The approach appears to be the latest tactic to compete with Nintendo’s Wii, the top-selling video game console. As the E3 video game conference kicked off this week, Microsoft (MSFT) announced several exclusive partnerships with big media companies to deliver more movies and TV shows to watch through the Xbox. Gamers can now download any movie available on Netflix (NFLX) on the Xbox to watch on their TVs. The service is free for Netflix subscribers.

Microsoft has also teamed up with NBC (GE) and Universal Studios to stream hits like “Monk,” “30 Rock,” and “The Bourne Supremacy” in high-definition through the Xbox. “This is how we’re fueling our growth with more entertainment choices,” said Xbox executive John Schappert at a press conference in Los Angeles.

Schappert promises that the Xbox operating system will be easier to use. He unveiled a new Xbox Live dashboard that arranges the different categories in a more simplistic manner. The Xbox also introduced animated characters known as avatars - a feature found on the Wii - that players create to interact with Xbox Live’s online community. Don Mattrick, who leads Microsoft’s entertainment and gaming division, said the new graphical look of the Xbox will “drive console demand.”

But will it drive the mass market to buy the Wii over the Xbox? Gaming analysts say that despite the new games and family-friendly offerings from the Xbox, the console still has a ways to go to convince soccer moms it’s a better value. Microsoft cut the price of its older Xbox versions by $50 to $299 but plans to discontinue that model. It will sell a 60 gigabyte version for $349. The Wii retails for $249. “If Microsoft wants to attack the casual market, they need to get down to $249,” said Todd Greenwald, a gaming analyst with Signal Hill Group.

The Xbox has struggled to crack the broad consumer audience the way the Wii has. Mattrick declared that the Microsoft would sell more Xboxes than Sony’s PlayStation3 (SNE), the other console favored by hardcore gamers. Though he never challenged Nintendo publicly, Mattrick said the Xbox will “transcend to deliver to everyone.”

Microsoft tried a similar strategy at the last E3 gaming conference when it introduced a new movie trivia game called Scene It that used a four-button controller that resembled the Wii controller. Said Greenwald, “[The Xbox] is trying to be too many things to too many people. It’s not succeeding. I don’t think the Xbox is getting the right message across to the Targets and Wal-Marts, where the mass market is.”

According to a study released by comScore (SCOR), a company that tracks online business, e-commerce grew by 6% in the third quarter versus the same quarter a year ago. But that was slower than the 13% year-over-year growth in the second quarter and 12% year-over-year increase in the first quarter.

"It really goes to the point that no segment has been immune" to the pull back in consumer spending, said Michael Niemira, chief economist and director of research at International Council of Shopping Centers. "Every segment of retail has been affected," he said.

Total online retail sales in the U.S. were approximately $30 billion in the third quarter, excluding travel spending, according to the study.

Online spending has been the fastest growing area of retail, but as the credit crunch has cramped the consumer, even e-commerce has fallen off significantly.

"Beginning in Jan. of 2008, we saw a fairly precipitous decline that coincided with some of the softness in the market," said Andrew Lipsman, senior analyst at comScore. The drop off in online retail sales "does coincide pretty closely with what has been going on in the market and consumer confidence," he said.

Looked at on a month-by-month basis, online spending grew by 18% in December of 2007 and 20% in November, compared with the same month a year prior. In June of 2007, online spending had surged 25% over the previous year.

Part of what contributed to the historical surge in Internet retail spending, according to Niemira, was the transfer of dollars from mail order catalogue spending to spending on the Web. In the short term, however, the decline in retail spending was due to to consumer pullback in the face of economic hard times.

Lipsman said that the deceleration of retail spending on the Internet happened too immediately to be a natural unwinding, according to Lipsman. "It is clear that this is not just a market reaching its point of maturation," said Lipsman.

"Consumers' economic pressures continue to have a significant impact on retail spending, which is evident in the slowing growth rates in the online channel," said comScore Chairman Gian Fulgoni in a written statement.

Fulgoni said that the online segment remained important, however, because consumers could be expected to comparison shop for bargains online heading into a tight holiday season.

Lipsman echoed the sentiment. "Consumers in this economy are going to shop around and online is the easiest way to do it. They are going to look for the best price," he said.

While consumers have pulled back their spending overall, video game sales surged by 60% in the third quarter of 2008 compared with a year earlier. Spending on furniture and appliances also jumped, up by 52% from the same quarter one year ago.

Consumers decreased their spending on music, movies and video, with sales down 29% from 2007 levels. And consumers spent 11% less on jewelry and watches.

"Discretionary purchases are one of the first things to see declines and a lot of the categories that we are seeing declines in here one might consider discretionary purchases," said Lipsman.

