But doctors said the new cut, after a 5.4 percent cut last year, would give them a fresh incentive to limit the number of elderly patients. "Physicians want to keep treating Medicare patients, but there comes a point where it is just not economically reasonable," Dr. Donald J. Palmisano, president of the American Medical Association, said. Maureen K. Maxwell, a spokeswoman for the American Academy of Family Physicians, said that more than one-fifth of family doctors were not accepting new Medicare patients.

"One of the reasons companies prefer to do rebates instead of price discounts is because fewer people take advantage of rebates," said Gerald E. Smith, an associate professor of marketing at Boston College and a consultant with Strategic Pricing Group Inc. "They get lazy." Redemption rates range from 5 percent to 40 percent, with higher responses for more expensive items, retail industry groups say. But even if consumers are not lazy, companies still come out ahead. … [The time consumers wait is] money in the bank for the manufacturer -- a very useful float when one considers the time value of that money.

… Meanwhile, consumers give up personal information on rebate forms that can be used to cobble together a picture of their buying patterns, Smith said. Companies can track how deep a discount it takes to "incentivize" you to buy. If you buy a computer, they may send you a rebate for a printer. They may even entice you (with coupons, for instance) to trade in the computer earlier than planned. Over time, as you respond to these offers or not, they analyze how much you are worth to them during your lifetime.

Credit card issuers are just as meticulous about tracking consumer behavior -- and taking advantage of its quirks -- when deciding which introductory rates to offer, said Lawrence Ausubel, an economics professor at the University of Maryland in College Park. … [B]y tracking the consumers' charging, borrowing and repayment records, the company also learned that most of the people who accepted the low six-month rate would have been better off with a higher (and significantly less popular) 7.9 percent rate that lasted a full year. Why? Because by the time the six-month offer expired, many of those consumers had not wiped out their debt. Under the terms of the agreement, they were then locked into a 15 percent rate for as long as they kept the card. And many of them did keep the card. Back-of-the-envelope math would have showed them that the 4.9 percent and 15 percent rates averaged out to about 10 percent for the year -- obviously higher than the less-appealing 7.9 percent annual rate. … As for penalty fees: $8 billion. That's how much consumers paid to Visa and MasterCard issuers last year, up from $7.3 billion in 2001, said James Daly, editor of Credit Card Management, a monthly industry magazine. Those penalties -- 90 percent of which came from late fees -- made up about 8 percent of the issuers' revenue, compared with 3 percent from annual fees.

… Another reliable source: the inattentive who don't read the fine print and unwittingly sign up for a product or service because they did not check the "opt out" box or did not call to cancel after a "free trial" expired. Over the past two years, complaints to the Federal Trade Commission about unordered merchandise have increased by 60 percent, and opt-out marketing made up a significant chunk of those complaints.

… In the telecommunications industry, the quest to offer the customer rock-bottom "permanent rates" has led to a rash of additional fees disguised as taxes, Seidel said. … Many corporations use these fees, and clever marketing ploys, to make up for the low prices they offer customers up front.

The new information indicates a pattern in which President Bush, Vice President Cheney and their subordinates -- in public and behind the scenes -- made allegations depicting Iraq's nuclear weapons program as more active, more certain and more imminent in its threat than the data they had would support. On occasion administration advocates withheld evidence that did not conform to their views. The White House seldom corrected misstatements or acknowledged loss of confidence in information upon which it had previously relied:

• Bush and others often alleged that President Hussein held numerous meetings with Iraqi nuclear scientists, but did not disclose that the known work of the scientists was largely benign. Iraq's three top gas centrifuge experts, for example, ran a copper factory, an operation to extract graphite from oil and a mechanical engineering design center at Rashidiya.

• The National Intelligence Estimate (NIE) of October 2002 cited new construction at facilities once associated with Iraq's nuclear program, but analysts had no reliable information at the time about what was happening under the roofs. By February, a month before the war, U.S. government specialists on the ground in Iraq had seen for themselves that there were no forbidden activities at the sites.

• Gas centrifuge experts consulted by the U.S. government said repeatedly for more than a year that the aluminum tubes were not suitable or intended for uranium enrichment. By December 2002, the experts said new evidence had further undermined the government's assertion. The Bush administration portrayed the scientists as a minority and emphasized that the experts did not describe the centrifuge theory as impossible.

• In the weeks and months following Joe's Vienna briefing, Secretary of State Colin L. Powell and others continued to describe the use of such tubes for rockets as an implausible hypothesis, even after U.S. analysts collected and photographed in Iraq a virtually identical tube marked with the logo of the Medusa's Italian manufacturer and the words, in English, "81mm rocket."

