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I'm Steve Ember with the VOA Special English Economics Report.
Businesses are structured in different ways to meet different needs.
The simplest form of business is called an individual proprietorship. The proprietor owns all the
property of the business and is responsible for everything. This means the proprietor receives all the
profits -- but must also pay any debts. The law recognizes no difference between the owner and the
business.
Another kind of business is the partnership. Two or more people go into business together. An
agreement is usually needed to decide how much of the partnership each person controls.
There are limited liability partnerships. These have full partners and limited partners. Limited partners
may not share as much in the profits. But they also do not have as many responsibilities.
Doctors, lawyers and accountants often form partnerships to share the profits and risks of doing
business. A husband and wife can form a business partnership.
Partnerships can end at any time. But partnerships and individual proprietorships exist only as long as
the owners are alive.
The most complex kind of business organization is the corporation. Corporations are designed to have
an unlimited lifetime.
Corporations can sell stock to raise money. Stock represents shares of ownership. Investors who buy
stock can trade their shares or keep them as long as the company is in business. A company might
use some of its earnings to pay shareholders what are called dividends. Or the company might
reinvest the money into the business.
If shares lose value, investors can lose all the money they paid for their stock. But shareholders are
not responsible for the debts of the corporation. A corporation is recognized as an entity -- its own
legal being, separate from its owners.
A board of directors controls corporate policies. The directors appoint top company officers. The
directors might or might not hold shares in the corporation.
Corporations can have a few major shareholders. Or ownership can be spread among the general
public. Incorporating offers businesses a way to gain the investments they need to grow.
But not all corporations are traditional businesses that sell stock. There are non-profit groups that are
also organized as corporations.
This VOA Special English Economics Report was written by Mario Ritter. Read and listen to our reports
at voaspecialenglish.com. I'm Steve Ember.

TRACK 5

Economic Conditions: Trying to Read the Future
I’m Steve Ember with the VOA Special English Economics Report.
Economics and weather have a lot in common. Knowing what conditions will be like weeks or months
in the future is not easy. One thing that helps economists predict the future is the index of leading
economic indicators.
An index is a way to measure changes in a group of numbers over time. In financial markets, for
example, an index of stocks will rise or fall with changes in the wider market. The changes measured
by an index can be represented with a single percentage.
The index may start at a base period of time with a value of one hundred. Now say that a month later
the value is recorded as one hundred one. That means it gained one percent. If the index lost one
percent, however, the value would be ninety-nine.
The leading economic indicators are really ten indexes. Four deal with manufacturing activity. One
deals with unemployment claims. Another measures people’s expectations of the economy. Still
others involve financial information like the money supply and interest rates.
The index of leading indicators is just one of the tools used to measure the business cycle. Business
cycles are the normal changes that happen in economic growth over time.
A measure called the coincident index provides information about current conditions. Employment
rates are an important part of it. There is also a lagging index. It helps confirm economic changes that
currently appear to be taking place. Interest rates are an important lagging indicator.
The Conference Board publishes economic indicators for the United States. The Conference Board is a
non-profit organization based in New York. It brings together business leaders to learn new ideas from
one another. It has member companies around the world.
The Conference Board also does economic research. Its work helps show business and government
leaders what conditions might be ahead.
But this group did not always produce the index of leading economic indicators. It took over the job in
nineteen ninety-five from the Bureau of Economic Analysis, part of the Commerce Department.
The Conference Board also publishes economic indicators for Australia, France, Germany and Japan.
Others are Britain, Mexico, South Korea and Spain.
This VOA Special English Economics Report was written by Mario Ritter. Read and listen to our reports
at voaspecialenglish.com. I'm Steve Ember.

TRACK 6
I'm Bob Doughty with the VOA Special English Economics Report.
Fannie Mae, the mortgage-finance company, agreed this week to pay a fine of four hundred million
dollars. The United States government will get some of that money. Most of it will go to shareholders.

