Pole gets 30 years for killing 6 on Channel Island

LONDON (AP) — A Polish builder who killed six people, including his wife and children, on the British Channel Island of Jersey has been sentenced to 30 years in prison.

Damian Rzeszowski, 31, carried out the knife attack in August 2011 at his home. He was said to have become depressed after his wife admitted to an affair.

Rzeszowski was convicted of six counts of manslaughter but cleared of murder. On Monday, Judge Michael Birt sentenced him to 30 years in jail for each victim, but the sentences are to run concurrently.

Rzeszowski’s victims were his wife Izabela Rzeszowska, 30; 5-year-old daughter, Kinga; 2-year-old son, Kacper; father-in-law, Marek Gartska, 56; his wife’s friend Marta De La Haye, 34; and her 5-year-old daughter, Julia.

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PayPal cutting jobs as part of major reorganization

SAN FRANCISCO (Reuters) – PayPal is cutting about 325 jobs as part of a major reorganization by its new president, David Marcus, designed to regain an innovative edge and head off rising competition.

PayPal, the online payment pioneer owned by eBay Inc, said on Monday the full-time jobs would be eliminated as it combines nine product-development groups into one. The company is also cutting about 120 contractors.

EBay will take a $ 15 million pretax restructuring charge in the fourth quarter related to the job reductions.

PayPal, which started in the late 1990s as a scrappy Silicon Valley start-up, had almost 13,000 employees earlier this year.

“In a large company, at some point you reach the law of diminishing returns when more people means slower,” said Marcus, who used to run mobile payments start-up Zong, which PayPal acquired last year.

“You have a lot of duplication of roles with nine product groups merging into one,” he said.

Wall Street considers PayPal the crown jewel of eBay because it is growing fast and profit margins are expanding. But in Silicon Valley, PayPal is considered a slow, bureaucratic behemoth – a reputation that has made it difficult for the company to attract and retain smart software engineers and designers.

PayPal needs such talent more than ever because a slew of payments start-ups, including Square, Stripe and Dwolla, are developing rival services and products that are beginning to catch on with merchants and consumers.

“PayPal has been on a very strong growth trajectory, but it’s facing a period of disruption ahead,” said Kevin Hartz, chief executive of ticketing start-up Eventbrite.

“We just haven’t seen a lot of innovation that’s needed for them to continue their leadership,” added Hartz, who was an early investor in PayPal and owns a small stake in Square now.

Still, Hartz said PayPal’s new executive team is the right one to overhaul the company’s culture and approach.

Marcus said he is reorganizing PayPal to help engineers and designers develop new products and services more quickly – to keep up with new rivals.

Marcus has organized demonstrations of rival services at PayPal headquarters in San Jose, California, and screen shots of competing products line the walls of some corridors.

“It’s important to face the reality of the situation,” Marcus said. “In some cases, we don’t have better products and we have to do something about it.”

In the past, it took PayPal six to nine months to develop and launch a product, partly because there was a long application process to assemble the required teams of employees.

After products were released, engineers and developers moved on to other projects. That meant any problems with new products took a long time to update and fix, Marcus said.

Marcus’ new approach involves giving smaller groups of engineers and designers the freedom to coalesce quickly and release early versions of products that will be tested with a small sub-set of PayPal users and updated quickly, he said.

‘JOLTED’

Hill Ferguson, PayPal’s new head of global product, and Chief Technology Officer James Barrese oversee the new, single-product development group.

“We had multiple different product teams coming to me with their ideas and requests, which was crazy,” Barrese said. “We brought that all together and can make much swifter decisions. Hill and I sit in a room and decide to do something and it’s done.”

The company launched PayPal Here, a credit card processing service for small merchants that competes with Square, earlier this year. The product was initially developed by a group that consisted of one product developer, two engineers and two designers.

“We are using that model for how we work going forward,” Ferguson said.

PayPal is now assembling a small team of engineers and designers to change the company’s core online checkout service, Ferguson and Marcus said.

