NEW YORK (AP) — U.S. markets were mostly flat in early trading Thursday, follow a sell-off the day before, as U.S. investors had little reaction to comments from European Central Bank President Mario Draghi, who announced new economic stimulus measures for the continent. European markets fell.
KENNESAW, Ga. (AP) — Authorities are trying to find whoever is throwing socks filled with sand and rocks at motorists northwest of Atlanta.
Drivers say they suspect the projectiles are being hurled by someone hiding in the woods near roads in western Cobb County.
Murray Chalmers tells WSB-TV that he was driving after dark Monday when something slammed into his windshield. He saw a couple of young men in the area, and didn't immediately realize what had happened.
Another motorist, Allen Ashwege, thought he hit an animal over the weekend and then found a sand-filled sock imbedded in the front grill of his vehicle. He returned to Kennesaw Due West Road and found several other makeshift devices along the road.
Police say they've received several similar reports and are tracking down leads.
CALUMET, Okla. (AP) — A decade ago, states offered wind-energy developers an open-armed embrace, envisioning a bright future for an industry that would offer cheap electricity, new jobs and steady income for large landowners, especially in rural areas with few other economic prospects.
To ensure the opportunity didn't slip away, lawmakers promised little or no regulation and generous tax breaks.
But now that wind turbines stand tall across many parts of the nation's windy heartland, some leaders in Oklahoma and other states fear their efforts succeeded too well, attracting an industry that gobbles up huge subsidies, draws frequent complaints and uses its powerful lobby to resist any reforms. The tension could have broad implications for the expansion of wind power in other parts of the country.
"What we've got in this state is a time bomb just waiting to go off," said Frank Robson, a real estate developer from Claremore in northeast Oklahoma. "And the fuse is burning, and nobody is paying any attention to it."
Today, many of the same political leaders who initially welcomed the wind industry want to regulate it more tightly, even in red states like Oklahoma, where candidates regularly rail against government interference. The change of heart is happening as wind farms creep closer to more heavily populated areas.
Opposition is also mounting about the loss of scenic views, the noise from spinning blades, the flashing lights that dot the horizon at night and a lack of public notice about where the turbines will be erected.
Robson said the industry is turning the landscape into a "giant industrial complex," and the growing cost of the subsidies could decimate state funding for schools, highways and prisons.
Oklahoma went from three farms with 113 turbines a decade ago to more than 30 projects and 1,700 active turbines today.
With the rapid expansion came political clout. The industry now has nearly a dozen registered lobbyists working to stop new regulations and preserve generous subsidies that are expected to top $40 million this year.
Evidence of that influence can be seen at the Statehouse. A bill by the Senate president pro tem to ban any new wind farms in the eastern half of the state was quickly scuttled in the House. When state Rep. Earl Sears tried to amend the proposal to include some basic regulations for the industry, lobbyists killed that idea, too.
"I personally believe that wind power has a place in Oklahoma, but I'm frustrated," Sears said. "I think they should have more regulations."
Wind developers say they're just protecting their investment — more than $6 billion spent on construction of wind farms in Oklahoma over a decade, according to a study commissioned by the industry. In addition to royalties paid to landowners, the giant turbines themselves are valued at as much as $3 million each.
Monte Tucker, a farmer and rancher from Sweetwater in far western Oklahoma, said his family has received annual payments of more than $30,000 for the four wind turbines placed on their ranch two years ago.
"We're generating money out of thin air," Tucker said. "And if the landowners don't want them, the developers have to go somewhere else."
Tucker says the turbines take only about 5 acres of his property out of production, and they have not affected the deer, turkey and quail hunting on the land. On a recent 101-degree day, he found about 40 of his cows lined up in a single row in the turbine's shadow.
Meanwhile, a formal inquiry into how the industry operates in Oklahoma is being launched by a state regulatory agency at lawmakers' request. The fact-finding mission could lead to legislation targeting the industry.
The turbines are subject to local property taxes after a five-year exemption for which the state reimburses local counties and schools. The exemption for wind producers was designed to offset a lifetime property tax exemption in neighboring Kansas.
