The Coal Age Nears Its End --

(As this article demonstrates, the Environmental Protection Agency is targeting the US coal industry for virtual extinction. Thousands of jobs will disappear, and cities throughout the US will be looking for other sources of cheap electricity. Many think a recession will surely follow. -- Michael G. Zey)

After
burning coal to light up Cincinnati for six decades, the Walter C. Beckjord
Generating Station will go dark soon -- a fate that will be shared by dozens of(A
aging coal-fired power plants across the U.S. in coming years.

Their
owners cite a raft of new air-pollution regulations from the Environmental
Protection Agency, including a rule released Wednesday that limits mercury and
other emissions, for the shut-downs.

But energy
experts say there is an even bigger reason coal plants are losing out: cheap
and abundant natural gas, which is booming thanks to a surge in production from
shale-rock formations in the U.S.

"Inexpensive
natural gas is the biggest threat to coal," says Jone-Lin Wang, head of
global power research for IHS CERA, a research company. "Nothing else even
comes close."

For
decades, coal produced more electricity than all other fuels combined, and as
recently as 2003 accounted for almost 51% of net electricity generation,
according to the U.S. Energy Information Administration.

But its
share has dropped sharply in the last couple of years. It fell to 43% for the
first nine months of 2011, as natural gas's share has jumped to almost 25% from
under 17% in 2003. Meanwhile, gas prices, on average, have fallen 37 cents to
$4.02 per million British thermal units so far this year.

Many big
utilities have announced retirements of coal-burning power plants, including
Southern Co., Progress Energy Inc., First Energy Corp., Xcel Energy Inc.,
Ameren Corp. and the Tennessee Valley Authority.

Coal
consumption by the power sector is expected to fall 2% this year and 4% next
year; even small movements are important because utilities burned 92.4% of the
1,071 million tons of coal distributed last year.

Experts
think 10% to 20% of U.S. coal-fired generating capacity will get shut down by 2016.

Some of
the soon-to-be-defunct plants have been operating only sporadically because
they are inefficient and expensive to operate; Duke Energy Corp.'s Beckjord
plant in Ohio, for example, didn't even run three of its six generating units
in 2010.

Market and
regulatory forces are "sounding a death knell for many an older coal-fired
power plant," says Hugh Wynne, senior research analyst for Sanford C.
Bernstein & Co. in New York.

John
Stowell, vice president of energy and environmental policy at Duke, says the
EPA rules are triggering "an aging baby-boomer-type situation," that
will force a record number of retirements -- and soon.

The coal
and mining industries have opposed the new EPA regulations as job-killers,
though some coal companies have job openings they can't fill. The communities
that are home to the closing plants will lose jobs and tax revenues.

Closing
Beckjord, for example, will eliminate as many as 120 jobs at the plant,
according to Duke. The loss of tax revenues will cost the local school district
in New Richmond, Ohio, about $2 million a year, says Teresa Napier, the
district's chief financial officer.

Meanwhile,
natural-gas plants are springing up around the country, from Connecticut to
California. More are expected to crop up along natural-gas pipelines,
especially in places like Texas where demand for power is outstripping
supplies.

Duke, for
example, is building four big power plants. Two, in the Carolinas, will burn
natural gas. One, in Indiana, will convert coal to a cleaner, combustible gas.
Only one, in North Carolina, will burn coal.

Cost is a
big reason for the shift. Coal prices have jumped an average of 6.7% a year for
the past decade, according to the U.S. Energy Information Administration. Coal
cost $12 to $75 per short ton in early December, depending on where it was
mined and how hot it burns.

And with
energy markets flooded with cheap natural gas from shale rock, utilities have
been idling coal capacity and running gas-fired plants harder. Fitch Credit
Ratings estimates this is whittling coal sales by 63 million tons a year,
equivalent to 6% of 2010 U.S. coal consumption. Fitch says the new EPA
regulations could reduce coal sales by another 55 million tons a year, or 5% by
2016, due to plant retirements.

Coal-firm
shares have shown the strain. Peabody Energy Corp.'s stock has dropped by half
since April, to $34.54, and Consol Energy Inc.'s stock is off by a third since
March to $38.38.

But the
new EPA rules are also significant. On Wednesday, the agency released its
latest rule, requiring power plants to slash emissions of mercury, arsenic and
other toxic pollutants within three to four years.

Many state
utility commissioners say they fear the agency's recent rules will push up
electricity prices or could even hurt reliability if too many plants are shut
down.