The Office of Federal Housing Enterprise Oversight says top officers at Fannie Mae created a false
image of always meeting earnings targets. This let them receive millions of dollars in extra pay.
The office released a report that deals with the period from nineteen ninety-eight to two thousand
four. It says former chief Franklin Raines set high goals for earnings per share. Company officials
then produced misleading financial reports that gave the appearance of smooth growth.
The report says Mister Raines received fifty-two million dollars in bonus payments.
Mister Raines says he never approved or knew about any violations of accounting rules. And his
replacement, Daniel Mudd, says Fannie Mae has "learned some powerful lessons." Yet the report says
Mister Mudd did not fully investigate concerns expressed by three employees.
Fannie Mae buys home loans from banks and other lenders. This gives them money to lend for other
purposes. Fannie Mae is a private company. It began in nineteen thirty-eight as the Federal National
Mortgage Association, created by Congress.
To buy mortgages, Fannie Mae borrows huge amounts of money. In fact, it is the second largest
borrower in the world after the United States government.
Fannie Mae sells and trades investment products secured by mortgages. The report says Fannie Mae
sought to present itself as a very low-risk company when, in fact, it was out of control. The report
also says Fannie Mae officials tried to slow the investigation through influence in Congress.
The civil fine is one of the largest ever in such a case. The settlement does not require Fannie Mae to
admit or deny wrongdoing. Under the agreement, Fannie Mae will not add to its mortgage holdings
without approval. And it must propose a system of financial controls.
Fannie Mae has already been ordered to restate its earnings to correct for accounting mistakes.
These are currently estimated at about eleven thousand million dollars.
Fannie Mae and a smaller company, Freddie Mac, control about half the home loans in the nation.
Three years ago, Freddie Mac reported five thousand million dollars in accounting mistakes.
This VOA Special English Economics Report was written by Mario Ritter. I'm Bob Doughty.

TRACK 7
I’m Steve Ember with the VOA Special English Economics Report.
The cost to borrow money is the interest rate. For many years, the United States central bank has
used its target interest rate as a tool to fight inflation.
The idea behind this policy is that higher interest rates will mean less borrowing. Less borrowing will
mean less spending. And less spending will mean less demand. The aim is to reduce pressures that
raise prices for goods, materials and labor.

Last week, the Federal Reserve again raised its target interest rate. The federal funds rate is what
banks charge other banks to borrow money overnight. These short-term loans come from balances
held in the Federal Reserve.
The Federal Open Market Committee at the bank increased the target rate by twenty-five basis points.
A basis point is one one-hundredth of a percentage point. The target is now five percent, the highest
since early two thousand one.
The committee is led by Ben Bernanke, the new chairman of the Board of Governors of the Federal
Reserve.
This was the sixteenth increase in a series that began in two thousand four. Markets expected it. But
many investors were hoping for a clear signal that this would be the last one at least for now.
In its statement, the committee said economic growth has been strong so far this year. It said a
slowing housing market and rising interest rates and energy prices have largely contained inflation
pressures. But the committee also said that higher prices for energy and materials could add to those
pressures in the future.
To deal with inflation risks, the committee said "some further policy firming may yet be needed."
Policy firming is the term for raising rates. But the statement added that the extent and timing will
depend on further information about the economy.
On Wednesday, the Labor Department announced that the consumer price index rose six-tenths of
one percent in April. Experts thought this important measure of inflation would increase no more than
five-tenths of one percent.
The increase was the biggest in three months. And it showed that the effect of higher energy prices
might be spreading. Higher energy costs push up prices for transportation and many products.
Economists are divided on what the report will mean for interest rates. The open market committee
meets next for two days starting June twenty-eighth.
This VOA Special English Economics Report was written by Mario Ritter. Read and listen to our reports
at voaspecialenglish.com. I'm Steve Ember.

TRACK 8
I’m Steve Ember with the VOA Special English Economics Report.
Ford Motor Company plans to close fourteen factories and cut as many as thirty thousand jobs in the
United States and Canada. Its North American operations employ more than one hundred twenty
thousand people.
Ford plans to do this over six years. The action will affect workers in Michigan, Ohio, Missouri and
Georgia, and in Ontario, Canada.

