Finance news. My opinion.

The township of Huaxi in the Yangtze River Delta is a proud symbol of how Chinese communists embraced capitalism to lift 300 million people out of poverty during the past three decades.

Its leaders took a farm community with bamboo huts and ox carts in the 1970s and transformed it into an industrial and commercial powerhouse where today many of its 30,000 residents live in mansions and most have a car. Per-capita income of 80,000 yuan ($11,700) — almost four times the national average — allows Huaxi to claim it’s China’s richest village.

Huaxi is also emblematic of the country’s construction and real estate boom. Communist Party officials there are building one of the world’s 30 tallest buildings, a 2.5 billion yuan, 328-meter (1,076-foot) tower. The revolving restaurant atop the so-called New Village in the Sky offers sweeping views of paddy fields, fish ponds and orchards, Bloomberg Markets reports in its April issue.

Marc Faber, publisher of the Gloom, Boom & Doom Report, says China is overdoing it. “It does not make sense for China to build more empty buildings and add to capacities in industries where you already have overcapacity,” Faber told Bloomberg Television on Feb. 11. “I think the Chinese economy will decelerate very substantially in 2010 and could even crash.”

Huaxi has an even more ambitious project coming up: a 6 billion yuan, 538-meter skyscraper that would today rank as the world’s second tallest. The only loftier building is the new Burj Khalifa in Dubai.

Dubai Times a Thousand

Such undertakings figured in warnings hedge fund manager Jim Chanos delivered in January that China is Dubai times a thousand. The costs of wasteful investments in empty offices and shopping malls and in underutilized infrastructure will weigh on China, Chanos, president of New York-based Kynikos Associates Ltd., said in a speech at the London School of Economics. “We may find that that’s what pops the Chinese bubble sooner rather than later.”

China has defied the global recession of the past two years and remained the fastest-growing major economy. Gross domestic product soared 10.7 percent in the fourth quarter. The government has provided 4 trillion yuan in stimulus spending and encouraged banks to lend a record 9.59 trillion yuan last year, trying to bridge the gap until demand for exports rebounds or domestic consumption takes off.

Risk for Commodities

Last month, banks lent a further 1.39 trillion yuan — almost one-fifth of the target amount for the whole of 2010. Also in January, foreign direct investment climbed 7.8 percent to $8.13 billion. Retail sales during last week’s Lunar New Year holiday rose 17.2 percent from the same period in 2009, according to the Ministry of Commerce.

While China’s resilience has helped support the world economy, raising demand for energy and raw materials, the bursting of a bubble would have the opposite effect. Government efforts to wean the economy off its extraordinary support may roil markets.

In January, the central government ordered banks to curb lending, which put China’s stock market into reverse. In a sign, in part, of how dependent the world has become on China, stocks and currencies slumped in places such as Australia and Brazil that supply commodities to the People’s Republic. On Feb. 12, the eve of the one-week Lunar New Year holiday, China for the second time in a month ordered banks to set aside more deposits as reserves. The Shanghai Composite Index has fallen 8 percent year-to-date, after gaining 80 percent in 2009.

Bidding Up Prices

“If the Chinese economy decelerates or crashes, what you have is a disastrous environment for industrial commodities,” said Faber, who oversees $300 million at Hong Kong-based Marc Faber Ltd.

The stimulus tap that Beijing turned on has flowed to projects such as its 2 trillion yuan high-speed-rail network. The 221 billion yuan Beijing-Shanghai line has surpassed the Three Gorges Dam as the single most expensive engineering project in Chinese history.

Some beneficiaries of the government efforts have plowed their loans into real estate and stocks. Property prices across 70 cities jumped 9.5 percent in January from a year earlier, according to government data.

Bridge of Strength

Instead of concentrating on their core businesses, giant state-owned enterprises, or SOEs, have bet on real estate, according to Zhang Xin, a former Goldman Sachs Group Inc. analyst who’s chief executive officer of Soho China Ltd., the biggest property developer in Beijing’s central business district. “All the SOEs are bidding the prices up to the sky,” Zhang told China International Business, a magazine backed by China’s Ministry of Commerce, in December. That’s despite office vacancies in China’s capital being at record highs, according to Boston-based commercial real estate company Colliers International.