• The escalation of nuclear rhetoric a year ago, including the introduction of the term "mushroom cloud" into the debate, coincided with the formation of a White House Iraq Group, or WHIG, a task force assigned to "educate the public" about the threat from Hussein, as a participant put it.

"It is a region," Rice said, "where hopelessness provides a fertile ground for ideologies that convince promising youths to aspire not to a university education, a career or family, but to blowing themselves up, taking as many innocent lives with them as possible. We need to address the source of the problem."

"We will work with our partners to ensure that small and mid-sized businesses have access to capital and support efforts in the region to develop essential laws on property rights and good business practices," Bush said May 9. "By replacing corruption and self-dealing with free markets and fair laws, the people of the Middle East will grow in prosperity and freedom."

… [B]usiness investment over all has been the weakest segment of the economy for the last several years. Instead, companies have shifted strategy and hunted relentlessly for every possible way to squeeze more production out of the remaining workers.

… The hope [of the economists] is that the Bush administration's recently passed tax cuts, which include rate reductions as well as immediate rebates for families that claim child tax credits, will increase consumer demand for the next six to nine months. By that time, economists say, increased sales will have forced companies to start expanding both their factories and their work forces. … But even those who agree are cautious. Manufacturing in the United States remains stagnant, with ever greater numbers of domestic producers being eclipsed by low-wage rivals in China.

Preliminary plans for a new contract, which industry executives had thought might total $1 billion, were announced late in June by the Corps of Engineers. The bidding was meant, in part, to introduce competition and a sense of fairness into the lucrative Iraqi reconstruction market, an executive with a major engineering concern said. Like many industry executives, he would speak only on condition of anonymity because his company does not want to jeopardize its chances for future government contracts. But in the last month, the corps, which is overseeing the reconstruction efforts, has specified a timetable for the work that effectively means that the value of any contract companies other than Halliburton could win would be worth only about $176 million, according to Corps of Engineers documents and executives in the engineering and construction business.

… The newly released information indicates that a week before the Dallas meeting, the Corps of Engineers and Halliburton participated in a large workshop in Baghdad that also included representatives of the Iraqi oil ministry and the ruling Coalition Provisional Authority to draw up a detailed plan for rebuilding much of the Iraqi oil industry by the end of March 2004.

… But the corps notes in the plan [for reconstruction, on which bids were "sought"] that the first two phases, which together would require about $967 million in investments, would have to be completed by Dec. 31. Halliburton's competitors worry that if the winner of the new contracts is not announced until Oct. 15, that company could not even begin the work before year's end. The only company that could do the work based on that timetable is Halliburton, its competitors say.

… Working in Iraq has helped turn around Halliburton's financial performance, its second-quarter results showed. The company made a profit of $26 million, in contrast to a loss of $498 million in the period a year earlier. The company stated that 9 percent, or $324 million, of its second-quarter revenue of $3.6 billion came from its work in Iraq.

An act of sabotage that damaged a gasoline pipeline near Tikrit in northern Iraq last week highlights one reason oil may not provide the deep pockets for Iraq's reconstruction that some had predicted. … Iraq's oil production is expected to return to prewar levels - of about 2.8 million barrels daily - by next spring under an industry rehabilitation plan approved recently by American and Iraqi authorities. That plan calls for the US to pay $1 billion of the $1.6 billion initial refurbishing costs - much more than some supporters of an Iraq invasion estimated when they said rebuilding could be self-financing. … Iraq needs $20 billion just to keep services at bare-bones levels, a UN official said recently. But revenues from oil and whatever other income the country can muster - such as repatriation of frozen assets held overseas - is likely to provide no more than $15 billion.

1. Since 1998 insurers’ losses on medical malpractice claims have increased rapidly in some states. For example, in Mississippi the amount insurers paid annually on medical malpractice claims, or paid losses, increased by approximately 142 percent from 1998 to 2001 after adjusting for inflation. We found that the increased losses appeared to be the greatest contributor to increased premium rates, but a lack of comprehensive data at the national and state levels on insurers’ medical malpractice claims and the associated losses prevented us from fully analyzing the composition and causes of those losses.

