In New Year, Errors Mount at High-Speed Exchanges

Confidence-shaking technology mishaps have been an almost daily occurrence at the nation’s stock exchanges in the new year.

The latest example came Wednesday night when the nation’s third-largest stock exchange operator, BATS Global Markets, alerted its customers that a programming mistake had caused about 435,000 trades to be executed at the wrong price over the last four years, costing traders $420,000.

A day earlier, the trading software used by the National Stock Exchange stopped functioning properly for nearly an hour, forcing other exchanges to divert trades around it. The New York Stock Exchange, the nation’s largest exchange, has had two similar, though shorter-lived, breakdowns since Christmas and two separate problems with its data reporting system. And traders were left in the dark on Jan. 3 after the reporting system for stocks listed on the Nasdaq exchange, the second-biggest exchange, broke down for nearly 15 minutes.

The stream of errors has occurred despite the spotlight on the exchanges since a programming mishap nearly derailed Facebook’s initial public offering on Nasdaq last May and BATS’s fumbling of its own I.P.O. two months earlier. At the end of 2012, a number of exchange executives said they were increasing efforts to reduce the problems. But market data expert Eric Hunsader said that the technology problems have become, if anything, more frequent in recent weeks.

Matt Samelson, the founder of the industry consultancy Woodbine Associates, said, “Now that the world is watching, everyone is trying to be more rigorous. Their increased rigor is not yielding the benefits they hoped.”

Joe Ratterman, the chief executive of BATS, said Thursday that he viewed the firm’s announcement this week as a sign of markets that were functioning well, given his firm’s ability to find a problem that he called an “extreme edge-case scenario.”

“We discovered this problem and reported it — it’s a positive thing,” Mr. Ratterman said. “It’s being covered as if it’s a negative issue, and a continuation of a series of problems.

“Call me an optimist, but I see positive indications of the markets moving forward,” he said.

Regulators and traders have said that malfunctions are inevitable in any complex computer system. But many of these same people say that such problems were less frequent before the nation’s stock exchanges were thrown into a technological arms race in the middle of the last decade as a host of upstart exchanges like BATS challenged incumbents like the New York Stock Exchange.

The nation’s 13 public stock exchanges now compete fiercely to offer the latest, fastest and most sophisticated trading software, in part to appeal to the high-speed trading firms that have come to account for over half of all stock trading. With each tweak comes a new opportunity for a mistake to be inserted into the system.

“The rate of change is getting so rapid that the quality assurance process isn’t as robust as it should be,” said George Simon, a partner at Foley & Lardner who used to work at the Securities and Exchange Commission, which oversees the nation’s stock markets. “This has been something that has been brewing now for five years, and it keeps getting worse.”

Mr. Simon said that in less fragmented and complex markets, technology problems had been less common.

The market malfunctions have been assigned part of the blame for the diminishing amount of trading happening on the nation’s stock exchanges. The total volume of daily trading was down 17.6 percent in 2012 from 2011, according to Rosenblatt Securities.

Mr. Samelson of Woodbine Associates said the problems had long rattled retail investors, but they were becoming increasingly worrying for big institutional investors as well. While he was talking about the BATS mishap on Thursday, he received a text message from one big investor who said, “as if we didn’t have enough bad news.”

The problem reported by BATS was different from many other recent problems because it did not halt trading. Instead, the programming error meant some trades were not executed at the best price, as exchanges are required to do by law.

Only a small category of very complex trades were executed at the wrong prices, all of them coming from investors trying to do a so-called short sale of stocks. The 435,000 erroneous trades were only 0.003 percent of all trades over the last four years, according to Mr. Ratterman.

“This is so hard to identify that no customer ever identified it,” Mr. Ratterman said.

Mr. Ratterman said that 119 member firms lost money. He said he was not yet sure if BATS would compensate its members for their losses. BATS informed the members and the S.E.C. of the problem on Wednesday night, after discovering it on Friday.

The S.E.C. was not previously aware of the problem, but the enforcement division is already reviewing the issue, according to people with knowledge of the review who spoke on the condition of anonymity.

S.E.C. officials have acknowledged that they do not have adequate tools to properly police the high-speed, highly fragmented stock markets. But the agency has started several initiatives to catch up. Last year, the agency purchased software from a high-frequency trading firm that will give regulators a real-time window into the markets.

The agency has also been considering a rule that would force exchanges to submit their technology for regulatory review, something that some exchanges currently do voluntarily. At recent hearings called to examine the automation of the markets, members of the industry have supported other reforms to strengthen the system, like kill switches that would automatically stop errant trading.

Mr. Ratterman said regulators could make small changes to rules that would simplify the market infrastructure and make it less prone to mishaps.

But executives at some other exchanges have said that more sweeping changes are necessary. At a hearing in December, Joe Mecane, an executive at the New York Stock Exchange’s parent company, said that “technology and our market structure have created unnecessary complexity and mistrust of markets.”

Amy Butte Liebowitz, the former chief financial officer at the exchange, said that “you are only going to see more and more of this until someone says, ‘I’m not going to put up with this level of errors.’ ”

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India Ink: Lawyer Says Indian Gang Rape Suspect Was Tortured by Police

NEW DELHI — A lawyer defending one of the six young men accused in a gang rape case that has gripped India claimed on Thursday that his client had been tortured by the police and that his confession had been coerced.