Chanos, a short-seller who was early to warn about Enron Corp., is one of a growing number of investors sounding the alarm. “Right now, the Chinese market is overheating,” George Soros said in a Jan. 28 interview.

Local-government officials have wasted stimulus funds by replacing infrastructure that was fine in the first place. State media complained in May 2009 that party chiefs in Jianyang, Sichuan province, decided to help boost the local economy by rebuilding a bridge that was in such good condition it had emerged unscathed a year earlier from the earthquake that killed 70,000 people. The so-called Bridge of Strength withstood a demolition crew that tried to blast it to pieces with dynamite, the official China Daily reported.

Real Estate or Soybeans?

Another example Chanos has cited is the city of Ordos, where party officials have built an entire new downtown on the windswept grasslands of Inner Mongolia, 25 kilometers (15 miles) outside the existing municipality of 1.5 million people.

Mark Mobius, meanwhile, is sticking with China. The executive chairman of Templeton Asset Management is encouraged that the government is pulling back some of its extraordinary economic support. “We see the government’s tightening of lending as a positive because it moderates the risk to some degree,” says Mobius, who oversees $34 billion. “This is a correction in an ongoing bull market.”

Chris Ruffle, who helps manage $19 billion for Edinburgh- based Martin Currie Ltd., also remains confident China will avoid a bust. “It’s not a highly leveraged situation,” says Ruffle, who works in Shanghai. “I was in Japan in the 1980s, and that was a bubble. Here in China, we are nowhere near that.”

Still, even Mobius says investors have to be wary. He got rid of an investment in a Chinese food company after discovering that it was using funds to buy apartments instead of to process soybeans.

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Problems with Toyota cars are cropping up faster than the automaker can deal with them. Following two different recalls for problems involving accelerator pedals on various models comes the revelation of braking problems in the iconic Prius.

Here’s a rundown of the problems, the cars involved and what to do if your car’s caught up in any of this.

Prius brakes

What’s the problem? Under certain conditions, particularly at relatively low speeds when traveling over rough or potholed roads, drivers have complained of a brief, but significant, delay in brake performance.

Is it being blamed for crashes? Yes, at least four crashes in the U.S. have been reported, allegedly as a result of this problem.

What cars are involved? 2010 model year Toyota Priuses made before January, 2010. Toyota is also investigating whether the Lexus HS250h hybrid, which shares its mechanical parts with the Toyota Prius, might have a similar problem.

Is there a recall? No, at least not yet.

Is there a fix for it? None has been announced yet, but Toyota has fixed the problem on cars coming off the assembly, so there does seem to be some sort of solution. Now Toyota has to figure out how to get that change made to cars already on the road.

What should I do? The safest thing to do, of course, would be not to drive the car until the problem has been fixed. If you do drive, be aware of the problem and allow extra following distance and be begin to stop a little sooner for red lights and stop signs, especially if the road is choppy.

David Champion, Consumer Reports’ head of auto testing, also reminds drivers not to lift off the brake pedal if they feel a loss of power. Instead, keep your foot pressed down hard on the brake pedal and don’t pump the brakes.

Sticky gas pedals

What’s the problem? Over time, gas pedals in some cars become sticky. At first, they just become a little harder to push down and when you lift your foot off the gas, they’re slower to come back up. In the worst case, the pedal on these cars can become stuck part way down.

Is it being blamed for crashes? There have been no crashes or injuries reported as a result of this problem.

What cars are involved? Toyota’s 2009-2010 RAV4, Corolla and Matrix models; the 2005-2010 Avalon; 2010 Highlander; 2007-2010 Tundra and the 2008-2010 Sequoia; and some 2007-2010 Camrys (only those with gas pedal assemblies made by a specific Toyota supplier; your dealer can check). No Lexus or Scion models are involved.

