Archive for August, 2010

China’s massive traffic jam could last for weeks (AP)

Tuesday, August 24th, 2010 | Finance News

BEIJING – China has just been declared the world's second biggest economy, and now it has a monster traffic jam to match.

Triggered by road construction, the snarl-up began 10 days ago and was 100 kilometers (60 miles) long at one point. Reaching almost to the outskirts of Beijing, traffic still creeps along in fits and starts, and the crisis could last for another three weeks, authorities say.

It's a metaphor for a nation that sometimes chokes on its own breakneck growth.

In the worst-hit stretches of the road in northern China, drivers pass the time sitting in the shade of their immobilized trucks, playing cards, sleeping on the asphalt or bargaining with price-gouging food vendors. Many of the trucks that carry fruit and vegetables are unrefrigerated, and the cargoes are assumed to be rotting.

On Sunday, the eighth day of the near-standstill, trucks moved just over a kilometer (less than a mile) on the worst section, said Zhang Minghai, a traffic director in Zhangjiakou, a city about 150 kilometers (90 miles) northwest of Beijing. China Central Television reported Tuesday that some vehicles had been stuck for five days.

No portable toilets were set up along the highway, leaving only two apparent options — hike to a service area or into the fields.

But there were no reports of violent road rage, and the main complaint heard from drivers was about villagers on bicycles making a killing selling boxed lunches, bottled water to drink and heated water for noodles.

A bottle of water was selling for 10 yuan ($1.50), 10 times the normal price, Chinese media reports said.

The traffic jam built up on the Beijing-Tibet highway, on a section that links the capital to the Chinese region of Inner Mongolia. The main reason traffic has increased on this partially four-lane highway is the opening of coal mines in the northwest, vital for the booming economy that this month surpassed Japan's in size and is now second only to America's.

Although wages remain generally low, auto ownership and gridlock have grown so commonplace that Inner Mongolia authorities restrict cars' movement to alternate days, based on odd or even numbers in their license plates.

The car invasion is widely felt; Guo Jifu, head of the Beijing Transportation Research Center, told a symposium Monday that vehicles on Beijing's roads multiplied by 1,900 per day on average in the first half of this year, Xinhua, the official news agency, reported.

The immediate cause of the traffic jam that began Aug. 14 is construction on one of three southbound highways feeding into Beijing.

Authorities are trying to ease the snarl-up by letting more trucks into the capital, especially at night, said Zhang, the traffic director. They also asked trucking companies to suspend operations and advised drivers to take the few alternate routes available.

"Things are getting better and better," he said, but he added that the construction would go on until Sept. 17.

Alan Pisarski, author of "Commuting in America," said the worst traffic jams in U.S. history tend to be associated with natural disasters, such as people fleeing Hurricane Katrina or the collapse of the upper deck of a freeway in Oakland, Calif., in the 1989 earthquake.

"It took some people days to get home after that one," Pisarski said.

Traffic arrangements built up over generations in the U.S. are lacking in much of China, said Bob Honea, director of the University of Kansas Transportation Research Institute, who has visited China.

"We'll see this problem more and more often. It's true of every developing country," he said.

Honea said the U.S. has never experienced a traffic jam as big as the one now bedeviling northern China, but he noted that traffic in Los Angeles "is pretty bad. It's not a highway, it's a parking lot."

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Associated Press Writer Joan Lowy contributed to this report from Washington, D.C.

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Pacific Sunwear fiscal 2Q loss widens, shares fall (AP)

Tuesday, August 24th, 2010 | Finance News

ANAHEIM, Calif. – Teen retailer Pacific Sunwear of California Inc. posted a wider loss in its fiscal second quarter as sales fell 10 percent and issued a third-quarter outlook that partly fell below analyst expectations.

Shares slid 6 percent in after-hours trading on the news.

Pacific Sunwear reported a loss of $23.5 million, or 36 cents per share, in the three-month period ended July 31. That compares with a loss of $14.2 million, or 22 cents per share, in the year-ago quarter. Excluding a tax-related charge, losses totaled $15 million, or 22 cents per share, in the latest period.

Revenue dropped to $218.3 million from $242.8 million last year, but the company said buying trends in its young men's division improved. The company didn't disclose back-to-school sales trends. Teen retailers have been struggling amid the weak economy to win sales, with promotions remaining elevated for rivals such as Aeropostale, American Eagle and Wet Seal.

The results came in slightly better than the 23-cent-per-share loss and $213.3 million in revenue that analysts had expected, according to a Thomson Reuters poll.

However, revenue at stores open at least a year — a key figure for retailers — fell 10 percent in the period. That's an important measurement of a retailer's health because it measures growth at existing stores, rather than including new ones.

And for the third quarter, the company forecast an adjusted loss of 9 cents to 16 cents per share, compared with a loss of 12 cents as forecast by analysts. Revenue at stores open at least a year is expected to fall 4 percent to 9 percent.

Over the rest of year the company expects revenue at stores open at least a year to improve sequentially, with the possibility of positive growth in the fourth quarter. Capital expenditures for the year are now projected at the lower end of its previous guidance range of $20 million to $30 million.

Shares fell 25 cents, or 6 percent, to $3.80 in after-hours trading Tuesday. In regular trading shares closed down 7 cents to $4.05.

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Dollar tumbles to 15-year low versus yen (AP)

Tuesday, August 24th, 2010 | Finance News

NEW YORK – The dollar tumbled to a 15-year low against the yen Tuesday as worries about a slowdown in the global economy boosted currencies seen as safer bets.

The dollar fell below 84 yen for the first time since 1995 and also lost ground against the Swiss franc.

Investors have traditionally seen the dollar as a safe haven, but its appeal has been tarnished as expectations for U.S. growth weakened this summer. The dollar ended stronger Tuesday against most other major currencies, but traded below the day's highs after the midmorning release of a weak report on the U.S. housing market.

"Global growth is undoubtedly faltering and the outlooks for the major advanced economies are pretty poor," said Julian Jessop, chief international economist with Capital Economics in London.

With uncertainty about the strength of the recovery dominating sentiment, investments considered safer, such as gold and U.S. Treasurys, are also benefiting. Stocks fell.

A report from the National Association of Realtors brought new concerns about the economy. The trade group reported that U.S. home sales plunged 27 percent in July to the lowest level in 15 years.

The dollar fell as low as 83.61 yen Tuesday, its weakest level since June 1995, before recovering slightly to 84.23 in late trading. On Monday the dollar was worth 85.28 yen.

The dollar fell to 1.0303 Swiss francs from 1.0394 francs.

"The market is very sensitive to negative economic data right now, which is expected to continue feeding into safe haven currencies," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon.

The euro also hit a record low versus the franc Tuesday at 1.3050 francs. It also fell to its lowest point versus the yen since 2001 at 105.45 yen.

The strengthening yen is becoming a problem for Japan's exporters, because it weighs on earnings and makes their products less competitive compared to goods from other countries.

The U.S. currency lost some ground against other currencies after the housing report, but largely managed to hold above late Monday's prices.

The British pound traded at $1.5442 from $1.5535 late Monday, while the U.S. currency dropped from above 1.0660 Canadian dollars earlier Tuesday to 1.0600 Canadian dollars in late trading. Late Monday, the dollar was worth 1.0514 Canadian dollars.

The dollar also pared its gains versus the Australian and New Zealand dollars, the Mexican peso, and the Brazilian real, as well as the Scandinavian currencies.

The euro was nearly flat at $1.2673 versus $1.2682 late Monday. The dollar had been stronger against the euro before the report was released.

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