Hartz said customers who pay for tickets through Eventbrite using PayPal are “jolted” over to PayPal’s website to complete the transaction. That can reduce “conversion,” or the percentage of customers who complete purchases, he said.

Marcus said PayPal will be working to fix such issues.

“We want to do what’s right for merchants and customers. Neither wants to be re-directed when they pay,” he said.

TALENT MAGNET?

Marcus, Ferguson and Barrese hope their changes will attract software engineers and designers to the company again. That may be tough.

Soon after eBay acquired PayPal in 2002, some of the founders and early executives, including Peter Thiel, Reid Hoffman, Jeremy Stoppelman, David Sacks and Max Levchin, left to start other businesses such as LinkedIn Corp, Yelp Inc and Yammer. Thiel and Levchin are among investors in Stripe now.

That talent drain at the top of PayPal, combined with a lack of incentive to innovate further, meant top engineers often went elsewhere.

“They aren’t a very strong magnet for talent right now,” said Elad Gil, a Silicon Valley investor who owns stakes in Stripe and Square. “It’s possible that may change.”

Douglas Crockford, an expert in JavaScript, came to PayPal from Yahoo! Inc recently, joining Bill Scott, former director of User Interface Engineering at Netflix Inc.

Ed Sexton came to PayPal in September as a lead engineer after working at Apple Inc and Jive Software Inc. Sexton had previously worked at eBay for about five years.

“I heard from my colleagues that there was an insurgence of new management at PayPal, some of whom I worked within the past when I was at eBay,” he said.

One attraction was PayPal’s recent embrace of Hadoop, an open-source technology for crunching lots of data quickly.

“They are looking to staff engineers for this technology. That brought a lot of comfort to me,” Sexton said.

Sexton’s LinkedIn page now says, “NO JOB OFFERS PLEASE. Currently having the time of my life at PayPal.”

(Reporting by Alistair Barr; Editing by John Wallace, Bernard Orr and Lisa Shumaker)

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Rolling Stones memorabilia auctioned after divorce

NEW YORK (Reuters) – An assortment of Rolling Stones memorabilia and artwork provided by Rolling Stones guitarist Ronnie Wood and his ex-wife was sold in a two-day auction, Julien’s Auctions said on Sunday.

The collection featured memorabilia spanning four decades from the guitarist’s work with the band, and included several worn leather and velvet jackets, real and cardboard guitars, tour ephemera and a signed lithograph of Eric Clapton.

Among the items were a white leather coat worn by Wood that sold for $ 8,960, and a lithograph of Eric Clapton drawn by Wood that features his signature as well as Clapton’s that fetched $ 5,120.

Despite being made of cardboard, a guitar cutout gifted to Wood by Keith Richards sold for $ 6,875. The real thing commanded almost nine times that price, with a 1955 Fender Stratocaster guitar often played on stage by Wood bringing in $ 60,800.

Bidding took place live online as well as in person and by phone at Julien’s Beverly Hills gallery on Friday and Saturday.

The auction comes ahead of the release next February of the memoirs of Wood’s ex-wife Jo, which promise to reveal her tales of life as the wife of a Rolling Stone.

Ronnie and Jo Wood were married for 23 years before separating in 2008 when Ronnie left her for a young cocktail waitress named Ekaterina Ivanova. The couple’s divorce was finalized in 2011.

After the auction was announced in September, the former couple issued opposing statements feuding about the ownership of the auction items, but seemed to have worked out their disagreements. Julien described the items for sale as jointly owned and said that they were part of the couple’s divorce settlement.

Part of the proceeds from the auction will go to MusiCares, the Grammy Awards charity that offers help to people in the music industry with finance and addiction.

Wood has recently been focused on his visual art career, but is best known as a musician with the Rolling Stones and The Faces. He has been inducted into the Rock and Roll Hall of Fame twice.

In addition to her upcoming memoirs, Jo Wood – a former model – has also founded a skincare line.