Is there a recall? Yes , 2.3 million vehicles.

Is there a fix for it? Yes. Toyota dealers can install a small metal plate that reduces wear on the plastic parts involved.

What should I do? Get your car fixed as soon as you can. If your gas pedal starts to feel sticky, stop driving immediately, Toyota says. Pull over in a safe place, then call a dealer.

If the pedal becomes stuck part way down, applying the brakes should be enough to slow the car and bring it under control. Don’t pump the brakes, though. That will just weaken your power brakes. Instead, press and hold the brakes. Also, at the same time, you can shift the transmission into neutral, which will stop the engine from driving the wheels.

Keep in mind that these situations are rare occurrences.

Floor mat pedal entrapment

What’s the problem? In some cars, gas pedals can become stuck on the edge of afloor mat, particularly when thick all-weather floor mats are used or when floor mats are stacked on top of one another. In this case, the pedal can be stuck almost all the way to the floor, creating a particularly dangerous situation.

Is it being blamed for crashes? Yes, there have been crashes and some deaths on account of this problem.

What cars are involved? 2008-2010 Highlander, 2009-2010 Corolla, 2009-2010 Venza, 2009-2010 Matrix, 2009-2010 Pontiac Vibe (a version of the Matrix), 2007-2010 Toyota Camry, 2005-2010 Avalon, 2004-2009 Prius, 2005-2010 Tacoma, 2007-2010 Tundra and the 2007-2010 Lexus ES350, 2006-2010 IS250 and the 2006-2010 IS350.

Is there a recall? Yes 5.3 million vehicles have been recalled for floor mats.

Is there a fix for it? Yes. Dealers will alter the shape of the gas pedal to prevent it becoming stuck on the floor mat even when thick or stacked floor mats are used. In some cars, the floor area under the gas pedal may also be reshaped slightly to make more room.

What should I do? Get your car fixed as soon as possible. If your car hasn’t been fixed yet remove your floor mats.

If your gas pedal becomes stuck in the "floored" position, immediately shift the transmission to "Neutral" and press hard on the brake pedal. Don’t pump the brakes but apply even, firm pressure. 

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The Colorado Business Hall of Fame inducted eight business notables Thursday night during its annual induction banquet at the Hyatt Regency Denver at the Colorado Convention Center.

Junior Achievement-Rocky Mountain Inc. and the Denver Metro Chamber of Commerce operated the event, and UMB Bank was the underwriter.

The Colorado Business Hall of Fame is in its 21st year, and has more than 100 members.

The 2010 laureates:

• The Gart Brothers: Nathan, Melvin, Jerry and Mickey Gart — In 1928, Nathan Gart founded Gart Bros. Sporting Goods Co. Melvin Gart joined the business in 1946 and oversaw all the advertising.

Nathan’s two sons, Jerry and Mickey, also worked for the company. Jerry Gart joined full time in 1953. He also opened the first branch store — a camera store at 16th Street and Court Place in downtown Denver — and built it into the largest photographic outlet in the Rocky Mountain West.

He added sporting goods to the upper level and took charge of the business. Eventually, that led to a highly successful chain of sporting goods stores, including the Sportscastle at 10th Avenue and Broadway.

The Garts also came up with “Sniagrab” — bargains spelled backward — and turned it into the largest ski sale in the world. It starts every year during Labor Day weekend.

• James B. Wallace — He’s one of four partners of Bownlie, Wallace, Armstrong and Bander Exploration. After 17 years working in the oil business in Texas, Wallace and his associates moved the company to Denver in 1970. Soon, Joe Bander joined the partnership.

Brownlie, Wallace, Armstrong and Bander was active in the Rockies in the 1970s. In 1980, they formed BWAB Inc. and Brownlie, Wallace, Armstrong and Bander Exploration.

Wallace served on the board of directors of Tom Brown Inc. until its sale to EnCana Oil and Gas USA Inc. He currently serves on the boards of Delta Petroleum, Ellora Energy and Savant Resources.

The Denver Petroleum Club named him Man of the Year in 1981.

