The Wall Street Journal Education Program
Weekly Review & Quiz
Covering front-page articles from Sep 30 – Oct 6, 2006
Professor Guide with Summaries Fall 2006
Developed by: Scott R. Homan Ph.D., Purdue University
Questions 1 – 12 from The First Section, Section A
A Poison Spreads Amid China's Boom
By SHAI OSTER and JANE SPENCER
September 30, 2006; Page A1
http://online.wsj.com/article/SB115955597971578257.html
XINSI, China -- Doctors treating a five-year-old boy after a horrific electrical accident
this spring were surprised to find another, equally serious problem: dangerously elevated
levels of lead in his blood.
The incident uncovered one of China's worst known cases of lead poisoning. For a
decade, a factory near Xinsi, an isolated village in the mountains of China's western
Gansu province, made lead ingots used in manufacturing color television tubes and
cables shipped around the world.
It also poured out poisoned air containing 800 times the permissible level of lead
emissions, officials say.
Nearly everyone from the village who has been tested so far -- including some 250
children from three schools -- has been found with unsafe amounts of lead in their bodies.
Ten children remain hospitalized and at least four are likely to have severe brain damage
in the village of 1,800 people, according to Xinhua, China's official news agency.
"There's not one person in this village without lead poisoning," says Zhou Xiang, whose
son was hospitalized with level of 488 micrograms per liter of blood. "My children's
fingers are black and blue."
The World Health Organization says that lead blood levels of 100 micrograms per liter
and above (or 10 micrograms per deciliter, using the measurement standard more
common in the U.S.) are cause for concern in children. Studies show even slightly
elevated lead levels can lead to permanent neurological damage and reduced IQ.
Clutching their carefully folded lab results and pointing to the numbers -- 304, 488 and
even 798 -- the parents of Xinsi say they finally understand why their children have
complained for so long of nausea, headaches and pains. They say their babies' teeth are
growing black or not coming in at all. Parents and teachers say children are having
memory and concentration problems.
The disaster shows how vulnerable China's citizens are to the environmental damage
inflicted by the country's rapid industrial growth. The result is a health crisis that could
have long-term consequences for a generation of children. Even in wealthier areas of
China such as Shanghai and Guangdong province, officials say the deteriorating
environment is a factor behind a rise in birth defects.
A lack of pollution controls has contaminated China's soil, water and air with lead,
mercury and other pollutants -- and left millions of children with dangerously high levels
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 1 of 31
of toxic metals in their blood. Making matters worse, much of the manufacturing that
used to pollute the West has found a ready home in China, where environmental
regulations are loosely enforced.
About 34% of children in China have blood-lead levels that exceed the WHO limit,
according to a recent report by researchers at Peking University Health Science Center in
Beijing, who reviewed 10 years of data on the topic. The situation is considerably worse
in factory towns like Xinsi. By comparison, fewer than 1% of children in the U.S. have
levels above the WHO limit.
High lead levels are "very common in my clinic," says Yan Chonghuai, a specialist in
childhood lead poisoning at Xinhua Hospital, affiliated with Shanghai Jiaotong
University School of Medicine. Dr. Yan treats cases from all over the country. On a
recent day, the hospital accepted a child from Fujian province with a blood lead level of
700 and another with a level of 500 from exposure to talcum powder contaminated with
lead.
In China, lead is still prized in manufacturing because it is plentiful, cheap, malleable,
and resistant to corrosion. Lead compounds are regularly added to plastics and vinyl to
make them more resistant to high temperatures. Because lead is heavy, it is often added
to cheap metal products to make them seem more substantial.
Lead dust is sometimes added to herbal products that are sold by weight to make them
heavier and increase their value. If lead is in a stable solution it may not pose a problem.
But lead can be particularly dangerous in toys and jewelry because children can swallow
it.
China's lead problem is drawing new attention from U.S. regulators. In the past two
years, the U.S. Consumer Products Safety Commission has recalled roughly 20 products
imported from China because of high lead content. They range from beach umbrellas to
portable karaoke machines to children's animal-shaped flashlights.
"Given the nature of the global economy, the manufacturing processes abroad can have a
substantial impact on the health of young children in the United States," says John F.
Rosen, who runs the lead program at the Children's Hospital at Montefiore in New York.
Earlier this year, a 4-year-old Minneapolis boy died of lead poisoning after swallowing a
metal charm that came as a gift with a pair of Reebok sneakers. The charm, which was
made in China, was 99% lead.
A representative of Reebok International Ltd. says the company takes "product safety
very seriously" and immediately recalled 500,000 products in 25 countries following the
incident. The company has since stepped up oversight of suppliers, and increased testing
of products for restricted substances.
China's pollution problems are in some ways reminiscent of what was seen during the
rapid industrialization of 19th-century Britain and other industrial revolutions. But
China's rapid growth is taking place at a time when government officials are well aware
of the dangers of toxic substances like lead.
China is in the early stages of a battle against lead that the U.S. started nearly three
decades ago. During the 1960s and early 1970s, hundreds of American children were
hospitalized each year with severe lead poisoning linked to exposure from lead in paint
and gasoline. One in four hospitalized children died, because there were no treatments at
the time. The deaths led to laws banning lead in paint, gasoline and other industrial
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 2 of 31
products. The campaign against lead was part of a wave of environmental legislation
passed in the 1970s aimed at reining in rampant industrial pollution.
Now, China is confronting the same "trade-off between short-term profits by industry and
the long-term burden of human and environmental costs," says Bruce Lanphear, a
professor of environmental health at Cincinnati Children's Hospital Medical Center.
After decades of ignoring the rising environmental toll of its breakneck economic growth,
China's central government is now trying to stem the damage. The government has
already taken some steps to curb lead exposure such as phasing out leaded gasoline in the
late 1990s and passing stricter rules on workplace exposure. Yet central authorities have
found their efforts stymied by local officials whose promotions are based on growth in
their local economies.
Xinsi, or new temple, seems like an unlikely place for an environmental battlefield. Eight
hours by bus from Xi'an, the largest nearby city and home of the famed terra-cotta
warriors, Xinsi is a farming village of old mud-walled homes with traditional curved
Chinese roofs and wood lattice windows.
The factory, which took lead ore and melted it to separate impurities, was opened 10
years ago by a company called Huixian Hongyu Nonferrous Smelting Co. Ltd. Huixian
was owned at the time by a state conglomerate called Gansu Luo Ba Nonferrous Group.
Government officials say the factory's smelter distilled lead ore into 5,000 tons a year of
lead ingots and dumped the waste in unsafe slag piles. Some of that output was
eventually used in television screens or cables exported to the U.S. and South Korea,
according to the parent company's Web site.
The factory lies at the base of a small creek, a stone's throw from the local primary
school, and its smokestack dominates the countryside. It is far from any lead-ore deposits
or convenient transportation. One local official said the factory was built in Xinsi instead
of closer to bigger cities to avoid scrutiny. China's environmental regulators and activists
say it's increasingly common for heavily polluting industries to move to the countryside,
where supervision is weak.
There are signs that the Xinsi factory followed at least rudimentary safety procedures
with its own workers, many of whom came from outside the village. The factory
conducted blood tests and dismissed those whose lead levels were elevated. Zhou Fei, a
42-year-old Xinsi resident, lost his job after a failed blood test. His neighbors say he has
trouble remembering dates now. Asked directly, Mr. Zhou can't recall when he worked at
the factory.
Many Xinsi villagers say they had no idea that the lead dust spewed by the smelter posed
a hazard to them. "We're just simple peasants," said Xu Minzheng, whose 2-year-old son
has a lead level of 263 micrograms per liter of blood. His 7-year-old daughter has a lead
level of 316. He pointed to the smokestack overlooking the rutted dirt path winding past
corn and red chili peppers hanging to dry. "We didn't have any awareness of what lead
could do. But the government officials should have known. We just don't have the means
to deal with this sort of thing."
Lead causes brain damage by mimicking helpful metals found naturally in the body, such
as calcium, iron and zinc, and binding with the same molecules and proteins. Calcium,
for example, is essential for brain development because it facilitates the growth of nerve
cells. But lead binds with the sites in the brain that were intended for calcium, disrupting
brain circuits critical for learning, and sometimes impeding cell growth. The process
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 3 of 31
leads to irreversible intellectual impairment. Lead exposure is especially harmful to
children.
Last year, the Xinsi smelter's parent company, the Gansu Luo Ba Nonferrous Group,
went private in a management buyout. The factory upgraded its emissions controls, but
turned them off at night, when the factory would emit heavy smoke, to save money,
villagers said. Earlier this year, government authorities told the factory to cease
operating, but it continued to produce in secret, according to the villagers and Xinhua,
China's official state-run news agency.
The situation might have continued unchanged if it weren't for a little boy's curiosity back
in March. Five-year-old Zhou Hao was playing with a classmate near a slag heap from
another factory in their hamlet. Hopping over an unfinished wall, the boy touched a big
electric transformer. The massive shock blew off his shoes and knocked him
unconscious.
The boy's parents rode with their badly injured son overnight in an ambulance to the
nearest big city hospital, in Xi'an, for the first of many operations to save his life. His left
arm was amputated, he needed skin grafts, and his badly gashed scalp swelled like a
balloon.
1. Studies show even slightly elevated lead levels can lead to ____.
a. reduced IQ
b. permanent neurological damage
c. cancer
d. Both a and b Correct
2. In China, lead is still prized in manufacturing because _____.
a. it is often added to cheap metal products to make them seem more substantial
b. it is plentiful, cheap, malleable, and resistant to corrosion
c. when added to plastics and vinyl it makes them more resistant to high temperatures
d. all of the above Correct
Continental Airlines Finds a Safe Haven In a Texas Bunker
By MELANIE TROTTMAN
October 2, 2006; Page A1
http://online.wsj.com/article/SB115974968675779545.html
MONTGOMERY, Texas -- The 40,000-square-foot, two-story bunker here was the
creation of Ling-Chieh "Louis" Kung, the nephew of Taiwan's influential Madame
Chiang Kai-shek. The fortune he earned during the booming 1970s from his now-defunct
Houston oil company, Westland Oil Development Corp., allowed him to indulge his fears
that Red China or the Soviet Union would launch a nuclear attack on the U.S.