A senior
EPA official said the agency doesn't order plants to shut down -- they are
fined for noncompliance, instead, when not meeting emissions standards -- so
"making a decision not to retrofit a plant is really a business choice by
the owner."

Credit: By
Rebecca Smith

Oldest Baby Boomers Face Jobs Bust

(As this article demonstrates, the economic recession continues for all age groups. We know that college graduates are not finding jobs easily--one survey claims that only 53% of the class of 2010 was able to find employment or any type. However, we have been told that the 55-64 group was actually having a slightly better time holding on to their jobs. This article illustrates the slow, inexorable decline in the American standard of living being experienced by this group. The only solution, as I have pointed out in my books, is economic growth, in the 5%-6% per year range. Energy development and a rebirth in manufacturing are the first steps in an American economic renaissance.---Michael G. Zey, author, Ageless Nation.)

Many older Americans fear they will be working well into their 60s because they didn't save enough to retire. Millions more wish they were that lucky: Without full-time jobs, they are short of money and afraid of what lies ahead.

Deborah Kallick was a professor of biomedical chemistry at the University of Minnesota until she ventured into the private sector in 2000 with a job in genome research. She is now one of more than four million Americans aged 55 to 64 who can't find full-time work. That number has nearly doubled in five years, according to U.S. Department of Labor figures in October.

Ms. Kallick, 60 years old, has been unemployed since 2007 and lives in the Northern California home of an ex-boyfriend. She has run out of unemployment insurance, used up most of her retirement savings and is indebted to relatives and credit-card companies.

A good job could settle her accounts, she said. Until then, Ms. Kallick relies on generosity, occasional consulting work and the sale of sweaters, purses and other possessions on eBay.

"It is very hard to work through this and learn to be calm and happy day to day," said Ms. Kallick, who never married. "It has taken a lot of strength and courage to learn to do that."

Older Baby Boomers are trying to postpone retirement, as many find their spending habits far outpaced their thrift. With U.S. unemployment at 8.6%, and much higher among people in their teens and 20s, younger members of the labor pool accuse Boomers of refusing to gracefully exit the workplace.

But their long-held grip is slipping, as employers look past older Americans to younger, cheaper workers.

The Labor Department counts people as unemployed only if they have looked for a job in the previous month. By that definition, 6.5% of workers aged 55 to 64 were unemployed in October, below the national average but more than twice the jobless rate for the group five years earlier.

Taking into account the number of older people who want full-time work but are unemployed, working part-time or need a job but have quit looking, the percentage jumps to 17.4%, or 4.3 million Americans ages 55 to 64, according to the government data. The number has grown from 2.4 million in October 2006.

This group without full-time work now accounts for more than one in six older Americans seeking positions.

In some ways, older people are doing better than everyone else: Among all U.S. workers, 20% are unemployed, underemployed or have given up looking for jobs. But older people have far less time to rebuild savings.

"This is new. It is different. It is worse than we have experienced before and it is very widespread," said Carl Van Horn, head of the John J. Heldrich Center for Workforce Development at Rutgers University. "It is going to get worse. You are going to have a higher level of poverty among older Americans."

Older people have more trouble finding new jobs. Among unemployed workers older than 55, more than half have been looking for more than two years, compared with 31% of younger workers, according to the Heldrich Center. Among older workers who found a new job, 72% took a pay cut, often a big one, the Rutgers data show.

The problem has been building for decades: Inflation-adjusted, middle-class incomes have stagnated in parallel with a free-spending culture of indebtedness that has left many Americans with too little saved. Over the same time, many U.S. companies cut pensions and shifted to less-generous retirement-savings plans such as 401(k) accounts that have stagnated or diminished in the market tumult of past years.

Older families aren't just failing to save, they are increasingly draining accounts that were supposed to help finance retirement.

The median household headed by someone aged 55 to 64 has $87,200 in retirement accounts and other financial assets, according to Strategic Business Insights' MacroMonitor database. If each of the 4.3 million unemployed or underemployed people in this age group runs through half the family savings, that will, in theory, total $188 billion in lost retirement money.

The typical retirement-age household has too little saved to maintain its standard of living in retirement, according to actuarial and Federal Reserve data.

Financial planners often advise that retirement resources be large enough to provide 85% of a person's working income. Median households headed by a person aged 60 to 62 with a 401(k) account have saved less than one-quarter of what is needed in that account to live as well in retirement, according to Fed data analyzed for The Wall Street Journal by the Center for Retirement Research at Boston College.