In 1986, the Independent Petroleum Association of the Mountain States named him Wildcatter of the Year, in recognition of his 30 years in oil and gas exploration.

The Colorado Petroleum Association named him Man of the Year in 1991, and the Rocky Mountain Oil & Gas Hall of Fame inducted him in 2004. He’s also a member of the All-American Wildcatters group and the 25-Year Club of the Petroleum Industry.

• Henry Bosco — His father owned the Denver Hotel in Glenwood Springs, and Henry Bosco worked at a variety of jobs there as he grew up.

In 1956, the owner of the Hot Springs property, Frank E. Kistler, decided to sell the property and retire. Bosco and his father, Mike, were two of the 22 investors who bought the property.

Bosco helped lobby for the location of Interstate 70's Eisenhower/Edwin Johnson Memorial Tunnel.

He served as general manager of the hot springs property from 1976-89. Today, he serves as president and board chairman.

The Glenwood Chamber Resort Association named Bosco Citizen of the Year in 2006. The Glenwood Chamber of Commerce has established the Bosco Tourism Business of the Year award, an annual award in honor of the Bosco family.

• Merle Catherine Chambers — In 1980, she founded and served as CEO of Axem Resources LLC, an independent oil and gas production firm. Chambers ran it for 17 years. She also became board chairman of Clipper Exxpress Co., a family-owned transportation business based in Illinois. Her father, Jerry Chambers, started that company.

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Appliance World stores in the Denver area have been closed in the wake of the chain’s parent company filing for bankruptcy protection three months ago.

"Effective immediately, Appliance World stores are permanently closed," a notice on the retailer’s website said Thursday.

The chain has five metro-area stores, in Denver, Arvada, Aurora, Littleton and Highlands Ranch, plus one in Colorado Springs, according to the website.

On Oct. 20, Denver-based GCF Holdings LLC, which owns Appliance World, filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Tampa, Fla. The company listed between $1 million and $10 million in both assets and liabilities, and said it had between 100 and 199 creditors.

In addition to Appliance World, the company had subsidiaries in Florida and New Mexico, according to the filing and news reports.

Riverview Ventures Inc. of Bradenton, Fla., did business as DeSears Appliance & Home Entertainment. Four DeSears stores in Florida were closed Dec. 2, the Bradenton Herald newspaper reported.

Another GCF subsidiary, DCE New Mexico LLC, operated a pair of electronics and appliance stores under the Baillio’s name in Albuquerque and Santa Fe. The Baillio family, which had sold the stores to the Denver company, resumed ownership after the Chapter 11 filing, the Santa Fe New Mexican newspaper reported.

The Appliance World website notice said that customers who already have been notified their appliance order is in "may pick up on Tuesday February 2 at our Denver warehouse located at 320 S. Lipan."

It said others with existing orders should "please continue to visit our website for ongoing information on receiving your product or a refund."

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Starbucks Corp.’s fiscal first-quarter profit soared and topped Wall Street’s forecast Wednesday as the upscale coffee retailer boosted its outlook for 2010.

The world’s largest coffee chain reported a profit of $241.5 million, or 32 cents per share, during the three months ended Dec. 27, which was a nearly four-fold rise from a year ago.

Stripping out restructuring charges, Starbucks posted an adjusted profit of 33 cents per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their forecasts, expected 28 cents per share.

The Seattle-based company’s quarterly sales rose to $2.7 billion, a 4% climb compared with the same period in the prior year. The revenue beat analysts’ forecast of $2.6 billion.

"Continued innovation, the successful enhancement of the customer experience and a transformed, more efficient cost structure have brought Starbucks to a significant milestone — a return to positive growth," said Howard Schultz, chairman, president and chief executive of the company, in a statement.

During a conference call, Shultz added that Starbucks’ performance during the holiday season was the best in the company’s history, with the Caramel Brulee Lattee, which was launched during the season, lifting beverage sales by 30%.

He also said that Starbucks’ new line of instant coffee called Via outperformed expectations and was a highlight for the quarter.

