PARIS: Trends may turn, but when it comes to restaurants, the international fashion flock remains loyal: as long as the cocktails and laid-back ambience continue, they'll return.

During the 1980s and 1990s, everyone used to pile into Natacha's restaurant. In the 1990s, Anahi, the Argentine restaurant in the Third Arrondissement, became a top favorite. Anahi is still going strong and so is the relative newcomer Ferdi, which opened in 2004 and whose regulars include Azzedine Alaïa, Alber Elbaz, Nicolas Ghesquière, Pierre Hardy, Marc Jacobs and Christian Louboutin.

Alicia and Jacques Fontanier, self-described hippies, describe their establishment as “strictly non chichi.” Named for their son Ferdinand (”because he's our best creation”) the décor consists of his old toys and framed family photos. Very beach bar meets neighborhood café in atmosphere; it is not for the impatient. A handwritten note on the door warns in French, Spanish and English: “Good food takes time. We have the food. Do you have the time?”

Curiously, Ferdi was the brainchild of Alicia Fontanier's sister, Marie Luisa Poumaillou, known for her namesake clothing shops. “Neither of us knew the restaurant business,” Jacques Fontanier admits. But Poumaillou, well-known for relying on her gut instinct, was convinced they would do well. After all, at family gatherings, Jacques always had a way with cocktails while her younger sister was hailed for her cooking.

And proving that life can begin at 50, the couple set off on what Alicia describes as “a wonderful adventure.” Jacques runs the restaurant while his wife reigns over the kitchen. “I'm hardly a professional cook,” she admits; before Ferdi, she was a 24/7 mother. “So the menu consists of dishes that I knew I could do.”

Client favorites include the cheeseburger; caponata, a rich ratatouille crunchy with pine nuts; ceviche, a whitefish salad marinated in lime; and shredded beef served with black beans. Alicia does not have a sweet tooth, so the dessert menu is limited. Still, the vanilla ice cream with hot chocolate sauce is a big hit.

On the cocktail front, Jacques does a mean mojito with lime, mint and rum; his own creation, Le Pompadour, is a mix of wild strawberries and vodka.

Ferdi, 32 rue du Mont Thabor, 75001 Paris; Tel: 01-42-60-82-52; reservations accepted; open Tuesday through Saturday, lunch and dinner.

read more from " Feeding fashion — The Paris restaurant Ferdi is a style favorite "

By Matthew Mosk and Perry Bacon Jr.

When former Massachusetts governor Mitt Romney closes the books on his latest campaign finance report today, it will reveal a slow but steady shift from a candidacy built on thousands of individual donations to one relying increasingly on his own personal fortune.

Top Romney advisers said last week that they expected his campaign to raise almost $40 million in the first nine of months this year. And though they have not released a firm figure, they expected that Romney will have supplemented those contributions with nearly $15 million of his own money.

Romney’s candidacy has quietly morphed into one of the nation’s first hybrid campaigns for a major-party presidential nomination: one that is neither a traditional bid built on individual donations nor a self-funded effort such as those launched by billionaires Steve Forbes and Ross Perot.

“Romney is something different,” said Jennifer A. Steen, a Boston College professor who has written a book on self-financed candidates.

That Romney is spending some of his personal fortune, estimated to be between $190 million and $250 million, in part reflects a decline in donations to his campaign. He led all of the GOP contenders in fundraising during the first three months of the year. But he relied in large part on maximum donations from business allies in Massachusetts, where he ran the venture capital company Bain Capital Partners, as well as from fellow Mormons in Utah, where Romney managed the 2002 Winter Olympics. His donations from those two states fell sharply between April and June.

Romney’s personal money has helped him avoid the plight of another White House contender, Sen. John McCain, who found himself laying off staff in July while Romney was able to air ads in key primary states. His spending is a more dramatic and expansive version of what then-candidate John F. Kerry did in December 2003, when the Democratic senator from Massachusetts lent his campaign more than $6 million in a last-ditch effort that helped him win the Iowa caucuses.

Romney launched his campaign with a showy Jan. 8 event at the Boston Convention & Exhibition Center, placing 400 of his biggest supporters in front of phones and asking them to devote the day to raising money from friends and contacts around the country. The event yielded $6.5 million, a huge haul for a single day’s effort.