(Reporting by Andrea Burzynski, editing by Gary Crosse)

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Meningitis outbreak spreads to 19 states with case in Rhode Island

(Reuters) – The deadly meningitis outbreak tied to steroid injections from potentially tainted medications spread to a 19th state on Monday with the first case reported in Rhode Island, the Centers for Disease Control and Prevention said.

Only four of the 23 states that received some of the medication have not reported cases of fungal meningitis, which has killed 25 people nationwide.

The four states that have not reported at least one case of meningitis are California, Nevada, West Virginia and Connecticut, the CDC said.

The total number of meningitis cases including the expansion to Rhode Island reached 347 nationwide on Monday, the CDC said, up 10 from the last report on Saturday.

There also are seven reported cases of infections after the tainted steroid was injected into a joint such as a knee, hip, shoulder or elbow, bringing the total number of infections to 354.

The steroid was supplied by New England Compounding Center of Massachusetts, which faces multiple investigations. Health authorities have said its facility near Boston failed to make medications in sterile conditions.

(Reporting by Greg McCune; Editing by Eric Beech)

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Baidu profit up 60 percent, revenue growth slows

BEIJING (AP) — Chinese search engine operator Baidu Inc. says its latest quarterly profit rose 60 percent but revenue growth slowed as the economy cooled.

The Beijing-based company said Tuesday that profit for the three months ending Sept. 30 was $ 478.6 million (3 billion yuan). Revenue rose 49.7 percent to $ 994.6 million (6.3 billion yuan) but that growth was down from the previous quarter’s 60 percent.

Baidu has about 78.6 percent of China’s Internet search market, ahead of No. 2 Google Inc. with 15.4 percent, according to Analysys International, a research firm in Beijing.

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Ukraine’s opposition doing well in election

KIEV, Ukraine (AP) —

Ukraine’s opposition parties performed strongly in Sunday’s parliamentary vote, according to an exit poll, but President Viktor Yanukovych‘s party could still retain control of the legislature as its members are likely to sweep individual races across the country.

The West is paying close attention to the conduct of the vote in the strategic ex-Soviet state, which lies between Russia and the European Union, and serves as a key conduit for transit of Russian energy supplies to many EU countries. An election deemed unfair would likely turn Ukraine further away from the West and toward Moscow.

Opposition parties alleged widespread violations on election day, such as vote-buying and a suspiciously high amount of home voting, but a local election monitor said those violations were isolated. Authorities insisted the election was honest and democratic.

The Fatherland party, led by the jailed charismatic former Prime Minister Yulia Tymoshenko, the Udar (Punch) of world boxing champion Vitali Klitschko and a nationalist party together received more than 50 percent of the vote on party lists, outnumbering Yanukovych’s Party of Regions and its traditional ally, the Communist Party.

Both Yanukovych’s and Tymoshenko’s parties claimed victory, saying the election showed the voters trust them to lead the country.

However, only half of the parliament’s 450 seats are split proportionately between the winning parties. The other half is filled by the winners of single-mandate races, where Yanukovych loyalists are expected to make a strong showing. In the election, each voter had two ballots, one with party names and one with the name of candidates in specific constituencies. No exit poll numbers were available for the individual races.

With Yanukovych under fire over the jailing of his top rival, Tymoshenko; rampant corruption and slow reforms, the opposition made a strong showing.

Tymoshenko’s Fatherland party is poised to get about 25 percent of the proportional vote, the Udar (Punch) led by world boxing champion Vitali Klitschko is set to get around 15 percent and the nationalist Svoboda (Freedom) party receives some 12 percent. The Party of Regions polled 28 percent and the Communists nearly 12 percent.

If the three opposition groups unite, they could get 127 parliament seats versus 98 seats gained by the Regions and Communists. The distribution of the remaining 225 seats is expected to be clear Monday.

Opposition forces hope to garner enough parliament seats to weaken Yanukovych’s power and undo the damage they say he has done: the jailing of Tymoshenko and her top allies, the concentration of power in the hands of the president, the snubbing of the Ukrainian language in favor of Russian, waning media freedoms, a deteriorating business climate and growing corruption.