Mr. Kung, who died in 1996 at about the age of 75, bought hundreds of acres of wooded
cow pasture on the edge of this small town and secretly built an underground fortress to
house at least 700 people, including his employees and their families, for a two-month
emergency.
Now, Continental Airlines, for reasons of its own, has taken over part of the extravagant
Cold War folly, with plans to use it as a crisis-operations center.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 4 of 31
The destruction and panic wrought along the Gulf Coast by Hurricanes Katrina and Rita
last year prompted many companies to seek new places to house emergency operations.
Continental had an emergency-operations center near Houston's George Bush
Intercontinental Airport and it has offices downtown. But concerned about gridlock,
floods and possible electrical outages in a hurricane, the company decided it needed a
safer backup facility to operate its world-wide flights if it should ever have to evacuate its
Houston headquarters. The airline, along with more than 20 other companies, found its
solution buried deep inside a hill in this small community northwest of Houston.
n May, John Stelly, Continental's managing director of technology, was given 45 days to
convert the rented shelter space for emergency offices and data storage. After descending
more than 50 feet in an elevator to survey the project, he found himself in a subterranean
ghost town of shadowy halls, mysterious rooms and dust-covered equipment.
The executive says he stared in wonder at a room filled with 115 triple-decker bunks,
each with an individual reading light. Later, as he went to work there, he sometimes
imagined what it would be like to be trapped in this place for months with hundreds of
other people. "It gives you a weird, eerie feeling," he said.
The world was awash in old fallout shelters after the Cold War ended in 1989. Over the
years, many public and private bunkers in the U.S. and Europe have been converted to
wine cellars, nightclubs, storage facilities and even mushroom farms. A bunker secretly
built in White Sulphur Springs, W. Va., to house Congress is now rented out to the public
for parties and showcased in guided tours. Many other old shelters have been marketed as
secure data centers or emergency headquarters for companies.
Adam Laurie, who renovates and leases ex-military bomb shelters in the United
Kingdom, toured Mr. Kung's Texas bunker three years ago. Though he was impressed
with the quality of construction, "the degree of paranoia of the person who built it was
extreme," he said.
The bunker was as self-contained as a small city, with its own power and medical
facilities, morgue, jail cells, recreation rooms and water tanks. Two pagoda-style
buildings outfitted with gun ports for machine guns protected stairwell entrances to
tunnels leading into the shelter. In case of an attack, the tunnels were designed to
collapse, sealing off the bunker from the outside world. Two hundred feet away, an
above-ground, four-story office-building with bulletproof windows housed Mr. Kung's
oil-company headquarters and family residence.
From the start the project, completed in 1982, was a source of intrigue and gossip for the
town of Montgomery. Residents watched as a mile-long procession of cement trucks
ferried cargo to what they knew only as a giant hole in the ground. Rumors swirled for
years of a secret subterranean shopping mall. "Everybody's heard about it. Everybody's
curious about it. Not everybody's seen it," said Jennifer Stratton, a waitress at Phil's
Roadhouse & Grill down the road from the bunker.
Mr. Kung lost title to the property after the 1980s oil bust. The bunker sat frozen in time
until investors bought it and in 2003 hired Montgomery-based Westlin Corp. to take
charge of converting it into a rental site for data storage.
A quick survey of the property made it clear this would be no ordinary renovation. Using
a flashlight to light his way, Westlin President David Herr says he made his way past
wasp nests and thick cobwebs to the underground stairwell, then through two reinforced
steel blast doors that slammed shut behind him.
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WSJ Professor Guide: Page 5 of 31
In the bunker's control room, the panel where flashing lights would signal a nuclear
attack was still mounted on a wall with the key in the slot for locking down the facility.
Geiger counters for measuring radioactivity remained on water and ventilation systems.
Mr. Herr quickly saw that some of the rooms would be easier to convert than others.
Decontamination showers have been left alone since they might still prove useful in a
chemical spill or other emergency.
Westlin installed a small elevator so tenants wouldn't have to take the stairs, and secured
it with biometric access that requires handprints to verify identities. The company is
converting 13 small conjugal rooms, originally intended to give couples privacy, but Mr.
Herr and his staff are still puzzling over what to do with some of the space. For example,
four steel-encased jail cells remain untouched with their original bed frames and doors
because they are too small to bother updating.
Interest was only lukewarm when the bunker opened for leasing in early 2005. That
changed after Hurricanes Katrina and Rita, with the number of bunker tenants doubling to
50, including Continental, the largest occupant. Other tenants include Anadarko
Petroleum Corp. and medical companies from Houston and Louisiana.
Continental spent several million dollars -- it won't say exactly how much -- to customize
its bunkhouse space and additional space leased in the nearby office building. Once the
lease contract was signed, Mr. Stelly had to rush to complete the conversion of the
company's 2,000-square-foot bunker space before this year's hurricane season. Workers
had to tear down one wall, a job that usually takes a couple of hours. In this case, it took
two days' labor with a sledgehammer to break up the two-foot-thick steel-reinforced
concrete.
When power and air-conditioning units proved too big to get down the elevator, workers
had to dig down through the earth to reach the corrugated-steel tunnels and peel back the
top panels so the equipment could be lowered in by crane.
Continental's executives have decided they will activate the bunker in a Category 3
storm, or whenever workers must evacuate the downtown Houston control center. The
airline's space leased in the above-ground office building is for 275 emergency staff.
Only a few workers will be needed in the bunker.
Tomorrow, Continental plans to operate a work shift from the site and hold an open
house and barbeque so employees can bring their families to see the bunker. If history is
any indicator, not everyone will be interested in the tour. Mr. Stelly said some
Continental employees who have already been to the facility have preferred to wait up
top rather than descend into the depths of the bunker.
"It can give you that claustrophobic feeling," he said.
3. Continental Airlines has recently converted a ________ into a crisis-operations center.
a. wine cellar
b. underground bunker Correct
c. mushroom farm
d. underground nightclub
4. Continental Airlines plans to use their new facility in the event of ____.
a. nuclear war
b. extreme global warming
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 6 of 31
c. a hurricane that causes them to evacuate their Houston facility Correct
d. inability to find a unique place for the company picnic
Israelis Reach Out to Arab Nations That Share Fear of Ascendant Iran
By KARBY LEGGETT and MARCUS W. BRAUCHLI
October 3, 2006; Page A1
http://online.wsj.com/article/SB115984120864280816.html
JERUSALEM -- Israel's summer war against Iranian-backed Hezbollah militants has
redoubled its concerns about the threat from Iran, leading Israeli officials to reach out to
Arab governments that share their concern about Tehran's growing influence in the
region.
Leaders across the political spectrum here now agree that Israel must find ways to work
with other Middle Eastern states, even if that means dealing with governments that have
been hostile to Israel in the past. Asked in an interview last week if Saudi Arabia, a
longtime backer of groups that have fought Israel, would be considered a moderate Arab
nation Israel could potentially work with, Foreign Minister Tzipi Livni replied bluntly:
"Yes."
More keenly debated is how far Israel should go to broaden such ties -- particularly
because its territorial dispute with the Palestinians is likely to come into diplomatic play.
This week, U.S. Secretary of State Condoleezza Rice is visiting the region, and she will
focus on both Iran, which the U.S. worries is trying to develop a nuclear weapon, and the
Palestinian question.
The increased alarm here about Iran has arisen in large measure because of Israel's
critical self-assessment of a war that ended indecisively in August, with Hezbollah -- and
others in the region -- calling it a defeat for Israel's vaunted military. That left many
Israeli leaders worried about an emboldened Iran.
"The main threat in this region is fundamentalism, radicalism and unconventional
weapons -- everything under the title of Iran," said Ami Ayalon, a leader of Israel's Labor
party.
The ascent of violent Islamism is another area where Israel's interests are converging with
those of its Arab neighbors. An array of Sunni Muslim networks such as al Qaeda,
though ideologically at odds with Shiite Muslim Iran, consider Israel a mortal enemy
while deriding many Arab governments as corrupt and illegitimate -- and have targeted
both.
The Nuclear Question
The concern about Iran comes as the international community tries to persuade Tehran to
suspend a nuclear program the U.S. believes is aimed at building a weapon. Iran says the
program is purely peaceful. Tehran defied one United Nations resolution that had called
on it to suspend by the end of August any activities that could produce a nuclear weapon,
and the U.S. and Europe are weighing further steps. Israel's worries about Iran are
compounded by comments from Iranian leaders, including President Mahmoud
Ahmadinejad, suggesting a desire to see Israel eliminated as a state. "History has taught
us to listen to this kind of talk," said the foreign minister, Ms. Livni, alluding to the
Holocaust.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 7 of 31
The more immediate lesson Israeli leaders are taking from the 34-day war in Lebanon is
that Iran is building an organized military threat capable of taking on Israel and extending
its influence in the region. The Lebanon war began July 12, when Hezbollah militants
attacked inside Israel, killing three soldiers and kidnapping two others. Israel responded
with a devastating air and ground campaign that killed more than 1,000 Lebanese -almost all civilians -- and devastated the nation's infrastructure. Hundreds of Hezbollah
fighters were killed, according to Israel, along with more than 150 Israelis, mostly
soldiers.
Israeli officials and politicians across the political spectrum are convinced Iran represents
an existential threat. Withdrawing from territory in the absence of a negotiated deal, as
Israel did in Gaza last year and Lebanon in 2000 -- and was contemplating doing in the
West Bank before the war -- is increasingly seen as futile. "We had withdrawn from
every inch of their territory" in Lebanon, said Benjamin Netanyahu, former Israeli prime
minister and current leader of the opposition Likud party, referring to Israel's 2000
pullout from Lebanon. Hezbollah and the Lebanese government contend the withdrawal
was incomplete because Israel retained control of a parcel of land called Shebaa Farms,
and complain of regular violations of Lebanese territory.
Mr. Netanyahu and other leaders believe Iran is a regional threat, pointing out that its
influence is growing in Iraq following the model Tehran used to establish Hezbollah in
Lebanon. One senior security official said Tehran is funneling increasing sums of money
and arms to organizations it supports in Lebanon and now Iraq. "Iran is building an
enormous force in Iraq," he said, adding that the goal is to exert influence in the run-up to
and aftermath of American and other troops' inevitable exit.
