Finance & Business World

When the market falls as rapidly as it has lately, you’ll inevitably hear analysts proclaiming that stocks are now bargains.

At one level, they’re stating the obvious: Like shirts on the department store’s bargain rack, companies are suddenly 5, 10 or 20 percent cheaper than they were a few months ago. The current crop of bargain-hunters, though, think they’ve found something more significant than a quick markdown.

By some traditional measures, stocks are as cheap as they have been in decades. The stocks in the Standard & Poor’s 500 index, for example, sell for about 12 times the profit they earned in the past year. That’s called the price-earnings ratio, and its long-term average is around 16.

The S&P 500 companies also are trading at less than twice their book value, which is the accounting measure of their worth. Historically, a typical number would be more like 3 times book. The last time the price-to-book measure got this low was in March 2009, which in hindsight turned out to be a terrific buying opportunity.

Some money managers see a similar opportunity today. “We really think the market is pretty darned cheap,” says David Rolfe, chief investment officer at Wedgewood Partners in Ladue. “There’s this fear of what may happen in Europe, but if you get just a whiff of relief, a whiff that maybe we’ve priced in the worst of Greece, the U.S. stock market is like a coiled spring.”

In other words, he’s buying and waiting for a bounce. With short-term interest rates at near zero, Rolfe adds, stocks have never been more attractive in comparison to Treasury bills and other cashlike investments.

When someone talks about ratios, though, it’s important to look at both numerator and denominator. A plunging stock price might make the price-earnings ratio look attractive, but how reliable are the earnings?

After all, stocks didn’t look overpriced in 2007, but then a severe recession turned profits into losses and the market lost half its value.

Perhaps, then, we should put a little less faith in analysts’ estimates of what a company might earn next year. If earnings are volatile, maybe the classic P/E ratio can’t tell us whether stocks are cheap or expensive.

Robert Shiller, a finance professor at Yale University, tackled this problem by constructing a cyclically adjusted price-earnings ratio. It compares today’s stock price to a 10-year average of company profits. By his measure, today’s stock market isn’t cheap. In fact, the so-called Shiller P/E stands at almost precisely its 50-year average.

The Shiller concept is a good tool for assessing today’s market, says Mark Keller, chief investment officer at Confluence Investment Management in Webster Groves.

“Earnings are so volatile in recent years,” he explained. “You could argue that today’s profit margins are not sustainable.”

As a percentage of the U.S. gross domestic product, corporate profits are already at a record level. “Maybe we’ll go to a new all-time high, but we find it hard to believe things could get much better,” Keller said.

Perhaps, then, we’ve hit the profit peak for this cycle. If profits can only grow as fast as GDP

A Shanghai subway train crashed into another that was stopped underground Tuesday afternoon, injuring more than 210 people in the latest trouble for the rapidly expanded transportation system in China’s commercial center.

The crash occurred after Shanghai Shentong Metro Group blogged that line 10 was having delays due to equipment problems. Line 10 opened just last year as one of the city’s newest subways.

At least 212 people were hurt, three seriously, the metro operator said. It said none had life-threatening injuries, though some of the injured were carried away on stretchers.

One train rammed into the back of another that was stopped. Reports said problems with signaling equipment had prompted the line to switch to manual operations.

The trains were relatively crowded when they crashed between stations downtown in midafternoon. Photos posted online by passengers showed some of the injured covered in blood and lying on the floor of the train.

Firemen helped evacuate the approximately 500 passengers on the trains, taking them out through emergency exits and walking them through the subway tunnel.

The crash snarled downtown traffic as police blocked roads to clear the way for ambulances, and hundreds of gawkers gathered to watch as passengers were escorted from the subway.

Shanghai, a city of 23 million, has rapidly expanded its subways in recent years and some lines have seen problems with faulty signaling, windows shattering, doors not opening properly and poorly trained train operators.

Shanghai’s No. 10 line was among several opened last year that were built hastily ahead of the 2010 World Expo, which brought more than 72 million visitors to the eastern city.

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WASHINGTON

Greece’s finance minister has started new talks with international debt inspectors on reforms the debt-crippled country must implement to keep receiving rescue loans.

The finance ministry says the teleconference between Evangelos Venizelos and officials from the European Commission, International Monetary Fund and European Central Bank _ collectively known as the troika _ started late Tuesday.

Venizelos, who held a first call with the troika officials Monday, has to convince them that Greece’s delayed reform and cutback program is viable.