The surge in video games sales seems to contradict this trend, but Lipsman said that during the last holiday season, the surge in video game sales growth far outpaced current levels. In addition, the video game segment is a smaller section in terms of sales dollars, and so changes are more exaggerated.

In a survey of 1,000 consumers, ComScore said 82% are more afraid about the economic future than ever before.

With the mid-term elections in full swing, the war is being hotly debated. October is the third-deadliest month for U.S. troops in Iraq. Defense Secretary Donald Rumsfeld resigns after Democrats make major gains at the polls in November.

On the home front, the economy seems strong

July - Home prices hit an all-time high.

Market talk is that Fed will raise interest rates.

But trouble lurks

New home construction continues at a brisk pace during the summer - chugging along at more than twice the current rate - after hitting its peak at the start of the year.

August - Home prices nationwide post first decline in 10 years.

Having briefly spiked over $3 a gallon following Hurricane Katrina a year earlier, gas prices now average $3 a gallon - and stay there for multiple weeks.

The monthly Market Share survey from Net Applications, which had reported steady increases for the Mac OS in the previous two months and sharp growth for the iPhone — including a 57% surge in August — showed a very different picture in the October report issued overnight Saturday.

In October, iPhone growth slowed to 3.12% (down from 6.67% in September) and the Mac’s share actually fell, down 0.85% from September. (Linux was particularly hard hit, down nearly 22% for the month; see charts below.)

Windows, meanwhile, got a little bump — up 0.25% — thanks to a healthy 5.24% jump in Vista’s share.

How did this happen?

The first thing to be said about these results is that Net Applications’ “market share” report doesn’t actually measure share of market as a percentage of revenue or unit sales. That’s the business Gartner and IDC are in. And in Gartner and IDC’s latest reports, Apple’s (AAPL) share of the U.S. market had grown to 9.5% and 9.1% respectively, largely at the expense of the HP (HPQ) and Dell (DELL) (see here).

What Net Applications does measure — based on browser data from some 160 million visits to websites operated by Net Applications’ clients — is the extent to which users of each operating system are hanging out on the Internet.

In other words, what the Web metrics firm’s latest data show is that in October, Windows users — and Vista users in particular — were coming online at a faster rate than Mac users. This despite the fact that Mac sales grew 21% worldwide last quarter according to Apple, and roughly 30% in the U.S. according to Gartner and IDC.

So what was it about October that drew Vista users to the Web in greater proportion than Mac users? Could it have something to do with Microsoft’s (MSFT) $300 million ad campaign for Windows? Was it PC users obsessively tracking poll numbers in the U.S. presidential race? Could it be related somehow to the meltdown of the global financial markets?

While you ponder that, here are summaries of the latest Net Applications reports, broken down first by OS and then by different versions of those operating systems. To see the full results, click here.

The Dow Jones Industrial average (INDU) gained 144 points or 1.6%. The Dow also gained Thursday, making this the first time in October the blue-chip indicator has gained two sessions in a row.

The Standard & Poor's 500 (SPX) index gained 1.5% and the Nasdaq composite (COMP) added 1.3%.

Stocks have rallied sharply this week, with investors stepping back in to select areas of the market, at the end of a nearly two-month bloodletting that hit its stride in October. (For details, click here).

For the week, the Dow was up 10.1%, the S&P 500 was up 9.5% and the Nasdaq had gained 9.8%.

The gains this week reflect all the selling in the previous weeks - and that investors have already priced in a pretty severe economic downturn, said Rob Lutts, chief investment officer at Cabot Money Management.

On a short-term basis, these factors are giving stocks a lift. He said that next Tuesday's presidential election has also played a role in the rally this week.

"No matter what happens, we are going to have a new administration and that's going to give us a bounce," Lutts said.

Beyond that, the focus returns to the recession, he said, and stocks probably have another leg down amid questions about the depth and length of the slowdown.

"This is a dangerous market and obviously people have lost a lot of money this year," Lutts said. "But I'm not sure the market has fully discounted the slowdown yet."

Despite the gains this week, investors pulled more money out of equity mutual funds than they did in the previous week, according to fund tracker Trim Tabs. Withdrawals from stock mutual funds in the week ended Oct. 29 rose to 9.2 billion from 6.5 billion the previous week.

Investors have gone from fear to panic to the current cautious mode, said Joe Arnold, wealth manager at Dawson Wealth Management.

"I think people are feeling a little numb right now," he said. "They're ready for the economy to turn around, and they know it will eventually, but we still have a ways to go before that happens."

A variety of economic reports were released Friday, including readings on personal income and spending, regional manufacturing and consumer sentiment.

