America's Dirtiest Vehicles

These cars fall behind in fuel efficiency, carbon footprint and air pollution.

In Pictures: America's Dirtiest Vehicles

Starting in 2011 the Ford Focus electric sedan will be sold in 19 cities across the United States. It's built in Michigan, uses the same platform as the conventional, gas-powered Focus sedan, and can go 100 miles on a single charge of its zero-emission lithium-ion battery.
Compare that to the Buick Lucerne. The $29,730 sedan gets 15 miles per gallon in the city, and 23 mpg on the highway. All that burnt fuel dumps an EPA-estimated 10.4 tons of carbon dioxide into the environment yearly--significantly more than other cars in its class, like the Toyota ( TM - news - people ) Avalon (8.1 tons per year) and Chevrolet Impala (6.3 tons).

In fact, the Lucerne is so far behind the pack in terms of its environmental footprint that it landed on our 2010 list of the year's dirtiest vehicles, along with the GMC Yukon, Cadillac CTS and Toyota Sienna.

In Pictures: America's Dirtiest Vehicles

To be fair, all of these cars meet or exceed federal emissions standards, and are significantly cleaner than the heavy, loud, inefficient gas guzzlers our grandparents drove. Automakers are quick to defend their cleanliness: The Sienna, for instance, rates lower in terms of fuel economy because of a gas-hungry all- wheel-drive model, which competitors don't offer, according to a Toyota Motors spokesman.

Still, the cars on this list lag behind the rest of the market, and are certainly "dirtier" than other new models.
Behind the Numbers
To determine the dirtiest cars on America's roads, we looked at data from the U.S. Environmental Protection Agency for all 2011-model-year vehicles. Each car was scored for its performance in terms of air pollution, fuel efficiency and carbon footprint ratings.

Our air pollution score reflects the amount of tailpipe emissions a vehicle releases; vehicles with better scores emit fewer pollutants like hydrocarbon, carbon monoxide and formaldehyde. The carbon footprint score measures the impact a vehicle has on the environment, based on how many tons of CO2 it dumps annually. Those estimates are based on full fuel-cycles, combine all steps in the use of a fuel from production to consumption, and include carbon dioxide, nitrous oxide and methane, the three major greenhouse gases emitted by motor vehicles.
For each car, we supposed 15,000 miles driven annually, 45% on the highway and 55% in the city. The worst offenders in each of 10 automotive segments made our list.
We did not evaluate vehicles classified as "heavy duty," like the 3500 series of the Dodge Ram, which are exempt from federal fuel economy requirements. We also deliberately omitted some vehicles that rated higher on the particulate-emissions scale, including exotics like the Ferrari 599 GTO and high-performance variants like Mercedes-Benz's AMG. Many of those cars do have poor emissions and fuel efficiency ratings but are produced in such small quantities and are driven so infrequently that they don't significantly contribute to air-pollution problems.

How Many ETFs Do You Need?

Exchange-traded funds, which are fixed baskets of stocks that trade like shares of stock, are an explosively successful product, with assets in the category approaching $1 trillion. A lot of customers are making mistakes, though. By owning diversified ETFs they are missing opportunities to capture tax losses.
In a tax-deferred account like an IRA or a 401(k), carve-ups are irrelevant. Go ahead and buy a broad fund. Two excellent choices for U.S. stocks are the SPDR S&P 500 (SPY), with $82 billion in assets and an expense burden of only $9 a year per $10,0000; and the Schwab U.S. Broad Market ETF (SCHB), a tiny $360 million fund with a $6 annual cost per $10,000.
Outside your tax shelter, however, these are poor choices. You are better off chopping the ETF into bite-sized pieces. Vanguard has separate ETFs for large, medium and small companies, with separate growth and value portfolios for each. Get six ETFs instead of one. That way, if just one or two of these groups go down in value, you can capture a capital loss deduction by selling and reinvesting in a similar (but not identical) portfolio.
What about foreign stocks? If you have $25,000 or less to put in, Schwab’s International Equity fund (SCHF) is a bargain at $13 a year in overhead per $10,000 invested. If you have more money, buy Vanguard’s separate European (VGK), Pacific (VPL) and Emerging Market (VWO) funds rather than a tutti-frutti international ETF.
If you have more than $250,000 to put abroad and also have opinions about where the world economy is going, consider the iShares single-country funds. Expenses are higher, at about $55 a year per $10,000.
Don’t misunderstand. The point is not to lose money so you can get a deduction. Your aim is to have all your funds go straight up. But bad things happen. When they do, you want the federal government to share some of the loss.
You can use capital losses to absorb any amount of capital gains plus up to $3,000 of “ordinary” income (from interest, dividends, salary and so on). Unused losses can be carried forward indefinitely (but expire with you).
If you have unused losses carried forward from the recent crash, more losses won’t help you right away. But they could be valuable down the road. Don’t waste time when an opportunity to capture a loss presents itself. If your ETF sinks $1,000 or more, book the loss before it recovers.
Of course, you should get right back in with a similar ETF. Nothing worse than taking money out of the market to grab a tax benefit, only to see it rebound while you wait on the sidelines. You have to dodge the IRS rule against “wash sales”—selling something at a loss and buying back the same thing within 30 days before or after. Do that by switching into an ETF with a similar but not identical portfolio.
Someday you may be very glad you have loss carryforwards on hand. You may have capital gain distributions from funds, gains on stocks that get taken away in mergers, or a gain on a vacation home.
Avoid selling winning funds and stocks in a taxable account, unless they grow to an outsized fraction of your net worth. There are three better things to do with winners:
–Give winners to charity. If you pay $5,000 for ETF shares and donate them when they are worth $12,000, you get a deduction for the full $12,000 but owe no capital gain tax on the $7,000 profit.
–Give winners to a relative who’s in a low tax bracket—for example, your daughter as she is headed off to college. She inherits your tax basis. She immediately sells the stock or fund. The taxable appreciation is the same as if you had sold the investment, but her tax rate is likely lower than yours.
–Leave winners in your estate. Under the estate law likely to go back into effect in January, appreciated property gets stepped up fair market value when the owner dies. That means capital gain tax is forgiven.