The assessment that Iran is a regional threat and could one day be a nuclear rival
unnerves other countries in the region, Israeli officials and politicians say. That has led
them to decide they should attempt a new embrace not only of Egypt and Jordan -- which
already have formal relations with Israel -- but also Arab countries with which it has had
few to no dealings.
"We have to do everything to lead Iran to collapse from internal reasons... the way to do
that is to isolate them even in the Arab world," said Ran Cohen, a member of the Knesset,
or Parliament, from the liberal Mertz-Yahad Party.
5. Leaders across the political spectrum now agree that Israel must find ways to work
with_______.
a. Canada
b. the United States
c. Japan
d. other Middle Eastern states Correct
6. The more immediate lesson Israeli leaders are taking from the 34-day war in Lebanon
is that Iran is building ________.
a. new watch towers
b. new highways
c. new bridges
d. an organized military threat Correct
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 8 of 31
In Corridors of Power, Farmers, FDA Tussle Over Tiniest of Turtles
By ANNA WILDE MATHEWS
October 4, 2006; Page A1
http://online.wsj.com/article/SB115990717955981521.html
When Andrew von Eschenbach, the acting head of the Food and Drug Administration,
paid a courtesy visit to Sen. David Vitter last spring, the Louisiana Republican zeroed in
on a key issue: What is the agency doing about little turtles?
The FDA, which regulates about one-quarter of the U.S. economy, is used to being
barraged by the heavyweight companies that make pharmaceuticals, medical devices and
food. But these days it is the target of a lobbying campaign that, ounce for ounce, ranks
among the most intense of recent years: efforts by a handful of farmers to reverse a threedecade U.S. ban on baby turtles.
The agency prohibited sales of small turtles in 1975, after the then-popular pets were
blamed for causing as many as 280,000 salmonella infections a year, mostly in children.
The FDA edict almost completely barred U.S. commerce in "animals commonly known
as turtles, tortoises [or] terrapins," with shells less than four inches long. The size was
selected largely because bigger turtles couldn't easily be popped into children's mouths.
American turtle growers survived by selling the reptiles abroad. But pressure from the
farmers' biggest market, China, sent wholesale turtle prices plunging by more than half
two years ago, and farmers have been desperate to reopen the domestic market. So like
other American industries in a regulatory bind, the growers are mounting a full-fledged
Washington campaign -- soliciting endorsements from state officials, lining up research
on turtle-borne bacteria and pleading to President Bush for intervention.
Their efforts center around the red-eared slider, or Trachemys scripta elegans, a species
native to areas including the Mississippi delta and watery central and southern Louisiana.
As long ago as the late 1950s, growers began stocking man-made breeding ponds with
adult turtles, which laid their eggs on the ponds' sandy banks. Farmers collected the eggs,
hatched them and, by the 1970s, were selling millions of quarter-size, green and yellow
babies each year. The turtles, which can grow to a foot long and live for more than three
decades, were typically sold in the U.S. as pets.
"They've got a personality. They're very, very friendly," says George F. "Sonny" White,
Jr., 49, a former oil-industry worker who raises 400,000 red-eared sliders each year on his
farm near Jonesville, La. "They swim, and you can take them out and play with them."
That's the problem, the FDA says. Turtles often carry salmonella in their digestive tracts.
Infected turtles can convey the bacteria to their eggs. (The FDA also restricts the sale of
turtle eggs in the U.S.) Though bacteria-carrying turtles may not show symptoms of
illness, they can spread salmonella to their handlers. Ingesting it -- typically, after failing
to wash hands after playing with a turtle -- can lead to vomiting, fever and cramps, even
death in vulnerable patients. After the 1975 restriction, turtle-related infections appeared
to nearly vanish.
Eddie Jolly, a bearded 52-year-old Louisianan who raises about 300,000 turtles a year on
a farm he inherited from his grandfather, says he and his seven children haven't been
infected by turtles. "I've been bit by them, scratched by them. I've drunk the water out of
the breeding pond," he said. "You can eat them in a salad."
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 9 of 31
After the ban, Louisiana sued the FDA to overturn its tiny-turtle restrictions and lost. In
1998, a breeder petitioned the agency to allow baby turtles to be sold to adults; his
request was rejected in 2003. The agency allows eggs and small turtles to be sold for
some non-pet uses, including educational and scientific purposes.
Breeders say it wouldn't be profitable to raise turtles until their shells measure four
inches. Most keep the small sliders at temperatures of 40 to 60 degrees Fahrenheit after
they hatch so the reptiles hibernate, without eating, for as long as eight months until
they're sold. Turtles undergo hibernations in the wild, growers say.
Over the years, the breeders rebuilt their business by selling baby turtles in markets from
Mexico to Asia. There are now more than 100 growers in Mississippi and Louisiana,
where the industry is centered, state regulators say. The growers' rebound was so
successful, in fact, that a group of them pleaded guilty in 1995 to forming a cartel to fix
prices, a sort of OPEC for baby turtles.
Breeders pin their industry's 2004 crash on the Chinese market, where turtles serve as
pets, food, even medicine. The Chinese were not only raising their own turtles, but they
also held out on purchases of U.S. turtles, say breeders and shippers, forcing the
American growers to sell low. Red-eared sliders, which breeders once sold wholesale for
more than $1 apiece, plunged below 30 cents each, which farmers say is about their
break-even point. Mr. White estimates his gross sales in 2006 will be about $80,000. In
the years before prices crashed, he says he typically grossed $200,000.
Turtle growers ramped up a campaign to end the FDA's ban. Mr. Jolly, Mr. White and a
partner, Mississippi businessman Walter Davis, staked out congressional campaign
events and town-hall meetings, sometimes bringing crowds armed with pink fans bearing
slogans like "Open U.S. Market for Turtle Farmers." They collected statements of
support from Sen. Vitter, Louisiana Republican Rep. Rodney Alexander and Louisiana
Democrat Sen. Mary Landrieu, as well as from the Louisiana Department of Agriculture
and Forestry and the American Farm Bureau Federation.
Officially, political pressure isn't supposed to influence the FDA's scientific decisionmaking, but the turtle-rights advocates say they have no other option. Messrs. Jolly,
White and Davis, who founded a company two years ago to sell turtles and accessories if
the ban ends, say they haven't made donations to individual politicians.
Mr. White also begged the president to get involved. "Mr. President, the turtle farmers of
the state of Louisiana need your help desperately," he wrote in a November 2004 letter.
He asked Mr. Bush to "contact me as soon as you have reviewed this information." Five
months later, he got a letter from an FDA official reiterating the case for the ban.
By then, the turtle lobby had garnered additional support. Mark Mitchell, an associate
professor of zoological medicine at Louisiana State University, demonstrated in a study
that salmonella rates could be driven down -- to as low as 1% of turtle eggs and
hatchlings, in one test -- by disinfecting eggs with dilutions of Clorox bleach and a pool
cleaner. (Low concentrations aren't believed to harm the eggs.)
Dr. Mitchell's research was funded by the state of Louisiana, and part of the money came
from a board funded by a tax on the turtle industry, and farmers paid his way to
Washington recently to lobby the FDA. Dr. Mitchell says the ban is unfair because
cleaned-up turtles, though not completely risk-free, are at least as safe as a number of
other pets and foods.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 10 of 31
The FDA countered that the studies didn't prove the salmonella could be fully eliminated
or that the turtles wouldn't be re-infected. Stephen Sundlof, head of the FDA veterinary
medicine center, says turtles pose a particular risk because children handle them often.
"The kids are exposed constantly," he says. Compared with bigger animals, such as
iguanas, he adds, they "seem to fit in the mouth better."
7. The FDA prohibited sales of small turtles in ______ after the then-popular pets were
blamed for causing as many as 280,000 salmonella infections a year, mostly in children.
a. 1965
b. 1975 Correct
c. 1985
d. 1995
8. The FDA allows eggs and small turtles to be sold for some non-pet uses, including
a. decorative home decor
b. educational and scientific purposes Correct
c. candy for children with strong immune systems
d. food for pet snakes and iguanas
Pepsi Sales Force Tries to Push 'Healthier' Snacks in Inner City
By CHAD TERHUNE
October 5, 2006; Page A1
http://online.wsj.com/article/SB116001454312883351.html
CHICAGO -- A new rack of PepsiCo Inc.'s Baked Doritos and Baked Lay's potato chips
greets customers inside the door of the Sammy G convenience store here.
But most customers who frequent the inner-city store bypass the lower-fat chips. Instead,
they grab the 25-cent packages of Flamin' Hot Cheetos and Nacho Cheese Doritos by the
cash register. In store slang, those popular snacks are known simply as "quarters."
Even so, Rafael Herrera, a 30-year-old district sales manager for Pepsi's Frito-Lay unit,
considers Sammy G a big breakthrough for his company's lower-calorie products -simply because the store agreed to stock them. Managers of other stores he deals with
have refused outright. "The baked snacks don't sell as fast," he concedes.
Pepsi, with net income of $4.1 billion last year on revenue of $32.6 billion, is one of the
biggest sellers of sugary colas and high-calorie snacks. That puts the company in the
crosshairs of a growing public-health debate over obesity, nutrition and marketing to
children. This year, Pepsi is spending millions on a test program in Chicago, trying to
encourage inner-city African-Americans and Latinos to adopt healthier eating and
exercise habits -- without seeing any loss in sales for the company.
Whether a giant snack and soda maker should proselytize for healthier diets -- or can pull
off so contrarian a message -- remains a question within the company's Purchase, N.Y.,
headquarters and among critics. Beyond selling the idea to consumers, Pepsi must
persuade skeptical salesmen like Mr. Herrera, whose pay is driven by sales. Winning over
store managers, accustomed to selling huge volumes of colas and salty treats, is even
harder.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 11 of 31
Mr. Herrera, a tall, athletic-looking father of two, grew up in Chicago. His relationships
with neighborhood bodegas are one of the company's most-powerful assets. But even he
was reluctant to bother customers about the new snacks until he went to an employee
health fair and learned some unsettling news about his own health.