“Yesterday when I found him, he was unable to speak a single word,” the lawyer, Manohar Lal Sharma, said in a phone interview, referring to his client, Mukesh, who he said goes by only one name. “He was crying and he was murmuring, saying, ‘Help me out! I’m being tortured!’ ”

Rajan Bhagat, a spokesman for the New Delhi police, declined to comment on the torture accusations.

The police have accused the men of luring the rape victim, a 23-year-old college student, and her male friend onto a bus in New Delhi on Dec. 16, beating both of them, raping the woman and sexually assaulting her with an iron rod. She died of her injuries two weeks later. Charges against the adult men include rape, murder and attempted murder, and they could face the death penalty if convicted. They are being held in Tihar Jail, a notorious prison in the capital.

A sixth defendant, believed to be 17, is expected to be tried in a juvenile court, where the maximum sentence would be three years in a reform institution. The case against the five adults is expected to be transferred to a special fast-track court on Monday.

Earlier Thursday in an interview with Bloomberg News, Mr. Sharma suggested that the victim was to blame for the attack. “Until today I have not seen a single incident or example of rape with a respected lady,” he was quoted as saying. Asked later about his comments, he said that they had been mischaracterized, and that he held the woman’s friend accountable. He said the two should never have been out on a cold Delhi night. “The girl’s boyfriend should be punished,” he said. “A lady always relies on a man if she’s moving with him.”

Mr. Sharma’s remarks are not unusual in India, where politicians, religious leaders and others have routinely shifted the blame from the attackers in the aftermath of the rape. On Thursday afternoon, Mr. Sharma and a battery of lawyers for the five adult suspects poured out of a court here in New Delhi after completing paperwork authorizing them to prepare a defense. Speaking to reporters, the lawyers tried to paint their clients in a favorable light.

Vivek Sharma, who is no relation to Manohar Lal Sharma, said he agreed to represent a second defendant, Pawan Gupta, a fruit seller, after his client’s father approached him and asked for help.

“After hearing his story, I felt it appropriate to represent him,” said Mr. Sharma, declining to elaborate on the father’s account. He added that he was taking the case pro bono because Mr. Gupta’s family was poor and because he believed in his client’s innocence.

He also noted that despite the heinous nature of the crime, defendants are legally entitled to representation, a constitutional principle that some lawyers nevertheless vociferously challenged during a chaotic hearing on Monday. “If someone approaches you under the Advocates Act, you cannot refuse,” Mr. Sharma said.

Manohar Lal Sharma said his client, Mukesh, was a naïve 22-year-old from a village outside New Delhi who was there on Dec. 16 only to meet his older brother, Ram Singh, another suspect in the case.

A. K. Singh, the lawyer for two other suspects, Akshay Thakur and Vinay Sharma, said he initially refused to represent them. It was only after he was prodded by his own mother, who sympathized with the two men’s families, that he accepted the case, he said.

The victim’s male friend described the attack in a television interview broadcast last Friday, and a fourth lawyer in the case, V. K. Anand, said he planned to seek a tape of the interview as evidence. Mr. Anand, who is defending Ram Singh, the driver of the bus in which the attacks took place, said, “This is a material piece of evidence which will destroy the prosecution’s case.”

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Campaign to Cut Deficit Has Deep Business

When Jim McCrery, a former Louisiana congressman, urged lawmakers last month to pursue entitlement cuts and tax reform, he was introduced on television as a leader of Fix the Debt, a group of business executives and onetime legislators who have become Washington’s most visible and best-financed advocates for reining in the federal deficit.

Mr. McCrery did not mention his day job: a lobbyist with Capitol Counsel L.L.C. His clients have included the Alliance for Savings and Investment, a group of large companies pushing to maintain low tax rates on dividend income, and the Win America Campaign, a coalition of multinational corporations that lobbied for a one-time “repatriation holiday” allowing them to move offshore profits back home without paying taxes.

In Washington’s running battles over taxes and spending, Mr. McCrery and his colleagues at Fix the Debt have lent a public-spirited, elder-statesman sheen to the cause of deficit reduction. Leading up to the fiscal negotiations, they set up grass-roots chapters around the country, met with President Obama and his aides, and hosted private breakfasts for lawmakers on Capitol Hill. In recent days, Fix the Debt has redoubled its efforts, starting a new national advertising campaign and calling on Mr. Obama and Congress to revise the tax code and reduce long-term spending on entitlement programs.

But in the weeks ahead, many of the campaign’s members will be juggling their private interests with their public goals: they are also lobbyists, board members or executives for corporations that have worked aggressively to shape the contours of federal spending and taxes, including many of the tax breaks that would be at the heart of any broad overhaul. While Fix the Debt criticized the recent fiscal deal between Mr. Obama and lawmakers, saying it did not do enough to cut spending or close tax loopholes, companies and industries linked to the organization emerged with significant victories on taxes and other policies.

“Some of these folks who are trying to be part of the solution have also been part of the problem,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a liberal-leaning advocacy group, and a former economic adviser to Vice President Joseph R. Biden Jr. “They’ve often fought hard against the kind of balance that we need on the revenue side. Many of the people we’re talking about are associated with policies that would make it a lot harder to fix the debt.”

Sam Nunn, a former Democratic senator from Georgia who is a member of Fix the Debt’s steering committee, received more than $300,000 in compensation in 2011 as a board member of General Electric. The company is among the most aggressive in the country at minimizing its tax obligations. Mr. McCrery, the Louisiana Republican, is also among G.E.’s lobbyists, according to the most recent federal disclosures, monitoring federal budget negotiations for the company.