Results: Chevron (CVX, Fortune 500) reported sharply higher sales and earnings in the third quarter that topped estimates, thanks to the surge in oil prices through the first part of the quarter. On Thursday, Exxon Mobil reported the biggest quarterly profit ever and other oil services firms have also reported big profits.

But the energy sector was an exception.

With roughly 65% of the S&P 500 results out, profits are currently on track to have fallen 11.7% versus a year ago, according to the latest data from tracking firm Thomson Reuters.

Insurers continued to tumble, with Cigna (CI, Fortune 500) losing another 10% in active New York Stock Exchange trading after reporting a big drop in third-quarter profit and said that 2008 profit won't meet earlier forecasts.

Video game publisher Electronic Arts (ERTS) posted a wider quarterly net loss Thursday night and said it is cutting 6% of its workforce to trim costs. Shares fell 17.9% Friday.

Among other movers, General Motors (GM, Fortune 500) continued to retreat on general worries about the automaker sector and on speculation that a potential deal with Chrysler won't come through due to lack of financing. GM lost 4.6% Friday. It's down nearly 40% in October and almost 80% this year.

Financial stocks led the advance, with American Express (AXP, Fortune 500), Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500) and Morgan Stanley (MS, Fortune 500) all gaining.

Market breadth was positive. On the New York Stock Exchange, winners beat losers eleven to four on volume of 1.57 billion shares. On the Nasdaq, advancers topped decliners three to one on volume of 2.50 billion shares.

Economic news: Personal income rose 0.2% in September, edging forecasts for a rise of 0.1% following the previous month's rise of 0.5%. But that didn't correspond to increased spending, which fell 0.3% in the month versus a flat reading in the previous month and forecasts for a dip of 0.2%.

The Chicago PMI, a regional read on manufacturing, plunged deeper into recessionary territory, in tune with other regional manufacturing readings. PMI fell to 37.8 in October from 56.7 in the previous month. Economists thought it would fall to 48.

Consumer sentiment fell to 57.6 in October from 70.3 in September, according to a University of Michigan report Friday. It was the biggest month-to-month drop ever.

The employment cost index, a measure of total compensation costs, rose 0.7% in the third quarter, in line with forecasts and following a rise of 0.7% in the previous quarter.

Other markets: The dollar gained against the euro and fell against the yen.

COMEX gold for December delivery fell $20.30 to settle at $718.20.

U.S. light crude oil for December delivery rose $1.85 to $67.81 a barrel on the New York Mercantile Exchange.

Gasoline prices fell another 4.3 cents overnight, to a national average of $2.504 a gallon, according to a survey of credit-card activity by motorist group AAA. It was the 44th consecutive day that prices have decreased. During that time, prices have fallen by $1.35 a gallon, or 35%.

Lending rates: The credit market continued to improve, with Libor, the overnight bank-to-bank lending rate, falling to 0.41% from 0.73% Thursday, according to Dow Jones. The 3-month Libor fell to 3.03% from 3.19% Thursday. (Full story)

The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, rose to 0.44% from 0.4% late Thursday, with investors preferring to take a small return on their money than risk the stock market.

Last month, the 3-month yield reached a 68-year low around 0% as investor panic hit its highest level.

Treasury prices inched higher, giving up bigger gains. The advance lowered the yield on the benchmark 10-year note to 3.96% from 3.97% Thursday. Treasury prices and yields move in opposite directions.

A brutal month: Stocks have bounced back this week, finding some momentum at the end of a wretched October.

Yet, despite the recovery, October still goes down in the history books as one of Wall Street's worst months of all time.

In the month, the Dow lost nearly 1,526 points, the Dow's worst month ever, according to Stock Trader's Almanac info going back to 1901. On a percentage basis, the decline of 14.1% doesn't rank in the top ten.

The S&P 500 lost nearly 198 points, or 16.9% in the month, and is currently on track to post its worst month ever on a point basis and eighth worst ever on a percentage basis, going back to 1930.

The Nasdaq dropped 361 points, or 17.4% in October, tracking its seventh-worst month ever on a point basis and its fifth-worst month on a percentage basis, going back to its inception in 1971.

The Nikkei, Japan's largest business newspaper, and Kyodo News agency both reported a deal may be struck by the end of this year.

Sanyo said in a statement it was considering various options concerning its preferred shares but had yet to make a formal decision.

The deal, if realized, would be a major realignment for the Japanese electronics industry. It also would see major banks sell share holdings for cash, despite recent falls in stock prices.

Struggling Sanyo was rescued in 2006 with a 300 billion yen investment by Goldman Sachs, Sumitomo Mitsui Banking Corp. and Daiwa Securities SMBC, which received preferred shares making them the company's biggest shareholders.

