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Assembly line workers at the Chrysler assembly plant in Sterling Heights, Mich. The economy is getting good marks in the latest data, but some worries about the job market continue. (AP)

Job Worries Linger But The Economy Is Looking Good

Jul 30, 2014

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Marilyn Geewax

Five years after the Great Recession ended, where are we with this recovery?

On Wednesday, the Commerce Department and the Federal Reserve both answered by saying, in effect:

We're in a sweet spot — growing at a decent rate with good reason for optimism.

Or as the Fed blandly put it, "economic activity will expand at a moderate pace."

President Obama, speaking on the economy in Kansas City, Mo., was more effusive.

After a brutal recession, "we have fought back. We have got back off our feet, we have dusted ourselves off ... ," Obama said. "Construction is up. Manufacturing is back. Our energy, our technology, our auto industries — they're all booming."

Most economists agree the signposts are pointing up. New numbers provide evidence "that the economy is healthy and will continue to grow at an above-average rate in the second half of this year and into 2015," IHS Global Insight chief U.S. economist Doug Handler said in his written assessment.

The upbeat day started with the Commerce Department saying GDP, or gross domestic product, rose at a robust 4 percent pace during April, May and June.

Economists were relieved to see the key measure of all goods and services rebound after a dismal winter. Back in January, February and March, when frigid temperatures and unusual snow storms kept many shoppers at home, the economy shrank by 2.1 percent.

But then consumers came out of hibernation. Most economists had predicted a springtime bounce back of 3 percent, and were surprised to see the surge to 4 percent.

When the past 12 months are tallied together, growth evens out to about 2.4 percent over the period, a moderate pace.

Economists were still chewing over the GDP report when another important announcement came out at 2 p.m.

Federal Reserve policymakers ended their regularly scheduled meeting by saying "economic activity rebounded [and] labor market conditions improved, with the unemployment rate declining further."

But it wasn't all rosy. The Fed also noted that the job market remains slack. As a result, the central bank will continue to try to make it easier to borrow. The goal is to help businesses expand and hire more.

The extra stimulus is still needed because "a range of labor market indicators suggests that there remains significant underutilization of labor resources," the Fed said in its statement.

So the central bank will stick with its current program of buying bonds to help spur growth, but will continue to "taper" it down until an end date in October. For now, the Fed will cut its monthly bond purchases by another $10 billion, pushing the total down to $25 billion. Back in 2013, the amount was $85 billion a month.

Interpretation: The Fed is committed to taking its foot off of the economy's gas pedal. But the move will continue to be very gradual, and it has no plans yet to pump the brakes by intentionally raising interest rates.

Some economists don't like that super-gradual approach. One critic is Charles Plosser, president of the Federal Reserve Bank of Philadelphia. As one of the Fed policymakers, he cast the sole vote in dissent because he disagrees with the Fed's plan to keep short-term interest rates near zero for "a considerable time." The fear is that such low rates might allow the economy to overheat and generate inflation.

But Fed Chair Janet Yellen remains more worried about jobs than inflation. Earlier this month, she expressed her concerns about the labor market and said "the recovery is not yet complete."

On Friday, everyone will get fresh ammo to continue this debate. At 8:30 a.m., the Labor Department is scheduled to release the July labor report. If the unemployment rate falls significantly from its current 6.1 percent level, it will strengthen the hand of critics who say it's time to push interest rates back up to higher, more normal levels.

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An injured man screams as he is carried to an ambulance following a strike in Gaza City's Shijaiyah neighborhood on Wednesday (AP)

Amidst Confusion, 17 Killed By Shelling At Market In Gaza

by Alan Greenblatt
Jul 30, 2014

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Alan Greenblatt

It may have been a tragic case of confusion.

The Israeli Defense Forces declared a four-hour humanitarian cease-fire on Wednesday. But the army said it did not apply where soldiers were already engaged and that residents who had evacuated should not return to those areas.

According to Gaza's health ministry, at least 17 Palestinians were killed and as many as 200 wounded when shells hit a street market in Gaza City's Shijaiyah neighborhood, "which residents thought was temporarily safe but which the Israelis considered part of an active combat zone," The New York Times reports.

More than 1,300 Palestinians, mostly civilians, have been killed during the 23-day old conflict. Israel has lost 56 soldiers and three civilians.