Other board members and steering committee members have deep ties to the financial industry, including private equity, whose executives have aggressively fought efforts to alter a tax provision, known as the carried interest exception, that significantly reduces their personal income taxes.

Erskine B. Bowles, a co-founder of Fix the Debt, was paid $345,000 in stock and cash in 2011 as a board member at Morgan Stanley, while Judd Gregg, a former Republican senator from New Hampshire and a co-chairman of Fix the Debt, is a paid adviser to Goldman Sachs. Both companies have engaged in lobbying on international tax rules.

Mr. Gregg also sits on the boards of Honeywell and IntercontinentalExchange, a company that has warned investors that a tax on financial transactions would lower trading volume and curtail its profits. The two companies paid Mr. Gregg almost $750,000 in cash and stock in 2011.

In all, close to half of the members of Fix the Debt’s board and steering committee have ties to companies that have engaged in lobbying on taxes and spending, often to preserve tax breaks and other special treatment.

Fix the Debt does not endorse specific tax proposals. Instead, it advocates broad principles for debt reduction, including “comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit.” A spokesman, Jon Romano, said that the executives involved with the campaign were committed to tax reform, even if it closed loopholes that benefited their companies.

“All the people involved in this campaign have said from the beginning that everything has to be on the table,” Mr. Romano said. “Our C.E.O.’s, our state chapters, our small-business leaders — they are all willing to give something up for the sake of the country.”

Those involved with the campaign say they have tried to separate their advocacy for Fix the Debt and their private work for clients. Vic Fazio, a former Democratic congressman from California who is on the campaign’s steering committee, is a lobbyist at Akin Gump, a firm whose clients include KKR, a leading private equity shop, and the Private Equity Growth Capital Council, an industry trade group.

Nelson D. Schwartz contributed reporting.

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Americans Under 50 Fare Poorly on Health Measures, New Report Says

Younger Americans die earlier and live in poorer health than their counterparts in other developed countries, with far higher rates of death from guns, car accidents and drug addiction, according to a new analysis of health and longevity in the United States.

Researchers have known for some time that the United States fares poorly in comparison with other rich countries, a trend established in the 1980s. But most studies have focused on older ages, when the majority of people die.

The findings were stark. Deaths before age 50 accounted for about two-thirds of the difference in life expectancy between males in the United States and their counterparts in 16 other developed countries, and about one-third of the difference for females. The countries in the analysis included Canada, Japan, Australia, France, Germany and Spain.

The 378-page study by a panel of experts convened by the Institute of Medicine and the National Research Council is the first to systematically compare death rates and health measures for people of all ages, including American youths. It went further than other studies in documenting the full range of causes of death, from diseases to accidents to violence. It was based on a broad review of mortality and health studies and statistics.

The panel called the pattern of higher rates of disease and shorter lives “the U.S. health disadvantage,” and said it was responsible for dragging the country to the bottom in terms of life expectancy over the past 30 years. American men ranked last in life expectancy among the 17 countries in the study, and American women ranked second to last.

“Something fundamental is going wrong,” said Dr. Steven Woolf, chairman of the Department of Family Medicine at Virginia Commonwealth University, who led the panel. “This is not the product of a particular administration or political party. Something at the core is causing the U.S. to slip behind these other high-income countries. And it’s getting worse.”

Car accidents, gun violence and drug overdoses were major contributors to years of life lost by Americans before age 50.

The rate of firearm homicides was 20 times higher in the United States than in the other countries, according to the report, which cited a 2011 study of 23 countries. And though suicide rates were lower in the United States, firearm suicide rates were six times higher.

Sixty-nine percent of all American homicide deaths in 2007 involved firearms, compared with an average of 26 percent in other countries, the study said. “The bottom line is that we are not preventing damaging health behaviors,” said Samuel Preston, a demographer and sociologist at the University of Pennsylvania, who was on the panel. “You can blame that on public health officials, or on the health care system. No one understands where responsibility lies.”

Panelists were surprised at just how consistently Americans ended up at the bottom of the rankings. The United States had the second-highest death rate from the most common form of heart disease, the kind that causes heart attacks, and the second-highest death rate from lung disease, a legacy of high smoking rates in past decades. American adults also have the highest diabetes rates.

Youths fared no better. The United States has the highest infant mortality rate among these countries, and its young people have the highest rates of sexually transmitted diseases, teen pregnancy and deaths from car crashes. Americans lose more years of life before age 50 to alcohol and drug abuse than people in any of the other countries.

Americans also had the lowest probability over all of surviving to the age of 50. The report’s second chapter details health indicators for youths where the United States ranks near or at the bottom. There are so many that the list takes up four pages. Chronic diseases, including heart disease, also played a role for people under 50.

“We expected to see some bad news and some good news,” Dr. Woolf said. “But the U.S. ranked near and at the bottom in almost every heath indicator. That stunned us.”

There were bright spots. Death rates from cancers that can be detected with tests, like breast cancer, were lower in the United States. Adults had better control over their cholesterol and high blood pressure. And the very oldest Americans — above 75 — tended to outlive their counterparts.

The panel sought to explain the poor performance. It noted the United States has a highly fragmented health care system, with limited primary care resources and a large uninsured population. It has the highest rates of poverty among the countries studied.

Education also played a role. Americans who have not graduated from high school die from diabetes at three times the rate of those with some college, Dr. Woolf said. In the other countries, more generous social safety nets buffer families from the health consequences of poverty, the report said.

