Financial life in a big town

Enormous oil wealth lies thousands of feet below Libya, but whether it will be claimed, and by whom, now that Moammar Gadhafi is gone is very much an open question.

Drilling and shipping equipment has been damaged in the Libyan civil war, land mines must be cleared around oil fields, and a legal framework for how oil money is collected and distributed must still be worked out.

Whatever government is formed could open vast regions of Libya for drilling at reasonable terms _ or it could demand that foreign oil companies pay exorbitant royalties or require them to build infrastructure in exchange for access to oil.

Libya sits on the biggest reserves of oil in Africa. Those resources could help Libya recover from Gadhafi’s decades-long corruption and the civil war. Or the oil could be kept out of reach by political chaos, crumbling infrastructure or violence.

“It’s extraordinary how the Gadhafi regime squandered so much oil wealth and left it a deprived country in terms of infrastructure,” says Daniel Yergin, chairman of IHS CERA, an energy research firm, and author of a Pulitzer Prize-winning history of the oil industry. “The country will need oil revenues to rebuild and recover.”

The oil industry had already begun to recover in recent months, especially in parts of the country where fighting had long since stopped. Libya is producing about a quarter of the 1.6 million barrels per day of oil it pumped out before the war.

Gadhafi’s death reduces the threat of further fighting in other parts of the country, especially the west and south, where the country’s most important oil fields are. In the best outcome, the national oil company and international companies will soon be able to return to those fields, repair equipment and get oil flowing again.

Analysts say it will take about a year for the country to return to full oil production, but many uncertainties remain.

The country has the potential to someday produce much more oil than it has in recent years, but the oil industry could languish if Libya’s dozens of tribes can’t form a representative government and the country falls into chaos.

The first and most important step is to establish security, experts say. International oil companies with a presence there won’t bring in engineers to assess damage to oil fields and pipelines until they are reasonably sure their workers will be safe.

Gadhafi loyalists are thought to have planted land mines around critical oil infrastructure. Thousands of shoulder-fired missile systems have disappeared from Libyan weapons depots and could be in the hands of Gadhafi loyalists or insurgents.

“If you want to cripple the state, you attack its biggest source of revenue,” says Helima Croft, an analyst for Barclays.

Next, the country must set up a system for oil companies to negotiate contracts for finding, retrieving and selling oil. At least in the interim, it appears that a government oil minister will set policy, such as how much oil companies must pay to extract Libyan oil, and the head of the national oil company will oversee operations.

But the details will probably remain in flux until an interim government can be established. Until then, oil companies can’t be sure that their existing contracts in Libya will remain in effect, although the head of the national oil company has said contracts will be honored at least for a while. It would be up to an elected government to determine whether the contracts would be revised.

What’s most important, analysts say, is that oil companies feel assured that whatever terms are set will not change in the future. Otherwise, they will never agree to spend tens of billions of dollars to repair fields and infrastructure and restore production. Some of the nation’s oil fields, pipelines, refineries and shipping terminals are in relatively good repair, but others are badly damaged.

In general, though, analysts say infrastructure in Libya is in better shape than once feared.

“What we haven’t seen is oil fields blazing,” says Jon Marks, an Africa and Middle East expert with London-based consulting firm Cross-border Information.

Major international oil companies that operated in the country before the civil war, such as Italy’s Eni and Spain’s Repsol, are beginning to assess the situation and restore production in the oil fields offshore and in Libya’s east, long held by anti-Gadhafi forces.

But international oil companies have yet to assess oil fields in the south and west, which produce most of the nation’s oil. U.S. companies that were active in Libya before the war, including Hess Corp. and Marathon Oil Corp. have not returned workers to the country.

Nuri Berruien, the head of the national oil company, told The Associated Press earlier this month that most of the damage appears to be from corrosion. Some older oil fields, such as those of the Sirte basin, require water or natural gas injection to maintain pressure in the reservoir, and that has not been done for more than six months.

Two important oil terminals, which are needed to export oil, are said to be severely damaged, but another is said to have suffered little damage. Also, looters have made off with essential oil field equipment such as power generators, pumps and trucks.