The Israeli army said that Hamas fired dozens of rockets into Israel Wednesday, reporting no injuries or damage. Hamas said the number was far fewer.

Israel's Security Cabinet met for four hours on Wednesday and ordered the army to continue its offensive in Gaza. An Israeli official told the Jerusalem Post that the operation has led to "significant achievements on the ground" and is damaging Hamas' "strategic apparatus."

As we reported earlier, at least 20 people were killed, according to Palestinian health officials, when a shell struck a United Nations-run school Wednesday morning in Gaza.

Both the U.N. and the White House have condemned that attack.

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A glass is filled with Moldovan wine at a wine fair in Belgium on Nov. 4, 2013. (AP)

Moldova's Winemakers Seize Upon Region's Geopolitical Moment

Jul 30, 2014

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Grapes to make Cabernet wine are readied to be harvested in southern Moldova in 2009. Only 3.6 million people live in Moldova, but the country is ranked fourteenth in the world among wine producers.

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Dan Charles

Consider, for a moment, the misfortunes of winemakers in Moldova, a former Soviet republic in southeastern Europe, tucked in between Ukraine and Romania.

Their country is the poorest in Europe, with a per capita GDP about the same as Honduras. They'd love to sell their product — which have gotten approving nods from foreign critics in wealthier countries. But most of those customers don't even know that Moldova exists, let alone that its winemaking tradition goes back thousands of years.

"It's a very popular question: Where's Moldova?" says Veaceslav Nivnea, marketing director for Albastrele Wines, a company based in Chisinau, the country's capital.

Now throw in a dose of political upheaval. And we're not just talking wars and revolutions, Soviet rule or destruction of vineyards during Mikhail Gorbachev's anti-alcohol campaign in the 1980s.

There's more. Late last year, Russia, traditionally their biggest market, banned imports of Moldovan wine, ostensibly for reasons of food safety.

But the timing — right before Moldova was set to sign an agreement to pursue closer ties to the European Union — suggested that the move could have been political retaliation. (The EU's food safety authorities saw no problem with the same wines.) Meanwhile, right next door in Ukraine, there's a political crisis and escalating violence.

So are Moldovan winemakers feeling beaten down? Not at all. "It helps us," says Andrian Davidescu, commercial director of Vinaria din Vale, another wine producer. "Before, nobody knows there is a country Moldova. Now, they know where it is. Next to Ukraine!"

In fact, 13 of Moldova's top wine producers chose just this moment to promote their wines — which observers say have improved vastly in recent years — to wine reviewers and importers in the U.S. Earlier this week, they held a tasting event in Washington, D.C. On Thursday, they'll be doing the same at the Astor Center in New York.

According to Christy Canterbury, a New York-based wine expert, wines from Moldava certainly could claim a place on the wine list, if given a fair chance. "Prospects for the dry aromatic whites are fantastic," she says. Their biggest obstacle? A lingering perception among many importers that former Soviet republics "must be rustic countries that don't know what they're doing."

Moldova has outgrown that reputation, she says. Winemakers are using the latest technology, and "the terroir is excellent." She's tasted 13 wines from producers on the current tour. Eleven of the 13, she says, "were very good." (The other two were "fine, but nothing to write home about.")

The other big obstacle for Moldovan producers, she says, is the crowded wine marketplace, and the tendency of shops to put wines from Moldova in the section marked "Other Regions," at the back of the store or the bottom of the rack. Canterbury advises Moldovan producers to focus on promoting their local wine varieties, such as Feteasca Alba and Feteasca Neagra, because few others grow them.

But the essential problem of Moldova's obscurity remains. The country's winemakers need something to grab a buyer's attention; something that gives Moldovan wines an identity, and makes them memorable.

Canterbury has one idea. There may not be another country in the world that relies so heavily for its economic survival on this ancient drink.

Only 3.6 million people live in Moldova, but somehow it's the fourteenth biggest wine producer in the world, just ahead of Brazil. According to Canterbury, roughly a quarter of the country's population works, directly or indirectly, in the wine business. Astonishingly, it even boasts the world's biggest wine cellar, a vast cave with 120 miles of passageways, of which 34 miles are used. Moldovans even claim that the shape of their country resembles a bunch of grapes.

So who's got a catchy marketing slogan for a small, embattled, country that's kind of like a big, big vineyard?

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A glass is filled with Moldovan wine at a wine fair in Belgium on Nov. 4, 2013. (AP)

Why Are Theater Tickets Cheaper On The West End Than On Broadway?