Still, even the people most likely to be healthy, like college-educated Americans and those with high incomes, fare worse on many health indicators.

The report also explored less conventional explanations. Could cultural factors like individualism and dislike of government interference play a role? Americans are less likely to wear seat belts and more likely to ride motorcycles without helmets.    

The United States is a bigger, more heterogeneous society with greater levels of economic inequality, and comparing its health outcomes to those in countries like Sweden or France may seem lopsided. But the panelists point out that this country spends more on health care than any other in the survey. And as recently as the 1950s, Americans scored better in life expectancy and disease than many of the other countries in the current study.

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Americans Under 50 Fare Poorly on Health Measures, New Report Says

Younger Americans die earlier and live in poorer health than their counterparts in other developed countries, with far higher rates of death from guns, car accidents and drug addiction, according to a new analysis of health and longevity in the United States.

Researchers have known for some time that the United States fares poorly in comparison with other rich countries, a trend established in the 1980s. But most studies have focused on older ages, when the majority of people die.

The findings were stark. Deaths before age 50 accounted for about two-thirds of the difference in life expectancy between males in the United States and their counterparts in 16 other developed countries, and about one-third of the difference for females. The countries in the analysis included Canada, Japan, Australia, France, Germany and Spain.

The 378-page study by a panel of experts convened by the Institute of Medicine and the National Research Council is the first to systematically compare death rates and health measures for people of all ages, including American youths. It went further than other studies in documenting the full range of causes of death, from diseases to accidents to violence. It was based on a broad review of mortality and health studies and statistics.

The panel called the pattern of higher rates of disease and shorter lives “the U.S. health disadvantage,” and said it was responsible for dragging the country to the bottom in terms of life expectancy over the past 30 years. American men ranked last in life expectancy among the 17 countries in the study, and American women ranked second to last.

“Something fundamental is going wrong,” said Dr. Steven Woolf, chairman of the Department of Family Medicine at Virginia Commonwealth University, who led the panel. “This is not the product of a particular administration or political party. Something at the core is causing the U.S. to slip behind these other high-income countries. And it’s getting worse.”

Car accidents, gun violence and drug overdoses were major contributors to years of life lost by Americans before age 50.

The rate of firearm homicides was 20 times higher in the United States than in the other countries, according to the report, which cited a 2011 study of 23 countries. And though suicide rates were lower in the United States, firearm suicide rates were six times higher.

Sixty-nine percent of all American homicide deaths in 2007 involved firearms, compared with an average of 26 percent in other countries, the study said. “The bottom line is that we are not preventing damaging health behaviors,” said Samuel Preston, a demographer and sociologist at the University of Pennsylvania, who was on the panel. “You can blame that on public health officials, or on the health care system. No one understands where responsibility lies.”

Panelists were surprised at just how consistently Americans ended up at the bottom of the rankings. The United States had the second-highest death rate from the most common form of heart disease, the kind that causes heart attacks, and the second-highest death rate from lung disease, a legacy of high smoking rates in past decades. American adults also have the highest diabetes rates.

Youths fared no better. The United States has the highest infant mortality rate among these countries, and its young people have the highest rates of sexually transmitted diseases, teen pregnancy and deaths from car crashes. Americans lose more years of life before age 50 to alcohol and drug abuse than people in any of the other countries.

Americans also had the lowest probability over all of surviving to the age of 50. The report’s second chapter details health indicators for youths where the United States ranks near or at the bottom. There are so many that the list takes up four pages. Chronic diseases, including heart disease, also played a role for people under 50.

“We expected to see some bad news and some good news,” Dr. Woolf said. “But the U.S. ranked near and at the bottom in almost every heath indicator. That stunned us.”

There were bright spots. Death rates from cancers that can be detected with tests, like breast cancer, were lower in the United States. Adults had better control over their cholesterol and high blood pressure. And the very oldest Americans — above 75 — tended to outlive their counterparts.

The panel sought to explain the poor performance. It noted the United States has a highly fragmented health care system, with limited primary care resources and a large uninsured population. It has the highest rates of poverty among the countries studied.

Education also played a role. Americans who have not graduated from high school die from diabetes at three times the rate of those with some college, Dr. Woolf said. In the other countries, more generous social safety nets buffer families from the health consequences of poverty, the report said.

Still, even the people most likely to be healthy, like college-educated Americans and those with high incomes, fare worse on many health indicators.

The report also explored less conventional explanations. Could cultural factors like individualism and dislike of government interference play a role? Americans are less likely to wear seat belts and more likely to ride motorcycles without helmets.    

The United States is a bigger, more heterogeneous society with greater levels of economic inequality, and comparing its health outcomes to those in countries like Sweden or France may seem lopsided. But the panelists point out that this country spends more on health care than any other in the survey. And as recently as the 1950s, Americans scored better in life expectancy and disease than many of the other countries in the current study.

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Delegation to North Korea Urges More Access to Internet and Cellphones

PYONGYANG, North Korea (AP) — A private delegation to North Korea that includes Google’s executive chairman, Eric E. Schmidt, is urging North Korea to allow more open Internet access and cellphones, although it is unclear how that message is being heard by a leadership that has long depended on a near-total ban on outside information to maintain its totalitarian rule.

David Guttenfelder/Associated Press

Eric E. Schmidt, Google’s executive chairman, standing center, with Bill Richardson, standing right, and North Korean soldiers Wednesday at the Grand People’s Study House in Pyongyang.