The strong showing by the far-right Svoboda (Freedom) party which campaigns for the defense of the Ukrainian language and culture but is also infamous for xenophobic and anti-Semitic rhetoric emerged as a surprise and showed the widespread disappointment and anger with the ruling party.

It remains to be seen whether Tymoshenko’s group, Klitschko’s party and Svoboda can forge a strong alliance and challenge Yanukovych.

The election tainted by Tymoshenko’s jailing on charges of abuse of office has also been compromised by the creation of fake opposition parties, campaigns by politically unskilled celebrities, and the use of state resources and greater access to television by Yanukovych’s party.

___

Yuras Karmanau in Kiev contributed to this report.

Europe News Headlines – Yahoo! News

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Steve Jobs’s Secret Yacht Looks Like a Giant iPhone

RELATED: Should You Buy an iPad 2?

Just over a year after Steve Jobs’s death, shipbuilders in Aalsmeer, Holland have finally finished the yacht that the Apple visionary spent years designing — stealthily, of course. Boy, does it look like an Apple product. Her name is Venus.

RELATED: A Guide to the Reactions and Tributes to Steve Jobs

Built entirely out of aluminum, the yacht was designed by Jobs personally along with some help from French designer Phillipe Stack. It’s a big one, too. The ship measures between 70 and 80 meters, but because of the aluminum construction, it’s lighter than your typical yacht, giving it a bit of an edge when it comes to speed. It doesn’t lack amenities, either. The front of the ship is equipped with a uniquely large sun deck with a jacuzzi built in. Behind that comes an all glass cabin that’s topped with a bridge equipped with seven 27-inch iMacs that handle the ship’s navigation and controls. When you take a step back, squint a little and turn your head to the left, it sort of looks like an iPhone 4 with the strip of windows around the middle and the clean lines.

RELATED: The Motherlode of iPhone Rumors: Apple Will Release Two This Fall

Jobs’s yacht project might seem a little out of character at first. After all, the billionaire was famously humble about many aspects of his lifestyle. He lived in a normal house on a normal suburban street in Palo Alto, California, not some massive mansion out in the mountains. He wore jeans, a black turtleneck sweater and New Balance tennis shoes, a basically thrifty choice for a man who could afford his own cashmere farm. He also drove a very nice car, but it wasn’t rapper nice. That is, it wasn’t a Bentley or an Aston Martin or a Maybach — just a Mercedes. (Ok, now we’re stretching the humble thing, but you get the point.)

RELATED: Listen to Steve Jobs Describe the iPad in 1983

We now know that Steve Jobs was not a stranger to the finer aspects of being filthy rich, luxuries like chrome-coated yachts and custom-built private jets. But hey, the guy wanted to retire one day, and so what if he wanted to live like a king after building the world’s most valuable technology company. Walter Isaacson wrote about the yacht in his biography of Steve Jobs, who had evidently been working on the project alone for six years:

After our omelets at the café, we went back to his house and he showed me all of the models and architectural drawings. As expected, the planned yacht was sleek and minimalist. The teak decks were perfectly flat and unblemished by any accoutrements. As at an Apple store, the cabin windows were large panes, almost floor to ceiling, and the main living area was designed to have walls of glass that were forty feet long and ten feet high. He had gotten the chief engineer of the Apple stores to design a special glass that was able to provide structural support. By then the boat was under construction by the Dutch custom yacht builders Feadship, but Jobs was still fiddling with the design. “I know that it’s possible I will die and leave Laurene with a half-built boat,” he said. “But I have to keep going on it. If I don’t, it’s an admission that I’m about to die.”

Sadly, Jobs did die before the yacht was finished, but the folks at Feadship finished the job. Evidently, the Jobs family recently had a little christening party with the shipbuilders, who all got an iPod Shuffle with “Venus” engraved on the back as a token of thanks. Now that we said all that stuff about Jobs and conspicuous consumption, you’d think they could have at least splurged for the iPod Touch.