2. From 1998 through 2001 medical malpractice insurers experienced decreases in their investment income as interest rates fell on the bonds that generally make up around 80 percent of these insurers’ investment portfolios. (24-27)

3. During the 1990s insurers competed vigorously for medical malpractice business, and several factors, including high investment returns, permitted them to offer prices that in hindsight, for some insurers, did not completely cover their ultimate losses on that business. As a result of this, some companies became insolvent or voluntarily left the market, reducing the downward competitive pressure on premium rates that had existed through the 1990s. (28-32)

4. Beginning in 2001 reinsurance rates for medical malpractice insurers also increased more rapidly than they had in the past, raising insurers’ overall costs. (32-33)

In combination, all of these factors contribute to the movement of the medical malpractice insurance market through cycles of hard and soft markets – similar to those experienced by the property-casualty insurance market as a whole – during which premium rates fluctuate. Cycles in the medical malpractice market tend to be more extreme than in other insurance markets because of the longer period of time required to resolve medical malpractice claims, and factors such as changes in investment income and reduced competition can exacerbate the fluctuations. (33-36)

It addressed possible reasons for observed increases in payouts (24):

1. The cost of medical care and the value of lost wages rise;

2. A greater societal propensity to sue; a “lottery mentality,” where a lawsuit is seen as an easy way to get a large sum of money;

3. A sicker, older population;

4. Greater expectations for medical care because of improved technology; and

5. A reduced quality of care and the breakdown of the doctor-patient relationship owing, for example, to factors such as the increasing prevalence of managed care organizations.

Based on available data, as well as our discussions with insurance industry participants, a variety of factors combined to explain the malpractice insurance cycle that produced several years of relatively stable premium rates in the 1990s followed by the severe premium rate increases of the past few years. To begin with, insurer losses anticipated in the late 1980s did not materialize as projected, so insurers went into the 1990s with reserves and premium rates that proved to be higher than the actual losses they would experience. At the same time, insurers began a decade of high investment returns. This emerging profitability encouraged insurers to expand their market share, as both the downward adjustment of loss reserves and high investment returns increased insurers’ income. As a result, insurers were generally able to keep premium rates flat or even reduce them, although the medical malpractice market as a whole continued to experience modestly increasing underlying losses throughout the decade. Finally, by the mid- to late 1990s, as excess reserves were exhausted and investment income fell below expectations, insurers’ profitability declined. Regulators found that some insurers were insolvent, with insufficient reserves and capital to pay future claims. In 2001, one of the two largest medical malpractice insurers, which sold insurance in almost every state, determined that medical malpractice was a line of insurance that was too unpredictable to be profitable over the long term. Alternatively, some companies decided that, at a minimum, they needed to reduce their size and consolidate their markets. These actions, taken together, reduced the availability of medical malpractice insurance, at least in some states, further exacerbating the insurance crisis. As a result of all of these factors, insurers continuing to sell medical malpractice insurance requested and received large rate increases in many states. It remains to be seen whether these increases will, as occurred in the 1980s, be found to have exceeded those necessary to pay for future claims losses, thus contributing to the beginning of the next insurance cycle.

Meanwhile, the proposed legislation has turned into a lavish exercise in corporate welfare. Both the House and Senate bills bristle with tax breaks and subsidies for special interests, ranging from Midwest ethanol producers to the coal and nuclear power industries. … [The approach of the Bush plan] is flawed. First, it focuses largely on boosting production. Second, it relies on official intervention rather than improving market mechanisms. [Whatever energy crisis exists] will be more effectively resolved by restraining demand. Although the US has more than halved the amount of energy needed to produce a unit of economic output since 1973, its consumption remains high by European standards. Most egregiously, US motorists' love affair with petrol-guzzling vehicles has kept fuel consumption bounding ahead.

… Yet ballooning federal and state budget deficits …, higher energy taxes may be one of the few revenue-raising alternatives available. In the end, the US energy market may be shaped much more - and for the better - by the unintended consequences of Mr Bush's fiscal policies than by the pork-barrel legislation now before Congress.

As the 1990s unfolded, uncertainty persisted. There were plenty of bumps in the road - the cowboy capitalists who stripped privatized companies, the corrupt state officials and, not least, the breakup of the optimistic Czechoslovak federation. Although average household income has quadrupled since 1990, the cost of housing has risen sevenfold and unemployment has gone from near zero to 10 percent. For many Czechs, the transition has been more like swapping one set of problems for another, rather than the salvation they envisioned. Now, Prague has to cope with huge traffic jams because its roads were not built for a society in which everyone can own a car. Strip malls are drawing shoppers away from the city center. Meanwhile, the old communist-era cement housing blocs are becoming ghettos for those who have not coped so well with capitalism.

A major impediment to better CEO accountability and corporate governance is "social distancing" -- pushing reform-minded directors from the circles of power in the corporate elite, according to a new study by University of Texas management professors. … The research and resulting 65-page paper, "Social Distancing as a Control Mechanism in the Corporate Elite" by Westphal and Poonam Khanna, confirms what critics have long argued -- country-club cronyism bogs down efforts to rein in CEO power and advance shareholder rights. … When asked if legally mandated board reforms that require greater board independence will make a difference in governance, Westphal said if the law requires companies to do it -- they will. But when corporate America is left to making choices, he is less optimistic.