Bill Richardson, the former New Mexico governor leading the delegation, said Wednesday in an interview in Pyongyang, the North’s capital, that his nine-member group had also called on North Korea to put a moratorium on missile launchings and nuclear tests that have prompted United Nations sanctions.

He said the group had also asked for “fair and humane treatment” for Kenneth Bae, a naturalized American citizen born in South Korea who was detained by the North in November and charged with unspecified “hostile acts.”

The delegation’s visit has been criticized as appearing to hijack United States diplomacy and bolster North Korea’s profile after its latest, widely condemned rocket launching less than a month ago.

The State Department characterized the trip as unhelpful at a time when the United States is rallying support for sanctions by the United Nations Security Council as a response to the launching.

North Korea has shown no inclination to back off its nuclear program or to stop the launchings that it depicts as needed to send satellites into orbit, but that Western countries believe are tests for technology to create missiles that could eventually be used to deliver nuclear weapons.

Mr. Schmidt is the highest-profile American business executive to visit North Korea since Kim Jong-un took power a year ago. A vocal proponent of Internet freedom and openness, Mr. Schmidt has not said publicly what he hopes to get out of the visit. On Wednesday, he toured the frigid brick building in central Pyongyang that was presented as the heart of North Korea’s computer industry, at one point briefly donning a pair of 3-D goggles.

Mr. Kim has emphasized the importance of computerizing factories, many of which have fallen into disrepair in the years since the collapse of the former Soviet Union deprived the country of its main provider of technology. But he also has vowed in recent weeks to crack down on the “enemy’s ideological and cultural infiltration,” apparently a reference to the growing flow of information over the border with China.

That flow has been driven in part by North Koreans who sneak into China to bring much-needed food and goods back home, but who also bring back news of the outside world and sometimes DVDs and thumb drives containing banned South Korean dramas.

Mr. Richardson, who has described the delegation as a private humanitarian mission, said the members were bringing a message that more openness would benefit North Korea. Almost no one in the impoverished country owns computers, and even many of the computers that are allowed are not hooked up to the Internet, according to analysts who study the North. They say that even the small number of North Koreans allowed onto the Web — a group said to include party loyalists and computer science students — are severely restricted in what they can access.

On Tuesday, Mr. Schmidt, Mr. Richardson and other delegation members chatted with students who have permission to access the Internet for research at the elite Kim Il-sung University in Pyongyang.

On Wednesday, the group toured the main library in Pyongyang, the Grand People’s Study House, where people were crowded into drafty, unheated halls at computers with intranet access to the library’s archive of books, documents and newspapers.

Later, the delegation visited the Korea Computer Center, the hub of North Korea’s efforts to develop software, where a quote from the current leader’s father and predecessor as leader, Kim Jong-il, reads: “Now is the era for science and technology. It is the era of computers.”

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Chinese Firm Buys an American Solar Technology Start-Up

Alexander F. Yuan/Associated Press

The chief of MiaSolé, John Carrington, left, at the announcement of the company’s purchase by Hanergy Holding Group, for which Zhou Jiesan is an executive.

Just a few years ago, Silicon Valley investors were pouring money into solar technologies and talking about how they would bring the same kind of innovation to green energy that they had to the computer chip.

But few anticipated that prices for silicon, the main component of traditional solar panels, would plummet or that Chinese manufacturers, backed by enormous subsidies from their government, would increase solar production capacity by a factor of 17 in just four years.

The resulting plunge in solar panel prices wiped out the dream of a new Solar Valley. Despite making advances in the new technology, known as thin-film solar, the American companies just couldn’t compete.

The federal government’s imposition of steep tariffs last year on Chinese conventional panels helped, but the industry had waited so late to apply for the tariffs that balance sheets had already been crippled with accumulated losses and investors had lost interest.

Some thin-film companies went bankrupt, including Solyndra, which had received half a billion dollars in federal subsidies. Others, like Stion, licensed their technology or formed strategic partnerships with large corporations.

On Wednesday, the chief executive of MiaSolé, one of the most promising Silicon Valley solar start-ups, appeared in Beijing for the announcement that Hanergy Holding Group of China had completed the purchase of his company and its technology for a fraction of what investors had put in. Hanergy made its money building hydroelectric dams.

Hanergy’s purchase of the 100-employee MiaSolé, based in Santa Clara, Calif., follows its acquisition in September of the 400-employee thin-film solar unit of Q.Cells, an insolvent German solar company. The two deals have allowed Hanergy to acquire at low cost an array of patents developed for hundreds of millions of dollars of venture capital investments.

“Going head to head against the Asian low-cost, mass-volume crystalline silicon manufacturers is not a wise strategy if you’re trying to produce an ultracheap module in the United States or in high-cost markets,” said Neil Z. Auerbach, managing partner of Hudson Clean Energy Partners, a SoloPower investor. “But if you’re adopting advanced technology, you have a niche strategy in which those incumbents do not have a competitive edge because they don’t really have a product that suits.”

The industry’s broad competitive challenges have prompted American investors to shun the sector. Last year, venture capital financing in the solar sector plummeted nearly 50 percent to $992 million in 103 deals from $1.9 billion in 108 deals in 2011, according to Mercom Capital Group, a clean-tech research and communications company.

Chinese regulators, too, have begun trying to deal with the overcapacity, discouraging their banks from making more large loans to the solar panel sector.