If so, the country will receive the next euro8 billion ($11 billion) installment of the bailout that has been keeping it solvent since May 2010. Otherwise, Greece’s cash reserves will run out around mid-October, forcing a chaotic bankruptcy.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

ATHENS, Greece (AP) _ Greek authorities, in a bid to prevent a potentially disastrous default, will try to convince international creditors on Tuesday that their debt-ridden country will meet the strict budget targets required to keep getting rescue loans.

Markets are fairly hopeful that Greece will receive the next euro8 billion ($10.9 billion) installment of its bailout, without which the country would go bankrupt next month, plunging Europe’s banking system into turmoil.

The talks will be held by teleconference between Finance Minister Evangelos Venizelos and officials from the European Commission, International Monetary Fund and European Central Bank, collectively known as the troika.

Though stocks were up on expectations some deal would be struck, most analysts think the country will have to restructure its debts at some point, especially if the economy remains mired in recession. Fitch Ratings said in a report Tuesday that it expected Greece to eventually default, but to do so while remaining in the eurozone.

Some experts believe the country will have to drop out of the 17-nation euro, a notion Venizelos dismissed.

“Greece’s participation in the eurozone and the euro is an irrevocable and fundamental national choice that the Greek population is making sacrifices to safeguard, in full knowledge of how priceless it is,” Venizelos told journalists, rejecting a Greek newspaper report that the government was considering a referendum on the issue.

German Chancellor Angela Merkel has likewise had to quell fears of a euro break-up, a scenario elected officials in her own government speculated about last week, roiling financial markets.

Prime Minister George Papandreou plans to meet Merkel next week during a visit to Berlin, a German government official said. The official, who spoke on condition of anonymity because the meeting hasn’t yet been announced officially, said the two would talk on the sidelines of the Federation of German Industries’ annual meeting on Sept. 27.

Since May 2010, Greece has been dependent on a euro110 billion ($150 billion) bailout from other eurozone countries and the IMF to continue servicing its debt and to pay salaries and pensions. Without the next installment, the country only has enough funds to see it through mid-October.

The funds had been expected in September, but the country’s creditors have said a decision on whether to disburse the funds will not be made until early October.

A first teleconference between Venizelos and the troika Monday night was “productive and substantive,” the Finance Ministry said.

Inspectors from the IMF, ECB and Commission suspended their quarterly review of the country’s progress earlier this month, amid talk of missed targets and delayed implementation of reforms.

The Socialist government has already taken a series of austerity measures, cutting public sector pay and pensions and hiking taxes. Unions have responded with strikes and demonstrations.

Hundreds of civil servants demonstrated peacefully in central Athens, while about 250 high school students marched in a separate protest against shortages in schoolbooks and other supplies at state-run schools. Public transport workers have called for a daylong strike Thursday, while air traffic controllers have declared a 24-hour strike Sunday and a four-hour work stoppage on Sept. 28.

Efforts so far have proved to be not enough to tackle the country’s severe debt crisis. In July, European countries agreed to extend a second bailout, worth euro109 billion, to Greece. However, the details of the second rescue package, which includes voluntary bond rollovers, have still to be worked out.

On Monday, the IMF representative in Greece, Bob Traa, said Greece needed to speed up its reforms in tax collection and reduce the size of the overmanned public sector.

Ahead of Tuesday’s teleconference, Venizelos was attending a parliamentary committee meeting, at which the director of Greece’s Statistical Authority has been summoned to testify after a member of the outgoing agency’s board claimed budget deficit figures in 2009 were miscalculated, inflating the annual figure. A judicial investigation has been launched into the claims.

“As a result of our actions in the past year, the agency has experienced a strong recovery in confidence regarding its international reputation,” Andreas Georgiou, director of the Greek Statistical Authority, said at the committee hearing.

The European Commission’s representative office in Athens issued a statement saying the EU’s statistics agency, Eurostat, had published the reviewed Greek 2009 deficit figures “without reservations” last November.

____

Geir Moulson in Berlin, David McHugh in Frankfurt and Derek Gatopoulos in Athens contributed.

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In a sharp challenge to the GOP, President Barack Obama proposed paying for his costly new jobs plan Monday with tax hikes that Republicans have already rejected, and he accused them of political motives if they still refuse to go along.

“The only thing that’s stopping it is politics,” Obama declared.

The president’s proposal drew criticism from House Speaker John Boehner, who’d previously responded in cautious but somewhat receptive tones to the $447 billion jobs plan made up of tax cuts and new spending that Obama first proposed in an address to Congress last Thursday.