The news from Ford last week was not unexpected. General Motors announced similar cost-cutting
measures in November.
G.M. and Ford have both been losing market share in North America. As recently as nineteen ninetyeight, Ford had twenty-five percent of the United States market. Autodata, an industry information
provider, says the number has shrunk to around nineteen percent.
By closing factories, Ford and G.M. expect to reduce costs. They are also reducing their production
capacity in North America. Experts say the carmakers have been making too many vehicles for their
share of the market.
Credit rating companies have also been concerned about the cutting of prices through sales incentive
programs. Low prices sell more cars, but they also lower profits. G.M., for example, sold more than
nine million vehicles last year, its second highest total ever. Yet it reported a loss of more than three
thousand million dollars.
Ford reported a profit of two thousand million dollars last year. But most of the gains were from
financial services. Ford's automotive business lost about one thousand million dollars. Most of that
was from its sales in North America. Ford reported profits in South America, Europe and Asia.
Both Ford and G.M. have reported fast growth in Asia. Ford says its sales in China grew forty-six
percent last year. Sales growth in South America has also been strong.
The market in North America is changing. Strong sales in trucks and sports utility vehicles provided
big profits in recent years. Today, with fuel prices up, many people are buying more economical cars.
America’s Big Three carmakers -- G.M., Ford and DaimlerChrysler -- face competition from another big
three. Those are Toyota, Honda and Nissan of Japan. In fact, Toyota could soon pass General Motors
to become the biggest seller of automobiles in the world.
This VOA Special English Economics Report was written by Mario Ritter. Our reports are online at
voaspecialenglish.com. I'm Steve Ember.

TRACK 9
I’m Steve Ember with the VOA Special English Economics Report.
Gold has long been valued, and not just for its beauty. The metal is also valuable for its resistance to
chemical reactions, and for its electrical qualities. But some people have always valued gold most as
an investment, even without any guarantee of growth in its value.
For years, gold prices fell. Now gold is in the news because prices have risen to their highest levels
since the early nineteen eighties. Gold is trading above five hundred dollars a troy ounce, about
thirty-one grams.

There seems to be no simple explanation for the increase in gold prices. Experts say investments in
precious metals have increased in general. This is true even without the economic warning signs that
have traditionally led many investors to buy gold.
In any case, the common belief in the security of gold has a long history.
From nineteen hundred to nineteen thirty-three, United States money was fully based on gold. In fact,
under the gold standard, anyone who wanted could exchange paper money for gold coins.
But President Franklin Roosevelt and Congress began to cut the link between gold and money.
Congress passed the Legal Tender Act of nineteen thirty-three. All United States money, paper or
metal, became acceptable as payment for all debts, public and private.
In nineteen thirty-four, the Gold Reserve Act made it illegal to use gold as a form of currency within
the United States.
But the gold standard remained important to international trade.
In nineteen forty-four, the United Nations held a meeting at a hotel in Bretton Woods, New Hampshire.
The Bretton Woods conference established a new international monetary system. Other currencies
were linked to the value of the American dollar, and the dollar remained linked to the value of gold.
The official price of gold was controlled. It stayed at about thirty-five dollars an ounce until the late
nineteen sixties.
In nineteen seventy-one, the gold standard ended in the United States. By nineteen seventy-six, the
International Monetary Fund agreed to a new system of exchange rates. But the process did not go
smoothly. Gold prices reached record levels in the early eighties, at a time when inflation also
jumped.
Today, gold remains important to the wealth of nations. But money supplies and gold supplies no
longer have the relationship they had in the past.
This VOA Special English Economics Report was written by Mario Ritter. Internet users can read and
listen to our reports at voaspecialenglish.com. I'm Steve Ember.