In addition, the state offers wind developers tax credits based on per-kilowatt production that can be applied to any corporate income tax liability and then sold back to the state for 85 cents on the dollar. Those cash subsidies are expected to total $80 million over the next four years, according to estimates from the Oklahoma Tax Commission.
Oklahoma is one of at least six states competing for wind industry development, which often breathes life into communities that have lost manufacturing jobs and family farms.
Over the last decade, the number of wind-generated megawatts has grown from 6,000 in 2003 to 61,000 last year, which equates to roughly 30,000 turbines.
The biggest wind industry boom is taking place in Texas. Iowa and Oklahoma are close behind. Other states that have announced major projects include Kansas, North Dakota and New Mexico, according to the American Wind Energy Association, a trade group.
In Kansas, Republican Gov. Sam Brownback is trying to balance his state's embrace of wind with opposition to a 2009 state energy law that requires utilities to use more wind and other renewable sources of power. Brownback supports wind energy, but his political base includes free-market GOP conservatives who oppose such mandates.
Texas Comptroller Susan Combs released a report last week urging an end to state subsidies for wind power, saying that tax credits and property tax limits helped grow the industry but today give it an unfair advantage.
"It's time," Combs said, "for wind to stand on its own two feet."
NEW YORK (AP) — A bottleneck is building in the global market for bonds.
Main Street investors have poured a trillion dollars into bonds since the financial crisis, and helped send prices soaring. As fund managers and regulators fret about an inevitable sell-off, the bigger fear is that when people go to unload, there won't be anyone to buy.
Too many funds own the same bonds, making them difficult to sell if panic ensues. On top of that, the banks that used to bring bond buyers and sellers together have pulled back from the role. If investors started looking to sell, they'd be slow to find buyers, spreading fear through the $100 trillion global bond market and sending prices tumbling.
It's a situation known as "liquidity risk" and some bond pros are scrambling to prepare for it.
Worried portfolio managers are hoarding cash. BlackRock, the world's largest fund manager, is suggesting regulators consider new fees for investors pulling out of funds. Apollo Management, famous for profiting from a bond collapse 25 years ago, is launching a fund to bet against bonds.
What's at risk is more than money in retirement accounts. Big investors often borrow when buying bonds and so losses can be magnified. Trillions of dollars of bets using derivatives ride on bonds, too. A small fall in prices could lead to losses that reverberate throughout the financial system.
"There's no place to hide," says JPMorgan's William Eigen, head of the Strategic Income Opportunities fund, who has 63 percent of his portfolio in cash.
Here are the reasons bond experts are worried:
HIGH PRICES: Demand and prices have soared for nearly every kind of bond, even the diciest. Since the start of 2009, funds invested in "junk" bonds from risky companies have returned an average 14 percent each year, double its average in the prior six years.
RISE OF QUICK-HIT INVESTORS: The biggest owners in many bonds are small Main Street investors more easily spooked than traditional holders like insurers and pension funds. Main Street investors buying through mutual funds and exchange traded funds, vehicles for quick-trading, own 40 percent of corporate bonds, according to the International Monetary Fund. The insurers and pension funds that help stabilize the market by sticking with bonds through busts hold 25 percent.
RATE HIKES: This market faces a big test next year when the Federal Reserve is expected to start raising interest rates. When the Fed announced a series of surprise rate hikes in 1994, bond prices plunged, a big hedge fund collapsed, companies like Procter & Gamble were hit with losses and Orange County, California, had to file for bankruptcy.
Many people don't think the rate increases next year will roil the bond market much because the Fed is telegraphing its every move. But given the high prices and lack of liquidity, not everyone is confident.
"The market isn't pricing in the risk that it's going to be like 1994 — or even worse," says Hans Mikkelsen, global credit strategist at Bank of America Merrill Lynch. His worries were echoed recently in an IMF report warning that a breakdown in trading could lead to "fire sales" in some parts of the bond market.
TRADING PROBLEM: To buy or sell many kinds of bonds, you have to phone or email brokers at banks and other firms who pair buyers and sellers. If they can't find a match for you, they dip into their own stash of bonds to buy and sell themselves.