The trouble spreads across generations. Older people hang on to jobs or, out of desperation, take lower-level jobs for which they are over-qualified. Either way, they displace younger workers.

In the past, older people who lost jobs often gave up and retired. No longer. In October, two-thirds of people aged 55 to 64 had jobs or wanted them, up from 59% in 1994, according to Labor Department data.

At an age when they should be generating peak incomes and savings, many unemployed and underemployed Americans are applying for early Social Security benefits and spending what's left in their retirement accounts.

Kathi Paladie, 64 years old, lost her job as an executive assistant at a mortgage company in Tacoma, Wash., six years ago. She hasn't found full-time work since but works occasionally as a phone interviewer for a political survey firm.

Her retirement savings is spent, and she said her monthly $800 Social Security checks, $100-a-week unemployment benefits and occasional paychecks barely cover expenses.

"If I don't buy a lot of groceries, then I am OK," said Ms. Paladie, who is divorced. "I do a lot of puzzles sitting here and watching TV. And I play with my bird. And that's about it."

She rarely goes out, she said, "but I've got a clean house." To save money, she sometimes eats Frosted Flakes for dinner. She shares them with her African Grey parrot, Muffin, who also likes the sweetened cereal.

Ms. Paladie hasn't been to the doctor for five years, she said. She frets about paying rent after her unemployment benefits run out next year. Her daughter lives nearby but doesn't have the room for her, Ms. Paladie said.

"It is kind of a standing joke," she said, "that if this fails, that I can always move in with them and sleep in the garage."

The problem of older, out-of-work Americans extends beyond individuals to the U.S. economy. Among jobless people aged 55 to 64 who want to work, lost annual wages exceed an estimated $100 billion, based on the median income of this age group.

Retirement savings losses exceed $10 billion a year, assuming contribution rates of 8% for employees and 2% for employers. Even if only half the people were working, the economy would gain $50 billion a year in income and another $5 billion in retirement savings.

That doesn't count the lost wages of people who have taken salary cuts to get new jobs.

Richard Foster, 59 years old, a former computer programmer and software analyst in Arvada, Colo., near Denver, has been unemployed several times over the past decade. The older he gets, the more trouble he has finding jobs in computer mainframes, his specialty, amid changing technologies. And the longer his absence from programming, the harder it is to attract recruiters, who prefer people with experience in the past six months, Mr. Foster said.

These days, he works on the telephone nearly full-time as a customer-service representative. His employer grades him on how fast he finishes each call and how customers rate his service. Mr. Foster recently contracted Bell's palsy, a temporary facial paralysis thought to be stress-related.

The work pays a lot better than a previous job, delivery driver for a dry cleaner. Still, Mr. Foster said, it pays 40% less than what he earned as a programmer at the University of Colorado Hospital, a job he lost in a restructuring that kept more tenured employees.

Mr. Foster's wife, Tina, has complications from a detached retina, which keeps her from working. Her treatment is only partially paid for by his medical plan, which classified Ms. Foster's eye problem as a pre-existing condition.

He has a retirement-savings plan at his new employer, he said, but it's hard to save, given the couple's struggle "to make ends meet day to day." He is putting off dental work, for example, to save money.

While out of work, Mr. Foster said, he sometimes depended on food banks. He filed for personal bankruptcy in 2003. He and his wife got a break recently: his wife's sister and her husband helped them purchase a home. Mortgage payments to his in-laws are less than his rent. Retirement? He said he has no idea when.

Mr. Foster's worries aren't unusual. More than two-thirds of unemployed people older than 50 report extreme stress, trouble sleeping or family strains, according to surveys by the Heldrich Center at Rutgers. More than 60% of respondents said they didn't expect to hold another full-time job in their field and a similar percentage said they were pessimistic about finding any job soon. One-third of those over 55 reported selling possessions to stay afloat.

In another unfortunate consequence, the younger people are when they apply for Social Security retirement benefits, the lower their monthly checks for the rest of their lives. Two-thirds of Americans older than 50 expect to file for the benefits earlier than they would prefer, or already have done so, according to the Rutgers survey.

"People are taking in boarders, they are moving in with their kids, selling their homes for the cash that they can live on," said Abby Snay, executive director in San Francisco for JVS, a community agency that teaches work skills.