Ron Kaufman, a top Romney adviser who attended the event, said it sent a powerful message to potential supporters who might have wondered whether Romney would simply run on his personal fortune.

“As self-funding, big-spending candidates have proven, it doesn’t get you anything,” Kaufman said. “The bottom line is: The way to be a candidate for president is prove you can put the organization together, prove to the voters that you’ve earned the right to be a serious candidate for president. You’ve got to earn it; you can’t buy it.”

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St. Petersburg, Florida:

DURING the next year or so, The St. Petersburg Times plans to continue pursuing deeply reported, long-term features about such topics as Florida's property insurance crisis, complex tax issues, public education at all levels, and wildlife and endangered species. It will balance this slate of stories against all the other bread-and-butter issues it covers everyday for its readers: politics, business, sports, community affairs, culture and more.

“We're going to invest the time and energy and the resources in these stories because the question we're always asking ourselves is what matters to our audience,” said Stephen Buckley, the managing editor of the newspaper. “And that's the question that really drives our organization: Are we doing work that matters?”

Such ambitions were rare enough in the good old days of gumshoe journalism, when newspapers were cash machines. Now, as more readers and advertisers migrate to the Internet, this kind of enterprise reporting has become harder to find at many papers. And in that context, The St. Petersburg Times is itself an endangered species — an independent, privately owned daily that continues to serve up quality journalism. Many owners of other daily city papers sold them off years ago to try to avoid inheritance taxes. But The St. Petersburg Times was not sold; to guarantee local ownership and independence, its owner, Nelson Poynter, gave it away upon his death in 1978 to a nonprofit educational organization now called the Poynter Institute.

For newspaper publishing — an industry awash in uncertainty as it tries to adapt to the Internet — The St. Petersburg Times offers one possible model for salvaging enterprises that must, as all businesses do, respond to financial reality. In contrast to some other businesses, newspapers also have to address technological change and economic shifts while carrying out their traditional mission of trying to provide independent, high-quality information and analysis to readers.

Interest in the St. Petersburg model has grown in the wake of Rupert Murdoch's recent agreement to acquire Dow Jones & Company, the publisher of The Wall Street Journal. That was just the latest in a wave of seismic changes that include plummeting stock prices for publicly owned newspaper companies (including The New York Times Company), the divestiture of the Knight Ridder chain and the cost-cutting that has ravaged newspapers like The Baltimore Sun, The Miami Herald, The Philadelphia Inquirer, The Courier-Journal of Louisville, Kentucky, and The Los Angeles Times.

“I think the St. Petersburg Times model is wonderful, and I think it would be great if there would be more of them,” said John S. Carroll, a former top editor at The Los Angeles Times, who resigned after resisting staff cuts ordered by its owner, the Tribune Company. “The value of newspapers is dropping so the financial sacrifice necessary to do this is becoming easier, and I think there is a lot of charitable money around, and there are some money people who are concerned about the future of journalism.”

FOR their part, editors at The St. Petersburg Times say Poynter was a visionary whose act of singular munificence allows their reporters to do painstaking reporting because the paper doesn't answer to outside investors who constantly watch the bottom line. “We don't put out a newspaper to make money,” says Paul C. Tash, the chief executive of the Times Publishing Company, which oversees the paper. “We make money so we can put out a great newspaper.”

Poynter didn't make all his family members happy by giving away a fortune, but as he said, “I haven't met my great-grandchildren, and I may not like them.” While his legacy allows for patient, long-term investment, The St. Petersburg Times isn't free from the industry's challenges.

The paper doesn't get any money from the Poynter Institute. Just like other private businesses, it pays for its operating expenses, $90 million this year for payroll alone, from its own revenue, and it pays taxes on its profits. It must also pay the Poynter Institute a yearly dividend, currently about $6 million, for which it receives no tax benefit. “The Times Publishing Company has no tax advantages related to our ownership,” said Jana Jones, the company's chief financial officer.