“It would be fair to say this tax increase on job creators is the kind of proposal both parties have opposed in the past. We remain eager to work together on ways to support job growth, but this proposal doesn’t appear to have been offered in that bipartisan spirit,” Boehner spokesman Brendan Buck said.

The biggest piece of the payment plan would raise about $400 billion by eliminating certain deductions, including on charitable contributions, that can be claimed by wealthy taxpayers. Obama has proposed that in the past _ to help pay for his health care overhaul, for example _ and it’s been shot down by Republican lawmakers along with some Democrats.

Yet by daring Republicans anew to reject tax hikes on the rich Obama could gain a talking point as the 2012 presidential campaign moves forward, if not a legislative victory.

At a Rose Garden event Monday, Obama brandished his jobs bill in the air and surrounded himself with police officers, firefighters, teachers, construction workers and others he said would be helped by it. Adopting a newly combative tone that’s been welcomed by dispirited Democrats, Obama said he was sending the bill to Capitol Hill and demanded immediate action.

“This is the bill that Congress needs to pass. No games. No politics. No delays,” Obama said.

“Instead of just talking about America’s job creators, let’s actually do something for America’s job creators.”

Obama told of reading a quotation in a newspaper article from a Republican congressional aide who questioned why Republicans should work with Obama since the result might just be to help the president politically. “That was very explicit,” Obama said.

Buck, the Boehner spokesman, said the anonymous quote cited by the president didn’t reflect the view of Republican leadership.

And even as Obama was accusing Republicans of playing politics, he and his Democratic allies were marshaling an aggressive political response of their own.

Obama was traveling to Boehner’s home state of Ohio Tuesday to promote his jobs plan, and following that with a trip Wednesday to North Carolina, a traditionally Republican state he won in 2008.

He was getting back-up from the Democratic National Committee, which announced a television ad campaign starting Monday to promote Obama’s jobs plans in key swing and early-voting states and to call on voters to pressure their lawmakers for support. The ads urge viewers to “Read it. Fight for it. … Pass the President’s Jobs Plan.”

The back-and-forth was taking on elements of a political campaign, with high stakes for both sides as Obama heads into his re-election fight with the economy stalled, unemployment stuck at 9.1 percent and polls showing deep public unhappiness with his leadership on the economy.

His jobs package would combine tax cuts for workers and employers by reducing the Social Security payroll tax, with spending elements including more money to hire teachers, rebuild schools and pay unemployment benefits. There are also tax credits to encourage businesses to hire veterans and the long-term unemployed.

The payment method the White House announced Monday would consist of:

_$405 billion from limiting the itemized deductions for charitable contributions and other deductions that can be taken by individuals making over $200,000 a year and families making over $250,000;

_$41 billion from closing loopholes for oil and gas companies;

_$18 billion from requiring fund managers to pay higher taxes on certain income;

_$3 billion from changing the tax treatment of corporate jets.

White House Budget Director Jacob Lew said that Obama will also include those tax proposals in a broader debt-cutting package he plans to submit next week to a congressional “supercommittee” charged with finding $1.2 trillion in savings later this year. He said that the supercommittee would have the option of accepting the payment mechanisms for the jobs bill proposed by Obama, or proposing new ones.

Republicans have indicated they’re receptive to supporting Obama’s proposed payroll tax cut and finding a way to extend unemployment benefits, though many have rejected Obama’s planned new spending. Obama’s new proposal Monday to pay for it all by raising taxes without any proposals to cut spending is unlikely to win him any new GOP support for any element of his plan.

“I sure hope that the president is not suggesting that we pay for his proposals with a massive tax increase at the end of 2012 on job creators that we’re actually counting on to reduce unemployment,” said House Majority Leader Eric Cantor, R-Va.

The new DNC ads are airing in: Denver; Tampa and Orlando, Fla.; Des Moines, Iowa; Las Vegas; Manchester, N.H.; Raleigh and Charlotte, N.C.; Columbus and Cleveland, Ohio and Norfolk, Richmond and Roanoke, Va.; as well as Washington, D.C.

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Associated Press writers Julie Pace and Darlene Superville contributed to this report.

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OTTAWA

On Tuesday, Missouri lawmakers will start debating $360 million in proposed tax breaks to help turn St. Louis’ underused airport into a bustling international cargo hub.

Yet, as currently written, that bill could commit Missouri to spending $300 million of that to build factories and giant freezers

Consumers’ confidence in August dropped almost 15 points to the lowest level since April 2009 as worries about the economy fueled the wildest stock market swings since the financial meltdown in 2008.