And there are other issues. Many of the country’s most experienced and senior oil engineers are seen by workers as Gadhafi loyalists. At one field, workers are refusing to work until these top engineers are removed.

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AP Business Writers Tarek El-Tablawy in Kabul, Afghanistan, Alan Clendenning in Madrid, and Adam Schreck in Dubai contributed to this story.

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Small Business Administration guaranteed loans hit a record $210.9 million for the eastern district of Missouri in the past year.

That’s a 51 percent increase from a year ago and a record level of SBA lending, according to SBA St. Louis District Director Dennis Melton.

In the eastern Missouri SBA’s 2011 fiscal year, which ended Sept. 30, there were 533 loans to small businesses and start-up companies, totaling $210.9 million. For the 2010 fiscal year, there were $139.2 loans to 566 borrowers.

The previous record was in fiscal 2007 when the SBA’s eastern district reached $178.4 million in loans for 1,173 borrowers.

The SBA said fee waivers on certain kinds of loans

Stocks got a boost Thursday after the release of surprisingly strong U.S. economic data and the overwhelming approval by Germany’s parliament of a bill to strengthen a bailout fund intended to help European countries mired in debt crises.

News that the U.S. economy grew by more than previously thought in the second quarter of the year and a surprisingly large drop in weekly jobless claims drove stocks.

The Commerce Department said the U.S. economy grew at an annual rate of 1.3 percent in the April-June quarter, up from an estimate of 1 percent made a month ago. The improvement reflected more consumer spending and a bigger boost from trade.

“The quality of the improvement far outweighs the scale of improvement with the U.S. consumer key to future growth,” said Michael Woolfolk, an analyst at The Bank of New York Mellon. “The risk for the third quarter is to the upside, with the outside possibility that it could well come in at the upper end of the 2.0-3.0 percent range.”

Further good news emerged from the Labor Department, which found that jobless claims last week dropped 37,000 to a seasonally adjusted 391,000, the lowest level since April 2. It’s the first time applications have fallen below 400,000 since Aug. 6.

The mood in stock markets had already been largely positive after a clear victory for Chancellor Angela Merkel in a vote on beefing up Europe’s bailout fund. More encouraging for the markets, perhaps, was the fact that Merkel did not have to rely on support from opposition parties.

In the short-term, the markets’ hope is that the vote in favor of an expanded rescue fund _ with 523 lawmakers in favor, 85 against and 3 abstentions _ indicates Germany is fully behind efforts to shore up Europe’s defenses against a crisis that has already seen three countries bailed out and stoked talk that Greece will default.

Germany is the biggest economy among the 17-countries that use the euro currency and has to contribute more than others to boosting the firepower of the bailout fund, the so-called European Financial Stability Facility, or EFSF. If passed, Germany will be guaranteeing loans in the future for up to euro211 billion ($288 billion), rather than euro123 billion so far.

“The overwhelming majority in the Bundestag is a good sign and will hopefully mark a step change in German commitment to bringing the spiraling crisis under control,” said Sony Kapoor, managing director of Re-Define, an economic think-tank.

In Europe, Germany’s DAX was up 1.4 percent at 5,657 while France’s CAC-40 rose 1.5 percent to 3,041. The FTSE 100 index of leading British shares was underperforming, trading up 0.3 percent to 5,234.

Wall Street was poised for big gains at the open _ Dow futures were up 1.3 percent at 11,115 while the broader Standard & Poor’s 500 futures rose by the same rate to 1,163.

The improved appetite for risk on Thursday also helped the euro brush off another survey showing that Europe’s economy was grinding to a halt. When risk appetite is high, the euro usually garners support against the dollar. Following the German vote, it was trading 0.8 percent higher at $1.3646.

In its monthly survey of economic conditions around the 17 countries that use the euro, the EU’s executive arm, the European Commission said confidence fell further in September following the previous month’s precipitous collapse. Its economic sentiment indicator stands at 95, against August’s 98.4, and is below the long-run average. The last time it was lower was in December 2009.

The further decline in confidence is likely to pile the pressure on the European Central Bank to reverse recent course and start cutting interest rates again, if not in October, then in November when Italy’s Mario Draghi will have replaced the current head Jean-Claude Trichet.