RELATED: Steve Jobs Resigns as Apple CEO, Staying on as Chairman

Check out the chrome plates on the stern. The sleek windows that wrap around the middle of the ship is where the Jobs family quarters are. The crew gets the little portholes underneath.

You can see the row of iMacs in the bridge.

End-to-end, it’s a pretty impressive vessel.

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“Argo” rises above “Cloud Atlas” as Sandy spooks

LOS ANGELES (Reuters) – Acclaimed Iran hostage thriller “Argo” brought home its first box-office win over a quiet weekend, leading movie charts with $ 12.4 million in U.S. and Canadian ticket sales as would-be moviegoers hunkered down for Hurricane Sandy.

The tally for “Argo,” directed by and starring Ben Affleck, topped the $ 9.4 million for new sci-fi drama “Cloud Atlas“. Halloween-themed animated film “Hotel Transylvania” scared up $ 9.5 million from Friday through Sunday, narrowly edging “Cloud Atlas“, studio estimates showed.

After two weeks in the No. 2 spot, “Argo” moved into the lead and lifted its domestic sales to $ 60.8 million through three weekends.

The movie, produced by Warner Bros. and GK Films for $ 44 million, tells the story of a mission to rescue U.S. government employees from Iran in 1979. The film has earned Oscar buzz after stellar reviews from critics and an “A+” grade from audiences polled by CinemaScore.

Dan Fellman, president of theatrical distribution for Warner Bros., a unit of Time Warner Inc, attributed the film’s jump to “great word-of-mouth”, which he called “the best form of advertising”.

“Cloud Atlas“, also from Warner Bros., fell short of industry forecasts for a $ 13 million debut at North American (U.S. and Canadian) theaters. Fellman said the film did better in larger cities, but struggled in the South and Midwest.

The film, starring Tom Hanks and Halle Berry, cost $ 100 million to make. Many in Hollywood thought the story, based on a philosophical novel by David Mitchell, was too complex to bring to the big screen.

The nearly three-hour film with six interweaving stories divided critics, with the harshest reviewers saying it would try audiences’ patience with multiple storylines and century-hopping plots. The film’s stars also shift characters. Hanks, for example, is a shady doctor in the 1840s, a nuclear scientist in the 1970s and a simple valley-dweller in the distant future.

But “Cloud Atlas” also drew praise as an ambitious and well-acted epic. Sixty-one percent of reviews on the Rotten Tomatoes website recommended the film.

“Hotel Transylvania” set a record for a September film opening in North America when it opened on September 28, and has performed solidly since then.

In the family comedy, Frankenstein, the Invisible Man and other monsters gather for a party at a high-end resort operated by Dracula. Their celebration is disrupted when a boy discovers the hotel and falls in love with Dracula’s daughter but must deal with her overprotective father.

The president of worldwide distribution for Sony Corp‘s Sony Pictures studio, Rory Bruer, wasn’t entirely surprised that the weeks-old movie beat “Cloud Atlas“, despite the latter movie’s buzz.

“Anything at this point doesn’t surprise me,” Bruer said. “It’s like an annuity that keeps on giving and giving.”

Paul Dergarabedian, box office analyst at Hollywood.com, said the Halloween weekend gave the film a boost, and is “still the number one choice for families” among the spooky seasonal films currently playing.

This weekend was fairly quiet at the box office in North America, which Dergarabedian attributed to Hurricane Sandy, a storm menacing the East Coast of the United States.

However, the new James Bond movie “Skyfall” whipped up a storm of its own overseas, taking $ 77.7 million in 25 countries. The latest installment of the British spy saga took the top spot in all 25 countries, broke the all-time Saturday attendance record in the United Kingdom, and was the biggest film opening there of 2012. It will open in the United States on November 9.

Rounding out the weekend’s top five, low-budget horror sequel “Paranormal Activity 4″ grossed $ 8.7 million at domestic theaters. “Silent Hill: Revelation 3D” and “Taken 2″ tied for fifth place, each pulling in $ 8 million.