Same-store sales, which measure sales at stores open at least a year and are a key gauge of customer traffic, grew for the first time since 2007, with a 4% uptick worldwide and a 4% boost in the United States fast cash online. In its last forecast, Starbucks said it expected a rise in same-store sales in 2010.

While analysts expected the pick-up in sales, the increase was a surprise said Buckingham Research’s Mitchell Speiser, who expected a 2% hike.

From mid-2008 to 2009, Starbucks closed 800 stores in the U.S. and 100 international locations, laid off workers, revamped its food menu and tinkered with drink prices. The company’s cost-cutting initiatives saved $580 million in 2009.

"Starbucks’ combination of value initiatives, improved food quality and focus on wellness, and new loyalty programs that are encouraging frequency helped it deliver a high quality earnings report," Speiser said. "They’ve brought it all together this quarter and that will give them momentum going forward."

Starbucks raised its outlook and said it expects to earn between $1.05 and $1.08 per share for the full year. In its last forecast, the company said it expected to earn between 92 and 96 cents per share in 2010.

As announced last fall, Starbucks maintains its target to open 100 stores in the United States and 200 in international markets during 2010.

Shares of Starbucks (SBUX, Fortune 500) surged more than 3% in after-hours trading, after falling 1.2% during regular hours.  

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BNP Paribas SA, the most accurate forecaster of the real’s world-beating rally last year, now says avoid Brazil’s currency in favor of the won and rupee as Asia’s central bankers prepare to raise interest rates.

South Korea and India’s currencies will climb 11 percent this year as Brazil’s rally ends, according to Sebastien Galy, the senior foreign-exchange strategist at France’s largest bank in New York. The real, Australia’s dollar and the South African rand were the best-performing of 16 major currencies in 2009, gaining more than 25 percent, on demand for their iron ore, coal and gold. The won rose 8.2 percent and the rupee 4.9 percent.

Bank Julius Baer & Co., Franklin Templeton and Investec Asset Management, which together manage $736 billion, say Asian policy makers will let their currencies strengthen as demand for exports recovers and the cost of imported food and fuel rises. The real weakened 0.1 percent since October 19, when Brazil began taxing foreign purchases of stocks and bonds to curb speculation. South African unions are pressing the government to weaken its currency.

“Much of the gains in commodity currencies already happened in 2009,” said Galy, 35, a former analyst for the International Monetary Fund. “As Asia tightens policy and finally lets its currencies appreciate, flows of capital should shift away from commodity currencies into Asia.”

Real Retreat

Even BNP’s forecast for the real to strengthen 16 percent to 2 per dollar, the most bullish among projections in a Bloomberg survey at the end of 2008, underestimated its rally. The currency closed 2009 at 1.7445, up 33 percent. BNP sees Brazil finishing this year at 1.75 to the dollar, in line with the median estimate in a Bloomberg survey of 17 analysts, as the exchange rate erodes the competitiveness of manufacturers.

The real gained 0.1 percent to 1.7178 per dollar at 8:19 a.m. in New York, from 1.7200 yesterday.

The won will be the 2010 winner, appreciating 7.8 percent to 1,080 and the rupee will climb 5.7 percent to 44, while the rand drops 6.4 percent to 7.90, separate surveys showed. BNP forecasts the won will rise to 1,050 and the rupee to 42. The Korean currency today gained 1.2 percent to 1,140.5, the biggest increase since July 14, and India’s touched a one-month high of 46.09.

Asian central banks “will be leaders in the hiking cycle,” said Werner Gey van Pittius, a London-based money manager who helps oversee about $60 billion in assets at Investec, which is speculating the real will decline. Its emerging-market bond fund returned 28 percent in 2009, beating the 22 percent gain in the JPMorgan Chase & Co. GBI-EM Global Diversified Unhedged index.

China Stimulus

Currencies of commodity producers rallied in 2009 as China led the global economic recovery by focusing its $586 billion two-year stimulus package on building roads and power plants.