What makes the company different from most private companies is that the owner, the Poynter Institute, does not take money out of the company beyond the dividend. Every decision that is made at the newspaper with regard to the use of profits, executives say, is based on the reinvestment needs of the company. No owner or chain is removing that money to invest in another newspaper or another business.

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PARIS: Cinched-in waists, wide-legged trousers and heavy knits may all be high on the list of autumn trends. But for the style-conscious Parisian, there is one further accessory to add to the shopping list: a bicycle.

The successful debut this summer of the Vélib' - the name given to the city's rental bike program, a fusing of the words “vélo” (bike) and “liberté” (freedom) - seems to indicate the bicycle is ready to reclaim its position as a style icon, with admirers recalling a golden age of cycling epitomized by the bicycle scenes in “Jules et Jim,” François Truffaut's 1962 film. More than 20,000 Vélib's are scheduled to fill the capital by the end of the year. (www.en.velib.paris.fr)

“Even in the world capital of fashion, the municipal bikes have quickly become dernier cri,” or the last word, wrote the Guardian's Paris correspondent Angelique Chrisafis after the Vélib' launch, going on to praise the understated elegance of the bike's pearly gray color.

In an interview with the free Paris newspaper “À Nous Paris,” Mademoiselle Agnès, the pseudonym of Agnès Boulard, a French fashion journalist and producer of the documentary “Signé Chanel,” was asked if she felt pressure when she got dressed in the morning and responded, “Enormous pressure, of course,” adding, “especially since I have started using a Vélib'!”

Paris blogs have been equally enthusiastic, coining the term “vélibataire” (a combination of Vélib' and célibataire, or single) to describe stylish singles who use Vélib's to find romance. The Web site Blogvelib.fr has even set up a vélibataire forum where self-styled “vélibats” can share stories of romance and find potential partners. “Touched by your smile, your look and your advice on how to detach a Vélib. You were wearing a T-shirt marked '57,' blue, I think,” read one post. “It would be lovely to find you again.”

Yet it is not just Vélib's that are at the pivot of the bicycle's renewed popularity.

Colette, the modish fashion boutique on rue Saint-Honoré, held a two month festival in the bike's honor this summer, combining an exhibition, “Joy Ride,” with Paris's first Bike Film Festival (the festival, which was started in New York in 2001 and shows films with a bicycle theme, moves on to Vienna and London this month). Artists who participated in the exhibition included the quirky French film director Michel Gondry and the New York street artist Swoon, while bike-themed merchandise on display encompassed clothes by the bikewear label Rapha in collaboration with Paul Smith, to cycling DVDs, books and, of course, bikes - from the industrial designer Ben Wilson's glittering Swarovski Low-rider to the sleek new Comète bicycle.

Meanwhile, outside the hip Murano Urban Resort hotel in Paris's Third Arrondissement, the usual front-door accessories of potted plants or liveried porters have been eschewed in favor of a stylish set of Electra bikes.

Cycling fashions look set to follow the trend and Gucci's boutique on Avenue Montaigne currently has a Gucci bicycle parked prominently at the front of the store as a centerpiece to a display of cycling accessories. Meanwhile this autumn's wider legged trousers are already proving a boon to those who found that last season's drainpipe legs hampered their motion.

Yet for loyal Paris cyclists, a new wave of bike-inspired clothing looks unlikely to influence their wardrobes. “It doesn't affect me at all,” said Aline Coquelle, a Parisian photographer who has had her own bike in Paris for seven years, “I am a true Parisian; a bike is just part of my way of life.”

read more from " The Velib’ — Paris’s hot new accessory "

There are deep roots to Myanmar's current unrest, pitting its repressive regime against Buddhist monks, but the immediate spark was the junta's unexpected decision in August to double fuel prices.

Overnight, diesel prices skyrocketed, and compressed natural gas rose fivefold.

In this respect, Myanmar is not an isolated case. Rising oil prices in recent years have created all kinds of headaches as they have rippled across the world. Many governments, especially in the developing world, have had to choose between raising domestic subsidies to offset the increases or letting the people bear the brunt.

Neither choice - higher government spending or the risk of popular discontent - has great appeal.