Although her agency has long focused on young people, the fastest-growing client group is closer to retirement age. Before the recession, only 11% of her clients were older than 55; now, it is 17%.

"We are seeing people in a panic, in survival mode," she said. "They are about to finish their financial assets and all they have after that is their retirement funds. They are trying to figure out some kind of bridge so they won't have to pay an early withdrawal fee for their retirement incomes."

Ms. Snay has even seen former donors return as clients. "There is a level of shame and humiliation," she said, "and, 'What have I done wrong?' "

She recently offered older clients a workshop on the website LinkedIn. She recalled some people said, "'If I put up a picture, no one will hire me.'"

Her response: "We advise people to put up a photo, put their best foot forward."

Credit: By E.S. Browning

Ties That Bound Europe Now Fraying

BRUSSELS
-- A common currency drove investors to Europe's outer reaches, then scared
them away.

The first
decade of the euro intertwined the Continent's financial systems as never
before. Banks and investment funds in one euro-using country gorged on the
bonds of others, freed of worry about devaluation-prone currencies like the
drachma, lira, peseta and escudo.

But as the
devaluation danger waned, another risk grew, almost unseen by investors: the
chance that governments, no longer backed by national central banks, could
default.

The first
hints of such a peril came with Greek budget problems, and as investors grew
increasingly wary of Greece, debt worries spread until they set in train a
reversal of the historic process of European financial integration -- with
manifold consequences now being played out.

Banks,
insurance companies and pension funds in Northern Europe have slashed their
lending to overextended countries to safeguard their money. Many now are
comfortable investing only at home or in the safest markets such as Germany.

"We
are seeing this deglobalization, a 'de-Euroization,' of the euro zone,"
said Andrew Balls of Pimco, head of the big bond shop's European portfolio
management. "Investors are going back to their own markets. They may still
hold bonds, but they won't have them spread across the euro zone as they had
before."

If fiscal
recklessness in some quarters sowed the seeds of the euro crisis, it was
investment decisions inside the euro zone that worsened it and made it
intractable.

Having
beaten a retreat, the big investors in Northern Europe aren't likely to return
to bond markets in the periphery any time soon, participants say. Carsten
Brzeski, an economist at ING Bank in Amsterdam, believes that a "home
bias" will persist even if political leaders can find a solution to the
immediate crisis. "Investors do not forget easily," he said.

Said
Philippe Delienne, president and chief executive officer of Convictions Asset
Management in Paris, which manages 776 million euros in assets: "Everyone
has stopped investing in certain parts of the euro zone."

He added,
referring to Germany's bonds: "You can't say any longer that Italy is like
the bund . . . To protect ourselves now, we are buying bunds."

For the
heavily indebted nations that must repeatedly replace maturing debt, the
investment ebb tide portends a long struggle.

The scale
of the shift suggests that the euro zone isn't merely suffering from a
short-term confidence crisis but that the financial lifeline of some European
states is ebbing away, perhaps not to return for years, leaving some countries
exposed and in danger of financial breakdown.

At worst,
the squeeze could spell a wave of sovereign bankruptcies that threatens to
cripple Europe's banking system, provoking a deep recession in the process. One
result could be a departure by one or more countries from the monetary union,
or even its breakup.

Investors'
retreat showed no sign of letting up this week after a summit of European Union
leaders last Friday failed to deliver measures that appeared able to resolve
the crisis.

The euro's
first decade was much different. The currency was introduced in 1999. Investors
-- their devaluation worries banished -- viewed the bonds of Mediterranean
economies as a close substitute for those of Germany and other solid economies,
and were drawn to them by slightly higher yields.

Another
lure was that pension-fund clients preferred investments in the currency their
liabilities were denominated in, the euro.

Regulatory
incentives gave a push, too. The European Central Bank lets any bank in the
euro area deposit government bonds in return for short-term loans, under
so-called repurchase, or "repo," agreements. This was profitable for
banks, since bond yields exceeded their interest cost for repo loans, and was
initially a spur to buy euro-zone bonds.

The ECB
monetary operations helped make it easy for weaker nations to borrow at
rock-bottom rates. And the operations fostered the view that a euro-zone sovereign
borrower would never be allowed to fail, say Simon Johnson, a former IMF chief
economist, and Peter Boone in a paper they wrote for the Peterson Institute for
International Economics.

Because
the default risk was seen as zero, European banks didn't have to hold capital
in reserve against euro-zone government bonds they owned. That gave banks a
further motive to buy them, especially after the 2008 financial crisis ate into
banks' capital buffers.