Li Hejun, the chairman of Hanergy, said at the news conference in Beijing that the company’s hydroelectric dams produce several hundred million dollars a year in free cash flow, so it can finance its own investments in solar, which already include six thin-film solar factories, plus three more under construction.

“Everyone knows about the overcapacity in solar energy industry in China, but for us industrial insiders, this overcapacity is but a relative one,” he said. “For those who have technology, the situation is the opposite.”

The thin-film technology championed by the Silicon Valley start-ups uses more exotic materials than conventional solar panels, which are made from crystalline silicon.

Most thin-film modules are slightly less efficient at converting sunlight into electricity than conventional panels, but they are much lighter, which makes them easier to mount in locations that may not support the weight of conventional panels.

Supporters of thin-film technology contend that it has the potential for considerable further efficiency gains that may not be possible for conventional panels, which have been researched for decades. And some research has shown that thin-film can outperform conventional silicon-based panels at high temperatures, such as in deserts, where solar farms are often located.

The technology’s promise attracted the attention of the Obama administration, which provided clean-energy grants and loans to some of the companies, although not to MiaSolé.

Diane Cardwell reported from New York and Keith Bradsher from Hong Kong. Patrick Zuo contributed research from Beijing.

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Square Feet: New Revival Plans for Historic Providence, R.I., Power Plant

PROVIDENCE, R.I. — As the new year dawns on Rhode Island’s capital city, a place still suffering a hangover from the recession, there is renewed interest in a waterfront building that has been vacant since plans to create a museum and hotel there collapsed in 2008.

Known popularly as Dynamo House — the name for the failed project begun in 2007 by Baltimore-based developer Struever Brothers Eccles & Rouse — the building is a former power plant on the National Register of Historic Places, with distinctive arched windows and thick brick walls.

Until recently, plans called for a 55,000-square-foot Rhode Island history museum that would be affiliated with the Smithsonian Institution in a portion of the old power plant. The Heritage Harbor Museum was to showcase Rhode Island’s diverse ethnic and cultural history and was the cherished dream of more than a dozen local cultural organizations.

But now that dream and the future of Dynamo House itself are in flux.

The property sits tangled in litigation. In recent weeks, the head of the nonprofit group that partnered with Struever Brothers and was overseeing the museum project said a museum in the former power plant was no longer feasible.

Museum economics have changed considerably in the last five years, said Ken Orenstein, interim executive director of the nonprofit group, Heritage Harbor Corporation. “The building plan is not viable,” Mr. Orenstein said.

At the same time, a new investment group named Dynamo House Funding L.L.C., which is affiliated with the Baltimore-based Harbor East Development Group, has taken over Struever Brothers’ position in the property by acquiring the developer’s mortgage with Citibank. It plans to secure the building and make it fit for a different type of development, Mr. Orenstein said.

According to James S. Bennett, director of economic development for Providence, “serious” possible tenants have looked at the building in recent months, though he declined to say who they were. Sources knowledgeable about the site said that Brown University might be interested since Dynamo House is in the city’s Jewelry District, where Brown has expanded in recent years.

Mr. Bennett said the city had made finding a new use for the building a priority, and would not consider the alternative: “It’s not going to be torn down,” he said.

The new group is in the process of trying to clear the property’s title, which was muddied by mechanics’ liens after Struever Brothers left Providence in 2009, leaving several subcontractors unpaid. It also must remove an easement on the property, which states that a museum must be built on the site, Mr. Bennett said.

To that end, negotiations are under way between Dynamo House Funding and Heritage Harbor over the value of the easement, and efforts are being made to reach out to the subcontractors in Rhode Island to whom Struever Brothers owes money. According to records in Providence Superior Court, a dozen or so individuals and companies contend that Struever Brothers never paid them for work they did on Dynamo House.

“It was a big mess,” said Joseph J. Reale Jr., a Providence lawyer who represents two of the subcontractors seeking payment.

Struever Brothers originally planned a $137 million conversion of the power plant, including the development of a “five star” waterfront hotel. In a 2007 agreement, Heritage Harbor gave Struever Brothers title to the property in exchange for development of the museum space.

But, walloped by a sinking economy, Struever Brothers abandoned the project. Construction had started in 2007, but didn’t last long; for the last four years, the property has been vacant and exposed to the elements.

C. William Struever, a principal partner in Struever Brothers and the company’s founder, said the Dynamo House project was “very sad for me” and a “heartache” because his company could not complete it. He said he was happy the new entity would step in to make the property usable. He said he was optimistic for the city and would do what he could in his limited capacity to see Dynamo House rehabilitated.

Read More..

Economic Scene: Health Care and Pursuit of Profit Make a Poor Mix

Thirty years ago, Bonnie Svarstad and Chester Bond of the School of Pharmacy at the University of Wisconsin-Madison discovered an interesting pattern in the use of sedatives at nursing homes in the south of the state.

Patients entering church-affiliated nonprofit homes were prescribed drugs roughly as often as those entering profit-making “proprietary” institutions. But patients in proprietary homes received, on average, more than four times the dose of patients at nonprofits.

Writing about his colleagues’ research in his 1988 book “The Nonprofit Economy,” the economist Burton Weisbrod provided a straightforward explanation: “differences in the pursuit of profit.” Sedatives are cheap, Mr. Weisbrod noted. “Less expensive than, say, giving special attention to more active patients who need to be kept busy.”

This behavior was hardly surprising. Hospitals run for profit are also less likely than nonprofit and government-run institutions to offer services like home health care and psychiatric emergency care, which are not as profitable as open-heart surgery.