Earlier in Asia, Japan’s Nikkei 225 index swung between gains and losses before finishing up 1 percent to 8,701.23. South Korea’s Kospi index shot up 2.7 percent to 1,769.29. China’s Shanghai Composite Index dropped 1.1 percent to 2,365.34. Markets in Hong Kong were closed due to severe weather.

Oil prices tracked equities higher too _ benchmark crude for November delivery rose 23 cents to $81.44 per barrel on the New York Mercantile Exchange.

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Sony Corp.’s movie studio has started a spat with theater owners, telling them in a recent letter that it will stop paying for disposable 3-D glasses in U.S. theaters next May. The decision could save it millions of dollars per movie, but consumers might have to pick up the tab.

Sony Pictures said in its letter that theaters could adopt a “guest ownership model” prevalent in Europe and Australia that charges patrons separately for the glasses, which they can re-use on future visits.

RealD Inc., one of the main suppliers of glasses, said a pair in Europe sells for about one euro, or around $1.36 at today’s exchange rate. Most patrons spend more than $3 on popcorn and sodas each, according to major theater chain Regal Entertainment Group, and the average 3-D movie already costs a few dollars more per ticket.

Some designer 3-D glasses cost more than $100 a pair.

The change would come ahead of the release of a couple of Sony’s own 3-D blockbusters next summer, “The Amazing Spider-Man” and “Men in Black III,” although some of Sony’s 3-D movies, including “Arthur Christmas,” come out before then.

Sony Pictures spokesman Steve Elzer said in a statement, “there are constructive ways to deal with the cost of 3-D glasses that will not adversely impact consumers, and can also help the environment.” He called on theater owners to come to the table to work out the issue.

Usually, such negotiations happen behind closed doors. In this case, Sony going public with its new policy didn’t sit well with theater owners. The nation’s largest cinema trade group, the National Association of Theatre Owners, said the unilateral policy change was “insensitive” to consumers in a weak economy.

Regal Entertainment Group on Wednesday threatened to cut the number of screens showing 3-D films if the move means it or its patrons will have to pay more.

“To the extent that Sony seeks to change the current model in a manner that shifts costs to exhibitors, we would be forced to evaluate this new economic model and program our screens accordingly,” said Regal CEO Amy Miles in a statement.

Theater association president John Fithian said Sony’s decision upends a six-year old practice of splitting the costs of the rollout of digital 3-D screens across the country high risk personal loans.

While movie studios have paid for 3-D glasses and the cost of digital projectors and equipment _ expecting to save on film printing costs in the future _ theaters have paid for 3-D add-on technology and labor costs.

The squabble comes amid changes in the movie business that have hurt studios’ profits. People are buying fewer DVDs and aren’t paying enough for Blu-ray discs, on-demand movie downloads, or online subscriptions to make up for the loss. Studios are trying to cut costs through layoffs and even smaller movie budgets.

Fithian said the belt-tightening shouldn’t result in passing the buck to theater owners or moviegoers. “It is nonsensical to say theater owners and our patrons should be paying for their mistakes in the home market,” he said.

It remains to be seen if other studios will follow Sony’s lead and stop paying for the glasses. Time Warner Inc.’s Warner Bros. said it was sticking with its arrangements with theaters for now.

“We are evaluating the situation,” said Chris Aronson, senior vice president of domestic distribution for News Corp.’s 20th Century Fox.

Representatives from Viacom Inc.’s Paramount, Comcast Corp.’s Universal and The Walt Disney Co. did not immediately respond to requests for comment.

One immediate result of the announced change was that RealD shares plunged $1.80, or 14.7 percent, to close at $10.42 in trading Wednesday. RealD supplies technology for about 90 percent of the 3-D screens in the U.S. and is a major supplier of the glasses, which made up about 40 percent of its revenue in the most recent quarter.

RealD spokesman Rick Heineman said the company is fine with any new model, including one in which consumers pay. He compared that system to buying headphones on an airplane. The core profit of the company comes through licensing its technology, he said.

Sony shares rose 12 cents to close at $19.34.