In oil-rich Iran, civil unrest spread through Tehran this summer after the government rationed gasoline in an effort to curb the country's addiction to cheap fuel; gasoline in Iran, imported because the country lacks refining capacity, is heavily subsidized and cost about 40 cents a gallon at the time. After two days of upheaval, the Islamic theocracy restored order and kept the policy.

In Nigeria, the outcome was different. Striking oil workers in June threatened to shut down the country's oil production if fuel subsidies were dropped. Faced with the threat of losing its biggest source of revenue, the government quickly backed down.

Fuel prices go to the heart of people's ability to move, stay warm or feed themselves. So it is no surprise that governments around the world have tried to blunt the effects of oil prices that have tripled in the past four years.

But interfering with energy markets can be a risky and costly game.

Prices kept high by market forces and taxes dampen expectations of cheap fuel. Fuel subsidies do the opposite, and countries that rely on them play with fire.

“Some countries are hiding the reality of high fuel prices to keep political peace,” said David Goldwyn, a U.S. assistant secretary of energy during the Clinton administration. “Nigeria caved, but it's not a sustainable strategy. The more they do it, the more they pump up demand with cheap energy.”

The problem is that fuel subsidies can quickly add up, especially when oil prices keep rising as they have since 2003. It has been estimated that Yemen, for example, devotes 9 percent of its gross domestic product to holding down energy prices.

Only a handful of countries provide very high subsidies on their retail fuel sales. These include Venezuela, Turkmenistan, Syria, Algeria, Angola and Malaysia, and, unsurprisingly, most of them are oil producers.

In fact, most countries have allowed domestic prices to creep up.

Drivers in Tunisia, Honduras and Pakistan all paid more for their gasoline than Americans did last year, according to a survey of fuel prices compiled by GTZ, a German consulting firm. The survey found only 20 countries where the price of gasoline was below $2 a gallon, that is, lower than the cost of refining it.

In most European countries, the opposite is true. Governments slap on high taxes, sometimes as high as 80 percent of the cost, in part to discourage consumption. In the Netherlands, gasoline cost $6.40 a gallon last year.

In the United States, where taxes represent about 20 percent of gasoline prices, regular gas averaged about $2.35 a gallon last year.

It's up to $2.80 these days. Still, the mere mention of raising gasoline taxes remains almost tantamount to political suicide.

When it comes to energy policy, the most closely watched country is China, where surge in demand has helped propel oil prices upward.

China needs to finely balance its need for growth while trying to keep a lid on energy use, both to control pollution and to keep prices from skyrocketing.

Though pollution has taken a toll on China's environment, the restive demands of the rural have-nots left far behind by the urban haves cannot be ignored. Last year, there were 90,000 protests against local governments, according to Michael Green, a senior adviser at the Center for Strategic and International Studies.

In most cases, fuel prices were not the cause of these protests, Green said, but they point to the risk of upheaval China faces: Each year, 20 million people move to big cities from the countryside in search of work.

“The mandate of the Communist Party is economic development,” Green said. “This is why it is so hard for them to ration energy demand. It's very difficult for the leadership in Beijing to develop a harmonious society if they cap energy demand.”

Still, the Chinese leadership has been gradually allowing fuel prices to increase, although its domestic state-run refineries still sell gasoline at a loss.

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OFF THE CHARTS

IN the heat of August, the American home market wilted.

Reports this week showed weak sales of both new and existing homes during the month, and the first two large home builders to report summer profits called the market dismal.

“The economy got to the point where pricing was just unrealistic and maybe even ridiculous,” said Stuart Miller, the chief executive of the Lennar Corporation. “August really seemed to be a melting pot of all things negative.”

The story was similar at KB Home. “The oversupply of unsold new and resale homes and downward pressure on new-home values has worsened in many of our markets,” said Jeffrey Mezger, the chief executive.

He said the market declined throughout the summer, but “the deterioration accelerated dramatically in the month of August.”

Those two companies are the only major builders with quarters ending in August, and between them operate in most of the major markets, including California, Florida, Illinois, Texas and New York.

“It is an unusual time where almost every market across the country is similarly impaired,” Miller said. Some were hurt less than others, he said, “but all of the markets are down.”