About 32% of all U.S. adults are obese, according to the federal Centers for Disease
Control and Prevention. Obesity afflicts 45% of blacks and 37% of Mexican-Americans.
In some of the neighborhoods Pepsi is targeting, more than 40% of children are
overweight, according to the nonprofit Consortium to Lower Obesity in Chicago
Children.
9. Pepsi, with net income of $4.1 billion last year on revenue of $32.6 billion, is one of
the biggest sellers of sugary colas and ________.
a. pizza
b. high-calorie snacks Correct
c. frozen yogurt
d. cookies
10. About _______ of all U.S. adults are obese, according to the federal Centers for
Disease Control and Prevention.
a. 12%
b. 22%
c. 32% Correct
d. 62%
Moscow Trumps West in Battle
For Clout in Former Soviet States
By MARC CHAMPION and GUY CHAZAN
October 6, 2006; Page A1
http://online.wsj.com/article/SB116003821757483555.html
In the struggle over influence, energy and the spread of democracy in its former empire,
Moscow has scored big gains and is taking off the gloves at a time when the West is
increasingly preoccupied.
Russia imposed a trade and transport embargo to pressure the pro-Western government in
neighboring Georgia this week akin to the U.S. embargo on Cuba, following a nasty
espionage dispute between the former Soviet states. The move laid bare the Kremlin's
determination to reassert itself in what Russians call their "near abroad."
When Georgia's arrest of four Russian military officers on spy charges came up during a
presidential phone call Monday, Vladimir Putin's message to George W. Bush was: Don't
interfere.
Hosting Russian minorities and pipelines taking Siberian and Caspian Sea oil and gas to
markets in the West, the former Soviet region has become the front line of conflict
between an increasingly assertive Russia and the West. The Kremlin appears to have read
the spy dispute as a sign that the West's willingness to intervene for Georgia is limited.
Just two years ago, it looked like Russia was losing its grip over what had been part of its
empire for centuries. U.S. troops were based across energy-rich Central Asia, where
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 12 of 31
Moscow was struggling to rebuild its influence. Pro-Western governments had swept to
power in Georgia and Ukraine, emboldening the White House to talk about a wave of
democratic change sweeping the region. Russian officials blamed the U.S. for
orchestrating the revolutions and worried openly that Washington had similar plans to
install a friendlier government in Moscow.
Since then, the most important of the uprisings, Ukraine's Orange revolution, has seen its
leaders become mired in infighting, opening the way for the appointment of an openly
pro-Russian prime minister in August. Last month, he said Ukraine was putting its
NATO membership bid on hold. Central Asian governments that had sought to play the
West off against Moscow have largely shifted into the Russian camp, ousting U.S.
military bases and tightening security and other ties to Moscow. This year, Russia
secured long-term contracts to purchase Central Asian gas, tightening its control over the
supply to Europe.
11. Russia imposed a trade and transport embargo to pressure the pro-Western
government in _____this week akin to the U.S. embargo on Cuba.
a. France
b. Spain
c. Florida
d. Georgia Correct
12. Last month, the leader of Ukraine decided to put its ____ membership bid on hold.
a. NATO Correct
b. Country Club
c. OPEC
d. STANDARD
Questions 13 – 17 from Marketplace
Amid Trans-Fat Fears, Time Appears Right For Dr. Fehr's Beans
By STEVEN GRAY
October 2, 2006; Page B1
http://online.wsj.com/article/SB115974877620779526.html
AMES, Iowa -- In his cramped lab at Iowa State University here, Walt Fehr developed a
soybean whose oil could help eliminate one of the biggest problems facing the food
industry today: trans fats blamed for everything from heart disease to hypertension to
memory loss.
But when he pitched oil made from his special bean to food and restaurant companies
more than a decade ago, almost nobody was interested. Now lots of them are.
"Timing's everything," says Jim Sladek, who has formed a company to produce oil from
Dr. Fehr's beans. "There's more demand than supply."
Amid pressure from health groups and government regulators, food companies are
scrambling for alternatives to cooking oils with trans fats. Last week, New York City
officials proposed to all but ban trans fats from restaurant food. The Center for Science in
the Public Interest, a Washington advocacy group, recently sued KFC parent Yum Brands
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 13 of 31
Inc. for using trans-fat-laden cooking oil. In January, the Food and Drug Administration
began requiring General Mills Inc., Kellogg Co., Sara Lee Corp. and other packaged-food
companies to disclose trans-fat content on product labels. Partly as a result, companies
have invested millions of dollars reformulating products to remove trans fats.
The solution isn't easy. Most of the trans fats in people's diets comes from partially
hydrogenated soybean oil. Some food companies have turned to oils made from other
vegetables, like canola, sunflower and palm. But each of these has drawbacks, including
everything from price to supply to how food prepared with them feels in the mouth. Few
are as versatile as soybean oil, which is used to make everything from fried chicken to pie
crusts.
13. In January, the Food and Drug Administration began requiring General Mills,
Kellogg, Sara Lee, and other packaged food companies to disclose ______ content on
product labels.
a. sugar
b. trans-fat Correct
c. omega-fat
d. tri-fat
Not Our Bag, Coach Says in a Lawsuit Alleging Target Sold Counterfeit Purse
By VANESSA O'CONNELL and KRIS HUDSON
October 3, 2006; Page A17
http://online.wsj.com/article/SB115981450811080264.html
Target Corp. has thrived by selling stylish apparel and accessories on the cheap. But
handbag maker Coach Inc. is accusing the big-box retailer of crossing the line by
marketing a fake Coach bag.
In a lawsuit filed in federal court in Manhattan Friday, Coach alleged that Target was a
counterfeiter by selling a Coach-style purse, complete with a hang tag that says "Coach,"
according to Coach Chief Financial Officer Mike Devine. The allegedly fake bag has
Coach's signature C-pattern and a touch of snakeskin-like fabric in the center of the bag,
according to a photo of it included in the lawsuit. The bag, purchased from a Target store
in Largo, Fla., is an "exact replica of a genuine Coach handbag" bearing at least one
Coach trademark, the suit says.
Target, which isn't a licensed distributor of Coach products, said the bag in question is an
authentic version and therefore the suit is without merit.
"Target has procedures in place to ensure that we do not sell counterfeit products to our
guests," Target said in a statement. "We have been assured that the Coach product
showcased in our store is authentic therefore we believe the lawsuit is without merit."
A subsequent message to The Wall Street Journal said "we are not providing any more
information than what is in the statement."
Coach said the bag was sold at Target for about $200 -- less than the original Coach bag,
but far more than Target bags usually sell for. The original bag was called the Python
Signature Striped Demi. It was offered by Coach about a year ago, but is no longer in the
product offering.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 14 of 31
The Coach suit is seeking at least $1 million as well as information about where the bag
was made. "This is a counterfeit," Mr. Devine says. "We have gone into stores in Florida
and purchased this ourselves. It isn't ours."
The suit illustrates a new aggressiveness on the part of luxury-goods companies to hold
retailers responsible for suspected instances of counterfeiting of their high-end products.
Mr. Devine says this is the first time Coach has sued a major U.S. retailer over
counterfeits. Last month, French luxury-goods brands Louis Vuitton and Dior Couture
filed a complaint in a French court against eBay Inc., alleging the online auctioneer isn't
doing enough to keep people from selling counterfeit goods through its site. That suit,
which seeks an estimated $47 million in damages, alleges that nine out of every 10 Louis
Vuitton brand items for sale on eBay are counterfeit. (Louis Vuitton is owned by LVMH
Moet Hennessy Louis Vuitton SA. Christian Dior SA, the holding company of luxurygoods mogul Bernard Arnault, controls LVMH and owns Dior Couture.)
Designers and manufacturers are getting more assertive about protecting their brands and
designs, in part because of a bill that would protect fashion trademarks from uses that
blur their distinctiveness or tarnish their reputations. The bill was recently passed by the
Senate and is headed to President Bush's desk.
Fashion designers also are pushing for separate federal legislation that would offer three
years of copyright-like protection for designs ranging from dresses and shoes to belts and
eyeglass frames. Peter Raymond, partner at the New York office of the law firm Reed
Smith LLP says the legislative push has "given some confidence to a number of
manufacturers" to take new measures to fight infringements of their design.
Putting a well-known trademark like Coach on a bag isn't considered copying but
counterfeiting and would be illegal under current laws, Mr. Raymond says. He says the
bag might have wound up at Target through the "gray goods" market, in which genuine
brand-name products get beyond their usual chain of distribution and make their way to
store shelves.
Though Coach has encountered other instances of stores selling Coach counterfeit goods,
those stores were "usually small mom-and-pops" against which Coach sought criminal
actions, working with police, Mr. Devine says. "What we don't see is reputable retailers
selling counterfeits, which is what is so surprising about the Target situation," he said.
The Coach lawsuit against Target is the latest in a string of designer brands suing large
retailers for alleged trademark infringement. Coach itself sued department-store chain
Kohl's Corp. earlier this year, accusing Kohl's of infringing on its trademarks for its
Sonoma handbags, among other goods. LVMH's Fendi brand sued Wal-Mart Stores Inc.
in June for allegedly selling counterfeit Fendi handbags at its Sam's Club warehouses.
Sometimes, the manufacturers win. In 1999, Wal-Mart agreed to pay Tommy Hilfiger
Corp. $6.4 million to settle a lawsuit alleging it sold fake Hilfiger apparel.
In its suit against Target, Coach cited more than 20 trademarks that it registered from the
years 1963 to 2005, including the signature Coach hang tag to distinctive patterns of
open-ended ovals on its fabrics.
Sales of the allegedly fake Coach bag aren't the only issue Coach has with Target. Mr.
Devine says Coach in the past had discovered Target knocking off its bags. "We had in
the past been able to reach an agreement with them to stop selling the bags," he says.
As recently as Sept. 21, Mr. Devine says, Coach sent Target a letter regarding an Isaac
Mizrahi tote bag that was sold under the Isaac brand but allegedly infringed on one of
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 15 of 31
Coach's existing styles. Then, in the past week to 10 days, Coach learned of another item
under Target's Cherokee label that was using Coach's so-called Optic C design and retails
for $11.89 compared with $170 and up for Coach bags.