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Asian stocks faced sharp losses early Friday following a precipitous session of trading of Wall Street sparked by fears that a global recession may already be under way.

Hong Kong’s Hang Seng index fell 2.3 percent to 17,493.07, a day after tumbling nearly 5 percent. South Korea’s Kospi plunged 4.8 percent at 1,713.56.

Australia’s S&P ASX 200 fell 1.4 percent to 3,909.5. Markets in Japan were closed for a public holiday.

Investors headed for the exits Thursday as they gave in to fears that a global recession was already under way. Selling started in Asia, picked up speed in Europe and sent Wall Street near its worst finish of the year.

The Dow Jones industrial average fell 3.5 percent to close at 10,733.83. It was the second consecutive rout in the stock market since Wednesday afternoon, when the Federal Reserve announced a change in strategy for fighting the economic slowdown _ a bid to lower long-term interest rates and get people and companies to spend more money.

The Standard & Poor’s 500 index, a broader measure of the stock market, and the Nasdaq composite, which is more heavily weighted with technology stocks, both fell more than 3 percent for the day.

Economic news was bad around the world. A closely watched survey in Europe indicated a recession could be on the way there, and a manufacturing survey suggested a slowdown in China, which has been one of the hottest economies.

Volatility has been exacerbated by investors who find themselves outside their “comfort zones,” according to Sean Darby, equity strategist at Jeffries Hong Kong Ltd.

“The low incidence of sovereign defaults and banking crises until 2008 created a false sense of security amongst investors that this was the ‘norm’. In reality, the global economy tends to experience long periods where countries are in default,” Darby wrote in a report.

The Fed announced Wednesday that it would shuffle $400 billion of its own holdings in hopes of reducing interest rates on long-term loans, a plan known as Operation Twist. The central bank hopes that if people and businesses are able to borrow money more cheaply, they will spend throughout the economy and give it a lift.

Still, the Fed announcement troubled investors because it came with a bleak assessment of the future. The Fed said it sees “significant downside risks to the economic outlook,” including volatility in overseas markets.

Asian stocks were hammered to start the world’s trading. The Nikkei index in Japan fell 2.1 percent. The main stock averages fell 2.8 percent in China, 2.9 percent in South Korea, 2.6 percent in Australia and almost 5 percent in Hong Kong.

Europe fared even worse. The stock market fell 5.3 percent in France, 5 percent in Germany and 4.7 percent in Britain.

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In the stunning case of controversial timber company Sino-Forest, Friday was perhaps the most stunning day of all.

The Ontario Securities Commission cracked down on the company, halting trading in its shares and demanding the resignation of several top executives. Just hours later the OSC rescinded the resignation order because it apparently overstepped the regulator

European stocks held on to small gains Wednesday, shrugging off a credit downgrade of Japan that weighed on Asian markets, as investors hoped that the Federal Reserve will this week announce more stimulus for the U.S. economy.

Markets are expected to fluctuate ahead of Friday’s speech by Fed Chairman Ben Bernanke at an economics conference in Jackson Hole, Wyo.

Hopes that Bernanke will signal new action to kick start the struggling U.S. economy helped lift most major markets Monday and Tuesday, in spite of disappointing indicators on both sides of the Atlantic, and appeared to persevere in morning trading in Europe.

Britain’s FTSE 100 rose 0.4 percent to 5,148. Germany’s DAX was 1.1 percent higher at 5,590 and France’s CAC-40 rose 1 percent to 3,114.

Wall Street, however, appeared to be headed lower, after recording big gains Tuesday. Dow Jones industrial futures and S&P 500 futures were down 0.8 percent at 11,075 and 1,152 respectively.

That followed losses on most major Asian markets, as well as declining oil prices, underlining investors’ reluctance to commit to assets that could quickly lose value if the global economy heads for another downturn.

“If Bernanke does not pull a rabbit out of the hat at Jackson Hole on Friday risk trades could look vulnerable once again,” warned analysts at Credit Agricole.

Fresh data out of the eurozone indicated that businesses are already preparing for potential troubles.

