and didn’t. Even faith itself can be faulted when it turns into blind optimism that sees no risk, hears no sirens. There are plenty of prosecutors who will have a chance to make their case against anyone who crossed a line. But there are also culprits who committed no crime, bankers and builders and prophets and Presidents, and the face in the mirror — since many of us in the mob now wish to punish those who gave us just what we asked for.

See the 25 People to Blame for the Financial Crisis.

See Who’s Who in Barack Obama’s White House.

See the top 10 financial collapses of 2008.

Shoppers Showing No Valentine’s Love for Retailers

Shoppers Showing No Valentines Love for Retailers

Like any guy, Rory Sheridan, a waiter from New York City, wants to impress his girlfriend during their first Valentine’s Day as a couple. But like any guy living in 2009, he’s looking to shave some expenses. So while he’s going to take her out to a nice dinner this Saturday night, they’ve also made a pact. “We told each other, ‘No presents,’ ” says Sheridan, 26. Would he have splurged for a nice bracelet, expensive roses or chocolates if they had the same Valentine’s date a year ago? Sheridan’s reply is as swift as Cupid’s arrow: “Absolutely.”

Lonely hearts, you’re not the only ones getting no love this Valentine’s Day. The economy will likely be joining you down in the dumps. According to a recent study from the National Retail Federation, consumers plan to spend, on average, $102.50 on Valentine’s Day gifts this year, down from $122.98 in 2008. That’s a 17% drop. Overall, the study projects that Valentine’s Day spending will fall 14%, to $14.7 billion, compared with last year. “People are trading down,” says George Van Horn, an industry analyst at IBIS World, a research firm that also is predicting a decline in Valentine’s Day spending. “This year consumers are thinking about smaller tokens that are thoughtful and not as elaborate and expensive as in years past.”

Among gift categories, IBIS World projects the sharpest drops for clothing and intimate apparel , dining out, jewelry, romantic getaways and flowers. Only greeting cards and candy, the smaller-ticket items, are showing a slight uptick. Brand Keys Inc., a New York City–based research and consulting firm, found that 15% of men and women said they would stay home this Valentine’s Day, nearly four times as many as in 2008. Consumers also told the company they’d share gifts with fewer friends and family members. “Your great-aunt may not get something this year,” says Robert Passikoff, the president of Brand Keys. “You may not give a card to your neighbor. Valentine’s Day will go back to resonating with core family and significant others. If you do that, it’s easy to save $20.”

These days, consumers, no matter how romantic and sentimental they may be, value that extra cash. So retailers must get more aggressive in order to spread the love. At Louis Martin Jewelers in New York City, for example, you can find the back room filled with sparkling rings and necklaces. “Last year, this was the high-end room,” says Martin, the owner. “Now, it’s the markdown room.” Everything’s on sale — for example, a $2,500, 18-karat-gold, diamond and amethyst ring now costs $597. “We’re selling things at or even below cost,” Martin says. “We have to adapt.” Bradsdeals.com, an aggregator of retail deals on the Web, features a $48 bead necklace from online jeweler Blue Nile. “I’ve followed Blue Nile for a long time,” says site founder Brad Wilson, who started bradsdeals.com eight years ago. “I hadn’t been aware they had a price tier that low.”

There’s a sharp difference in the volume and steepness of this year’s discounts from the ones offered last year. “It’s like night and day,” Wilson says. Online florist 1-800-FLOWERS.com, whose sales dropped for the first time in company history last quarter, is selling a dozen roses for $24.99. “That’s the lowest price we’ve seen in 25 years,” says company founder and CEO Jim McCann.

Price alone won’t compel consumers to spend big money for Valentine’s Day. Many retailers have tried creative marketing initiatives as well. “Companies are getting better and better at grabbing the customer’s attention during this downturn,” says Kathy Deane, the president of Tobe, a retail consultancy. For example, as part of its “We Love You” promotion, Bloomingdale’s will give you a free hippie scarf if you spend $100 at one of its stores. If you spend $25 or more on a box of Godiva chocolates, you could win a trip to the company’s Chocolate Decadence suite — where the chairs, walls and candles are all made out of chocolate — at a New York City hotel.