The cash from a share sale to Panasonic (PC) would be helpful to the banks, which are feeling the effects of the global financial slowdown.

In September, Warren Buffet's Berkshire Hathaway (BRKB) said it was investing at least $5 billion in Goldman Sachs (GS, Fortune 500) in a deal aimed at shoring up the bank's balance sheets and calming creditors. Last week Sumitomo Mitsui Financial Group cut its profit forecast for the current fiscal year by 63 percent.

For Panasonic, the recent plunge in share prices may present an opportunity. Sanyo's stock has fallen by almost a third over the last two months.

A deal would let Panasonic merge Sanyo's large battery operations with its own, as well as gain possession of Sanyo's solar panel business and enter the quickly growing industry.

Calls to Panasonic's headquarters in Osaka were not answered Saturday.

Panasonic changed its corporate name from Matsushita Electric Industrial Co. in October.

Sanyo's founder was a brother-in-law of Matsushita's founder and a former Matsushita employee. 

The government is moving forward on a plan to reduce foreclosures by guaranteeing some troubled mortgages after lenders agree to reduce loan balances. But while that $50 billion program will help some troubled homeowners, by consensus it will take a broader solution if the feds are to have any success in slowing the house-price declines that are wreaking havoc on financial institutions.

The answer, some market observers propose, is to bolster housing demand by bringing down mortgage rates. And one way to do that, believe it or not, involves another federal takeover of Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) - this time, for good. The mortgage giants were partially nationalized last month in an earlier, unsuccessful government-led effort to ease the problems in the housing market.

"If you're trying to stimulate demand, the best way is to bring down mortgage rates," says Len Blum, a managing director at New York investment bank Westwood Capital. "Doing that attacks two of the big problems in housing right now."

Blum sees three primary factors driving house prices lower. Sale prices, despite the plunge of the past year, remain above rental rates in most markets. Meanwhile the inventory of houses for sale remains near record levels, while mortgages are largely unavailable except for the most creditworthy borrowers. All of these factors tend to reduce either the pool of interested home buyers or the prices they'll pay.

Blum says one possible solution is for the feds to fully nationalize the companies, eliminating the public-private hybrid structure that survived September's partial takeover and bringing their debt onto the Treasury's balance sheet. Once Fannie and Freddie are explicitly part of the government, they should be able to borrow at Treasury rates, which are substantially lower than the rates the so-called government-sponsored enterprises have been forced to pay since their finances came into question earlier this year.

That should help bring down the effective cost of buying a house. A full nationalization of Fannie and Freddie could conceivably allow the companies to shave rates on 30-year conforming mortgages by as much as 2 percentage points, to around 4.5%.

Shaving 2 percentage points off the rate on a $200,000 mortgage could save the buyer around $250 a month, he says. The difference could be particularly telling for buyers who borrow through the Federal Housing Administration, which requires smaller downpayments than private lenders in midst of the credit crunch.

"A program like this allows more homeowners into the market," says Blum. Investment strategist Ed Yardeni, who advocates a similar plan, says adopting it should "revive the economy very quickly."

There are risks, of course, as the Treasury learned in its earlier dealings with Fannie and Freddie. In July, Treasury Secretary Henry Paulson asked Congress for the authority to invest in the companies. Invoking his now infamous bazooka analogy, Paulson said he believed he'd never have to use the money, because the sight of a huge federal credit line would scare the companies' detractors out of the market and bring down the rates they were paying to borrow.

As it turned out, Paulson did have to fire the bazooka, putting the companies into government conservatorship - but even that didn't bring down Fannie and Freddie's rates for long. One reason lies in the mayhem that followed Treasury's takeover of the companies, including the collapse of Lehman Brothers and the near bankruptcy of AIG (AIG, Fortune 500). All these factors conspired to drive investors away from assets riskier than Treasury securities, including so-called agency securities - the bonds Fannie and Freddie sell to finance their operations.

This time around, the biggest worry stems from the fact that a full takeover would add to the federal balance sheet, at a time when taxpayers are already running a tab on the bailout of the financial industry and various fiscal stimulus plans.

For years, economists have warned that Americans' habit of spending beyond their income and borrowing the difference from overseas is unsustainable. At any time, the thinking goes, the foreign central banks that buy huge amounts of U.S. government debt might shy away, forcing interest rates here higher.

"That's really the $64 trillion question," says David Merkel, chief economist at Finacorp Securities. "How well are we able to borrow in that environment?"

But so far, so good. Despite the rising tab of cleaning up the meltdown, the U.S. for now remains in what appears relatively safe territory, with federal borrowing recently tabbed at about 83% of gross domestic product. Merkel says buyers of government bonds typically "tend to start choking" on new issues when borrowing reaches around 150%.