Germany’s closely watched Ifo index of business optimism for fell more than expected in another negative signal about Europe’s largest economy. The index fell to 108.7 for August from 112.9 in July. Market analysts had expected a smaller drop to 111.0.

“August’s drop in Ifo business confidence adds to the growing evidence that the German economic recovery has faltered,” analysts at Capital Economics wrote in a note, adding that a slowdown for the eurozone’s growth engine is set to hurt other members of the currency union that are still fighting to pull themselves out of crisis no fax payday loans.

In Asia, Japan’s Nikkei 225 index fell 1.1 percent to close at 8,639.61 after opening higher early Wednesday.

Sentiment was dented after Moody’s Investors Service downgraded Japan’s credit rating to Aa3 from Aa2, citing weak growth prospects for the world’s No. 3 economy, massive government debt and constant political uncertainty. The new rating is three notches below Moody’s top Aaa rating.

The downgrade, which puts Moody’s rating in line with other major credit rating agencies, is the latest blow for Japan after its economy remained mired in recession in the second quarter due to tumbling factory production and exports following the March 11 earthquake and tsunami.

South Korea’s Kospi dropped 1.2 percent to 1,754.78. Hong Kong’s Hang Seng tumbled 2.1 percent to 19,466.79.

Australia’s S&P/ASX 200 fell 0.1 percent to 4,167.60 after spending much of the session in positive territory. Markets in Singapore, Taiwan and Indonesia also fell.

Mainland Chinese shares were mixed with the benchmark Shanghai Composite Index falling 0.5 percent to 2,541.09 while the Shenzhen Composite Index edged 0.1 percent higher to 1,144.74.

In commodities markets, benchmark oil for October delivery was down 16 cents to $85.28 a barrel in electronic trading on the New York Mercantile Exchange. In London, Brent crude for October delivery fell 27 cents to $109.04 on the ICE Futures exchange.

The euro rose, meanwhile, to $1.444 from $1.442 in late trading Tuesday in New York. The dollar fell to 76.54 yen from 76.66 yen.

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Pamela Sampson in Bangkok contributed to this story.

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A strong earthquake with a preliminary magnitude of 6.8 struck off Japan’s northeastern coast Friday, triggering a tsunami advisory that was later lifted.

Japan’s Meteorological Agency said the quake hit at 2:36 p.m. (0536 GMT) and was centered slightly south of where a massive magnitude-9.0 temblor struck in March.

The agency issued a tsunami advisory, predicting waves of 20 inches (50 centimeters) along the coast of Miyagi and Fukushima prefectures, where a nuclear plant crippled in the March 11 quake is located. But about a half-hour later, the advisory was lifted.

There were no abnormalities in key equipment at the Fukushima Dai-ichi nuclear power plant, said Chie Hosoda, an official with the Tokyo Electric Power Co., the plant’s operator. She said some of the plant’s workers assigned to the coastal side of the facility temporarily retreated inside the building.

Announcers on television urged residents in coastal areas to head for higher ground, but about a half-hour after the quake, there were no reports of a tsunami reaching Japan.

In Onagawa, about 210 miles (340 kilometers) north of Tokyo, town official Hironori Suzuki said there were no immediate reports of damage or injuries. There was no visible swelling of the ocean.

“It was a rather big one, perhaps it was because we are still in a makeshift office,” Suzuki told public broadcaster NHK. Suzuki said the town has urged all residents via community broadcast to stay away from the coast and evacuate to higher ground.

In Tokyo, buildings swayed only mildly.

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Britain has been transfixed by the phone hacking scandal that has shaken its media world. But will it really change the nation’s press?

Much depends on the shelf life of the outcry over alleged skullduggery by journalists working for British papers owned by Rupert Murdoch, who closed a newspaper, dropped a major business deal and agreed to testify before parliament in an attempt to defuse the uproar.

An inquiry authorized by Prime Minister David Cameron and a criminal investigation aim to clear up this particular mess, but reforming the media and untangling corrosive ties between politics and the press, what some call an embedded cultural defect, require the public’s attention in the long term.

Without grassroots pressure, Britain’s press will have less incentive to change.