TRACK 10
I’m Steve Ember with the VOA Special English Economics Report.
Stocks, bonds, land -- people invest in different things and for different reasons. But all investors
share the same goal. They want to get more money out of their investment than they put into it.
The money they invest today provides capital for future growth in the economy. But people can watch
their own financial future take a wild ride as markets rise and fall. So investors have to decide how
much risk they are willing to take and for how long.
One choice for people who want a low-risk investment is the money market. Usually individuals do
this through money market mutual funds. Mutual funds are investment pools. They gather the
money of many investors.

Money market mutual funds earn interest from short-term loans to government and businesses. But
the return to investors is low because little risk is involved.
Notes and bonds are loans, too. They have terms from two to thirty years. The longer the term of a
loan, the greater the risk that the investment will not be repaid. So notes and bonds usually pay
higher interest rates than short-term bills or commercial paper.
Millions of people invest in bonds and other debt-based products. This is true especially as people get
older and want to reduce the level of risk in their investments.
But over time, debt-based investments have traditionally provided lower returns than stocks. Stock is
a share of ownership in a business.
Common stock gives investors a vote on company issues and leadership. It might also pay a small
percentage of its value, a dividend, one or more times a year. Not all stocks pay dividends. Some are
valued more for their growth. Technology stocks, for example, rarely pay dividends.
Preferred stock is different from common stock. Holders of preferred stock have no vote on company
issues, but they also have less risk. They get paid a stated dividend before the company even
considers paying dividends on common stock.
Investing in stocks of individual companies can be very risky. Bad news can quickly cut their value.
Instead, many people invest in stock mutual funds so their money goes into many different stocks.
Balanced funds mix stocks and bonds to spread risk -- and capital -- even more.
This VOA Special English Economics Report was written by Mario Ritter. You can read a transcript of
this report and download the audio at voaspecialenglish.com. I'm Steve Ember.

TRACK 11
I’m Steve Ember with the VOA Special English Economics Report.
One of the most important questions a worker can ask is: “Will I have enough money for retirement?”
For more than thirty years, Americans have used individual retirement accounts, or IRAs, to increase
retirement savings. Today, there are several plans that let workers invest. The plans also offer tax
savings.
The Employee Retirement Income Security Act of nineteen seventy-four provided for the first IRAs. It
set rules for retirement plans run by big businesses. Other measures provided for individuals who did
not qualify for such plans, called pensions.
The first kind of IRA is now called a traditional IRA. A worker can put up to four thousand dollars of his
or her yearly earnings into a special account. Workers over the age of fifty can invest four thousand
five hundred dollars. Unlike a pension, the saver controls the account and decides how it is invested.

Money put in a traditional IRA is not taxed until it is withdrawn. But, savings cannot be withdrawn
before the account holder is fifty-nine and one-half years old. If the money is withdrawn before that
time, it is taxed like income and there is a ten percent fine. The account holder must start
withdrawals by age seventy and one-half or there also are fines.
At first, IRAs were only for people not covered by pensions at work. But in nineteen eighty-one,
everyone could to open an IRA. Six years later, congress banned highly paid individuals from claiming
tax reductions.
A Roth IRA is a similar plan. Workers can invest up to four thousand dollars of earnings yearly. But
there is no tax savings on the year’s earnings. Instead, withdrawals from a Roth IRA are generally not
taxed.
Roth IRA withdrawals cannot start until the saver is fifty-nine and one half years old. There are also
fines for putting too much money in them. But people over seventy can still invest.
Small businesses can also set up a kind of IRA. Simplified Employee Pensions, or SEP IRAs, have
elements of both traditional IRAs and pensions.
SEP IRAs are simple investment accounts controlled by the saver. And, like pension plans, employers
add money to them too. Limits on these accounts are higher. A worker and an employer can invest
twenty-five percent of the employee’s yearly pay up to forty-two thousand dollars. The money is not
taxed until it is withdrawn.
This VOA Special English Economics Report was written by Mario Ritter. I'm Steve Ember. Our reports
are online at voaspecialenglish.com.