But banks and other middlemen are pulling back from this matchmaking because of new regulations limiting their activities. And they have largely abandoned their role as a buyer or seller of last resort. They've slashed their stash of bonds by 80 percent since 2007, according to State Street Global Advisors.
The result is a shallow market in which buyers and sellers struggle to find each other, and prices can fall fast.
After the Federal Reserve hinted at a pullback from its bond-buying program last year, bonds from the safest "investment grade" companies fell 6.2 percent in less than two months, according to Barclays Capital.
Bonds bounced back when the Fed delayed its withdrawal of stimulus, but it spooked fund managers. They responded by raising cash from 6.3 percent before last year's sell off in May to 9 percent a year later, according to the Investment Company Institute.
That extra cash helped when junk bonds fell recently. Fearing the Fed might raise rates faster than expected, investors pulled billions of dollars out of junk bond funds earlier this summer. Many fund managers were able to the pay the investors without causing a panic. By the end of the month, the funds had fallen an average of 1.2 percent, according to Morningstar.
"Everyone thought it would be a blood bath," says Marilyn Cohen, founder of Envision Capital, a bond manager. The story is "crisis averted, for now."
But Michael Lewitt of the Credit Strategist Group is warning investors not to fool themselves that the worst in over. "When there's little liquidity, it doesn't take many sales to move the price," he says.
Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
MECCA, Saudi Arabia (AP) — As a child, Osama al-Bar would walk from his home past Islam's holiest site, the Kaaba, to the market of spice and fabric merchants where his father owned a store. At that time, Mecca was so small, pilgrims could sit at the cube-shaped Kaaba and look out at the serene desert mountains where the Prophet Muhammad once walked.
Now the market and the homes are gone. Monumental luxury hotel towers crowd around the Grand Mosque where the Kaaba is located, dwarfing it. Steep rocky hills overlooking the mosque have been leveled and are now covered with cranes building more towers in row after row.
"My father and all the people who lived in Mecca wouldn't recognize it," said al-Bar, who is now Mecca's mayor.
As Muslims from around the world stream into Mecca for the annual hajj pilgrimage this week, they come to a city undergoing the biggest transformation in its history.
Decades ago, this was a low-built city of centuries-old neighborhoods Over the years, it saw piecemeal renewal projects. But in the mid-2000s, the kingdom launched its most ambitious overhaul ever with a series of mega-projects that, though incomplete, have already reshaped Mecca.
Old neighborhoods have been erased for hotel towers and malls built right up to the edge of the Grand Mosque. Historic sites significant for Islam have been demolished. Next to the Kaaba soars the world's third tallest skyscraper, topped by a gigantic clock, which is splashed with colored lights at night.
"It's not Mecca. It's Mecca-hattan. This tower and the lights in it are like Vegas," said Sami Angawi, an architect who spent his life studying hajj and is one of the most outspoken critics of the changes. "The truth of the history of Mecca is wiped out ... with bulldozers and dynamite. Is this development?"
Critics complain the result is stripping the holy city of its spirituality. They also say it is robbing the hajj of its more than 1,400-year-old message that all Muslims, rich or poor, are equal before God as they perform the rites meant to cleanse them of sin, starting and ending by circling the Kaaba seven times.
Mecca is revered by hundreds of millions of Muslims worldwide. They face the Kaaba every day in their prayers. The Grand Mosque is one of the few places in the world where Muslims of all stripes gather — Sunnis and Shiites, secular Muslims, mystics and hard-liners.
Overseeing Mecca is also a key source of prestige for Saudi Arabia's monarchy. The past two kings — the current one, Abdullah, and his predecessor, Fahd — have adopted the further title of "custodian of the two holy mosques" to boost their status, referring to Mecca's Grand Mosque and Muhammad's mosque in nearby Medina.
Now the city is being molded to a particularly Saudi vision that bolsters the rule of the Al Saud royal family.
Two forces shape that vision. One is raw, petrodollar-fueled capitalism. Mecca's planners are largely catering to wealthier pilgrims by focusing on construction of five-star hotels, surrounding the Kaaba in marble-sheathed luxury. Nearby pilgrims can shop at international chains, including a Paris Hilton store and a gender-segregated Starbucks.