In some markets, he said, the company cannot sell homes for more than they would cost to build, even if the land were free.

As one of the accompanying charts shows, Lennar's rate of both new orders and deliveries — final sales — were down more than 40 percent from the previous year.

With sales of both new and existing homes down, more homes are now on the market than ever before — almost 4.5 million, a figure that is nearly double the number in early 2005, when prices were rising and home builders were reporting high profits.

And many of those homes have been on the market for a while. Of the 178,000 completed new homes that were available for sale at the end of July, fewer than 15 percent found buyers in August. That was the lowest rate in more than a decade.

In late 2006, it appeared that the housing market had stabilized after falling, with new homes selling at a seasonally adjusted annual rate of about one million, and investors bid up the price of home builder stocks.

But with all the bad news, those prices have fallen to new lows. The pace of new-home sales in August was just 795,000, a seven-year low.

Prices are falling in most markets, according to the S.&P./Case-Shiller index of home prices, and in July — the figures reported this week — they were down 4.5 percent, year-over-year, for a 10-city composite.

Futures are traded on that index, and while volume is very low and thus perhaps of little forecasting value, the futures prices indicate that home values are expected to keep falling until 2010.

The biggest reason for the August plunge appears to have been the chaos in the mortgage market, where a number of lenders have gone out of business.

Many buyers with good credit can still get mortgages, but their purchases often depend on selling their old homes, something that is getting much harder as other would-be buyers find they cannot get financing, or cannot sell their old homes.

As 2006 ended, economists generally thought the economy had weathered the housing decline with little effect on consumers. Now many are not so sure.

“The talk at Friday night dinner parties is going to be how little the house down the road sold for,” said Robert Barbera, the chief economist of ITG. And that, he said, is likely to restrain spending as homeowners feel less wealthy.

read more from " For housing, the summer of the unsold "

A sign at Lincolnway Energy in Nevada, Iowa, announcing the hours for farmers to deliver corn to be used in ethanol production. (Lynn L. Walters for The New York Times)

NEVADA, Iowa: The ethanol boom of recent years — which spurred a frenzy of distillery construction, record corn prices, rising food prices and hopes of a new future for rural America — may be fading.

Only last year, farmers here spoke of a biofuel gold rush, and they rejoiced as prices for ethanol and the corn used to produce it set records.

But companies and farm cooperatives have built so many distilleries so quickly that the ethanol market is suddenly plagued by a glut, in part because the means to distribute it have not kept pace. The average national ethanol price on the spot market has plunged 30 percent since May, with the decline escalating sharply in the last few weeks.

“The end of the ethanol boom is possibly in sight and may already be here,” said Neil E. Harl, an economics professor emeritus at Iowa State University who lectures on ethanol and is a consultant for producers. “This is a dangerous time for people who are making investments.”

While generous government support is expected to keep the output of ethanol fuel growing, the poorly planned overexpansion of the industry raises questions about its ability to fulfill the hopes of President George W. Bush and other policy makers to serve as a serious antidote to the nation's heavy reliance on foreign oil.

And if the bust becomes worse, candidates for president could be put on the spot to pledge even more federal support for the industry, particularly here in Iowa, whose caucus in January is the first contest in the presidential nominating process.

Many industry experts say the worst problems are temporary and have been intensified by transportation bottlenecks in getting ethanol from the heartland to the coasts, where it is needed most. And even if some farmers who invested in the plants lose money, most of them are reaping a separate bounty from higher prices for corn and other commodities, which are expected to remain elevated for some time.

Even so, companies are already shelving plans for expansion and canceling new plant construction. If prices fall more, as many analysts predict, there is likely to be a sweeping consolidation of the industry, and some smaller companies could go out of business.

The falling price of ethanol comes in sharp contrast to the rise in crude oil prices. Lower ethanol prices help reduce gasoline prices at the pump, where ethanol is available, but because it constitutes 10 percent or less in most blends, the impact for the consumer is marginal.

Congress essentially legislated the industry's expansion by requiring steadily higher quantities of ethanol as a gasoline blend, a kick-start that was further spurred by the proliferation of bans on a competing fuel additive used to help curb air pollution.