Near-zero interest rates in the U.S. encouraged investors to borrow dollars and invest the money in markets with higher returns through so-called carry trades. Benchmark interest rates are 8.75 percent in Brazil and 7 percent in South Africa.

Swap contracts to exchange fixed-interest payments for floating rates indicate the market anticipates faster increases in Asian borrowing costs. A one-year agreement in India has risen to 1.76 percentage points more than the central bank’s benchmark, up from 0.95 point on June 30. The spread in Korea is 1 free business cards.65 percentage points, compared with 1.69 points in Brazil and 0.13 point in South Africa.

Rate Increases

The Bank of Korea will raise its benchmark rate one percentage point to 3 percent by end-2010, according to a Bloomberg survey of economists. India’s central bank will increase its reverse repurchase rate to 4 percent from 3.25 percent, a separate poll showed.

Korean companies boosted capital spending 10 percent in the third quarter, helping win business as demand strengthened in China, just as the financial crisis forced Japanese factories to pare investment. The world’s most-populous nation is the biggest buyer of Korea’s exports, accounting for 18 percent of shipments last month.

Royal Bank of Scotland Group Plc has the most bearish 2009 forecast for the won, predicting a retreat to 1,300, and sees the rupee little changed at 46 as the dollar rallies and developed nations raise rates. New York University Professor Nouriel Roubini said in October that a rebound in the dollar may force carry-trade investors to “rush to the exit.”

“As the U.S. economy recovers, rates there will rise and this will reduce the portfolio inflows into India,” said Sanjay Mathur, a Singapore-based economist at RBS, which is controlled by the U.K. government. “As India’s economy rebounds, imports will rise, softening the external position.”

Rand Overvalued

The rand is overvalued by 8 percent to 9 percent, which will “penalize the economy” in 2010, said Murat Toprak, a strategist in London at Societe Generale SA, France’s second- largest bank. South Africa’s central bank will cut its benchmark rate by half a percentage point to 6.5 percent in the first quarter, he said.

SocGen’s 2009 forecast for the rand to gain 12 percent was the most accurate after Standard Bank Group Plc, Africa’s largest lender, in a Bloomberg survey of 22 analysts.

Investors will buy currencies “where they think rates will go up,” said Toprak. SocGen predicts the won will rise 11 percent in 2010 and the rupee 5.7 percent.

Asian nations will allow currency appreciation to reduce import costs and curb inflation, said Michael Hasenstab, who oversees the $2 billion Templeton Emerging Markets Bond Fund.

India’s wholesale food prices surged 20 percent in the week ended Dec. 19 from a year earlier, almost an 11-year high. Global costs jumped 7 percent in November from October, the most in about two years, according to the United Nations Food and Agriculture Organization.

Food Costs

“Emerging markets will be among the first to face inflation due to rising commodities prices,” Hasenstab said. His fund returned 49 percent last year, beating the 28 percent advance in the benchmark JPMorgan EMBI Global Index.

Standard Chartered Plc, whose 2009 won forecast was the most accurate, predicts gains of 11 percent for both the Korean and Indian currencies this year.

“You’re going to see Asian governments probably tolerating some currency appreciation to prevent inflation from becoming a bigger problem,” said Neo Teng Hwee, head of portfolio management for Asia at Bank Julius Baer, which oversaw assets equivalent to about $140 billion at the end of June. His preferred picks include the rupee and China’s yuan.

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Exxon Mobil may be getting more than it bargained for with its recent plan to purchase natural gas giant XTO Energy.

The $41 billion deal would make Exxon the country’s largest shale gas producer, drawing more attention to a controversial area of drilling that analysts say could invite tightened federal regulations for the entire industry.

When the acquisition was announced last week, it was generally seen as a smart business move. XTO (XTO, Fortune 500) is a big player in the so-called "unconventional" gas business — specifically, gas that lies in shale rock formations.

That business is booming. It’s one of the fastest growing energy sectors in the country. But some of the shale is near major population centers, and residents near the drilling are worried about air and, especially, water pollution from the chemicals used to extract shale gas.