What's more, there has been no lack of demand for Treasuries during the financial crisis - a trend some observers expect to continue in what's shaping up as an era of rather limited investment options.

"The U.S. was supposedly the basket case nation with the massive deficits whose currency was destined to lose its reserve status and whose credit rating was going to get cut at some point," writes Merrill Lynch economist David Rosenberg. "It appears that the full faith of Uncle Sam must still mean something, even as contingent liabilities head to the stratosphere."  

The average price of regular unleaded gasoline dropped 4.1 cents to $2.463 a gallon from $2.504 a day before, according to the survey released by motorist group AAA.

Gas last sold in the $2.50 range in mid-March 2007. The average price dropped below $3 a gallon on Sat., Oct. 18, for the first time in nearly nine months.

Gas prices have fallen for 45 straight days, shedding $1.39 since hurricanes battered the Gulf coast in September.

Unleaded is no down over 40% from a record high of $4.114 a gallon in mid-July, down in part due to the 50% drop in crude oil from its peak near $150 a barrel in mid July to its current trading price of around $63 a barrel. "[The price of] crude oil makes up about 70% of a gallon of gas," said Jason Toews, co-founder of GasBuddy, a network of web sites that list local gas prices state-by-state.

He also attributed the price cuts to the end of the summer driving season, when demand for gasoline drops off. "We will see gas prices continue to fall," said Toews. "By December it will be about $2.20," he added.

Americans are driving 5.6% fewer miles than last year, according data from the U.S. Department of Energy. A weekly trade survey from MasterCard showed motorists consumed 6.4% less gas in the past week compared to a year ago.

But, Torres said, gas prices will likely start rising again in late January 2009 as driving starts to pick up again and crude oil prices bottom out. "There's only so far that crude oil prices can go. A lot of major oil fields are not profitable below $60 a barrel for oil," he said, referencing the Alberta oil sands, a rich deposit of oil in Canada that is expensive for oil companies to tap.

State prices: Gas remained above $3 a gallon in Alaska ($3.465) and Hawaii ($3.413), according to AAA, but of the lower 48 states, California had the most expensive gas at an average of $2.872 a gallon, followed by New York at $2.835 and Nevada at $2.756.

Other fuels: The price of diesel fuel, which is used by most trucks and commercial vehicles, fell three cents to a nationwide average of $3.284 a gallon, according to the survey. The most expensive state for diesel was Alaska, at an average of $4.421 a gallon, while the cheapest was Missouri at an average of $2.974.

Meanwhile the price of E85 ethanol, an 85% ethanol blend that can be used as a gasoline alternative in specially equipped "flex-fuel" vehicles,declined to a nationwide average of $2.284 a gallon from $2.30 a day before, according to the AAA survey.

The AAA figures are state-wide averages, and individual drivers may see lower fuel prices in different areas of each state.

The experience: I knew the numbers, I knew the modifications, I knew it was going to be fast. But I had no idea how thrillingly capable Chevy's highest-performing 'Vette really is until I turned the traction control off and carefully laid the pedal all the way to the metal.

Lordy! I've always felt Corvettes were too big, too floaty, with too much hood in front to feel playful. But the ZR1 feels taut, stable, and extremely well sorted. Given its rear-wheel-drive setup, it also allowed me to ignite the tires at a moment's notice - with a dollop of electronic intervention to keep me pointed ahead.

The verdict: Surprisingly it was the most fun and most powerful, and a strong contender for easiest to drive. You can't possibly understand how fantastic it is until you experience it.

The Reserve Bank of India said it was cutting the benchmark repurchase rate from 8 percent to 7.5 percent, effective Nov. 3, after reducing it by one percentage point in a surprise move on Oct. 20.

The bank also further reduced the cash reserve ratio - the amount of cash Indian banks must keep on hand - from 6.5 percent to 5.5 percent, unleashing an additional $8.1 billion into the financial system.

The Reserve Bank of India says the additional liquidity is needed to fuel growth as "early signs of a global recession are becoming evident" and falling commodity prices have made inflation less of a concern.

Until recently, Indian regulators had been more concerned about controlling double-digit inflation and moderating the rapid inflow of foreign funds that helped power a four-year economic boom and stock market rally.

The financial crisis changed all that.

Foreign investors have pulled $12.9 billion from India's equity markets this year, sending the benchmark Sensex index down over 50 percent, and punishing the rupee, which has fallen more than 25 percent against the dollar.

Affordable financing for Indian companies eager to expand is harder to come by, corporate profits have been hit by slowing demand and foreign currency losses, and overnight lending rates have risen.