Two other new films failed to crack the top five.

New Halloween-themed comedy “Fun Size” brought in $ 4.1 million at domestic theaters, landing in tenth place. The $ 14 million production tells the story of a boy who goes missing among trick-or-treaters, sparking his teen sister’s frantic search to find him before her mother comes home.

Sports drama “Chasing Mavericks” disappointed, failing to break the top ten. The movie stars Gerard Butler in the story of a surfer who tries to conquer one of the biggest waves on Earth.

“Silent Hill: Revelation 3D” was released by Open Road Films, a joint venture between theater owners Regal Entertainment Group and AMC Entertainment Inc. Paramount Pictures, a unit of Viacom Inc, released “Fun Size” and “Paranormal Activity 4″.

“Chasing Mavericks” was distributed by News Corp’s 20th Century Fox studio. Sony Corp’s movie division released “Hotel Transylvania“.

(Reporting by Lisa Richwine and Andrea Burzynski; Editing by Will Dunham and Dale Hudson)

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U.S. regulator needs new authority over compounding pharmacies: report

WASHINGTON (Reuters) – The U.S. Food and Drug Administration‘s power to regulate compounded drugs similar to those linked to a deadly meningitis outbreak is legally nonbinding and lacks the authority of stringent standards imposed on drug manufacturers, according to a congressional report released on Sunday.

The report, compiled by the staff of U.S. Representative Edward Markey, a Massachusetts Democrat, drew an immediate response from FDA Commissioner Margaret Hamburg, who said the agency is committed to working with Congress and others to garner “the authority we need to help prevent tragedies like this from happening again.”

“Over the years, there has been substantial debate within Congress about the appropriate amount of FDA oversight and regulation of compounding pharmacies. But unfortunately, there has been a lack of consensus and many challenges from industry,” Hamburg said in a statement emailed to Reuters.

“As pointed out in the report from Congressman Markey, FDA’s authority over compounding pharmacies is more limited by statute than with drug manufacturers,” she added.

The Markey report and Hamburg’s comments surfaced as Congress has begun preliminary discussions that could give the FDA new powers to oversee compounding pharmacies like the New England Compounding Center, which is at the heart of a fungal meningitis outbreak that has sickened 337 people, including 25 who have died, in 18 states.

But the public health crisis has also stirred debate about how much authority the FDA actually needs. Last week, the advocacy group Public Citizen called on the Department of Health and Human Services to investigate the agency on grounds that it failed to exercise its existing authority to prevent the meningitis outbreak.

The FDA issued a warning letter to NECC in 2006 describing potential health risks including microbial contamination. But there has been little evidence of a follow-up. Congressional investigators also say there is evidence that the FDA and state regulators knew of potential problems at NECC in 2002.

Hamburg has had little to say publicly about the regulatory issue. “FDA’s primary focus right now is containing the immediate crisis, protecting patients and their families from any further harm and completing our investigation,” she said.

Compounding is a traditional pharmacy practice in which a pharmacist alters, mixes or recombines ingredients to make a drug that meets the special needs of a patient with a physician’s prescription. But in recent decades, officials say some compounding operations have grown to resemble full-scale manufacturing without meeting FDA standards.

DOZENS OF WARNING LETTERS

The congressman’s report, based partly on documents gathered by investigators in the House of Representatives, says state governments that are now the chief regulators of pharmacy compounding cannot perform the kind of safety oversight necessary to prevent more drug-related outbreaks from occurring.

The FDA has issued dozens of warning letters against compounding pharmacies since 2001. But the report said the agency has based its enforcement actions on relatively weak, nonbinding guidance documents since a 1997 law granting it oversight of “new drugs” was struck down in U.S. courts more than a decade ago in cases brought by compounders.

“Guidance documents do not establish legally enforceable rights or responsibilities and do not legally bind the public or the FDA,” said a Congressional Research Services report cited by Markey’s staff.

That gives the agency far less power over compounding operations than it has over conventional drug manufacturers, which must submit to stringent safety and efficacy standards.