A rare
dissenter from the clamor to own these bonds was Heineken NV's pension fund. It
dumped tens of millions of euros' worth of bonds from less-solid governments as
early as 2005. "The yield pick-up . . . was so low compared with the risk
involved, we decided to sell everything around the Mediterranean and invest
only in Dutch and German government bonds," said Frank de Waardt, managing
director of the 2.2 billion euro fund. "We sold Greece, Italy, France and
Portugal. We even sold Finland," he said.

The fund's
performance suffered versus its peers, as many others glommed onto the debt of
nations on the periphery.

In Greece,
where the preponderance of its bonds were once Greek-owned, foreign holdings of
them reached 55% by 2003. By the third quarter of 2009, it was 76%.

That was
just weeks before a new government in Athens disclosed the country's budget
deficit was far worse than believed. The assumption that euro-zone government
bonds were almost interchangeable and none could default steadily began to
crumble.

First,
Greece was forced to go hat in hand to the International Monetary Fund and
other euro-zone nations. Then, Germany made plain it didn't intend to foot the
bill indefinitely for the debts of what it saw as profligate governments.

German
concerns were crystallized into euro-zone policy.

In October
2010, on the boardwalk of the French resort of Deauville, German Chancellor
Angela Merkel and French President Nicolas Sarkozy agreed that any bailouts
after 2013 would require involvement of the private sector, which would have to
take reduction in the value of its government-bond holdings.

That
possibility sent investors scurrying away from a wider group of governments,
leading to a surge in their interest costs that was slowed, in some cases, by
ECB bond buying.

The share
of Greek bonds in the hands of investors outside Greece has since fallen
steeply to well below 50%.

Figures
from Fitch Ratings show how foreigners have retreated from weaker euro-zone
sovereign-bond markets across the board, leaving the bonds in the hands of
domestic investors.

It isn't
only in sovereign debt that Europe's financial integration has gone into
reverse. Euro-zone banks' holdings of assets of all types, including corporate
loans, in Cyprus, Greece, Ireland, Italy, Portugal and Spain hit $1.9 trillion
in 2007, up sixfold from 2001, but then declined 44% as of June 30, according
to Barclays Capital. Barclays based its calculations on data from the Bank for
International Settlements, or BIS.

Portugal's
Banco BPI SA had been an enthusiastic buyer of government bonds from elsewhere
in the euro zone. By September, it had sliced its portfolio about 30%,
according to regulatory disclosures.

Now,
"we will invest most likely in German bonds or something similar,"
said Fernando Ulrich, chairman of the executive committee.

Volatility
is a factor in the disenchantment. That itself increases risk, according to
institutions' pricing models.

Downgrades
by rating firms have also deterred investors, some of which have limits on how
much low-rated paper they can hold.

Italy's
bonds long remained fairly stable. For instance, French banks were buying more
of them earlier this year, and owned 9% more at midyear than at year-end 2010,
BIS data show.

The
stability didn't last. Italy's market turned volatile in July and August
following disagreements between then-Prime Minister Silvio Berlusconi and his
finance minister Giulio Tremonti over a series of issues.

A turning
point for euro-zone investment came in July. European leaders, in negotiating
an expanded Greek bailout, confirmed that investors in its bonds would take
losses.

"It
was a wake-up call for the industry," said a top French bank executive,
who soon started dumping his Italian government bonds. Deutsche Bank AG said it
substantially reduced its "net exposure" to Italy, both by selling
bonds and buying default protection.

Policy
makers' moves this fall may have exacerbated cross-border disinvestment.

The
European Banking Authority, or EBA, had subjected banks in July to "stress
tests" to see how well they could weather trouble.

But by
early October, the regulators were eager to send a signal they had a handle on
the crisis and to force weaker banks to bolster their capital. One option was
to re-crunch the stress-test numbers, in a way that reflected the possibility
-- not considered before -- of losses on euro-zone government debt.

For such
an exercise, banks would have to value these bonds not at their expected
long-term values but at the current depressed market values.

The banks
lobbied against such a step, fearing it would expose big holes in their balance
sheets. A top executive at France's BNP Paribas SA warned regulators that
"the moment you change the rules, we have to sell" bonds from
peripheral Europe, said a person familiar with the matter.