But the ethanol industry, which is also heavily subsidized by federal tax incentives, got far ahead of the requirements of the law, rapidly building scores of plants and snapping up a rising share of the corn harvest. Many of those plants have gone into operation in recent months, and many more are scheduled for completion by the end of next year.

The resulting ethanol oversupply is buffeting the market. Here in northern Iowa, deep in the corn belt, newly cautious farmers and ethanol executives are figuring out how to cut costs and weighing their options should the situation get worse.

“We don't know what, ultimately, the marketplace will price ethanol at,” said Rick Brehm, president and chief executive of Lincolnway Energy, a midsize distillery here. “It could go lower.”

Since construction crews broke ground on the Lincolnway plant in 2005, the price of ethanol on the local market has fallen to $1.55 a gallon from about $2, Brehm said. Over the same period, the price of corn, representing 70 percent of production costs, has risen to $3.27 a bushel from $1.60. “We're trapped between two commodities,” he said.

Lincolnway was once virtually alone in the region, but now a handful of new competing distilleries are operating and pouring even more ethanol onto the market, offering blenders more options to negotiate lower prices and driving up demand for corn.

“Obviously, I'm concerned about where we're going,” said Bill Couser, chairman of Lincolnway Energy, though he added that his company is still making money and he is optimistic about the future.

The ethanol boom was set off when Congress enacted an energy law in 2005 that included a national mandate for the use of renewable fuel in gasoline, obliging the market to consume 7.5 billion gallons a year by 2012, compared with 3.5 billion gallons in 2004.

read more from " Ethanol boom fades as oversupply depresses prices "

NEW YORK: Something went badly wrong in the subprime mortgage market. In fact, several things did. And now quite a few homeowners, investors and financial institutions are feeling the pain. So far, harried policy makers have focused on crisis management. But soon the nation will turn to good old-fashioned finger-pointing.

Finger-pointing is often decried both as mean-spirited and as a distraction from the more important task of finding remedies. I beg to differ. Until we diagnose what went wrong with subprime, we cannot even begin to devise policy changes that might protect us from a repeat performance. Because so much went wrong, the fingers on one hand will not be enough.

The first finger points at households who borrowed recklessly to buy homes, often saddling themselves with mortgages that were all too likely to default. What can we do to guard against it happening again?

Not much, I'm afraid. Greater financial literacy might help, but I'm dubious about our ability to deliver it effectively. The Federal Reserve is working on clearer mortgage disclosures to help borrowers understand what they are getting themselves into. While I applaud the effort, I'm skeptical that it will work. If you have ever closed on a home, you know that the disclosure forms you receive are copious and dense. Should we add even more?

Fewer words, and in plainer English, might help, especially if they highlighted the truly important risks. (”In two years, your mortgage payments could double.”) But the truth is that there is much to disclose and that people don't read those documents anyway.

It seems more promising to point a finger directly at lenders. Some lenders sold mortgage products that were plainly inappropriate for customers, and that they did not understand. There were numerous cases of unsophisticated borrowers being led into risky mortgages.

Here, something can be done. For openers, we need to think about devising a “suitability standard” for everyone who sells mortgage products. Under current law, a stockbroker who persuades Granny to use her last $5,000 to buy a speculative stock on margin is in legal peril because the investment is “unsuitable” for her. Knowing that, the broker usually doesn't do it.

But who will create and enforce such a standard for mortgages? Roughly half of recent subprime mortgages originated in mortgage companies that were not part of any bank, and thus stood outside the federal regulatory system. That was trouble waiting to happen. We should place all mortgage lenders under federal regulation.

That said, bank regulators deserve the next finger of blame for not doing a better job of protecting consumers and ensuring that banks followed sound lending practices. Fortunately, the regulators know they underperformed, and repair work is already under way.

Regulators also need to start thinking about how to deal with a serious incentive problem. In old-fashioned finance, a bank that originated a mortgage also held it for years, giving it a clear incentive to lend carefully. But in newfangled finance, banks and mortgage brokers originate loans and sell them quickly to a big financial firm that pools thousands of mortgages and issues marketable securities representing shares in the pool.