Coach has a signature "C" fabrication, with interlocking Cs, as well as a more abstract
version called Optic C, Mr. Devine says, and it has trademark protection on both. Neither
the Isaac Mizrahi nor the Cherokee purse is mentioned in the suit, however.
"Success frequently breeds imitation and counterfeiting, so naturally we're seeing more
activity" in the realm of knockoffs, says Mr. Devine.
14. Coach said a bag was sold at Target for about ______ less than the original Coach
bag, but far more than Target bags usually sell for.
a. $75
b. $100
c. $200 Correct
d. $250
Unthrilling but Inexpensive, the Logan Boosts Renault in Emerging Markets
By NORIHIKO SHIROUZU and STEPHEN POWER
October 4, 2006; Page B1
http://online.wsj.com/article/SB115982129443180351.html
The Dacia Logan isn't much to look at, with an anonymous econocar exterior and a
utilitarian interior with exposed screws and coarse grey fabric on the ceiling. The 90horsepower motor pulls the Logan to more than 60 miles an hour in an unthrilling 11.5
seconds.
But one thing about the Logan is proving surprisingly exciting to consumers in a growing
number of countries, and grabbing the attention of rivals: Its price tag. Starting at about
$7,300 in Eastern Europe, and about $9,000 in Western Europe, the Logan has turned
into a surprise hit for French car maker Renault SA.
Now rivals, including DaimlerChrysler AG and Toyota Motor Corp., are gearing up to
counter Renault's apparent success at designing a conventional car that can be sold new
for under $10,000. DaimlerChrysler Chairman and Chief Executive Officer Dieter
Zetsche has said the company is in talks with potential Chinese partners to develop
subcompacts for sale under its Dodge brand in the U.S. and elsewhere. Among possible
partners is China's Chery Automobile Co.
"We have been in contact with DaimlerChrysler about this issue since March or April.
The discussions are still ongoing," a Chery spokesman said.
For Western and Japanese auto makers, designing inexpensive -- but decent -- cars has
once again become a critical task, as growth in richer markets such as the U.S. or
Western Europe slows down. Now, the best opportunities are in fast-growing regions
such as Eastern Europe, Russia, the Middle East, India and China -- all places where the
average consumer has less to spend than the average resident of Germany or France.
The established auto giants also have reason to worry about upstarts that are making
inroads in developing markets with their $4,000 cars. Many of these homegrown people's
cars, like the Chery QQ in China and the Maruti 800 in India, often don't have the safety,
performance and environmental technologies required in more developed markets.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 16 of 31
But the Logan, launched in 2004, does offer such amenities, and some options such as
power windows, air conditioning and a CD player. As a result, the car has become
surprise hit for Renault, and potentially a prize should Renault and its alliance partner,
Nissan Motor Co., attempt to link up with a third auto maker, such as General Motors
Corp. or Ford Motor Co.
Last year, in the car's first full year of sales, Renault sold more than 145,000 Logans in
40 countries, mostly in Eastern Europe and the Middle East. Renault initially produced
all of the Logans it sold in Romania, but it has since begun building them in Russia,
Colombia and Morocco and plans to expand production to Iran, India and Brazil over the
next few years.
As it tries to expand sales, the company also plans to add variants: a Logan station wagon
called the Logan MCV that is expected to go on sale in Romania this month, possibly
followed by a car-SUV crossover and a hatchback.
"It is a simple car in terms of equipment and materials," says Luc-Alexandre Ménard,
head of Dacia, the Renault brand that produces and markets the Logan. "But it's rocksolid and has set a new standard as an affordable new car for middle-class families in
emerging markets."
Mr. Ménard says that by 2010 Renault should be able to sell as many as 800,000 Logans.
Renault sold 2.53 million vehicles in 2005. The Logan and its derivatives represent a
significant piece in Renault CEO Carlos Ghosn's strategy to boost the company's global
sales by 800,000 vehicles by 2009.
For Renault, the Logan is not just a car. It's a strategy. Mr. Ghosn says he plans by year
end a complete makeover of Renault's image based on the car's success. He wants to give
Renault a "new, more globalized identity" with the help of the new Logan lineup.
In designing the Logan, Renault from the get-go tried to "prevent technical people from
adding features which are not considered absolutely necessary for the customer," said
Renault's Mr. Ménard. "We absolutely refused to put luxury in the car." This "design to
cost" approach -- fixing a cost target and engineering the car to meet that target -resulted in such decisions as using a relatively flat side window glass. Curved glass gives
the car a sleeker look but costs more.
The Logan engineering team borrowed liberally from Renault-Nissan's existing parts bin.
The Logan's platform, for example, is a modified version of the basic vehicle building
block used in the Renault Clio and the Nissan March (called the Micra in Europe), among
other subcompact vehicles.
Renault's intended audience was less affluent consumers in Eastern Europe. The
company says it has been surprised by the enthusiasm for the Logan in Germany and
France, where better equipped diesel-powered versions of the car can sell for about
$13,000.
The Logan's success in Western Europe rattled rivals. After Renault introduced the Logan
in Germany last summer, GM countered with a budget version of its Opel Corsa
hatchback model without side air bags for under $13,000, compared with about $14,000
for the version with side air bags. Europe's biggest car maker, Volkswagen AG, tried to
fight the Logan with the Fox-a compact model that costs under $12,000 and is assembled
in low-wage Brazil, but the car has quickly turned into a money loser for VW as a result
of an unexpected surge in the value of Brazil's currency relative to the euro.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 17 of 31
The name Logan was chosen because Renault officials wanted one that "fits in any
country -- a simple name, easily pronounced all over the world," a Renault spokesman
says. In Europe, where the Renault and Dacia names are well established, the car is sold
under the Dacia brand. In parts of the world where Dacia is less known or not very well
regarded -- such as Russia, Iran and parts of Latin America -- the Logan is sold under the
Renault brand. Mr. Ménard says the Logan could be sold under the Nissan name in
markets like Mexico, where the Japanese brand has a better image and bigger presence.
There are no indications that the company has an eye on the U.S. market.
The Logan's early success is also raising eyebrows in Japan. Honda Motor Co. has said it
is considering developing a highly affordable microminicar, a vehicle smaller than the Fit
subcompact now sold in the U.S., for India and possibly other emerging markets.
Toyota President Katsuaki Watanabe, speaking at an investor meeting in Tokyo in
September, said Toyota is exploring whether to develop a low-cost, emerging-market car
of its own, inspired by the Logan's success and rapid growth expected in those markets.
He declined to share a price target for the car but noted that Toyota is "aiming to come up
with a ground-breaking car."
"We set up a project team last autumn and have been studying low-cost technology and
manufacturing know-how," Mr. Watanabe said. "And little by little, we've made progress,
and we're beginning to see light at the end of the tunnel."
15. The Dacia Logan made by car maker Renault SA sells for ______ in Europe.
a. under $10,000.00 US Correct
b. over $10,000.00 US
c. under $100,000.00 US
d. over $100,000.00 US
New Hot Spot For Tech Firms Is the Old One
By PUI-WING TAM
October 5, 2006; Page B1
http://online.wsj.com/article/SB116000292196783083.html
Matt Sanchez was just the kind of entrepreneur that the new wave of the Web boom was
supposed to spawn: one untethered by geography, able to locate his company anywhere
there was broadband Internet connection and a good idea.
But two years after the Yale University electrical-engineering graduate and two friends
formed VideoEgg Inc., Mr. Sanchez found that he was spending more days in Silicon
Valley than at the company's New Haven, Conn., headquarters. So, in December, he and
four employees packed up a 12-foot U-Haul van with their servers, whiteboards and
desktop computers and moved West. Since settling into an airy office in San Francisco,
the Web-video-technology company has snagged some venture funding, hired an
additional 22 people and signed deals with Time Warner Inc.'s AOL unit and Internet
firms such as Bebo Inc.
"There's a unique set of resources in Silicon Valley that don't exist in other places," says
Mr. Sanchez, 25 years old. "So if you're going to build a tech company, this is the place
to do it."
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 18 of 31
From early in the Web boom, there have been predictions that the Internet eventually
would erode Silicon Valley's pre-eminence in nurturing start-ups as entrepreneurs found
it more attractive -- and much cheaper -- to do business online from other regions.
Instead, companies like VideoEgg are now migrating to Silicon Valley and environs. The
trend shows how the San Francisco Bay Area continues to possess a unique mix of
venture-capital money and skilled workers that tech firms -- especially those that get to a
point where they want to grow quickly -- can't afford to pass up.
Of course, pockets of tech remain active elsewhere in the country, notably around
Microsoft Corp.'s home base near Seattle and also in Boston. But many companies -typically tech start-ups headed by entrepreneurs in their 20s, often with staffs of less than
five people -- are still heading to Silicon Valley. Mobius Microsystems Inc., a maker of
technology that regulates timing pulses in microchips, relocated from Detroit to
Sunnyvale, Calif., in March. LicketyShip Inc., an Internet firm that facilitates local
deliveries, moved from New Haven to San Francisco last September. Meetro Inc., a
maker of mobile social-networking software, transferred from Chicago to Palo Alto,
Calif., in January, while Box.net Inc., an online file-storage-and-sharing site, jumped
from Seattle to Silicon Valley that same month. Other companies are moving from
overseas: Internet video company Metacafe Inc. is currently shifting its main office to
Palo Alto from Tel Aviv.
16. According to Mat Sanchez, if you're going to build a tech company, ____ is the place
to do it.
a. Detroit
b. Boston
c. Cypress
d. Silicon Valley Correct
Chasing Mr. and Mrs. Middle Market,
J.C. Penney, Kohl's Open 85 New Stores
By JAMES COVERT
October 6, 2006; Page B1
http://online.wsj.com/article/SB116009903799284511.html
Fierce rivals J.C. Penney Co. and Kohl's Corp. have big plans for this weekend, and the
name of the game is expansion.
Kohl's is staging grand openings at 65 stores, the largest growth spurt in its history. At
the same time, plans call for Penney to cut ribbons to open 20 stores -- its biggest
expansion in two decades, and one with a new wrinkle: Of the 20, 17 of the stores are
free-standing -- a matter of course for Kohl's but a departure from Penny's longtime role
as an anchor in suburban shopping malls.
