ABCDE BUSINESS sunday, august 15, 2010 OUTLOOK
Is white bread toast? Sales of wheat bread leap ahead. B1
KIPLINGER’S PERSONAL FINANCE
The wisdom of betting against the crowd How to exploit gauges of investor sentiment. G3
CAR PAGES
Worth its weight in torque The new turbo-diesel Chevrolet Silverado pulls off the unlikely feat of adding both power and fuel efficiency.
Plus, ads for thousands of vehicles. Starting on the back page.
SHIP INSPECTORS HIRED BY OWNERS
Deepwater Horizon had maintenance problems
by David S. Hilzenrath
To ensure that oil rigs, tankers and other commercial ships are in safe operating condition, governments around the world, including the U.S. government, often rely on inspec- tions by private firms that are hired and paid by the vessels’ owners. But how much confidence should the world have in the maritime watchdogs? The Deepwater Horizon catastro- phe, which claimed 11 lives and fouled the Gulf of Mexico, has re- vealed that the mobile oil rig leased by BP had a host of maintenance problems.
Case in point: In April, the com-
pany that owned the rig gave parts of two cranes its worst rating, indicat- ing that they did not work or should be removed from service. That assessment was for the com-
pany’s internal use. Less than two months earlier, one of the main inspection firms upon which governments depend declared
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MARKETS Fears about recovery spark sell-off
Stocks post sharp losses as investors worry about the strength of the economic rebound. G5 YTD: Dow
NASDAQ S&P 500 -1.2% -4.2% -3.2%
Oil rigs’ safety net questioned
that the same cranes were in satisfac- tory condition. Although there is no reason to think the cranes had anything to do with the explosion that destroyed the rig on April 20, records of the Deep- water Horizon’s maintenance and in- spection history — including the crane assessments — open a window on possible weaknesses in the little- known industry that oversees the world’s commercial fleets. The business traces its roots to the
1700s, when insurers in London cre- ated a system to assess the ships they might insure. Today, owners of vessels flagged in
the United States generally have a choice. To fulfill federal require- ments, they can let the Coast Guard conduct primary inspections, or they can enlist one of several private firms authorized to do the work in place of the Coast Guard.
When it comes to vessels flagged by other nations — such as the Deep- water Horizon, which is registered in the Marshall Islands — the Coast Guard depends largely on the over- sight of foreign governments, which might essentially outsource the job to the same firms. The fact that the inspection firms, known as “classification societies,” are hired and paid by the vessels’ owners appears to present “a built-in conflict,” said Steve Gordon, a Hous-
inspections continued on G4
Their strategy? Just ask.
Firms hope you’ll text them instead of turning to Google
ILLUSTRATION BY TOMASZ WALENTA FOR THE WASHINGTON POST by Sarah Halzack N
eed to know the weather forecast for Boi- se, Idaho? Trying to settle a bar bet about the colors of the Zambian flag? Wonder- ing which Pauly Shore movie came first, “Encino Man” or “Son in Law”? For many people, finding an answer has practically become a reflex: Google it.
But as mobile technology becomes increasingly en- twined with daily life, at least two companies — ChaCha and KGB — are betting there’s a growing appetite for a different way to get answers on the go. Both firms are banking on the premise that cellphone users want a single, direct answer to a question. Many people still don’t have phone plans that allow for Web use, and those who do, the companies’ executives con- tend, cannot be bothered with sifting through search re- sults on a tiny screen. “The search experience is fundamentally different on
mobile,” said Bruce Stewart, chief executive of KGB. Enter the idea of human-powered search. Instead of using an algorithm to produce results, as
Google and Yahoo do, ChaCha and KGB rely on people to generate their answers. ChaCha provides a free serv- ice that allows users to send queries by text or voice mes- sage and then receive a text reply, often accompanied by an advertisement, from one of the company’s approxi- mately 50,000 part-time responders. Competitor KGB
has a similar setup, although its users pay 99 cents per answer and are spared the outside advertising with each response. Executives of both companies say they are convinced
that they can find a niche on cellphones, even as Google and Yahoo dominate the search market on computers. And both firms are getting some traction: The Nielsen Co. reports that in the first quarter of 2010, ChaCha’s text service had almost 3million unique users, while KGB’s had about 1.7million users. ChaCha saw a 4.3 per- cent increase in unique users from the fourth quarter of 2009, while KGB saw a 17.7 percent rise, according to Nielsen.