These “mortgage-backed securities” are then sold worldwide, to people with no idea who the original borrowers are.

Securitization is a marvelous thing. It has lubricated the market and made mortgages more affordable. We certainly don't want to end it. But securitization sharply reduces the originator's incentive to scrutinize the creditworthiness of borrowers. We need to find ways to restore that incentive, perhaps by requiring loan originators to retain a share of each mortgage.

But wait. Don't the ultimate investors have every incentive to scrutinize the credits? If they buy riskier mortgage-backed securities in search of higher yields, isn't that their business?

The answer is yes - which leads me to point a fourth finger of blame. By now, it is abundantly clear that many investors, swept up in the euphoria of the moment, failed to pay close attention to what they were buying.

Why did they behave so foolishly? Part of the answer is that the securities, especially the now-notorious CDOs, for collateralized debt obligations, were probably too complex for anyone's good - which points a fifth finger, at the investment bankers who dreamed them up and marketed them aggressively.

Another part of the answer merits a sixth finger of blame. Investors placed too much faith in the rating agencies. It is tempting to take the rating agencies out for a public whipping. But it is more constructive to ask how the rating system might be improved. That's a tough question because of another serious incentive problem.

read more from " Economic view: In the wake of the U.S. subprime turmoil, finger-pointing "

NEW YORK: You may remember Sunrise Senior Living, the beleaguered provider of assisted-living facilities, whom we've visited in this column twice before. Well, under pressure from an investor, Sunrise has finally scheduled its annual shareholder meeting for Oct. 16 - about 17 months after its last gathering.

Things have been going less than swimmingly at Sunrise since its shareholders last convened. It is in the midst of extensively restating earnings it booked from 2003 to 2005, and the Securities and Exchange Commission is investigating its stock option grants and accounting practices. Sunrise also has formed a special board committee, to review insider stock sales, after a big shareholder questioned transactions that occurred just before Sunrise announced a significant bookkeeping change.

As if that wasn't enough, last month, Bradley Rush, who was Sunrise's chief financial officer until he was fired in May, sued the company, contending that it had retaliated after he uncovered improper accounting practices and notified senior management, the board and the SEC.

A Sunrise spokeswoman said that the suit had no merit and that the company would defend itself vigorously.

Late Friday, the company announced that the special board committee and its outside law firm had concluded that there was no backdating or intentional misconduct in the company's option grants, and that there was no evidence that the insiders who sold stock ahead of the accounting disclosures had material information that was not public.

That's good news. But if Sunrise shareholders think that they will be able to ask tough questions of management at the coming meeting, or register their displeasure by voting against directors whose terms are up, they have another think coming.

The meeting will be conducted under rigid terms struck by Sunrise and a shareholder, the investment company Millenco. As a result, only three directors will stand for election - two incumbents and a representative of Millenco - and no other business issues will be allowed to come up.

In a July settlement approved by a Delaware court, Sunrise and Millenco, a subsidiary of Millennium Partners, an investment company controlled by Israel Englander, agreed to hold the meeting on those terms. Millenco had sued Sunrise, seeking to compel it to hold an annual meeting within 13 months, as Sunrise's bylaws specify. In exchange for agreeing to settle the suit, Millenco received the right to nominate a new director at Sunrise.

But other Sunrise shareholders are objecting to the restrictions on the meeting as stipulated by the agreement. The SEIU Master Trust, a pension fund that benefits members of the Service Employees International Union and owns Sunrise shares, is suing to open up the meeting to other business.

The trust has tried to force change at the company on several recent occasions. In fact, it was the shareholder that pressed for the board to examine insider stock sales. This time around, the Master Trust is trying to stop Sunrise from using an agreement with one shareholder to disenfranchise others.

The suit is based on the trust's view that the annual meeting, as structured, runs afoul of Sunrise's bylaws, which let shareholders nominate board candidates and bring up business at the annual meetings.

“An agreement was made apparently between another shareholder and the company as to how they are going to conduct the annual meeting, and that agreement deprives the rights of other shareholders who are not a party to it,” said Michael Barry, a partner at Grant & Eisenhofer who represents the Master Trust.