At a time when Americans growing increasing worried about a weak job market, higher costs for food and clothing and recent stock market turmoil, the falling confidence numbers raise concerns about their willingness to spend and jumpstart the economy. That particularly important since consumer spending accounts for 70 percent of U.S. economic activity.

“Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook,” said Lynn Franco, director of The Conference Board Consumer Research Center in a statement.

The Conference Board said Tuesday that its Consumer Confidence Index plummeted to 44.5, down from a revised 59.2 in July. The number was the lowest level since April 2009 when the reading was 40.8. It also is far below the 53.3 that analysts had expected. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth.

A number of factors contributed to the index’s decline. The Conference Board Index _ based on a random survey of consumers sent to 5,000 households from Aug. 1 to Aug. 18 _ captured the wildest week on Wall Street since the financial crisis in 2008.

Four days into the survey period, on Aug. 5, S&P downgraded the U.S. federal debt and concern revived about the health of European banks. On the news, The Dow Jones industrial average had four consecutive days of 400-point swings for the first time in its 115-year history during the week that ended Aug. 12.

Besides, market debt talks and market fluctuations, Americans are still plagued by old economic worries. The nation’s unemployment rate is stuck at 9 percent. Home values remain weak. And shoppers also are facing rising costs for everything from food to clothing as retailers pass along their higher costs for labor and materials.

As a result, one gauge of the index that measures how shoppers feel about the economy dropped to 33.3 from 35.7. Another measure that assesses shoppers’ outlook over the next six months fell to 51.9, down from 74.9 last month.

Consumers’ views on jobs, in particular, also have become more pessimistic. Those claiming that jobs are “hard to get” increased to 49.1 percent from 44.8 percent, while those stating jobs are “plentiful” declined to 4.7 percent from 5.1 percent.

Those anticipating more jobs in the months ahead decreased to 11.4 percent from 16.9 percent, while those expecting fewer jobs increased to 31.5 percent from 22.2 percent. The proportion of consumers anticipating an increase in their incomes dropped to 14.3 percent from 15.9 percent.

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Retreating loyalists of Moammar Gadhafi killed scores of detainees and arbitrarily shot civilians over the past week, as rebel forces extended their control over the Libyan capital, survivors and a human rights group said Sunday.

In one case, Gadhafi fighters opened fire and hurled grenades at more than 120 civilians huddling in a hangar used as a makeshift lockup near a military base, said Mabrouk Abdullah, 45, who escaped with a bullet wound in his side. Some 50 charred corpses were still scattered across the hangar on Sunday.

New York-based Human Rights Watch said the evidence it has collected so far “strongly suggests that Gadhafi government forces went on a spate of arbitrary killing as Tripoli was falling.” The justice minister in the rebels’ interim government, Mohammed al-Alagi, said the allegations would be investigated and leaders of Gadhafi’s military units put on trial.

So far, there have been no specific allegations of atrocities carried out by rebel fighters, though human rights groups are continuing to investigate some unsolved cases.

AP reporters have witnessed several episodes of rebels mistreating detainees or sub-Saharan Africans suspected of being hired Gadhafi guns. Earlier this week, rebels and their supporters did not help eight wounded men, presumably Gadhafi fighters, who were stranded in a bombed out fire station in Tripoli’s Abu Salim neighborhood, some pleading for water.

Najib Barakat, the health minister in the rebels’ interim government, said Sunday that he does not yet have a death toll for the weeklong battle for Tripoli. Hundreds have died and more bodies, some in advanced stages of decay, are still being retrieved from the streets.q

Barakat said efforts are being made to identify bodies. At the least, the corpses of suspected Gadhafi fighters, especially non-Libyans, are being photographed before burial, to allow for possible future identification by relatives.

In fighting late Sunday, pro-Gadhafi elements fired Grad rockets at rebel forces gathering in the town of Nawfaliyah, not far from Gadhafi’s home town of Sirte, rebels said.

Rebels gave residents there 10 days to allow rebel forces in peacefully or face an assault. A rebel spokesman said many Gadhafi loyalists have fled to Sirte and are preparing for a fierce battle.

Rebels rode into Tripoli a week ago, then fought fierce battles with Gadhafi forces, especially at the former Libyan leader’s Bab al-Aziziya compound and the Abu Salim neighborhood, a regime stronghold.

As the rebels consolidated their control and Gadhafi fighters fled, reports of atrocities began emerging over the weekend.