The other force is Wahhabism, the strict, puritanical interpretation of Islam that the Al Saud rulers elevated to the country's official doctrine. In return, Wahhabi clerics staunchly back the monarchy. The monarchy has long given Wahhabi clerics a monopoly of preaching at the Kaaba.
One tenet of Wahhabism is that Muslim tombs or sites connected to revered figures — even the Prophet Muhammad, his family and companions — should be destroyed to avoid veneration of anything other than God. It's the same iconoclastic zeal that has prompted militants from the Islamic State group to blow up Muslim shrines in Iraq and Syria.
In Mecca, hardly any site associated with Muhammad remains. Many were destroyed in previous expansions of the Grand Mosque in the 1980s and 1990s, and the new development is finishing off much of what remains. In 2008, for example, the house of Abu Bakr, Muhammad's successor as leader of the Muslim community, was razed to make way for a Hilton.
The country's top religious official, Grand Mufti Abdul-Aziz Al-Sheik, backed such demolitions last year, saying "the removal of such things within the expansion is necessary."
The urban renewal is necessary, Saudi officials say, to accommodate hajj pilgrims whose numbers are expected to swell from around 3 million currently to nearly 7 million by 2040.
The $60-billion Grand Mosque expansion will almost double the area for pilgrims to pray at the Kaaba. Around half the cost went to buying about 5,800 homes that had to be razed for the expansion, said al-Bar, the Mecca mayor. Domes and pillars dating back to rule by the Ottoman Empire are being pulled down to put up modern facilities.
Another mega-project is Jabal Omar, a hill on the mosque's west side. The hill — a landmark in the city — was levelled and in its place, construction of around 40 towers is underway, mostly for luxury hotels providing some 11,000 rooms. The first of the Jabal Omar hotels, a Hilton Suites and the Anjum Hotel, just opened in the past few months.
On the mosque's south side stands the 1,972-foot (600-meter) clock-tower skyscraper, part of a completed seven-tower complex that was built after tearing down an Ottoman fort on the site.
Also underway is the Jabal Sharashif project, in which a slum that largely houses Burmese and African migrants is to be torn down to build a new neighborhood for Saudis, along with hotels. A four-line metro system is planned for the city along with a high-speed rail line to the port city of Jiddah, where the area's airport is located, and to Medina.
The Grand Mosque's expansion is being headed by the Saudi Binladin Group, which also built the clock tower. The Binladin family has been close to Al Sauds for decades and runs major building projects around the country. Al-Qaida's late leader Osama bin Laden was a renegade son disowned by the family in the 1990s.
Speaking at a public forum in Jiddah in May, Nawaf Binladin, whose father is chairman of the conglomerate, said people are constantly asking if all this construction is needed.
"This can be answered in one moment in this image," he said, flashing a picture of tens of thousands of worshippers praying in the street because there was not enough room inside the Grand Mosque.
But many in the audience were not convinced. Saeed al-Ghamdi, a former Saudi diplomat, said he thinks greed is the main motivator.
Muslims around the world have an "intimate bond" with Mecca, he said. "It is not a place for one businessman or one company."
Mecca's planners didn't have to build so close to the Kaaba, overwhelming the simple cube-shaped structure, said Irfan al-Alawi, a Saudi who heads the London-based Islamic Heritage Research Foundation. The hotels could have been built miles away and transportation improved.
"Already we are losing the spirituality," he said. Pilgrims admire the clock tower instead of "looking at the Kaaba and admiring the house of God."
Essam Kalthoum, managing director of the government-owned Bawabat Makkah Company, which is involved in a number of projects around the city, acknowledged that "it would be a farce" to say financial motivations are not coming into play.
But he said the main goal is to increase space for pilgrims.
Kalthoum showed a gift from a Turkish foundation he had just received: a photo of Mecca from the late 1800s.
"This is painful," he said. "For those of us who witnessed some of this (past), it brings back memories."
But he pointed to the Kaaba in the photograph. "Because of this place," he said, the old markets and buildings had to go.