A shareholder might even applaud the creativity with which profit-seeking institutions go about seeking profit. But the consequences of this pursuit might not be so great for other stakeholders in the system — patients, for instance. One study found that patients’ mortality rates spiked when nonprofit hospitals switched to become profit-making, and their staff levels declined.

These profit-maximizing tactics point to a troubling conflict of interest that goes beyond the private delivery of health care. They raise a broader, more important question: How much should we rely on the private sector to satisfy broad social needs?

From health to pensions to education, the United States relies on private enterprise more than pretty much every other advanced, industrial nation to provide essential social services. The government pays Medicare Advantage plans to deliver health care to aging Americans. It provides a tax break to encourage employers to cover workers under 65.

Businesses devote almost 6 percent of the nation’s economic output to pay for health insurance for their employees. This amounts to nine times similar private spending on health benefits across the Organization for Economic Cooperation and Development, on average. Private plans cover more than a third of pension benefits. The average for 30 countries in the O.E.C.D. is just over one-fifth.

We let the private sector handle tasks other countries would never dream of moving outside the government’s purview. Consider bail bondsmen and their rugged sidekicks, the bounty hunters.

American TV audiences may reminisce fondly about Lee Majors in “The Fall Guy” chasing bad guys in a souped-up GMC truck — a cheap way to get felons to court. People in most other nations see them as an undue commercial intrusion into the criminal justice system that discriminates against the poor.

Our reliance on private enterprise to provide the most essential services stems, in part, from a more narrow understanding of our collective responsibility to provide social goods. Private American health care has stood out for decades among industrial nations, where public universal coverage has long been considered a right of citizenship. But our faith in private solutions also draws on an ingrained belief that big government serves too many disparate objectives and must cater to too many conflicting interests to deliver services fairly and effectively.

Our trust appears undeserved, however. Our track record suggests that handing over responsibility for social goals to private enterprise is providing us with social goods of lower quality, distributed more inequitably and at a higher cost than if government delivered or paid for them directly.

The government’s most expensive housing support program — it will cost about $140 billion this year — is a tax break for individuals to buy homes on the private market.

According to the Tax Policy Center, this break will benefit only 20 percent of mostly well-to-do taxpayers, and most economists agree that it does nothing to further its purported goal of increasing homeownership. Tax breaks for private pensions also mostly benefit the wealthy. And 401(k) plans are riskier and costlier to administer than Social Security.

From the high administrative costs incurred by health insurers to screen out sick patients to the array of expensive treatments prescribed by doctors who earn more money for every treatment they provide, our private health care industry provides perhaps the clearest illustration of how the profit motive can send incentives astray.

By many objective measures, the mostly private American system delivers worse value for money than every other in the developed world. We spend nearly 18 percent of the nation’s economic output on health care and still manage to leave tens of millions of Americans without adequate access to care.

Britain gets universal coverage for 10 percent of gross domestic product. Germany and France for 12 percent. What’s more, our free market for health services produces no better health than the public health care systems in other advanced nations. On some measures — infant mortality, for instance — it does much worse.

In a way, private delivery of health care misleads Americans about the financial burdens they must bear to lead an adequate existence. If they were to consider the additional private spending on health care as a form of tax — an indispensable cost to live a healthy life — the nation’s tax bill would rise to about 31 percent from 25 percent of the nation’s G.D.P. — much closer to the 34 percent average across the O.E.C.D.

A quarter of a century ago, a belief swept across America that we could reduce the ballooning costs of the government’s health care entitlements just by handing over their management to the private sector. Private companies would have a strong incentive to identify and wipe out wasteful treatment. They could encourage healthy lifestyles among beneficiaries, lowering use of costly care. Competition for government contracts would keep the overall price down.

We now know this didn’t work as advertised. Competition wasn’t as robust as hoped. Health maintenance organizations didn’t keep costs in check, and they spent heavily on administration and screening to enroll only the healthiest, most profitable beneficiaries.

One study of Medicare spending found that the program saved no money by relying on H.M.O.’s. Another found that moving Medicaid recipients into H.M.O.’s increased the average cost per beneficiary by 12 percent with no improvement in the quality of care for the poor. Two years ago, President Obama’s health care law cut almost $150 billion from Medicare simply by reducing payments to private plans that provide similar care to plain vanilla Medicare at a higher cost.

Today, again, entitlements are at the center of the national debate. Our elected officials are consumed by slashing a budget deficit that is expected to balloon over coming decades. With both Democrats and Republicans unwilling to raise taxes on the middle class, the discussion is quickly boiling down to how deeply entitlements must be cut.

We may want to broaden the debate. The relevant question is how best we can serve our social needs at the lowest possible cost. One answer is that we have a lot of room to do better. Improving the delivery of social services like health care and pensions may be possible without increasing the burden on American families, simply by removing the profit motive from the equation.

E-mail: eporter@nytimes.com;

Twitter: @portereduardo

Read More..

Economic Scene: Health Care and Pursuit of Profit Make a Poor Mix

Thirty years ago, Bonnie Svarstad and Chester Bond of the School of Pharmacy at the University of Wisconsin-Madison discovered an interesting pattern in the use of sedatives at nursing homes in the south of the state.

Patients entering church-affiliated nonprofit homes were prescribed drugs roughly as often as those entering profit-making “proprietary” institutions. But patients in proprietary homes received, on average, more than four times the dose of patients at nonprofits.