For weeks, regulators have been doing all they can to attract more capital and keep it flowing through the financial system.

The Reserve Bank of India said that during the month of October it pumped 1.85 trillion rupees ($37.4 billion) into India's financial system. Among other things, it cut the repurchase rate, trimmed the cash reserve ratio from its high of 9 percent, eased restrictions on foreign investment, and extended a credit line to domestic mutual funds struggling with redemptions.

Business leaders, however, complain that India's commercial banks, stung by the global credit squeeze and growing portfolios of nonperforming loans, are still being parsimonious with credit and haven't immediately passed on lower rates to consumers.

"Consumer finance has been a large deterrent to sales," Ravi Kant, the managing director of Tata Motors, said Friday, when the company announced a 34 percent drop in quarterly profits.

"Banks are still very reluctant to lend money," he added. "They have got money from the government but they are reluctant to pass it on."

The Confederation of Indian Industry, a business group, on Saturday praised the Reserve Bank's moves. "These are timely, coming on the back of a sharp increase in the overnight lending rates and serious concerns about the availability of credit at reasonable rates. We hope that banks will now follow the signal from the RBI and lower lending rates," the group said in a statement.

Charudatta Deshpande, a spokesman for ICICI Bank (IBN), the nation's largest private lender, said Saturday that the bank had no immediate plans to lower rates for consumers.

In August, ICICI raised its benchmark rates for retail loans, and on Oct. 10, it hiked rates on home loans for new customers by another percentage point. Annual rates for car loans have risen by 3 percentage points in the last year, and now stand at 15.5 to 17 percent.

"Rates are a function of a lot of things, not just the repo rate or the CRR," Deshpande said, referring to the repurchase rate and the cash reserve ratio. "It depends on our cost of funds." 

VeraSun (VSE) said it was working with lenders and expected to reach an agreement on additional financing to fund normal operations before a court hearing scheduled for Monday. The company said it plans to resume operations during the Chapter 11 proceedings, and it doesn't expect to reduce raw material purchases.

"Today's filing allows VeraSun to address its short-term liquidity constraints as we navigate historically challenging market conditions while we focus on restructuring to address the company's long-term future," Don Endres, VeraSun's chief executive, said in a statement.

VeraSun said it had significant losses in the third quarter due to a "dramatic spike" in the cost of corn it turns into fuel. The company also said the capital markets and a tightening of trade credit placed "severe constraints" on its liquidity.

VeraSun, founded in 2001, went public in June 2006 amid perfect market conditions. Corn was cheap, gas cost a bundle and refiners were clamoring for more ethanol to use as a cleaner-burning alternative to the additive MTBE.

But skyrocketing corn costs began cutting into ethanol producers' profits, and many tried to use hedging to control costs. Hedging sets future prices for corn sellers, while helping buyers avoid the risk of volatile price swings by letting them lock in at a set cost.

After VeraSun locked into prices for its feedstock for the third quarter, corn went into a sharp decline from almost $8 per bushel to a low of less than $5 per bushel in mid-August.

After a mid-September announcement of an expected third-quarter loss of $63 million to $103 million, the Sioux Falls-based company tried to raise $20 million in a public offering. VeraSun canceled the offering after several companies expressed a "strategic interest," it said.

The nation's 177 ethanol plants have the capacity to produce about 10.9 billion gallons annually, according to the Renewable Fuels Association. VeraSun's 16 biorefineries can produce 1.4 billion of the renewable fuel each year, second only to privately held Poet LLC.

At the dawn of the 21st century the U.S. had $5.7 trillion in total debt. As we approach the end of George W. Bush's presidency only eight years later, that sum has nearly doubled, thanks to war costs, tax cuts, spending increases, expanded entitlement programs, and now a welter of government bailouts and rescues.

This year was particularly bad. The federal budget deficit for fiscal 2008 hit $455 billion, up from $162 billion last year. That figure does not include the cost of the Emergency Economic Stabilization Act of 2008, which has an initial pricetag in the hundreds of billions of dollars. In fairness, some of that money presumably will come back to the Treasury, since the new rescue-related sums will be used to acquire preferred stock, mortgages, and other assets that someday could be sold at a profit.

Yet any such calculations are penny ante compared with the fiscal disaster that is bearing down on America. It's no longer an event in the misty future. It officially began earlier this year when teacher Kathleen Casey-Kirschling of Maryland became the first baby-boom retiree to collect Social Security benefits. She will be followed by about 78 million more boomers over the next 17 years.

The entitlements due from Social Security and Medicare present us with that frightening abyss. The costs of these current programs, along with other health-care costs, could bankrupt our country. The abyss offers no assets, troubled or otherwise, to help us cross it.