Jul 30, 2014 (All Things Considered)

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Grapes to make Cabernet wine are readied to be harvested in southern Moldova in 2009. Only 3.6 million people live in Moldova, but the country is ranked fourteenth in the world among wine producers.

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It's a Wednesday afternoon in London and a bunch of kids are standing outside a West End theater, giddily unaware that their parents have just shelled out a lot of money for the experience they're about to have. A giant sign over their heads shows a silhouette of a girl standing on a swing, her hair flying behind her in the wind — it's a matinee performance of Matilda.

More than 3,000 miles away on the same Wednesday afternoon, the same scene plays out on Broadway. It's the same show, with equally excited kids. The difference is that, in London, parent Amanda Mono paid about $60 a ticket, and, in New York, parent Jay Friedman paid $137.

"Should be $137 for four tickets, but it's not," Friedman says. "Welcome to New York."

If you go to see Les Miserables, the giant barricade will spin in London just like it does in New York. In Phantom of the Opera, the chandelier crashes to the ground on the West End just the way it does on Broadway. But according to the Society of London Theatre, the average ticket price for a West End show is about $70. In New York, according to the Broadway League, the average price just crossed $100 for the first time.

That's crazy, right? Everybody knows London costs more than New York. A sandwich costs more; a house costs more; nearly everything costs more — except theater. So what's going on?

"There's a kind of different mentality, I think, to British theater because of the subsidized sector," says Time Out theater editor Andrzej Lukowski. London has a long tradition of government-subsidized shows. And while these big, West End musicals aren't subsidized, they have to compete with theaters that are, which helps keep prices low.

On top of that, Lukowski says it costs a lot less to put a show on in London: Weaker unions mean lower salaries for the stagehands and technicians, and the performers tend to make less money too.

"Because it's a lot cheaper to run a show in the West End than on Broadway, a show doesn't really need to be as much of a hit to be able to kind of break even, cover its costs, carry on," Lukowski says. "My understanding of Broadway is a show is either a huge hit or it's really not."

Hal Luftig knows that first hand — he's produced shows in both cities. Right now, he's trying to bring the Tony Award-winning musical Kinky Boots from New York to London.

"The Brits don't really advertise on television as much as we do here on Broadway, and television advertising is a big, huge expense," Luftig says. "That's one big cost, and another is the construction, the building, of sets. And I think over on the West End in London, they're [also] doing movies, television and film all at the same time."

Think of it this way: In the United States, New York does the big theater shows while Los Angeles does TV and movies. But in London, it's all in one place. Sets, materials and workers can all be shared, so it's cheaper.

Then there's the experience itself. London theater goer Ben Mono says, in New York, "The theaters are nicer. The theaters are air-conditioned. You get a free program; you get your playbill. You get looked after; you get shown to your seat. People are polite. Here, if you get the cheaper theater tickets, you're in theaters that haven't got air conditioning; the theaters are crumbling. You're paying restoration levees for theaters which they're not doing anything about. People are rude. It's stuffy."

Hal Luftig says Mono has a point. "Yes, we do have much stronger air conditioning. And there's been a big, concerted effort over here on Broadway — we do charge a restoration fee and the theaters have been restored. There is some truth to what that gentleman is saying."

As for the claim that Broadway's prices make shows inaccessible, Luftig says, "If you really want to go, there are ways to get less expensive tickets." And even the West End has been raising its prices: "I just bought a theater ticket on the West End — it was 80 pounds. ... I do remember the day when you could go and it was 10 pounds."

At the end of the day, it's basic economics: Theaters charge what people are willing to pay. In fact, new pricing strategies now let producers charge the most for popular shows on popular days - it can be up to almost $500 for The Book of Mormon on Broadway.

Still, people keep seeing the shows. In the West End, theater-going parent Emma Ede says there's something really special about the theater. "It's magical and I think the children get really involved in the show."

But magic, after all, costs money.

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An Israeli army officer walks near the entrance of a tunnel allegedly used by Palestinian militants for cross-border attacks, at the Israel-Gaza border. A network of tunnels Palestinian militants have dug from Gaza to Israel is taking center stage in the latest war between Hamas and Israel. (AP)

Gaza's Network Of Tunnels Is A Major Hole In Israel's Defenses

Jul 30, 2014 (All Things Considered)

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An Israeli army officer gives journalists a tour on July 25 of a tunnel allegedly used by Palestinian militants for cross-border attacks, at the Israel-Gaza border.