"A $41 billion investment is going to make anyone with an environmental eye look sooner and deeper," said Kevin Book, a managing director at ClearView Energy Partners, a Washington, D.C.-based firm that tracks political developments in the energy sector. Exxon’s (XOM, Fortune 500) entry into the field, along with interest from other international oil companies, means that shale gas has hit the big time, Book said.

The shale gas industry has been operating in relative obscurity and with minimal federal oversight: A 2005 law exempted it from the federal Safe Drinking Water Act. State regulators do the policing.

Although there are air pollution and land issues associated with shale gas drilling, what most concerns people is the water. Extracting shale gas relies on a method known as hydraulic fracturing, where a huge amount of chemical-laced water is injected down the well hole to fracture the rock and allow the gas to flow out.

State regulators and the industry say the process is safe, as the gas lies thousands of feet below the water table.

But residents near the drilling, which includes much of the New York metro area, Dallas-Fort Worth, and other large population centers, fear the chemicals may contaminate the drinking water.

The federal Environmental Protection Agency has only just begun looking into the issue payday loans for bad credit.

Book said several bills in Congress include provisions that direct the EPA to study the issue more broadly, and could ultimately lead to further regulation. "These are the placeholders," said Book. "Is a change in the law coming? Probably."

Pushing up the price of clean energy

A change in regulation could result in gas companies having to pump out the injected water and removing the chemicals before disposing of it back in the ground. That could add anywhere from 8% to 30% to the cost of operating a well, said Neil Dingmann, a Houston-based analyst at Wunderlich Securities.

Yet pushing up the price of natural gas is not something environmentalists are keen to do. Natural gas is much cleaner source of electricity than coal and emits about half the carbon dioxide. Making it more expensive would only deter industries from using it, and push them toward cheaper and dirtier power sources like coal.

Exxon is so concerned about a change in the law it has a clause with XTO that allows it to walk away from the deal if Congress bans hydraulic fracturing or makes it prohibitively expensive, according to filings with the Securities and Exchange Commission. Exxon declined to comment for this story.

Dingmann also said there’s another reason Exxon may bring new attention to this type of drilling: They are a high profile company.

"It’s not the energy committee going after some company nobody’s heard of," said Neil Dingmann, a Houston-based analyst at Wunderlich Securities. "It’s big, bad Exxon."

Soon after the XTO deal was announced Chairman of the House Energy and Environment Subcommittee Rep. Ed Markey, D-Mass., issued a statement.

While acknowledging natural gas’ environmental benefits, Markey questioned the environmental safety of the drilling and raised anti-trust issues.

"I intend to convene hearings in the Subcommittee early next year so that our members can take a closer look at this proposed transaction," he said. 

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NEW YORK–General Motors Co. said Friday it will shut down Saab after talks to sell the brand to a Dutch carmaker collapsed, marking the third time this year that a deal by GM to sell an unwanted brand has fallen through.

GM said it had a small window of time to complete the deal and issues arose during the sale talks with Spyker Cars that could not be resolved. GM vice-president John Smith said: "Like everybody, we would have preferred a different outcome, and we all worked very hard for that different outcome and we’ve come up short."

Saab employs about 3,400 people worldwide, most of whom work at its main plant in Trollhatten, Sweden. The brand has 1,100 dealers, that General Motors said will continue to honour warranties as the brand winds down.

Chris Budd, owner of Budds’ Saturn Saab in Oakville – one of three Saab dealers in the GTA – said he feels as if he’s "lost a friend."

"I’ve had the Saab franchise longer than I’ve been married," he said, having carried the brand since 1977.

He blames the recession – not GM – for its demise.

Martin Olivera, service adviser at Saturn Saab Hummer on the Queensway, however, puts the blame squarely at GM’s feet.

"Truthfully, GM destroyed Saab," he said. "They made it into an American car, not a European car."

To enthusiasts, Saab became appreciated for quirks like placing the ignition lock between the front seats. It was the first to offer heated seating in 1971 easy to get unsecured personal loans.