“Absent clear new authority, FDA’s efforts will ultimately be constrained by gaps in regulatory authority and thwarted by an industry that has historically resisted a federal role for the oversight of its activities,” said Markey.

An aide to Markey, who is on the House Energy and Commerce Committee which is conducting one of two congressional investigations into the outbreak, said the report was compiled from staff research. The aide acknowledged that some of the documents also form part of the House panel’s probe.

Markey has said he will propose legislation to enhance FDA oversight when Congress returns after the November 6 election. The committee is expected to hold hearings by the end of the year.

The report cites FDA documents as saying that compounded drugs may have been responsible for at least 23 deaths and 86 other cases of disease or injury before the current outbreak, related to injectable steroid treatments for back and joint pain first drew public attention last month.

FDA records described by the report also show that 10 of 29 compounded products tested by the FDA in 2003 failed at least one of the regulatory agency’s safety or efficacy tests. Three years later, in 2006, one-third of 36 compounded drug samples failed FDA analytical testing.

“The risks of allowing the safety of compounding pharmacies to go largely unregulated have been recognized for years, and the devastating tragedies of this outbreak will be felt well beyond it,” Markey said.

(Editing by Christopher Wilson)

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Taskforce to rescue High Streets

28 October 2012 Last updated at 20:30 ET

By Emma Simpson Business correspondent, BBC News

Senior figures from across the banking, retail and property sectors have signed up to a new industry-wide group, the Distressed Retail Property Taskforce.

They are joining forces to find ways to rejuvenate failing town centres.

The Taskforce may be one of the most significant developments since Mary Portas’s much-talked-about review of the High Street.

Its first priority will be to find out how big the problem of retail property indebtedness is across the UK.

Empty, dilapidated shops are a familiar scene across many of Britain’s struggling town centres.

Whole swathes of retail – from shopping centres to run-down or shuttered-up shops – are worth far less than they used to be, with landlords unable or unwilling to invest, yet loath to sell and write off their debts.

Many landlords are also slow to cut the rents they demand in order to attract new tenants, because they have to earn a minimum rental income to keep up with their debt payments.

Stalemate

Often, the properties are no longer worth enough to repay those landlords’ debts.

And that means the landlords and the banks that lent them the money to buy their properties in the first place, find themselves in the same boat together.

Both face the same dilemma – whether to invest in the property in the hope of selling it at a higher price in the future, or instead to throw in the towel and sell off the property even if this means a big loss for both the landlord and its lender.

In many cases, however, landlords and their banks have simply ducked this hard choice, and are instead trying to struggle on with idle or dilapidated retail space.

The challenge for the Distressed Retail Property Taskforce is how to break the stalemate.

It is the first time an industry-wide body has been formed to look at indebted properties, and several big banks are also taking part.

Its first task is to find out the true scale of the problem.

The Distressed Retail Property Taskforce will spend around six months gathering hard evidence on the true scale of the problem and the towns worst affected.

Life support

The big challenge is to try to come up with some solutions, according to Mark Williams, the chairman of the new body.

“The Taskforce recognises that our high streets are going through a structural recalibration, rather than an economic cycle from which we will emerge over time,” he said.

And tough choices, he says, will have to be made:

“We have too many shops, the wrong size and under-invested. So the change in town centres that is required is significant and will require public and private sectors coming together to find ways of financing these changes.

“What we’re talking about are essentially infrastructure projects that can future-proof our towns for the next 50 to 60 years,” he said.

Last week, the governor of the Bank of England, Mervyn King, made clear that the issue of over-indebted businesses is exercising his mind of too:

“I am not sure that advanced economies in general will find it easy to get out of their current predicament without creditors acknowledging further likely losses, a significant writing down of asset values and recapitalisation of their financial systems.”

The problem for the banks is that turning off the life support machine on distressed property could cause too many losses for their balance sheets to bear.

The taskforce has the challenge of trying to come up with a workable, long-term solution.

BBC News – Business

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