TRACK 12
I’m Mario Ritter with the VOA Special English Economics Report.
The oldest of America's baby boomers are sixty years old this year. One-fourth of Americans alive
today were born in a population explosion between nineteen forty-six and nineteen sixty-four. As they
retire, they will leave a labor market very different from the one they entered.
In the middle of the twentieth century, one worker in three was a member of a labor union. Now it is
one worker in eight.
American unions had their greatest influence in the fifties and sixties. In nineteen fifty-five, the
American Federation of Labor joined with the Congress of Industrial Organizations. The first president
of the A.F.L.-C.I.O, George Meany, was a political force until he stepped down in nineteen seventynine.
Last July, the federation suffered a split that included the loss of the fastest growing union in the
country. The Service Employee International Union has almost two million members. Its president,
Andrew Stern, says unions today must organize workers at big international companies.

He supports a new labor federation, Change to Win. The unions in Change to Win together claim six
million members. The A.F.L.-C.I.O. now has about nine million.
Industrial changes have hurt some unions more than others. Automobile industry unions have
traditionally been among the strongest. But many of those jobs have disappeared as General Motors
and Ford shrink their North American operations.
G.M. faces a strike threat at a major parts supplier. Delphi is seeking to cancel union agreements and
cut pay. The United Auto Workers voted last month to permit a strike. Delphi, formerly part of G.M., is
under bankruptcy court protection from its creditors.
As the economy has changed, major new employers are companies like Wal-Mart. Wal-Mart says
unions are not needed in its stores. It says it does not need a “middle man” in its relationship with its
employees.
And now unions are facing a television campaign that uses humor to present a serious message. A
group has gathered what it calls "a wealth of information" about the political and criminal activities of
the American labor movement.
The Center for Union Facts says it is supported by foundations, businesses, union members and the
general public. It does not name its supporters.
And that's the VOA Special English Economics Report. I'm Mario Ritter.
--Correction: An earlier version of this page said "almost" one-fourth of Americans are baby boomers.
The Census Bureau estimate is 26 percent.

TRACK 13
I'm Steve Ember with the VOA Special English Economics Report.
A new state law in Maryland says large companies must spend at least eight percent of their total
wages on health care. If not, then they will have to pay the difference to the state to help provide
health care to the poor. The amount for non-profit employers is six percent.
The new law is called the Fair Share Health Care Fund Act. It will affect only companies with ten
thousand or more employees in Maryland. At least four companies are that big. But only one is
known not to meet the new requirement: Wal-Mart Stores. The legislation became known as "the WalMart Bill."
Wal-Mart employs about seventeen thousand workers in Maryland, and more than a million
nationwide. It has faced a lot of criticism about its employment policies.
The Maryland law is the first of its kind in the fifty states. Labor activists say they will try to get more
than thirty other states to pass similar legislation.

America's biggest labor group, the AF.L.-C.I.O., says fewer employers offer health coverage than five
years ago. It notes that many workers in low-paying jobs, including some at Wal-Mart, have to be
covered by Medicaid. Medicaid is a state and federal program that provides health care for the poor.
Maryland Governor Robert Ehrlich vetoed the legislation last May. He called it bad policy. He said it
sends an anti-business message and does little to deal with the national problem of limited health
care for the poor. But earlier this month Maryland's Democratic-controlled legislature voted to cancel
the veto by the Republican governor.
Wal-Mart strongly opposed the law. The company told Maryland lawmakers that it spends between 7
and 8 percent on health care. It says less than one-half of one percent of Maryland workers without
health insurance work at Wal-Mart.
It says more than three-fourths of its employees have health insurance. And it says every Wal-Mart
employee in Maryland can gain health coverage for as little as twenty-three dollars a month.
Wal-Mart and business groups like the United States Chamber of Commerce say the law will hurt
companies that create jobs.
Wal-Mart could try to stop the new law in court. It says Maryland lawmakers, in its words, "placed the
special interests of Washington, D.C., union leaders ahead of the well-being of the people they serve."
This VOA Special English Economics Report was written by Mario Ritter. Read and listen to our reports
at voaspecialenglish.com. I'm Steve Ember.