The fantasyland that Argentina represented for foreign financiers came to a catastrophic end early last year, when the government defaulted on most of its $141 billion debt and devalued the nation's currency. A wrenching recession left well over a fifth of the labor force jobless and threw millions into poverty. An extensive review of the conduct of financial market players in Argentina reveals Wall Street's complicity in those events. Investment bankers, analysts and bond traders served their own interests when they pumped up euphoria about the country's prospects, with disastrous results. Big securities firms reaped nearly $1 billion in fees from underwriting Argentine government bonds during the decade 1991-2001, and those firms' analysts were generally the ones producing the most bullish and influential reports on the country. Similar conflicts of interest involving analysts' research have come to light in other flameouts of the "bubble" era, such as Enron Corp. and WorldCom Inc. In Argentina's case, though, the injured party was not a group of stockholders or 401(k) owners, it was South America's second-largest country.

. . . [T]he optimism emanating from Wall Street, combined with the heavy inflow of money, made the Argentine government comfortable issuing more and more bonds, driving its debt to levels that would ultimately prove ruinous.

. . . Globalization is supposed to keep problems like Argentina's from occurring. In theory, international financial markets reward sound economic policies by steering capital to countries that practice them. The influence of the capital inflow makes a government even more disciplined, because policymakers know that otherwise investors may yank their money out. In practice, the gusher of foreign money lulled Argentina's government into complacency, acknowledged Rogelio Frigerio, who was secretary of economic policy in 1998. "If you get the money so easily as we did, it's very tough to tell the politicians, 'Don't spend more, be more prudent,' because the money was there, and they knew it," he said.

. . . [Wall Street's promotion of Argentinan debt, like other investments, followed this pattern:] "It's like, if you have something good to say, you say it, but if you have something bad to say, just keep your mouth shut." . . . But others acknowledge that they cannot help being influenced by the fact that their compensation is likely to be greater if their investment banking colleagues win deals to sell bonds. For one thing, success for the investment bankers means the pool of money available for bonuses will be larger, and at some firms, the analysts' bonuses are decided by groups of managers that include investment bankers.

. . . [The method of evaluating portfolio managers contributed to the problem.] Just as in the world of stock market investing, where money managers aim to beat the Standard & Poor's 500-stock index, many professional investors in emerging markets are judged every quarter or so by how well their portfolios fare in comparison to a benchmark. . . . The index virtually forced big investors to lend vast sums to Argentina even if they feared that the country was likely to default in the long run, several money managers said. Although default would hurt their portfolios, they would still lose less than the index as long as they were a bit "underweight," meaning they held a smaller percentage of Argentine bonds than the index dictated. They didn't dare be too far underweight. Money managers who shunned Argentine bonds were taking a huge risk, because their portfolios would almost certainly underperform the index in the event Argentine bonds rallied, as happened from time to time.

"Confidence is vulnerable right now," said Robert Shiller, a professor of behavioral economics at Yale University's International Center of Finance. "There's distrust and dissatisfaction with the people on Wall Street -- the talking heads and analysts who kept telling them the market would keep going up when it didn't." . . . So far, though, the economy hasn't shown the ability to create new jobs, and that's been a source of major concern for investors. . . . The jobs picture is one of the big factors sapping investor confidence, said Shiller. In surveys of investor confidence, he finds investors are increasingly willing to put money into stocks, but not for the long term. Most people still don't trust the market as a long-term investment, he said. . . . "The fact that the economy has lost 2.5 million jobs is an enormous negative," said Shiller. "It's a confidence destroyer."

. . . "A lot of people [e.g., the President] have been talking as if the economy will jump up like a coiled spring -- but what I see is something moderate," said Bitner.

The U.S. labor market continued to weaken last month as businesses shed jobs, workers put in fewer hours and about half a million people gave up looking for work, the Labor Department reported yesterday. The jobless rate declined to 6.2 percent, from 6.4 percent in June, entirely because of the drop in the size of the workforce -- a person must be actively seeking a job to be counted among the unemployed. . . . Overall, payroll employment dropped by 44,000 jobs in July, the sixth monthly loss in a row, as gains in a few industries partially offset larger declines elsewhere, including a huge 71,000 loss in manufacturing jobs. Payroll job losses in May and June also were larger than reported earlier, the department said. The number of factory workers has now fallen every month for three years, for a total decline of 2.7 million, nearly 16 percent since the middle of 2000.