Human Rights Watch said it has evidence indicating regime troops killed at least 17 detainees in an improvised lockup, a building of Libya’s internal security service, in the Gargur neighborhood of Tripoli. A doctor who examined the corpses said about half had been shot in the back of the head and that abrasions on ankles and wrists suggested they had been bound.

The group spoke to Osama Al-Swayi who had been detained there, along with 24 others.

On Aug. 21, detainees heard rebels advancing and shouting “Allahu Akbar!” or “God is great” he told Human Rights Watch.

“We were so happy, and we knew we would be released soon,” he said. “Snipers were upstairs; then they came downstairs and started shooting. An old man (and another person) were shot outside our door. (The rest of us) ran out because they opened the door and said, “Quickly, quickly, go out.”

He said the soldiers told them to lie on the ground. He said he heard one soldier saying, “Just finish them off.” Four soldiers fired at the detainees.

“I was near the corner and got hit in the right hand, the right foot and the right shoulder. In one instant, they finished off all the people with me. … No one was breathing. Some of them had head wounds,” he told the rights group.

Gadhafi forces set up another detention center in a hangar near their Yarmouk military base in southern Tripoli cash advance america.

Abdullah, who was at the hangar Sunday, said he had survived a massacre there last week. He said he had been detained in the city of Zlitan to the east on Aug. 16 and was brought to the hangar with other civilian captives. All were beaten and tortured, he said.

“They didn’t even ask us questions,” he said, “They just beat us and called us rats.”

On Tuesday, he said, more than 120 prisoners were in the hangar when a soldier told them they’d be released at dusk, Abdullah said. A short time later, guards hurled hand grenades inside, then opened fire. He was shot and wounded in his side, but fled the hanger. He hid outside when soldiers returned and fired on other survivors. When they left, he escaped.

Ahmed Mohammed, 25, also said he survived the massacre and told a similar story. Neither knew how many had been killed nor how and when the bodies had been burned.

Amnesty International spoke to another survivor, Hussein al-Lafi, who said three of his brothers were killed that day.

“They (the guards) immediately opened fire, and I saw one of them holding a hand grenade. Seconds later, I heard an explosion, followed by four more. I fell on the ground face down. Others fell on top of me and I could feel their warm blood … People were screaming and there were many more rounds of fire.”

On Wednesday, guards at a Gadhafi military base in the Tripoli suburb of Qasr Ben Ghashir shot dead five prisoners held in solitary confinement, Amnesty said, citing survivors. Other detainees panicked and broke out of their cells when they heard the shots, survivors said. By that time, the guards had fled, the report said.

In addition to the killings at detention centers, Human Rights Watch said it collected testimony about Gadhafi soldiers randomly shooting civilians. In one incident, on Wednesday, medical lab technician Salah Kikli said he saw Gadhafi fighters pull two unarmed men, including one in medical scrubs, from an ambulance and kill them.

Al-Alagi, the justice minister, said the reported atrocities did not come as a surprise because the regime acted in a brutal manner in the past. He said that the justice system would have to be “cleansed” before investigations can begin.

It remains unclear who is responsible for some of the other killings, including of dozens of dark-skinned men whose bodies were found in two areas of Tripoli.

Reporters saw bodies in advanced stages of decomposition at Abu Salim hospital, including in the parking lot, a ward and in the basement. Barakat, the health minister, said a total of 75 corpses were found at the hospital.

Another group of bodies was strewn across a roundabout near Bab al-Aziziya, Gadhafi’s compound. Five were in a field clinic, housed in a tent, and one of the corpses still had an IV sticking in his right arm.

Human Rights Watch counted a total of 29 bodies in that area, where Gadhafi loyalists, many from sub-Saharan Africa, had camped out in recent months. The group said it was not yet clear who was responsible for the deaths.

Some rebel fighters have mistreated detainees, pushing or hitting them, though others have tried to stop abuse. In many cases, wounded rebels and regime fighters were treated side-by-side in rebel-controlled hospitals.

On Sunday, in a neighborhood on the outskirts of the city, rebels apprehended a dozen black men and accused them of being mercenaries in Gadhafi’s army. The detainees were occasionally punched before one of the rebels convinced his comrades the men were just migrant workers.

William Osas, a 32-year-old Nigerian, said he and other Africans had fled to a farm nearby to escape the fighting, and the men were detained while they were looking for food. Reporters from The Associated Press visited the farm and found hundreds of Africans living there, including many women.

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