Both Penney, based in Plano, Texas, and Kohl's, based in Menomonee Falls, Wis., plan to
celebrate their growth with big discounts on fall fashions.
That will help set the tone for a highly competitive holiday season as the two battle for
the business of the middle-market shopper, says Britt Beemer of America's Research
Group, a consulting firm that tracks shopping patterns nationwide. "We're already seeing
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 19 of 31
big, in-your-face discounts of 30% to 50% off," he says. "This is going to be a good fight
to watch."
The middle market, sandwiched between discounters at the low end and luxury retailers
at the top, is actually growing more slowly than retail spending overall. This holiday
season, middle-income shoppers are less likely to increase their spending than their
lower- and upper-income counterparts, according to a recent survey by NPD Group, a
market-research firm. But Penney and Kohl's are growing faster than other midprice
department stores, and both companies raised their profit outlooks this week.
"We're taking share from somebody," says Myron "Mike" Ullman, Penney's chairman
and chief executive. "We're getting new customers whether they're trading up, down or
sideways."
Fe Limboc, a 55-year-old accounting analyst in Lewisville, Texas, says she shops at both
Penney and Kohl's stores because traditional mall department stores are "expensive for
what you get."
Both chains now have an opportunity to attract customers who once shopped at hundreds
of former Filene's, Foley's and Strawbridge's stores that Federated Department Stores Inc.
last month converted to Macy's, a chain with a more upscale image than many of those it
is supplanting. Federated also has been closing stores in the wake of its acquisition of
May Department Stores Co.
Richard Hastings, an analyst at New York-based retail consultant Bernard Sands, reckons
Penney and Kohl's lately are stealing shoppers away from discounters, too. He cites both
companies' strong September sales gains versus those of Wal-Mart Stores Inc. and Target
Corp.
The shift in strategy at Penney -- which operates about 1,050 stores -- comes as regional
mall construction has nearly ground to a halt, and time-strapped shoppers are favoring
stores that are closer to home and easier to navigate. Capitalizing on that trend, Kohl's has
expanded at a torrid pace, doubling the size of its chain to about 800 stores since 2001 by
pushing into new markets like Florida and California. What remains to be seen is whether
there are enough good free-standing locations for both companies' big expansion plans.
The stand-alone strategy also isn't a slam dunk. Penney has been tinkering with its freestanding format for three years, opening only 25 such stores prior to this weekend's
rollout. And while these types of stores have advantages over mall anchors -- Penney
says weekday traffic has exceeded its expectations -- other chains, including Sears
Holdings Corp., have seen mixed results with them.
17. Of the 20 new JC Penny stores to open very soon 17 of the stores are ______.
a. 5 story stores
b. larger than the biggest Walmart
c. free standing Correct
d. in shopping mall
Questions 18 – 23 from Money & Investing
Your Portfolio on Autopilot
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 20 of 31
By AARON LUCCHETTI and JUSTIN LAHART
September 30, 2006; Page B1
http://online.wsj.com/article/SB115956958418978572.html
One of the most powerful and risky investment tools available -- software sophisticated
enough to actually trade on your behalf -- is starting to trickle down to the little guy.
Previously, tools like these were the exclusive domain of whiz kids with Ph.D.s hired to
design complex trading algorithms for hedge funds and giant institutional investors.
Known as "quantitative" strategies or "program trading," it involves setting up specific
sets of rules -- say, buy 100 shares of Stock X if the Dow rises a certain amount for
several days in a row -- based on intensive data-crunching.
But now, in a race to keep up with the pros, a host of brokerage firms are starting to offer
services like these to regular investors. The most elaborate can execute complex
strategies involving stocks, options and currencies all at once and without any human
intervention, which makes them not only powerful, but potentially dangerous if the
investment strategy is poorly designed.
TD Ameritrade Holding Corp. plans to start rolling out automated trading for its six
million client accounts as soon as next month that is designed to mimic some of these
functions. In the past year or so, Fidelity Investments has rapidly enhanced its Wealth
Lab Pro software, which lets users pick from about 1,000 "quantitative" strategies or
program their own approaches using historical stock data and more than 600 market
indicators. Since June, Fidelity has added indicators including the trading of corporate
insiders and economic data such as housing starts.
It is proving to be popular with investors. At TradeStation Group Inc.'s brokerage unit,
where automated trading already makes up a significant percentage of the business,
trading is up 50% from last year and the average customer now buys and sells 47 times a
month. Over the next few months, the Plantation, Fla., firm plans to add computerized
trading of foreign currencies for individuals.
Interactive Brokers earlier this year held its first investing contest for computer
programmers, not only to encourage them to trade more, but also so they might offer their
software to other, less computer-literate clients. The Greenwich, Conn., firm hosts forums
at interactivebrokers.com1 where programmers can swap trading-system ideas. One such
strategy, dubbed MoneyMachine, describes itself as "an automated software program that
will buy and sell stocks completely unattended."
Other brokerage firms offer a less ambitious strategy that lets investors set up a computer
to track their order, and spot the right time to buy or sell, based on triggers set by the
customer.
In many ways, automated strategies like these level the playing field by giving investors
some of the same tools the pros have been using for years. It helps them get trades sent
into markets more quickly, and by giving them a preset strategy, "removes some of the
emotion" from investing, says Franklin Gold, a vice president at Fidelity's brokerage unit.
But rapid trading can also rack up big commission costs for investors -- something that
benefits the brokerage firms. Those fees can quickly eat into any profits.
One of the biggest risk areas for newbies, says Michelle Clayman of New York money
manager New Amsterdam Partners LLC, is the data mining. It is possible to look at
historical data about market behavior and find all sorts of things that appear to have
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 21 of 31
worked in the past -- but without extensive testing, it is hard to determine if they would
work the same way again or whether they simply represent a coincidence that might
never be repeated.
Another problem, says Paul Bukowski, a portfolio manager with Hartford Investment
Management, is that sometimes even tried-and-true methods can still put an investor into
too many of the same sorts of stocks. That lack of diversification is risky because if a
particular sector gets hurt badly, the portfolio could be in trouble.
"Bringing down quantitative analysis to the individual level -- I guess the whole thing is
caveat emptor," says Ms. Clayman of New Amsterdam Partners. "In the right hands, I'm
sure it's fine."
Fidelity says it is aware of the risks and in fact denies requests from many customers who
want to use its programs to essentially put their trading decisions on autopilot. "We don't
encourage people to automate their strategy and then go play golf," says Mr. Gold of
Fidelity. "It's like cruise control. The driver should still be behind the wheel."
Instead, Fidelity advises clients to set up their program so it sends them alerts when
certain marks are hit. That way, the computer still does most of the work, but the
individual makes the ultimate decision about whether to take the next step and buy or
sell. It also limits the service to clients who trade more than 120 times a year and have at
least $25,000 in their brokerage accounts.
Investors have other options if they want to get some exposure to these strategies. Amid
the boom in index-tracking mutual funds in recent years, some have now branched off
into "enhanced" index funds -- in which managers use quantitative techniques to add a
few percentage points of performance. Vanguard Group, American Century, Pimco,
Schwab, Janus Capital and Bridgeway Funds all feature quantitative mutual funds that
have attracted assets in recent years.
Vladimir Ivanov, an auto mechanic, decided to try his hand after he took evening
programming classes and found several Internet sites where programmers discussed
strategies like these. He opened an account at Interactive Brokers and at first made
money in a program he designed to buy and sell groups of stocks at once, a so-called
"pairs" strategy.
But those profits dwindled, he says, as more traders flocked to similar ideas, so now he
has switched to a newer program based on stock volumes. Mr. Ivanov won't disclose his
earnings, but wrote in an e-mail that he makes "a few times more than I used to make in
the garage," working on cars.
Mr. Ivanov's biggest fear: Losing a bundle of money based on a programming error that
buys or sells far too much stock.
All of this is a far cry from the rock-star "quants," as they are known, who run big hedge
funds that often deploy an array of complex program trading strategies. For instance,
Clifford Asness, a hedge-fund manager with engineering, economics and finance degrees,
left Goldman Sachs in the 1990s to start AQR Capital Management, which now oversees
$28 billion in assets.
According to Mr. Asness, one of the key things successful investors do is know when not
to believe in the investment strategies they have cooked up. That is particularly tricky for
amateurs, he says, because they might not have old hands to bounce ideas off of and help
guide them away from danger.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 22 of 31
18. A new investment tool available to individuals provides ____.
a. free currency transfers between Swiss banks
b. software sophisticated enough to actually trade on your behalf Correct
c. software to print up stock certificates
d. software to print up bond certificates
Where It Is Hard to Be a Bear
By HENNY SENDER
October 2, 2006; Page C1
http://online.wsj.com/article/SB115975277618579599.html
Playing the housing slowdown in financial markets is proving tougher than anyone
expected.
Some obvious bets against housing haven't been working out. Even though housing
statistics are sinking, home-builder stocks have risen since July and demand for
mortgage-backed securities has held up.
Just last week, the National Association of Realtors made the case for housing bears
stronger by reporting that prices of existing homes had fallen for the first time in 11
years.
The Federal Reserve is working against the bears by pausing its campaign of short-term
interest-rate rises.
If the Fed were to allow interest rates to get too high, that would raise mortgage costs and
could tip the economy into a serious slowdown. That is why some investors believe the
Fed might cut rates next time it meets. Long-term interest rates already are falling, which
is holding down mortgage costs at a critical time.
"Just when a lot of players were thinking that the sky would fall and delinquencies on
mortgage payments would rise, the Fed paused," says Boaz Weinstein, Deutsche Bank's
head of credit trading in the U.S. and Europe.
So even though the stream of bad housing news has worsened, people are still,
surprisingly, investing in mortgages. Just a few days ago, Amaranth Advisors -- a hedge
fund that had to liquidate its holdings after making bad natural-gas trades -- saw strong
demand for pieces of its mortgage portfolio.
19. Last week, the National Association of Realtors reported that prices of existing homes
had _______.
a. fallen for the first time in 11 years Correct
b. fallen 20 percent
c. risen 8 percent
d. risen 10 percent over the last 11 years
Street Sleuth Hot Investment: Calm Weather
By LIAM PLEVEN, IAN MCDONALD and KAREN RICHARDSON
October 3, 2006; Page C1
http://online.wsj.com/article/SB115983992062680785.html
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 23 of 31
Coastal homeowners will feel a lot safer if the next few weeks pass without a hurricane.