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Israeli officials say the country's deadly ground offensive won't end until its soldiers destroy a vast network of Hamas tunnels the militants use to try to attack Jewish communities outside the Gaza Strip.

Three more soldiers died Wednesday when explosives detonated as they uncovered one of those tunnels. That came hours after Hamas released a graphic video claiming to show another deadly tunnel-generated attack inside Israel earlier in the week.

Such incidents have many Israelis asking why their forces didn't stop Hamas from building the elaborate tunnels in the first place. And in Israel, calls are mounting for an investigation into how authorities have handled the tunnel threat.

In the grainy video released by Hamas Wednesday, black-clad militants shove their weapons through a tunnel entrance, then climb out and run toward what looks like an army post inside Israel.

Five Israeli soldiers were killed in the attack Tuesday — which the video purportedly shows — as were a handful of Hamas fighters. Israeli officials say the militants' aim was to kill and kidnap Israeli citizens.

Such revelations are rattling Israelis more than the 2,000-plus rockets Hamas has fired into their country since the war began earlier this month, says Smadar Perry, who writes about the tunnels for Israel's largest daily newspaper, Yedioth Ahronoth.

"If we don't finish the problem of the tunnels, people in the southern part of Israel along the border with Gaza may leave their houses and go look for a new address because nobody wants to go to sleep and wake up with the killers and terrorists in his bedroom," says Perry, who is the paper's Middle East editor.

But she and other journalists say Israeli authorities will likely have to answer for how Hamas was able to build enough tunnels to allow militants to infiltrate Israel six times since the Gaza offensive began three weeks ago.

An investigation by Israel's state comptroller in 2005 found "continued failure" in dealing with the tunnel problem due to issues with technology and intelligence. The Israeli military only intensified its efforts to deal with the tunnel threat in December 2004 — after a number of major attacks — but it wasn't enough, the state comptroller concluded.

At the time, the inquiry called for bringing in more international and Israeli experts to find better ways to detect tunnels.

At a briefing earlier this week, Yuval Steinitz, Israel's intelligence minister, defended the way authorities have dealt with the tunnels. The military says 32 have been uncovered so far; half of those have been destroyed.

"You know it is not always the case that if we have threats we decide to immediately go to a big ground operation in order to neutralize it," Steinitz said.

Perry, however, says she found few officials who were concerned about the tunnels before some of the newer, more sophisticated versions were accidentally uncovered earlier this year.

The journalist toured one of them with a senior Israeli officer.

"It was very strange," Perry says. "I could feel or I could sense that the officer and the military feel helpless because these four tunnels were exposed by coincidence because of the heavy rains and not because of intelligence."

Military officials deny they are negligent in tackling the tunnels and say they used both intelligence and technology to plot them.

But what they and their critics agree on is that previous encounters with the tunnels — most of which ran between the Gaza Strip and Egypt — were less worrying because they were mainly used for smuggling.

Israeli officials say it wasn't until Israel withdrew from the Gaza Strip in 2005 and Hamas took over the territory in 2007 that a labyrinth was created to send militants into Israel for large-scale attacks. Because Jewish settlements were gone, officials say, it made it more difficult to keep tabs on what Hamas was doing.

Israeli Reserve Brig. Gen. Shimon Daniel, who headed the combat engineering force between 2003 and 2007, says it wasn't easy to uncover tunnels even back then, because they aren't deep enough for ground penetration radar to locate.

He says Israel adapted foreign technology used to find oil and gas reserves to come up with a way to locate tunnels.

The newer tunnels are easier to find, Daniel adds, because they are far longer and heavily reinforced.

"Unlike what it was like during my time, they are put together with communications [capabilities], air, electricity, cement walls and other materials," he says.

All of this means they show up better on radar.

But not so their entrances into Israel, because they are too close to the surface for radar to locate.

"It looks simple, but it's complicated. It's low-tech that high-tech doesn't even know how to find," he explains. "It borders on the abilities of what modern physics can do today."

Nor can they be seen by the naked eye, Daniel adds, because they aren't dug open until the actual attack.

He adds that as many as 11 tunnel entrances into Israel have been uncovered so far.

Daniel Estrin contributed to this report.

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