Ayers said the ISM numbers echoed the Commerce Department's report Thursday that the economy grew at a 2.4 percent annual rate in the second quarter. "Both are telling the same story, that's it's going to be a slow crawl back," he said. "Neither the manufacturing sector nor the economy in general is going to be taking off anytime soon."

In September 1998, the [Intelligence Community] obtained information that Bin Laden's next operation might involve flying an explosive-laden aircraft into a U.S. airport and detonating it. (Emphasis added.)

In the fall of 1998, the [Intelligence Community] obtained information concerning a Bin Laden plot involving aircraft in the New York and Washington, D.C. areas.

In March 2000, the [Intelligence Community] obtained information regarding the types of targets that operatives of Bin Laden's network might strike. The Statute of Liberty was specifically mentioned, as were skyscrapers, ports, airports, and nuclear power plans. (Emphasis added.)

"That goal is to see the spread of our values and to understand that our values and our security are inextricably linked, much as they were in Europe, but they are also linked in the Middle East." The vision described by the official represents a change in the administration's emphasis in describing the U.S. purpose in Iraq. Before the war, Bush at times stressed the limits of the mission, promising to "remain in Iraq as long as necessary and not a day more." At that time, Bush justified the conflict largely by asserting the need to strip Hussein of chemical and biological weapons and disrupt his nuclear ambitions.

The same kind of pressure was applied to Japan in 1985 when its exports were seen as a threat. Japan Inc. buckled then, raising the value of the yen while also pumping cheap loans into the economy. That market bubble popped in 1990, and Japan has been stuck in a slump ever since. . . . China shouldn't repeat Japan's mistake with a dramatic yuan revaluation. Small steps to broaden the trading range of the yuan, reducing subsidies to exporters, and pegging the yuan to a "basket" of several currencies could help China slowly move from an export-driven model to one based on domestic demand.

Even a 40 percent rise in the yuan, as is possible in a true float, probably won't bring back American low-tech jobs. Globalized US companies will just move to other low-wage countries. And many of those firms are in China mainly to tap that huge market.

When the average large pickup truck collides with a second vehicle, people in the second vehicle die at a rate of 293 for every 100,000 crashes, according to federal crash statistics. By comparison, large sport utility vehicles kill people in the second vehicle at a rate of 205 per 100,000 crashes; minivans kill at a rate of 104 deaths; and large cars at a rate of 85 deaths. . . . Because they roll over more easily than cars, pickup trucks also have fatality rates for their own occupants that are slightly higher than those of passenger cars, but below those of sport utility vehicles, according to the most recent data from the traffic safety agency. . . . Big pickups tend to be safer for their own occupants than small pickups, but when used as family vehicles they are less safe than minivans and station wagons.

. . . Fuel efficiency of the average pickup has also declined from as high as 19.2 miles a gallon in the 1987 model year to 16.8 miles a gallon today. The average S.U.V. gets 17.8 miles a gallon now and the average car 24.8. And even those averages do not count the very biggest vehicles — those weighing more than 8,500 pounds fully loaded — which are exempt under federal law. Like the Hummer and other giant sport utilities, the biggest pickups average little more than 10 miles a gallon. And more gas burned means more gases spit out the exhaust pipe. Over its projected life span, the average pickup truck under 8,500 pounds emits 97.9 tons of global warming gases, according to the Union of Concerned Scientists, an environmental group. The average for S.U.V.'s is 93.4 tons and for cars 66.5 tons.

"I take personal responsibility for everything I say, of course," Mr. Bush said. "I also take responsibility for making decisions on war and peace. And I analyzed a thorough body of intelligence, good, solid, sound intelligence that led me to come to the conclusion that it was necessary to remove Saddam Hussein from power." Asked in several ways whether he had oversold the threat from Iraq to justify the war, Mr. Bush said that he remained confident that banned weapons would be found, and that there had been a well-documented case even before he took office that Mr. Hussein had biological, chemical and nuclear weapons programs.

A new report from the General Accounting Office (GAO) concluding that medical liability losses are the primary drivers of insurance rates reportedly corroborates data provided to the GAO last December by the National Association of Independent Insurers (NAII). "The GAO report reinforces insurers' contention that loss costs, not poor investment performance, are the most significant contributor to higher premiums," said David Golden, director of commercial lines for the NAII. "The insurance industry has always made it clear that although other factors have a marginal impact, rates are driven by losses, plain and simple. The leading cause of current market conditions was the massive increase in losses in the mid- to late 1990s. When the median judgment doubles from $500,000 to more than $1 million in just five years, this is bound to have an impact on premiums."