GM bought a 50 per cent stake and management control of Saab for $600 million (U.S.) after it split from Swedish truck maker Scania in 1989. It bought full ownership in 2000 for $125 million. But even after the GM takeover, Saab remained closely associated with Sweden and its history of making safe, reliable cars.

GM never made money on the acquisition and industry analysts complained that under GM, Saab lost its uniqueness in the crowded luxury segment.

GM first sought a buyer for Saab in January as part of its restructuring, which included plans to cut the number of its brands to four from eight. It was previously in talks to sell Saab to a consortium led by the Swedish sports carmaker Koenigsegg Group AB, but it turned to Spyker after Koenigsegg withdrew from the talks in November.

GM’s failure to sell Saab is the third deal to sell an unwanted brand that has failed this year.

In September, dealership chain owner Roger Penske scrapped plans to buy Saturn after an agreement to get cars from France’s Renault fell through. GM is now phasing out Saturn.

GM’s board last month ended a deal to sell the European Opel brand to a group led by Canadian auto parts maker Magna International Inc., fearing that Opel was too heavily integrated into GM’s global operations and that GM technology would fall into the hands of competitors.

With files from Brendan Kennedy

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Staples Inc reported third-quarter results that topped analyst estimates and forecast higher sales in the current quarter as trends improve at its North American retail business.

The results, which sent Staples shares to their highest level since September 2008, contrasted those reported by smaller rivals Office Depot Inc and OfficeMax Inc, who both posted sharply lower quarterly sales in October.

Staples continues to gain market share against those two rivals in North America, Sanford Bernstein analyst Colin McGranahan said in a research note.

Traffic in the company’s North American stores rose for the first time in nine quarters. Sales at North American stores open at least a year, or same-store sales, were flat in the third quarter after posting declines since last December.

CEO Ron Sargent said initiatives to boost its business in core areas like ink and paper during the recession were paying off with higher same-store sales.

“The North American retail and Staples business delivery (sales) trajectory are encouraging,” J.P. Morgan analyst Christopher Horvers said in a note to clients. He added that the profit outlook for the current quarter seems low compared with the company’s sales view.

The company also said it had a good start to the holiday shopping season over Thanksgiving weekend, and would ratchet up efforts to lure customers this year with promotions on items like printer ink. Staples cut back on marketing and promotional spending in 2008 in response to a bleak retail environment.

“I think it probably will be a pretty promotional holiday season,” Sargent said during a conference call.

Q4 FORECAST IN LINE

Office-supply retailers have suffered in the tough economy as both corporate customers and other shoppers have curbed their appetite for nonessential items, especially expensive goods like furniture and business machines.

Staples said it expects fourth-quarter earnings of 36 cents to 38 cents a share before one-time items, and a sales rise of 1 percent to 3 percent.

Analysts on average were expecting Staples to earn 37 cents a share, according to Thomson Reuters I/B/E/S. They had forecast sales of $6.14 billion, a decline from last year’s fourth-quarter tally of $6.17 billion.

Third-quarter net earnings rose to $269.4 million, or 37 cents a share, from $156.7 million, or 22 cents a share, a year earlier.

Excluding one-time items, it earned 39 cents a share in the quarter, which ended on October 31, beating analysts’ average forecast of 38 cents.

Sales fell 6 percent to $6.52 billion but beat analysts’ average estimate of $6.45 billion. 

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General Electric Co and Vivendi SA have agreed in principle to value the French company’s 20 percent stake in NBC Universal at $5.8 billion, a source familiar with the matter said on Monday, paving the way for Comcast’s proposed deal with GE.

GE and Vivendi have spent weeks negotiating over the value of Vivendi’s stake in NBC Universal, holding up Comcast’s plan to buy a controlling stake in NBC Universal. Vivendi has to agree to sell its stake to GE to make the Comcast deal possible.

With the two sides reaching an agreement on valuation, an announcement on the Comcast-GE deal could come as early as the end of this week, a second source said.

(Reporting by Jui Chakravorty and Anupreeta Das; Editing by Richard Chang)

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