Is Ireland Europe’s AIG?

Image by AFP via @daylife

The $100 billion bailout of Ireland currently being put together in Europe shares some frightening characteristics with the most infamous bailout that took place in the U.S., the taxpayer-funded bailout of American International Group.
The problem in Ireland is the banks. They are just about insolvent and the Irish government has already pretty much guaranteed all Irish bank debts. Many people saw the bailout of AIG as a backdoor bailout of its big bank creditors. It’s possible that the bailout of Ireland could turn into a backdoor method of helping German banks and other foreign banks that have mismanaged their exposure to Ireland’s banking system.
Two years ago the U.S. government made the politically unpopular decision to inject $180 billion of taxpayer funds into AIG even after letting Lehman Brothers fail. Some $60 billion of that money quickly passed through AIG to AIG’s creditors, big banks like Goldman Sachs, Bank of America and Société Générale, which had purchased insurance on mortgage-related securities from AIG that the giant insurer could no longer pay. The U.S. government payments came to be seen by many as a controversial backdoor bailout of the banks, especially because the U.S. government did not negotiate any sort of discount from the big banks that had mismanaged their counterparty risk.
German banks are Ireland’s biggest creditors, with $226 billion outstanding, according to the Bundesbank. Germany, the biggest and strongest economy in Europe, will probably be the single biggest contributor to the Irish bailout as it was in the rescue of Greece. As a German government spokesperson, Steffen Seibert, reportedly said recently: “The German government knows that German banks, above all I think Deutsche Bank, are considerably burdened by the Irish debt problems.” Banks in the U.K., France and Belgium also have large exposure to Ireland’s banks. So Britain is now committing $11 billion in bilateral aid to help rescue Ireland outside of the permanent bailout mechanism set up by euro-zone members.
The details of the Ireland bailout by the IMF and European Commission are not yet known, but the New York Times has reported that 15 billion euros will be used to backstop the Irish banks. There are fears about bank runs in Ireland and the New York Times has reported that Allied Irish Bank and Anglo Irish Bank have seen billions of euros get sucked out in recent months.
It seems possible that, like in the case of AIG, any bailout money that is transferred into the Irish banks will quickly leak out and be paid quickly to creditors and depositors, some of them foreign.
In Ireland, the financial rescue has been associated with a feeling of losing sovereignty and being forced into severe austerity measures, notions that have made the bailout deeply unpopular.  How will the Irish public feel about the bailout if they come to see it as a backdoor bailout of foreign financial firms? How will the financial rescue work if some of the money that goes into Ireland to prop up the banks goes flying out of the country moments later? The bailout of AIG seemed to work out much better for its creditors than the company itself.

Massive Case May Push The Envelope Of Insider Trading

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If the Wall Street Journal’s reports are correct, the feds have raided two hedge funds as part of a massive insider-trading case targeting the ecosystem of traders and the firms that supply them with hot tips on sales trends, the fate of drug trials, and other market-moving information.
The Journal today reported raids on the Connecticut offices of hedge funds Diamondback Capital Management LLC and Level Global Investors LP, both spinoffs from Steven Cohen’s SAC Capital Advisors. Based on the description of at least one of the purported suspects, Oregon tech analyst John Kinnucan, the feds are targeting traders and their consultants. These are firms that sift through the extended chain of participants in an industry, looking for information that in isolation might be meaningless but assembled with other facts presents the next great trading opportunity.
Financial analysts have a name for this: The mosaic theory. And according to that theory, it’s legal to assemble non-public, non-material facts into a material, non-public picture of what is going on.
That may be fine in theory, but it won’t stop an aggressive prosecutor intent on bagging the next Ivan Boesky, said Adam Hoffinger, a former federal prosecutor who now practices white-collar defense at Morrison Foerster in Washington.
“What you have to worry about is, even if the small piece you got is not material, a prosecutor looking through the glass darkly will piece it together,” said Hoffinger, who worked on insider-trading cases during his five years in the Southern District of New York in the late 1980s. “If I were counseling somebody ahead of time, I’d tell them don’t bank on it.”Instead of the mosaic theory, Hoffinger concentrates on the Pinkerton Theory. Named after a 1946 Supreme Court case involving a pair of brothers accused of evading federal liquor taxes, it lets prosecutors go after conspirators even if they don’t know all the other conspirators, participate in an actual crime, or understand the grand scheme of the plot. They can be liable for the crimes of their co-conspirators if prosecutors can prove they knew something illegal was likely to occur.