A few bold investors could feel a lot richer.
A handful of reinsurance companies and hedge funds made substantial bets on the
weather this year, collecting large premiums in exchange for covering potential disasters
along the shore. With each calm day that passes, they are getting closer to securing
hundreds of millions of dollars in gains.
Many insurers pared back their exposure after Hurricanes Katrina, Rita and Wilma last
year, but this group waded into the market for reinsurance -- insurance that insurers buy
for themselves to help pay large claims, thereby spreading some of the risk of their
policies to others.
Among the big potential winners are two divisions of billionaire investor Warren
Buffett's Berkshire Hathaway Inc., which used its deep pockets to sell coverage others
couldn't or wouldn't issue because of fears that last summer's monster hurricanes were a
taste of things to come.
Another company, Bermuda-based RenaissanceRe Holdings Ltd., even expanded in parts
of the Gulf Coast that suffered dramatic losses last year. "We often choose to grow in
areas that have been hit hardest by recent losses, as that is where the pricing and terms are
most attractive," Chief Executive Neill Currie told analysts in August.
Investors, for now, are happy: As of 4 p.m. composite trading yesterday on the New York
Stock Exchange, that company's stock was at $55, up 50% or so from late October 2005.
In the past year or so, several hedge funds and other investment managers have poured
about $4 billion into a new generation of reinsurance-type vehicles known as sidecars.
Among the investors were Highfields Capital Management LP, which oversees $8
billion, and Farallon Capital Management LLC, one of the nation's biggest hedge-fund
firms. Another firm, Third Avenue Management LLC, invested in a sidecar for a $2.3
billion mutual fund it runs, Third Avenue International Value. Farallon declined to
comment; Highlands and Third Avenue each didn't return a call.
There are now at least a dozen of these sidecars. These investment vehicles provide
capital to back chunks of risk for a year or two -- an array of policies for wind damage in
Florida, for instance. Investors typically leave the underwriting -- how much to charge,
policy details and the like -- to reinsurance company partners. The investors and their
reinsurance partners typically share in the premiums and the losses.
Rob Bredahl, New York-based president of reinsurance brokerage firm Benfield Inc.,
predicts returns of 20% to 30% or more for some sidecar investors if there are no major
catastrophe losses.
That could make bets on a light hurricane season one of the year's best wagers in the
financial markets. "If we have a mild [catastrophe] season, they're going to earn well in
excess of what they've been able to get in the stock market," says Sarah Hibler, a senior
analyst at Moody's Investors Service Inc. By comparison, the Dow Jones Industrial
Average is up nearly 9% this year.
20. Reinsurance is purchased by _______.
a. hurricane companies
b. young female drivers with many tickets
c. young male drivers with many tickets
d. insurance companies Correct
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 24 of 31
Cold Water Club
By JUSTIN LAHART
October 4, 2006; Page C1
http://online.wsj.com/article/SB115991544702281715.html
After more than six years, the Dow Jones Industrial Average finally eked out a new
record close yesterday. But before they pop the champagne corks, investors might want
to look back at the history books.
Back on Nov. 10, 1972, the Dow rose seven points to close at 995.26, surpassing the
record of 995.15 set on Feb. 9, 1966. It was a little more than six years between peaks,
just like today.
"We aren't alone in regarding the economic recovery as steady, strong and wellbalanced," Leo C. Bailey of the College Retirement Equities Fund told The Wall Street
Journal back then.
Mr. Bailey expected the Dow to cross the 1000 mark quickly, on its way to "1150 or
1200."
He was right on the first count -- the Dow closed above 1000 the next week -- but wrong
on the second. The Dow hit a high of 1051.7 in January 1973 and then fell. It would be
10 more years before it hit a new peak and the great bull market of the 1980s and 1990s
was to begin.
John Bollinger, head of Bollinger Capital Management, sees parallels. As in 1966, the
high that the Dow hit in 2000 came at the conclusion of a long bull market that pushed
stock-market valuations much higher. And as in 1972, the stock market today isn't as
expensive as it was six years ago, but it isn't dirt cheap, either.
"Great bull markets are born from periods of excessively low valuations," he says. "All
the current cycle has allowed us to do is bring us to just above average valuations."
He expects stocks to flounder even as earnings advance, until the market has reached a
point where stock prices are a much lower multiple of corporate earnings.
Of course, the 1970s turned out to be much worse than bulls like Mr. Bailey expected.
Inflation ran rampant, OPEC members squeezed oil supplies, the Watergate scandal
brought down a president, the U.S. would go through two recessions.
Today's outlook might be much more benign. The Federal Reserve seems to have a much
firmer grip on inflation and interest rates than it used to. But it hardly seems like a time
for lots of bubbly.
21. Recently the ____ eked out a new record close.
a. NASDAQ
b. Dow Jones Industrial Average Correct
c. New York Stock Exchange
d. Chicago Stock Exchange
Gasoline Prices Could Fall More
By STEVE LEVINE and CHRISTOPHER CONKEY
October 5, 2006; Page C1
http://online.wsj.com/article/SB116001013863483251.html
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 25 of 31
Gasoline prices have dropped more than 20% in the past two months, providing relief to
consumers and potentially propping up an economy that is showing signs of slowing.
Industry experts say further price declines are likely.
The big driver is oil, which accounts for more than half the cost of a retail gallon of
gasoline. Oil prices have been sliding since early August, tumbling 3% Monday and a
further 4% Tuesday. Yesterday, oil futures settled at $59.41 a barrel in New York
Mercantile Exchange trading, up 1.2%. Behind the drop in oil prices: easing geopolitical
tensions in oil-producing countries like Iran, the end of the summer driving season and
the exodus of some financial investors who had bid up energy prices.
But there are other factors afoot. Fuel prices were pushed up by hurricanes last year,
which smashed into the U.S.'s refining belt, and by a bumpy transition to new federal
requirements that gasoline have more ethanol content. Now, most of these supply
interruptions have vanished, and inventories are at high levels.
The retreat in energy prices cuts across the entire sector. Along with oil and gas, heatingoil-futures prices on the New York Mercantile Exchange are 17% lower than a year ago
and natural-gas futures are down 58% in the past year. Crude oil has dropped 5.4% and
gasoline futures have fallen 21% over that same period.
A sustained drop in gasoline prices could give a hand to retailers, particularly those
catering to lower-income customers. Still, despite a drop in fuel prices last month, WalMart Stores Inc. said yesterday that it expects to report just a 1.3% increase in September
same-store sales, or stores open at least a year. Wal-Mart's shares yesterday rose nine
cents, or 0.2%, to $49.55 as of 4 p.m. in New York Stock Exchange composite trading.
Cheaper gasoline could also play a role in the coming elections. Nearly one-third of
participants in a recent Wall Street Journal/NBC News poll said the dip in gasoline prices
made them feel either somewhat more confident or much more confident about the
economy.
Gasoline prices are volatile, and any number of factors -- ranging from refinery outages
to geopolitical tensions in oil-producing countries -- could put them on an upward march
again.
For now, most of the forces seem to be downward. The nation's refineries are operating at
about 90% capacity, compared with 75% capacity at the same time last year after the
hurricanes. U.S. gasoline stockpiles rose to 215.1 million barrels this week, 9.6% higher
than the same week last year, according to the Energy Information Administration. "You
can expect prices to keep falling. There is nothing in the fundamentals to indicate
anything but a further decline," said Paul Sankey, an analyst with Deutsche Bank AG.
The average price of regular gasoline early this week was $2.31 a gallon. The 24%
decline in gasoline prices since their peak of $3.03 in early August was the second largest
since the Energy Information Administration began tracking data in 1990. Industry
analysts say pump prices could dip as much as 25 cents in the next week or two as lower
wholesale gasoline and oil prices work their way through the system.
The bulge in fuel inventories developed largely because of gasoline imports from Europe,
attracted by soaring gasoline prices and high refining profits in the U.S. The imports
arrived at about the same time the summer driving season ended around Labor Day,
creating a glut of gasoline.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 26 of 31
Many analysts also attribute much of the volatility in the gasoline market to speculators.
Doug Leggate, an analyst with Citigroup Inc., says gasoline prices have closely tracked
bets by futures traders over the past several years. In July, speculators expecting
hurricane damage to Gulf of Mexico refineries placed heavy bets on a further surge in
gasoline prices. But starting at the beginning of August, they began to unwind their
positions, according to the Commodity Futures Trading Commission. When no storms
had hit the coast by September, "a massive liquidation of gasoline contracts" began, says
Larry Goldstein, president of the Petroleum Industry Research Foundation in New York,
a consulting firm.
A chief influence on the selloff, analysts say, has been a decision by Goldman Sachs
Group Inc. to reduce the weighting of gasoline futures in its Goldman Sachs Commodity
Index, the market's largest commodities index.
At its meeting last month, the Organization of Petroleum Exporting Countries agreed to
abandon output quotas for the time being, giving them flexibility to cut production as
needed. This also postponed any decision on a new set of quotas, if needed, until OPEC's
next meeting in December -- a process that could be contentious. Many of OPEC's
influential members see the need to cut output only when prices fall below $55 a barrel or
it looks as if prices are sliding uncontrollably. Yesterday, Saudi Arabia's ambassador to
the U.S. said he didn't expect the cartel to hold an emergency meeting to discuss prices
ahead of the December gathering.
22. ________ prices have dropped more than 20% in the past two months, providing
relief to consumers and potentially propping up an economy that is showing signs of
slowing.
a. Automobile
b. Housing
c. Food
d. Gasoline Correct
Stop Signs
By JON HILSENRATH
October 6, 2006; Page C1
http://online.wsj.com/article/SB116009571307384468.html
Today's jobs report could show who has a stronger case -- bond bulls who have been
gobbling up Treasury notes on the view the economy is slowing sharply, or stock bulls,
who have pushed the Dow industrials to a record on the contrary view that the economy
is just fine.
Economists expect the Labor Department to report the nation's payrolls grew by a bit
more than 100,000 in September, in line with August growth but a slowdown from last
year's monthly growth rates of closer to 200,000.