Yes, some have suggested less-than-revolutionary measures that could help. Among them: budget savings that would accrue from repealing the Bush-era tax cuts, ending the Iraq war, or expanding the economy after the current downturn runs its course. But even if the economy were to grow at the level of 3.2% a year, as it did in the 1990s, and these other savings were achieved, they wouldn't come close to addressing our federal financial problem.

Nor can we be complacent about timing. The costs of these programs start to threaten our solvency in the next several years. The only way to get across the chasm is to begin making tough choices now to change our current course. Delay will make the problem worse.

In fact, the deteriorating financial condition of our federal government in the face of skyrocketing health-care costs and the baby-boom retirement could fairly be described as a super-subprime crisis. It would certainly dwarf what we're seeing now.

The U.S. Government Accountability Office (GAO), noting that the federal balance sheet does not reflect the government's huge unfunded promises in our nation's social-insurance programs, estimated last year that the unfunded obligations for Medicare and Social Security alone totaled almost $41 trillion. That sum, equivalent to $352,000 per U.S. household, is the present-value shortfall between the growing cost of entitlements and the dedicated revenues intended to pay for them over the next 75 years.

Why call it a super-subprime crisis? Besides its gigantic scale, there are very disturbing similarities between the current mortgage-related crisis and our next potential disaster.

First, like the securitized investment vehicles that blew up, federal programs were launched without adequately thinking through who would bear the ultimate cost and related risk. Just as originators of mortgages let themselves off the hook by unloading packages of dubious loans onto others, lawmakers have increased spending, expanded entitlement programs, and cut taxes while expecting future generations to pay the bill.

Second, just as a lack of transparency associated with mortgage-backed securities resulted in big surprises and large losses for investors, our nation's huge off-balance-sheet obligations for Social Security and Medicare present a threat wrapped in camouflage. After all, the government's "trust funds" don't really provide much security since they don't hold anything but more government debt.

Third, in the same way that private sector "risk management" executives failed to prevent the subprime mortgage crisis, overseers in Congress and the executive branch have turned a blind eye to costs associated with entitlement programs and tax cuts. While lax regulation of banks fed the current subprime crisis, a lack of statutory budget controls has led to a widening gap between the government's revenues and costs.

At the heart of these problems is our leaders' collective failure to act in the face of known challenges. Our country has veered from its founding principles, which held to individual responsibility and accountability today in order to create more opportunity tomorrow. When our constitution was written, the concepts of thrift and prudence were no less at the center of the American spirit than liberty and justice.

As of September, 760,000 jobs have already been lost this year, according to data from the Bureau of Labor Statistics.

And a quarter of U.S. employers expect to make layoffs in the next 12 months, according to a recent report by consulting firm Watson Wyatt.

But which industries will suffer the most? Experts say certain sectors are more vulnerable to layoffs than others.

Housing: Jobs in the housing sector were the first to go when the mortgage meltdown took hold. But with the industry outlook at an all-time low, even more layoffs could follow.

Beyond mortgage lenders and homebuilders, jobs in commercial real-estate and at real-estate agencies will be the next to go, according to Dean Baker, director of the Center for Economic and Policy Research in Washington, D.C.

With the worst September for new home sales since 1981, "some of the big [real-estate] chains will do some consolidation," Baker said, "clearly you need fewer offices," Baker said.

Finance: Few in the financial sector are feeling secure about their positions. The latest employment figures from the Department of Labor show financial firms have eliminated an estimated 110,000 jobs over the past year through September, and experts say there will be even more losses in the months ahead.

As financial firms reorganize and consolidate, there are going to be a lot more layoffs, Baker said.

"Financial services firms have cut tremendously and I don't think that's over," echoed Lee Pinkowitz, associate professor at Georgetown University McDonough School of Business.

Retail: Before the credit crunch, retailers were already struggling with soft sales as high gas prices and falling home equity forced consumers to curtail non-essential purchases. Now retail sales are dismal heading into the holiday season. "This could be the weakest holiday hiring season since 2001," said John Challenger, chief executive of global outplacement firm Challenger, Gray & Christmas, and that's not good for those employed in the retail industry.

"I doubt we'll see the pick up in seasonal hiring that we'd normally see," Pinkowitz said.

But while department stores and high-end boutiques may be particularly hard hit, discount retailers, like Wal-Mart (WMT, Fortune 500) could fare well in the current climate, Challenger said. Wal-Mart is also the nation's largest private-sector employer, and could be a safe haven for those who work there.

Publishing: As consumers cut back, advertisers follow, and that means tough times for print publications, including newspapers and magazines, experts say.