So long as the partnership in crime continues, the partners act for each other in carrying it forward. It is settled that ‘an overt act of one partner may be the act of all without any new agreement specifically directed to that act.’

Unfortunately for traders, to prove guilt prosecutors zero in on the very practices hedge funds use to prevent other people from acting on their information. Secrecy, code words, evasive actions all can protect a trading strategy — and convince a jury somebody was aware of a criminal conspiracy.
“They call it `badges of knowledge,’” said Hoffinger. “Is he secretive? Is he using private line instead of the office line?”
Insider trading theory has advanced from the time when the crime was limited to insiders who had some kind of duty not to disclose the information they possessed. Instead of directors tipping their mistresses to an impending takeover, now prosecutors are going after people who stumble across market-moving information and act on it, regardless of their relationship to the company. The wide-ranging probe described by the Journal appears to target networks of traders who paid certain consultants for information, some of it derived from people like technology resellers who can offer their insights into how a particular line of products is selling. What one person might call fundamental analysis, another might call a fraud on the market.
“Some of these are getting complicated and frankly pushing the limits of the theory,” said Hoffinger. “That’s what prosecutors do, and what we do is hold their feet to the fire and keep ‘em honest.”
Hoffinger represented former Westar Chief Executive David Wittig, who was convicted of violating federal “honest services” law, a fuzzy statute the Supreme Court later hemmed in in a case involving former Enron Chief Jeffrey Skilling. Wittig’s conviction was overturned on appeal and prosecutors dropped the case after the Skilling decision came down.
The best defense against vague charges of belonging to an insider conspiracy may be showing you were open the whole time. That certainly helped Bear Stearns executives Ralph R. Cioffi and Matthew M. Tannin, who were acquitted of charges they lied to investors about the impending collapse of a $1.6 billion mortgage fund by arguing the e-mails prosecutors used to accuse them of hiding facts from investors openly discussed their own confusion about which way the market was headed.
Thus Kinnucan, the Oregon analyst, may have shown a flair for criminal defense work by blasting an e-mail to his clients describing how FBI agents tried to bully him into wearing a wire. As evidence of criminal intent, that behavior won’t fly with any jury.

The Biggest Names In Business

Bill Gates No Longer World's Richest Man

Carlos Slim Helu takes No. 1 spot on Forbes World's Billionaires list as a record 164 10-figure titans return to the ranking amid the global economic recovery.

In Pictures: The 20 Richest People In The World

For the third time in three years, the world has a new richest man.
Riding surging prices of his various telecom holdings, including giant mobile outfit America Movil ( AMX - news - people ), Mexican tycoon Carlos Slim Helu has beaten out Americans Bill Gates and Warren Buffett to become the wealthiest person on earth and nab the top spot on the 2010 Forbes list of the World's Billionaires.
Slim's fortune has swelled to an estimated $53.5 billion, up $18.5 billion in 12 months. Shares of America Movil, of which Slim owns a $23 billion stake, were up 35% in a year.
In Pictures: The 20 Richest People In The World
That massive hoard of scratch puts him ahead of Microsoft ( MSFT - news - people ) cofounder Bill Gates, who had held the title of world's richest 14 of the past 15 years.
Gates, now worth $53 billion, is ranked second in the world. He is up $13 billion from a year ago as shares of Microsoft rose 50% in 12 months. Gates' holdings in his personal investment vehicle Cascade ( CAE - news - people ) also soared with the rest of the markets.

The World's Billionaires

Buffett's fortune jumped $10 billion to $47 billion on rising shares of Berkshire Hathaway ( BRK - news - people ). He ranks third.
The Oracle of Omaha shrewdly invested $5 billion in Goldman Sachs ( GS - news - people ) and $3 billion in General Electric ( GE - news - people ) amid the 2008 market collapse. He also recently acquired railroad giant Burlington Northern Santa Fe ( BNI - news - people ) for $26 billion.
In his annual shareholder letter Buffett wrote, "We've put a lot of money to work during the chaos of the last two years. When it's raining gold, reach for a bucket, not a thimble."
Many plutocrats did just that. Indeed, last year's wealth wasteland has become a billionaire bonanza. Most of the richest people on the planet have seen their fortunes soar in the past year.

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