Despite those increases, some critics see difficulties for the companies as they try to gain footing in the shad- ow of giants in the search universe. Danny Sullivan, edi- tor of Search Engine Land, a trade publication about search engines, said human-powered search “has a place” but cautioned that “it’s not going to become Goo- gle. They’re not even on the radar screen of becoming Google.” Sullivan and other skeptics have noted that the qual-
ity of the companies’ answers is inconsistent. “Typically when I’ve looked at them, the answers have been really poor,” Sullivan said. The texting services are most popular with teens and
early-20-somethings. Although it wasn’t ChaCha’s ini- tial plan to target that demographic, ChaCha chief exec-
texting continued on G4
’ve got some good news for deficit hawks: This year, Congress passed legislation reducing the deficit by about $125 billion over the next 10 years. But, as they say on the infomercials, that’s not all! The bill cuts the deficit by $1.3 trillion in the second decade. That more than pays for every dollar we’ve spent on stimulus since 2008. It also sets up a new — and credible — system to keep Medicare’s costs under control. So, hear that, fiscal conservatives? Hear that, bond markets? This is progress, baby. We’ll lick our deficit problem yet. The bill in question, of course, is
I
A symptom of GOP confusion EZRA KLEIN
Economic and Domestic Policy
the Patient Protection and Affordable Care Act, better known as health-care reform. The numbers come from the nonpartisan Congressional Budget Office. But as always, there’s a catch: The savings arrive only if the policies behind the savings are allowed to do their jobs. And in the GOP’s zeal to repeal a bill it considers a deficit-increasing nightmare, Republicans are focusing their fire on the parts they should like: The cost controls. On July 27, Sen. Jon Cornyn
(R-Tex.) introduced the Health Care
Bureaucrats Elimination Act, co-sponsored by Sens. Orrin G.Hatch (R-Utah), Jon Kyl (R-Ariz.), Pat Roberts (R-Kan.) and Tom Coburn (R-Okla.). The legislation doesn’t seek to repeal health-care reform (though many Republicans would also like to do that). Instead, it takes aim at perhaps its most promising cost control: the Independent Payment Advisory Board. It’s a boring name, but the board —
IPAB to its friends — is a radical idea. Over the past decade, Congress has not exactly been a profile in courage when it comes to reforming Medicare. The program might be bankrupting the country over the long run, but congressfolk face
klein continued on G3
Give bank fees the slip (and slide)
flight attendant who allegedly cursed an uncooperative and rude passenger, then opened an emergency exit and jumped down the aircraft’s escape slide. He slid into infamy or history — depending on your take on the story — for deciding he wasn’t going to take it anymore. In the financial world, we’re fed up with a lot of things. For example, it’s time for a Slater Slide for offensively high overdraft fees and bank check-cashing policies that can boost those fees. Let’s say you use your debit card to buy your morning latte for five bucks or less and then learn your account didn’t have enough to cover it. Instead of the bank denying the purchase, it allowed the transaction to go through because you have overdraft protection. Then wham, the bank hits you with a $39 overdraft fee. Or maybe you wrote a slew of
T
here are a lot of bank fees that deserve the “Slater Slide.” Steven Slater is the JetBlue
MICHELLE SINGLETARY The Color of Money
checks thinking you had enough money to cover them all. You didn’t, and you get hit with multiple overdraft fees. You were careless, you admit, but the bank processed the checks in order of amount, from largest to smallest, triggering more overdraft fees than if your checks had been put through the system according to check number. The Federal Deposit Insurance
Corp. says it is sympathetic to your financial pain and frustration, and it
color continued on G2
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