According to Bureau of Labor Statistics data, employment in the publishing industry has been contracting since the beginning of last year.

But the "grand decline" of jobs in the media industry, which also includes broadcast and digital media, began with the dot-com bust in 2001, noted Heidi Shierholz an economist at the Economic Policy Institute, a research group based in Washington. Now a loss of jobs in traditional publishing is being exacerbated, in part, by the move away from print toward digital media.

"Every time you have a recession it pushes companies that have been holding on by their fingernails out of business," Challenger said. "It clears away an old generation of companies and I think we'll see that with print."

Autos: While sales at the Big Three automakers have fallen 20% this year and are likely to tumble further, trouble in the auto sector is not confined to manufacturing. All told, about 2 million Americans work in the industry.

While declining sales will likely lead to more job losses, those in "the tentacles of the auto industry" could be particularly hard hit in the coming months, Pinkowitz said, which includes those jobs at dealerships and suppliers.

Travel: Airlines have already announced layoffs across the board, but as consumers and businesses continue to scale back discretionary spending on travel, the implications go far beyond flying.

"All the industries under the umbrella of travel are going to be at risk" Challenger said, including rental cars, hotels and even restaurants.

If people are cutting back, travel and leisure activities are the easiest things to do without, explained Baker. Big restaurant chains will close locations, he said, which means eliminating many wait staff and service jobs, while some smaller restaurants will be forced out of business entirely.

But despite the mostly doom-and-gloom predictions, some say there are some bright spots ahead for American workers.

"Even if you're in an industry where there has been some job downturns, there still can be some opportunities," said Kimberly Bishop, vice chairman of Chicago-based executive search firm Slayton Search Partners.

Bishop suggests focusing on those skills and experiences that can translate beyond the industry in which you work. There are certain roles that every organization needs, she said, and you may be able to fulfill that role in another industry that has more promise.

Vigilance by fire officials and volunteers appears to have kept the number of arsons low in Detroit, Michigan on the night before Halloween, which had become notorious as "Devil's Night" in years past.

Lt. Ross Wallace, left, and Lt. Col.. Leonard Rusher discuss how their volunteers are guarding against arson.

Mayoral spokesman Daniel Cherrin said 65 of the 96 fires reported Thursday through late Friday were suspicious. The total reported was consistent with last year. Two people died Thursday evening in what is believed to be an accidental house fire, Cherrin said.

At its peak in 1984, 810 fires were reported in Detroit from Oct. 29 to 31, fueled by Devil's Night's growing notoriety and the city's large number of abandoned buildings.With large volunteer anti-arson campaigns in recent years, and the day before Halloween renamed Angels' Night, just 147 fires were reported on those three days last year.

About 35,000 volunteers had signed up with the city for this year's Angels' Night.

Phil Spector did not testify at the first trial. He is accused in the death of actress Lana Clarkson.Superior Court Judge Larry Paul Fidler said he spoke with the juror, who wanted to get medical attention and return Monday. The trial is not in session on Fridays.

The judge said he was reluctant to lose an alternate juror this early in the retrial for the 68-year-old music producer and would await the man's return.

Six alternates were previously selected to be available in case a regular juror has to leave.

The first scheduled witness, retired New York City police Detective Vincent Tannazzo, was in court ready to testify and was ordered to return Monday.

Spector lawyer Doron Weinberg said in his opening statement that he would show Tannazzo "is not who he says he is."

Tannazzo testified at the first murder trial that Spector had been ejected from two Manhattan Christmas parties given in the early 1990s by comedian Joan Rivers after yelling obscenities against women and shouting, "They all deserve a bullet in their heads."

Weinberg called the claim "preposterous" and said the words were never spoken.

The testimony was the subject of pretrial disputes, with the defense claiming the incendiary language attributed to Spector was prejudicial.

Tannazzo is expected to be followed on the stand by Dorothy Melvin, one of Spector's old flames.

The retrial opened Wednesday with Weinberg casting the shooting of Lana Clarkson as a probable suicide and with prosecutor Alan Jackson promising to show jurors "the real Phil Spector," a violent woman-hater.

Spector met Clarkson while he was out on the town in 2003 and she was working as a club hostess. He took her to his home, where she was found dead in the grand foyer, a gunshot through her mouth.

There were no witnesses to the shooting. The prosecution has said Spector shot her after she resisted his sexual advances.

The in Spector's first trial a year ago deadlocked 10-2, with the majority favoring conviction on second-degree murder.

Spector, the renowned inventor of the "Wall of Sound" recording technique, produced some of the biggest songs in rock music history, including "Be My Baby" and "You've Lost That Lovin' Feelin'."