Writing about his colleagues’ research in his 1988 book “The Nonprofit Economy,” the economist Burton Weisbrod provided a straightforward explanation: “differences in the pursuit of profit.” Sedatives are cheap, Mr. Weisbrod noted. “Less expensive than, say, giving special attention to more active patients who need to be kept busy.”

This behavior was hardly surprising. Hospitals run for profit are also less likely than nonprofit and government-run institutions to offer services like home health care and psychiatric emergency care, which are not as profitable as open-heart surgery.

A shareholder might even applaud the creativity with which profit-seeking institutions go about seeking profit. But the consequences of this pursuit might not be so great for other stakeholders in the system — patients, for instance. One study found that patients’ mortality rates spiked when nonprofit hospitals switched to become profit-making, and their staff levels declined.

These profit-maximizing tactics point to a troubling conflict of interest that goes beyond the private delivery of health care. They raise a broader, more important question: How much should we rely on the private sector to satisfy broad social needs?

From health to pensions to education, the United States relies on private enterprise more than pretty much every other advanced, industrial nation to provide essential social services. The government pays Medicare Advantage plans to deliver health care to aging Americans. It provides a tax break to encourage employers to cover workers under 65.

Businesses devote almost 6 percent of the nation’s economic output to pay for health insurance for their employees. This amounts to nine times similar private spending on health benefits across the Organization for Economic Cooperation and Development, on average. Private plans cover more than a third of pension benefits. The average for 30 countries in the O.E.C.D. is just over one-fifth.

We let the private sector handle tasks other countries would never dream of moving outside the government’s purview. Consider bail bondsmen and their rugged sidekicks, the bounty hunters.

American TV audiences may reminisce fondly about Lee Majors in “The Fall Guy” chasing bad guys in a souped-up GMC truck — a cheap way to get felons to court. People in most other nations see them as an undue commercial intrusion into the criminal justice system that discriminates against the poor.

Our reliance on private enterprise to provide the most essential services stems, in part, from a more narrow understanding of our collective responsibility to provide social goods. Private American health care has stood out for decades among industrial nations, where public universal coverage has long been considered a right of citizenship. But our faith in private solutions also draws on an ingrained belief that big government serves too many disparate objectives and must cater to too many conflicting interests to deliver services fairly and effectively.

Our trust appears undeserved, however. Our track record suggests that handing over responsibility for social goals to private enterprise is providing us with social goods of lower quality, distributed more inequitably and at a higher cost than if government delivered or paid for them directly.

The government’s most expensive housing support program — it will cost about $140 billion this year — is a tax break for individuals to buy homes on the private market.

According to the Tax Policy Center, this break will benefit only 20 percent of mostly well-to-do taxpayers, and most economists agree that it does nothing to further its purported goal of increasing homeownership. Tax breaks for private pensions also mostly benefit the wealthy. And 401(k) plans are riskier and costlier to administer than Social Security.

From the high administrative costs incurred by health insurers to screen out sick patients to the array of expensive treatments prescribed by doctors who earn more money for every treatment they provide, our private health care industry provides perhaps the clearest illustration of how the profit motive can send incentives astray.

By many objective measures, the mostly private American system delivers worse value for money than every other in the developed world. We spend nearly 18 percent of the nation’s economic output on health care and still manage to leave tens of millions of Americans without adequate access to care.

Britain gets universal coverage for 10 percent of gross domestic product. Germany and France for 12 percent. What’s more, our free market for health services produces no better health than the public health care systems in other advanced nations. On some measures — infant mortality, for instance — it does much worse.

In a way, private delivery of health care misleads Americans about the financial burdens they must bear to lead an adequate existence. If they were to consider the additional private spending on health care as a form of tax — an indispensable cost to live a healthy life — the nation’s tax bill would rise to about 31 percent from 25 percent of the nation’s G.D.P. — much closer to the 34 percent average across the O.E.C.D.

A quarter of a century ago, a belief swept across America that we could reduce the ballooning costs of the government’s health care entitlements just by handing over their management to the private sector. Private companies would have a strong incentive to identify and wipe out wasteful treatment. They could encourage healthy lifestyles among beneficiaries, lowering use of costly care. Competition for government contracts would keep the overall price down.

We now know this didn’t work as advertised. Competition wasn’t as robust as hoped. Health maintenance organizations didn’t keep costs in check, and they spent heavily on administration and screening to enroll only the healthiest, most profitable beneficiaries.

One study of Medicare spending found that the program saved no money by relying on H.M.O.’s. Another found that moving Medicaid recipients into H.M.O.’s increased the average cost per beneficiary by 12 percent with no improvement in the quality of care for the poor. Two years ago, President Obama’s health care law cut almost $150 billion from Medicare simply by reducing payments to private plans that provide similar care to plain vanilla Medicare at a higher cost.

Today, again, entitlements are at the center of the national debate. Our elected officials are consumed by slashing a budget deficit that is expected to balloon over coming decades. With both Democrats and Republicans unwilling to raise taxes on the middle class, the discussion is quickly boiling down to how deeply entitlements must be cut.

We may want to broaden the debate. The relevant question is how best we can serve our social needs at the lowest possible cost. One answer is that we have a lot of room to do better. Improving the delivery of social services like health care and pensions may be possible without increasing the burden on American families, simply by removing the profit motive from the equation.

E-mail: eporter@nytimes.com;

Twitter: @portereduardo

Read More..