For now at least, slower job growth suits the bond bulls and the stock bulls. It implies the
economy is growing, but not so fast that it will push inflation and interest rates higher.
But the bond bulls will stand up and cheer if the report indicates the job slowdown is
worsening.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 27 of 31
As is often the case, the headline tells only part of the story. Trends in two specific
industries -- temporary help and retail -- could help fill the gaps. Temporary help is a
leading indicator of broader job trends. Temp jobs started contracting before the economy
sank in 2001 and kicked in before employment started growing again.
Lou Crandall, economist at Wrightson ICAP, a bond-research firm, calls them a gauge of
corporate energy levels. "When they've got a lot of new projects that ultimately lead to
expanded economic activity, [companies] suck up temps," he says. Troublingly, yearover-year growth in temp employment has slowed from more than 6% last year to 2.5%
in August, a possible sign of brewing corporate retrenchment.
Retail employment might send similar signals. The last two times it dropped -- in the
early 1990s and the early 2000s -- it was accompanied by a recession. In August, it was
down 0.7% from a year earlier.
Michael Niemira, the International Council of Shopping Centers' research director, says
the drop is puzzling. Retail sales and profits are still strong. He says the job drop might
be happening because retailers are having a tough time finding qualified workers as the
economy expands.
His interpretation is a possible consolation to stock bulls counting on healthy economic
growth. But if the arrows on retail and temp work keep pointing in lower, the bond bulls
might win their case.
23. Economists expect the Labor Department to report the nation's payrolls ____ in
September.
a. grew by a bit more than 100,000 Correct
b. fell by a bit more than 100,000
c. grew by a bit more than 10,000
d. fell by a bit more than 10,000
Questions 24 – 26 from Personal Journal, Section D
Virtual Reality TV
By JESSICA E. VASCELLARO
October 3, 2006; Page D1
http://online.wsj.com/article/SB115983680201080700.html
The next season of "American Idol" doesn't start until January. But Ryan Leonard, an 18year-old freshman at the University of Pennsylvania, is already an "Idol" winner of
another kind. He and his friends made a lip-sync video to the tune of the Beatles' "I Want
to Hold Your Hand" in which two young men try oddball antics in a fruitless bid to win
the attention of the same girl. The video trumped the competition -- a male duo dancing
and banging pillows to an angst-filled love song by Vanessa Carlton -- by nearly 1,000
votes to win the title of best music video on "Google Idol," a new Web site with no
affiliation to either Google Inc. or News Corp.'s Fox Television.
Move over Taylor Hicks. Reality television is moving to the Web with a host of online
video contests and games modeled after reality television. The series, ranging from
elaborate online dating games to interactive game shows, offer anyone a shot at the
limelight. Large companies are creating new online ventures using reality contests, and
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 28 of 31
existing online video sites are using the contests as a way to set themselves apart from the
pack.
Time Warner Inc.'s AOL, in partnership with the producer of reality-TV hits such as
"Survivor" and "The Apprentice," recently launched an online reality contest called
"Gold Rush." The grand prize: a million dollars in gold. In the program, which runs
through November, anyone can log on to compete in online trivia challenges to qualify
for offline final rounds that are filmed and streamed as "webisodes" on
AOL.com/goldrush. In one contest, viewers match celebrities such as Justin Timberlake
and Shaquille O'Neill to their tattoos (a cross and a Superman insignia, respectively).
Microsoft Corp.'s MSN division recently wrapped up an online reality baseball series
called "Fan Club: Reality Baseball," where viewers acted as the team manager and made
decisions about the player lineup. A real minor league team, the Schaumburg Flyers, then
played according to their votes and MSN posted highlight clips and clubhouse videos,
viewed more than half a million times, back on the site.
24. Ryan Leonard, an 18-year-old freshman at the University of Pennsylvania, is a winner
of _________.
a. MSN Idol
b. Google Idol Correct
c. Oddball Antics
d. American Idol
Those IMs Aren't as Private as You Think
By AMOL SHARMA and JESSICA E. VASCELLARO
October 4, 2006; Page D1
http://online.wsj.com/article/SB115991992052181850.html
It's already a workplace maxim that employees should be careful what they say in their
emails from company computers. But fewer office workers know to apply caution to their
use of instant-messaging services.
These immensely popular computer programs, which let users exchange short text
messages with online buddies in real time, are no haven for private chatter. Companies
and government agencies can monitor and log IM conversations conducted on companynetwork computers. And though it seems that IM conversations disappear into a cybervacuum when a session is over, that isn't always true.
Two scandals currently dominating the headlines highlight the risks. In the past week,
instant messaging came back to haunt former Republican congressman Mark Foley of
Florida. He resigned abruptly when he was confronted with his emails to a young Capitol
Hill page, which showed a member of Congress taking an unusual -- and perhaps
disturbingly close -- interest in a subordinate. But the most damning revelations came
from his sexually explicit IM sessions with several pages.
Mr. Foley sent emails to pages from an AOL email account with the screen name
"Maf54," and he used the same ID for chats on AOL's AIM instant-messaging service,
says a person familiar with the matter. The pages were most likely AIM users as well,
though it is possible on AIM to write to users of Apple Inc.'s iChat software. It's unclear
how those IMs were saved. If they were using AIM, congressional pages could have
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 29 of 31
saved sessions on their computers or copied and pasted them into separate files that could
be printed or emailed.
And Hewlett-Packard Co.'s leak-investigation scandal, though it has centered on the use
of "pretexting" to obtain phone records of journalists and board directors, also involves
IMs. H-P tracked the instant-message communications between a company spokesman
and a Wall Street Journal reporter.
Most companies are just beginning to wake up to the popularity of IM in the workplace.
While more than a third of employees use instant-messaging services at work, only 31%
of organizations have policies in place that specifically restrict the use of IM, according
to a survey on workplace monitoring by the American Management Association and the
ePolicy Institute. But the issue has caught the attention of leading industries. The
National Association of Securities Dealers requires member firms to "supervise" the use
of instant messaging the same way they do written and electronic communications and to
retain electronic copies of instant messages for at least three years.
25. While more than a third of employees use instant-messaging services at work, only
_____ of organizations have policies in place that specifically restrict the use of IM,
according to a survey on workplace monitoring by the American Management
Association and the ePolicy Institute.
a. 21%
b. 31% Correct
c. 41%
d. 51%
Dealing With Hatred: How The Torrent of Anti-Americanism Affects Teenagers
By JEFF ZASLOW
October 5, 2006; Page D1
http://online.wsj.com/article/SB116000822824583215.html
Knowing that America is hated in many corners of the world, some of our best highschool students have a few requests.
Their school curricula require them to study the French Revolution, which began in 1789.
Why, they ask, aren't they also learning about the Iranian Revolution of 1979?
They're taught foreign languages -- lots of verbs and nouns -- but not enough about the
cultures where these languages flourish. Why, they ask, are they not given more insight
into the politics and religions of those countries?
I learned of these and other concerns last week, when I interviewed about 70 students
taking advanced-placement government and international-affairs courses at two suburban
Detroit schools. These juniors and seniors -- they were the 11- and 12-year-olds of Sept.
11, 2001 -- had a good sense of the issues threatening the nation they will inherit. Aware
that many of their contemporaries overseas are being taught to hate the U.S., they wonder
what confrontations lie ahead when their generation reaches adulthood.
"We think, 'If they hate us, we should hate them,' but the truth is, we don't know them
very well," said Gilbert Knie at Farmington High School in Farmington, Mich. "We need
classes that go deeper."
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 30 of 31
On the long list of troubling things that parents need to discuss with kids today -- from
school shootings to the risks of terrorism -- it's vital to include a look at America's place
in the world. How can parents explain recent hate-filled speeches by the leaders of Iran
and Venezuela? How can we help kids process the disparaging things being said about
our leaders, morals and lifestyles? How do we balance our love of country with our desire
to make our children good citizens of the world?
Though anti-Americanism has always existed, today's parents were only dimly aware of
it during their childhoods. Our kids have a scarier reality. In a post-9/11 world, they are
used to seeing a constant stream of TV images of hostile overseas rallies, with thousands
chanting against us.
"The anti-Americanism is ironic," said Brian Bowman, a student at Lahser High School
in Bloomfield Hills, Mich. "They say we're evil, but they accept every dollar we give
them. It's like they're saying, 'We hate you, but we need you.' "
The National Association of School Psychologists offers Web pages of advice to help
children cope with world affairs. As parents, we're told we shouldn't dwell on worst-case
terrorism scenarios, or let kids watch endless war coverage, which could heighten their
anxieties.
But in the classes I visited, students -- regardless of their politics -- said they wanted to
know more. "We're probably similar to teenagers in the Middle East, but we don't get to
see that," said Emily Maki, at Farmington.
Erika Mayer, a Lahser student, lived in Indonesia for two years, while her dad, an auto
executive, was based there. "The anti-American feelings were more than you can
imagine," she said. "They burned the flag every week in front of the [U.S.] Embassy. I
didn't understand how they could hate us so much, because I know we have freedoms
they don't have. They don't see the whole picture. They see only our mistakes."
Several Lahser students pointed out that ours is "a government of the people," so all of us
are responsible for the nation's reputation. "A lot of countries don't like Bush and blame
us for electing him twice," said Katherine Clair.
Given how news spreads globally today, Kara Koppinger said she wishes the U.S. media
would be more careful. "Our media feeds off of our failures, broadcasting them all over
the world." People in other countries see American teens carousing in decadent movies,
but they don't know that U.S. teens are among the world's leaders in community service.
Last month in Denver, 10 Nobel Peace Prize recipients spoke to 3,000 teens at an event
called PeaceJam. Some of the Nobel laureates blamed the U.S. for waging war in Iraq
rather than feeding the world's hungry and building schools. Others called for
negotiations with terrorists. The Michigan students rejected the idea of negotiations with
al Qaeda, and many were unhappy that PeaceJam included so much finger-pointing at
President Bush and the U.S.
26. Last month in Denver, 10 Nobel Peace Prize recipients spoke to 3,000 teens at an
event called ______.
a. MileJam
b. HighJam
c. JoyJam
d. PeaceJam Correct
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 31 of 31