TRACK 14
I’m Faith Lapidus with the VOA Special English Economics Report.
Minimum wage is the lowest hourly pay rate permitted by law. In the United States, the federal
minimum wage is five dollars and fifteen cents an hour. It has not changed since nineteen ninetyseven. And it does not include all jobs.
For example, workers who receive extra money in the form of tips can be paid two dollars and thirteen
cents an hour. Also, the federal rate may not cover some workers for small companies. State laws
often set minimum pay in these cases.
The Department of Labor says about two million workers earn the minimum wage or less. That is
about three percent of all workers paid by the hour.
Ohio and Kansas have lower minimum wages for some workers than under federal law. But sixteen of
the fifty states and the District of Columbia have minimum wages higher than the federal one.
In California, Republican Governor Arnold Schwarzenegger has just proposed what he says is a muchneeded raise. California's minimum wage would rise one dollar, to seven dollars and seventy-five
cents an hour, over the next year and a half.

State lawmakers passed a bill last year to add a dollar to the minimum wage. But Mister
Schwarzenegger vetoed it because it would have also required yearly increases for inflation.
State governments led the way in the history of the minimum wage in America. Massachusetts
passed a law for women and children in nineteen twelve. But in nineteen twenty-three, the Supreme
Court found wage requirements for private employers unconstitutional. It ruled that states could not
interfere with pay agreements.
In nineteen thirty-eight, however, the Fair Labor Standards Act established a federal minimum wage.
At that time, it was twenty-five cents.
Some economists and lawmakers argue that markets, and not the government, should set prices for
labor. They say minimum wage laws reduce the number of jobs for unskilled workers and young
people.
Employers might not be happy with higher labor costs. But labor activists warn that inflation has
reduced the buying power of today’s minimum wage. They say a minimum wage must be a “living
wage.” That is, it must be enough for workers and their families to live on.
This VOA Special English Economics Report was written by Mario Ritter. Read and listen to our reports
online at voaspecialenglish.com. I'm Faith Lapidus.

TRACK 15
I’m Steve Ember with the VOA Special English Economics Report.
A proposed deal announced this week could change the future of the telecommunications industry in
the United States. It would make the biggest telephone company in America, AT&T, even bigger.
AT&T plans to buy BellSouth, a major provider of local telephone service.
AT&T has offered to buy BellSouth for about sixty-seven thousand million dollars in stock. The
combined company would have more than one hundred twenty thousand million dollars in yearly
earnings.
The company formerly known as American Telephone and Telegraph controlled the United States
market for phone service. That changed in nineteen eighty-four. A judge ordered AT&T to divide itself
into competing businesses.
It was broken up to form seven companies to supply local telephone service in different areas of the
country. An eighth part became a long-distance carrier. It kept the name AT&T.
Now AT&T plans to buy back one of its former pieces – BellSouth of Alabama. Directors of both
companies have approved the merger deal. It must still be approved by shareholders of both
companies and by federal officials.
AT&T plans to cut about ten thousand jobs after the deal is closed.

Some experts believe the government might be willing to approve the merger. The reason is that the
telecommunications business has changed a lot in recent years. Now millions of people have wireless
phone service and the Internet. And they have more choices. For example, some people buy
telephone service from their cable television provider.
BellSouth's president says the merger will probably take about a year to complete. He says it will
mean new services and more competition.
Some public interest groups are not so sure, though. They worry about higher prices if AT&T is
permitted to grow again. But some experts say it might lead competitors to join forces to be in a
better position to compete.
And now, to follow up a recent story:
Research in Motion has settled the dispute over the ownership of technologies for its BlackBerry
wireless e-mail devices. The Canadian company announced the deal last Friday. That avoided a
possible court order to shut down the popular service. Research in Motion agreed to pay NTP, a
patent-holding company in Virginia, more than six hundred million dollars.
This VOA Special English Economics Report was written by Brianna Blake. Read and listen to our
reports at voaspecialenglish.com. I’m Steve Ember.

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