“What they did was agree to hold a pro forma meeting that would do nothing but rubber-stamp the election of incumbent Sunrise directors and a new director appointed by this shareholder.”

As companies go, Sunrise hasn't been exactly shareholder-friendly.

Its founder and chief executive, Paul Klaassen, assembled a chummy board over the years. The company's outside directors either have had business dealings with the company or serve on other boards with Klaassen.

The company has recently added two directors who it says are independent. And the deal between Sunrise and Millenco, of course, brings a new and independent director to the company's board.

The proposed director is Lynn Krominga, a lawyer and a consultant to private equity firms, venture capital businesses and technology start-ups. She was suggested by Millenco, but she is not affiliated with the firm.

For its part, Millenco said that although it would have preferred an open meeting, it was achieving its main goal through the settlement by placing an independent director on the Sunrise board.

read more from " An annual meeting, finally, for Sunrise Senior Living "

LONDON: Trusting ads - relatively

Among U.S. consumers, the word most closely associated with advertising is “false.”

That disquieting finding - for marketers, at least - comes from a trawl of blogs, social-networking services and other online discussion forums by Nielsen BuzzMetrics, which measures consumers' brand perceptions on the Internet.

The word association project was carried out in conjunction with a broader survey by Nielsen of consumer attitudes toward advertising in 47 countries. That study showed that consumers typically place more trust in recommendations from other consumers than in other advertising.

“The advertising industry has to do better work, and it has to do a better job at communicating the value it brings to consumers,” said Jonathan Carson, co-founder of BuzzMetrics, which is part of the market research company Nielsen.

The picture is not all doom and gloom for marketers or for media owners reliant on advertising, however. The study showed, for instance, that consumers in developing markets still have relatively high levels of trust in advertising, even if their counterparts in developed countries are more cynical. In the Philippines and Brazil, for instance, 67 percent of consumers said they generally trusted advertising.

The Danes, by contrast, appear to be a skeptical bunch, with only 28 percent saying they trusted advertising. Many other European nationalities were also at, or near, the bottom of the list, though Americans still appeared relatively trusting, at 55 percent.

That is good news for the advertising economy, because much of the growth in ad spending is expected to come from developing markets in coming years. While marketers in developed countries worry that consumers are recoiling from advertising, such concerns do not appear to be an issue yet in places like Brazil.

“Advertising is newer in those markets, so the cynicism hasn't built up yet,” said Carson, of Buzzmetrics. “In developing markets, advertising is seen more as a conveyor of useful information. In more developed markets, people don't need it to play that role. They have too much information already.”

Even in developed markets, some media still appear to benefit from relatively high levels of trust. Newspaper advertising, for instance, is trusted by 63 percent of consumers, according to the survey, with North Americans and Latin Americans particularly showing faith in it. Only half of the respondents in Eastern Europe, the Middle East and Africa said they trusted newspaper ads.

Television also did relatively well, with 56 percent of respondents worldwide saying they trusted it. Consumers in Latin America, where television shows featuring the best ads are a staple of prime-time schedules, were particularly well disposed toward television spots; Europeans less so.

Consumers appear to be wary about some new kinds of advertising, despite - or, perhaps, because of - the rampant growth in online advertising and other digital marketing. The format that fared worst, with only 18 percent of respondents saying they trusted it, was advertising in cellphone text messages, which in many countries can be done only if a marketer has obtained consumer permission.

Online banner ads and ads sold by search engines also fared poorly.

“The positive thing about these new digital channels is that they are extremely scalable,” Carson said. “You can get a very high reach at a low cost, compared with traditional media. But it's tempting to abuse it.”

If consumers are turned off by some kinds of digital advertising, like text messages, pop-ups or banners, that may explain digital marketers' eagerness to work indirectly, through blogs, social networks and other kinds of online forums. Of all survey respondents, for instance, 61 percent said they trusted consumer opinions posted online.

But even more consumers, 78 percent, said they trusted direct recommendations from other consumers: what marketers call word of mouth. And unlike some of the media, consumer recommendations scored highly across all markets. Everywhere, it seems, people still trust their friends.

Eric Pfanner can be reached at adcol@iht.com

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