When the
board of the EBA met in the first week of October, the routinely scheduled
gathering, held in the EBA's offices with panoramic views of central London,
took on an emergency tenor.

EBA
officials acknowledged a strong risk that banks would dump government bonds in
response to toughened stress tests, said people familiar with their thinking.
But they felt in a bind, because critics had derided the initial July stress
tests as too weak. Tougher ones might help restore shaken confidence in banks.

The board
members also were under the impression that EU leaders in Brussels were poised
to unveil a comprehensive plan to stabilize the Continent's financial system,
said those familiar with their thinking.

As a
result, the regulators hoped, sovereign-bond prices would come back somewhat
and banks wouldn't face pressure to sell.

The EBA
plowed ahead. On Oct. 26, it announced it was recalculating banks' capital
needs.

Bank
reactions were swift. The Association of German Banks wrote to EBA Chairman
Andrea Enria of Italy, saying regulators' policy risked "a fundamental
change in the perception of sovereign exposures."

Across
Europe, banks started selling bonds issued by Italy, Spain and other heavily
indebted euro-zone governments, regulatory filings show. The stampede was
partly an attempt to reduce the amount of capital banks needed to reserve
against possible losses on such bonds, as well as an effort to avoid the wrath
of risk-averse investors, executives say.

BNP
Paribas rid itself of more than 8 billion euros of Italian debt from June
through October. Belgian lender KBC Groupe SA cut its portfolio of Southern
European bonds by about half.

Even some
Italian banks, which long had been dutiful buyers in Italian treasury auctions,
moved to the sidelines. Regulatory filings show banks in Italy, Germany and
Spain cut their holdings of French, Belgian and Luxembourg government bonds by
half or more.

Heading
back to its home market, Spain's No. 2 bank, Banco Bilbao Vizcaya Argentaria
SA, virtually eliminated its 504 million euro portfolio of Finnish government
debt.

In some
cases, such as KBC's, executives said they racked up tens of millions of euros
of losses by selling in a hurry at cut-rate prices.

Despite
the fire sales, the regulators found that Europe's biggest banks still faced a
substantial capital shortfall.

The July
stress tests had showed them in need of just 2.5 billion euros in additional
capital; results of the new exam, revealed this month, raised this to about 115
billion euros.

What would
it take to get Europe's big investors buying the peripheral euro-zone
countries' debt again? Investors haven't been convinced by European leaders'
efforts at last week's summit to play down the likelihood that bondholders
would face losses on future country bailouts.

The
Transport Industry Pension Fund of the Netherlands sold Greek bonds last year,
followed by Spanish bonds and then short-maturity bonds of Italy, according to
its chief investment officer, Patrick Groenendijk. It still owns some
longer-term Italian bonds.

Asked when
it might invest new money in the Italian market, Mr. Groenendijk was blunt.
"If you want an honest answer, when they have their own currency," he
said.

The 'God Particle' and the Origins of the Universe

Physicists
around the world have something to celebrate this Christmas. Two groups of
them, using the particle accelerator in Switzerland, have announced that they
are tantalizingly close to bagging the biggest prize in physics (and a possible
Nobel): the elusive Higgs particle, which the media have dubbed the "God
particle." Perhaps next year, physicists will pop open the champagne
bottles and proclaim they have found this particle.

Finding
this missing Higgs particle, or boson, is big business. The European machine
searching for it, the Large Hadron Collider, has cost many billions so far and
is so huge it straddles the French-Swiss border, near Geneva. At 17 miles in
circumference, the colossal structure is the largest machine of science ever
built and consists of a gigantic ring in which two beams of protons are sent in
opposite directions using powerful magnetic fields.

The
collider's purpose is to recreate, on a tiny scale, the instant of genesis. It
accelerates protons to 99.999999% the speed of light. When the two beams
collide, they release a titanic energy of 14 trillion electron volts and a
shower of subatomic particles shooting out in all directions. Huge detectors,
the size of large apartment buildings, are needed to record the image of this
particle spray.

Then
supercomputers analyze these subatomic tracks by, in effect, running the video
tape backwards. By reassembling the motion of this spray of particles as it
emerges from a single point, computers can determine if various exotic
subatomic particles were momentarily produced at the instant of the collision.

The theory
behind all these particles is called the Standard Model. Billions of dollars,
and a shelf full of Nobel Prizes along the way, have culminated in the Standard
Model, which accurately describes the behavior of hundreds of subatomic
particles. All the pieces of this jigsaw puzzle have been painstakingly created
in the laboratory except the last, missing piece: the Higgs particle.