In London on Thursday, the third-floor lingerie aisles at department store Selfridges & Co. lured customers in a unique way. “Join Selfridges for a sexy and indulgent Valentine’s evening!” said the company’s website. The allure: while you shop, the “gorgeous dancers from Stringfellows” — a strip joint — perform, using Carmen Electra’s portable home pole-dancing kit.

Of course, you may want to skip the strippers and join the thousands of customers opting for a less decadent Valentine’s Day this year. Analysts predict that specialty arts-and-crafts stores should thrive as more consumers choose handmade over store-bought gifts. The website for specialty retailer Michaels details dozens of ideas for making cards, scrapbooks and jewelry. Since the holiday falls on a Saturday in 2009, couples can spend a full day at a museum — or at a picnic, if the weather permits. During these stressful times, people still want to huddle with their loved ones. “We won’t see people saying, ‘O.K., Valentine’s Day has been cancelled,’ ” says Van Horn. “People will still give their loved ones what they deserve.” Millions will be thinking pink this Valentine’s Day. But can the holiday retailers stay out of the red

Watch “TIME’s Favorite Movie Kisses.”

Read “Dating After Divorce.”

Kindness will help economy, homeless woman’s rescuer says

Henrietta Hughes, left, and Chene Thompson talk on the lawn of the home Thompson is letting Hughes use.
Acts of kindness will help pull the nation through its economic crisis, according to the woman who came to the rescue of a homeless Floridian who publicly appealed to President Obama.

Chene Thompson, the wife of state Rep. Nicholas Thompson, R-Fort Myers, is letting Henrietta Hughes and her son stay in a house she owns in nearby La Belle rent free until they get back on their feet. “You don’t have to be a politician to put forth a stimulus package,” Chene Thompson said during a joint interview with Hughes Thursday on CNN’s “American Morning.” “This is our own little mini-stimulus package for a person who was a stranger and now is a friend. “Anybody can help anybody at any time. It doesn’t need to be something that comes from Washington; it can come from your own home and from your heart, even if it’s for a little bit.” Hughes emerged from the crowd at Tuesday’s town hall meeting in Fort Myers to tell Obama she and her son were living in a car and needed immediate help. The president asked her name, kissed her on the cheek and promised his staff would work with her. Watch Hughes’ emotional plea to Obama » Thompson, who was in the audience, stepped forward afterward to offer Hughes her vacant house, which the Thompsons had to leave because it is outside her husband’s legislative district. “She was sincere and direct and to the point, and she needed help,” Thompson said. “And it actually touched me and I started to tear up and I started to cry. … It sort of broke my heart.”

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Hughes feels “overwhelming gratitude,” she told CNN in the front yard of the house, “because no one would do that.” “Oh, yes they would! Yes they would!” Thompson interjected, wrapping an arm around Hughes’ shoulders. “I was just in the right place at the right time.” Both women beamed. The house has remained unsold in southwest Florida’s depressed market, Thompson said. She continues to be responsible for paying the mortgage, property taxes, insurance and utilities, so it benefits her to have someone occupying it to keep it from becoming run-down, she said. According to the White House, the Fort Myers-Cape Coral area had the highest foreclosure rate in the nation last year, with 12 percent of housing units receiving a foreclosure-related notice. Median housing prices in the Fort Myers metropolitan area have plummeted from $322,000 in December 2005 to less than $107,000 in December 2008, the Obama administration said. Nearly 12,000 jobs have been lost in Fort Myers in the past year. White House spokesman Joshua Earnest said Wednesday that the administration connected Hughes with local housing officials in the crowd. On Wednesday, the head of the local housing authority, Marcus Goodson, said he met with Hughes and is working on finding her a subsidized housing unit with a short waiting time.

Hughes on Thursday urged Congress to approve legislation to deal with the housing crisis. “If that would pass, that would help many other — hundreds and thousands of — low-income persons to receive housing,” she said.