But there’s a fundamental dilemma: Even as Britons recoil at trashy tabloid tactics, they have bought such papers by the millions _ hungry for juicy gossip obtained by the very illegal means they decry.

Murdoch’s now-shuttered News of the World was, in fact, Britain’s best-selling paper.

“The public’s interest in these matters is fickle to say the least,” said Steven Fielding, professor of political history at the University of Nottingham. “Murdoch is probably thinking, ‘Well, if I can last for about six months, then everything will return back to normal.’”

Fielding said Britons were more concerned about the economy, jobs, services and quality of life, especially at a time when the government is implementing painful austerity measures aimed at getting the country’s finances in order.

Martin Moore, a founder of Hacked Off, a group that seeks full accountability in the phone-hacking allegations, said he was concerned that a “summer hiatus” could cool tempers and chip away at momentum for reform.

“This is a moment and an opportunity to change things,” he said.

In a speech on Thursday, Deputy Prime Minister Nick Clegg said Britain should look beyond the scandal and implement changes that will guarantee freedom of the press, which he described as the “lifeblood” of democracy, but also ensure accountability through robust corporate governance, and a solid framework that fosters diversity of ownership of media organizations.

“I know that there is real fear, among reformers, that this opportunity will pass us by. That there will be plenty of heat, but no light,” Clegg said. “The pessimists have a point. In recent decades the political class has consistently failed to stand up to the media. Seeking to curry favor with powerful media barons or prevent their own personal lives from being splashed across the front pages.”

Indeed, success and failure in British politics has long depended heavily on the blessing of the national press, which is, to put it diplomatically, unkind to those it does not respect. The media delivers judgments with icy, devastating eloquence or, in the case of some tabloids, piles on like bulky athletes in a rugby scrum.

The intimacy and sparring between British politicians and the press go back generations. Stanley Baldwin, then leader of the opposition Conservatives in 1931, was the target of a campaign for his ouster by Lord Beaverbrook, owner of the Daily Express, and Lord Rothermere, owner of the Daily Mail. He blasted their newspapers in a speech.

“They are engines of propaganda for the constantly changing policies, desires, personal wishes, personal likes and personal dislikes of two men,” declared Baldwin, who also served as prime minister. He said the press barons sought “power without responsibility, the prerogative of the harlot throughout the ages.”

The criticism did not induce Beaverbrook and Rothermere to temper their ways, though the latter later bet on the wrong horse with his enthusiastic support for Oswald Mosley, leader of the British Union of Fascists.

Murdoch, on the other hand, has been forced to make concessions, abandoning his bid to take full control of British Sky Broadcasting, a major satellite television operation.

On Friday, Rebekah Brooks quit as chief executive of his embattled British newspapers even though he had previously refused to accept her resignation. The publisher of The Wall Street Journal, who had been chairman of the company’s British newspaper arm during some of the alleged transgressions and had worked for News Corp. for more than five decades, quickly followed suit.

But these headline-grabbing developments mask broader questions about how to balance media freedom with accountability, whether new regulations should be introduced or enforcement of existing laws on corruption and other crimes is sufficient, and to what extent the politicians who now call for an overhaul of the way the media and politics intersect acted as promoters for suspect practices.

Cameron, of the Conservatives, is on the defensive because he had hired Andy Coulson, former editor of the News of the World, as his communications director despite the misgivings of Clegg’s Liberal Democrats, the junior partner in his coalition. Coulson, who was arrested last week, resigned in January as the hacking allegations grew.

Jeremy Black, a professor of history at the University of Exeter, said the scandal was a welcome distraction for political parties that are struggling for answers to economic challenges at home and across Europe, and that broader concerns about a “coarsening of public life” and the salacious nature of large segments of British media coverage are not being addressed.

He cited some of the reporting on Madeleine McCann, a British girl whose disappearance in Portugal in 2007 drew global attention. Her father, Gerry McCann, complained of sensational journalism in the case, and the parents won libel damages from some British newspapers over suggestions that they were responsible for their daughter’s death.

“This is an over-egged crisis,” Black said of the phone hacking affair. “It provides a wonderful opportunity for people, as it were, to express their accumulated grievances.”

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