It is a
crucial piece because it is responsible for explaining the various masses of
the subatomic particles. It was introduced in 1964 by physicist Peter Higgs to
explain the wide variation. Until then, a theory of subatomic particles had to
assume that the masses of these particles are zero in order to obtain sensible
mathematical results. This was a puzzling, disturbing result, since particles
like the electron and proton have definite masses. Mr. Higgs showed that by
introducing this new particle, one could preserve all the correct mathematical
properties and still have non-zero masses for the particles.

While
physicists cannot yet brag that they have found the Higgs particle, they have
now narrowed down the range of possible masses, between 114 and 131 billion
electron volts (over a hundred times more massive than the proton). With 95%
confidence, physicists can rule out various masses for the Higgs particle
outside this range.

Will
finding the Higgs boson be the end of physics? Not by a long shot. The Standard
Model only gives us a crude approximation of the rich diversity found in the
universe. One embarrassing omission is that the Standard Model makes no mention
of gravity, even though gravity holds the Earth and the sun together. In fact,
the Standard Model only describes 4% of the matter and energy of the universe
(the rest being mysterious dark matter and dark energy).

From a
strictly aesthetic point of view, the Standard Model is also rather ugly. The
various subatomic particles look like they have been slapped together
haphazardly. It is a theory that only a mother could love, and even its
creators have admitted that it is only a piece of the true, final theory.

So finding
the Higgs particle is not enough. What is needed is a genuine theory of
everything, which can simply and beautifully unify all the forces of the
universe into a single coherent whole -- a goal sought by Einstein for the last
30 years of his life.

The next
step beyond the Higgs might be to produce dark matter with the Large Hadron
Collider. That may prove even more elusive than the Higgs. Yet dark matter is
many times more plentiful than ordinary matter and in fact prevents our Milky
Way galaxy from flying apart.

So far,
one of the leading candidates to explain dark matter is string theory, which
claims that all the subatomic particles of the Standard Model are just
vibrations of a tiny string, or rubber band. Remarkably, the huge collection of
subatomic particles in the Standard Model emerge as just the first octave of
the string. Dark matter would correspond roughly to the next octave of the
string.

So finding
the Higgs particle would be the beginning, not the end of physics. The
adventure continues.

Financial Sector Proves Too Big To Shrink-$15 Tillion Economy Carrying $50 Trillion Debt

Financial
Sector Proves Too Big to Shrink

Can't live
with it; can't live without it. That is the trouble with the financial system.

The
relationship between markets and the "real" economy has gotten out of
whack. The amount of debt outstanding in the U.S. -- from home mortgages to corporate
bonds to municipal securities to U.S. Treasurys -- stood at roughly $50
trillion, or more than triple the size of gross domestic product, as of June.
On Thursday, the Federal Reserve's third-quarter "flow of funds"
report will offer updated figures through September.

The total
amount of debt actually peaked in the first quarter of 2009 at about $51
trillion. That it has only fallen a bit since is owed to the leap in government
borrowing to fund various stimulus programs. This occurred precisely to cushion
the economy from the effects of debt-shedding in the private sector, and to
wrench the U.S. out of recession. In turn, government debt now accounts for 24%
of the total, up from 15% in 2008.

This goes
to illustrate the nation's current conundrum: how to reduce the total debt
burden without triggering another recession. If the current 335% ratio of
household, business and government debt-to-GDP sounds bad now, just imagine if
GDP were to contract. A 3% drop in nominal GDP from current levels would push
that ratio up by more than seven percentage points to 342%. This is the trouble
with austerity measures, and is why Greece's debt-to-GDP has soared, not
declined, over the past 18 months.

The surest
way out of this trap is through economic growth, which is why the Federal
Reserve has been pursuing such aggressive easing measures. But again, its
methods conflict with its goals. Namely, the Fed relies on credit creation via
the financial sector to get the money it creates flowing into the real economy
-- and yet this credit creation was part of the problem in the first place.
Indeed, Princeton University economist Hyun Song Shin argues a global
"banking glut" precipitated the financial crisis, not a global
"savings glut," as Fed Chairman Ben Bernanke has said.

The
trouble is, urgency to shrink the financial system conflicts with the urgency
to boost growth. Call it the paradox of heft: The financial sector has become
so large it is damaging, and yet shrinking it is painful.

Credit: By
Kelly Evans