Economy shrinks at 6.1 percent pace in 1Q

WASHINGTON – The economy shrank at a worse-than-expected 6.1 percent pace at the start of this year as sharp cutbacks by businesses and the biggest drop in U.S. exports in 40 years overwhelmed a rebound in consumer spending.

The Commerce Department's report, released Wednesday, dashed hopes that the recession's grip on the country loosened in the first quarter. Economists surveyed by Thomson Reuters expected a 5 percent annualized decline.

Instead, the economy ended up performing nearly as bad as it had in the final three months of last year when it logged the worst slide in a quarter-century, contracting at a 6.3 percent pace. Nervous consumers played a prominent role in that dismal showing as they ratcheted back spending in the face of rising unemployment, falling home values and shrinking nest eggs.

In the January-March quarter consumers came back to life, boosting their spending after two straight quarters of reductions. The 2.2 percent growth rate was the strongest in two years.

Still, the consumer rebound was swamped by heavy spending cuts in virtually every other area.

Businesses cut spending on home building, commercial construction, equipment and software, and inventories of goods. Sales of U.S. goods to foreign buyers plunged as they retrenched in the face of economic troubles in their own countries. Even the government trimmed spending. It was the first time that happened since the end of 2005.

The sharp cuts underscore the toll the housing, credit and financial crises — the worst since the 1930s — are having on the country. The recession, which began in December 2007, has taken a big bite out of national economic activity and snatched 5.1 million jobs.

To cushion the impact of the downturn, the Federal Reserve has slashed a key bank lending rate to a record low near zero and rolled out a string of radical programs to spur lending. The Fed at the end of its two-day meeting Wednesday is expected to keep its key rate near zero and probably hold it there well into next year.

President Barack Obama is counting on his $787 billion stimulus of tax cuts and increased government spending on big public works projects to help bolster economic activity later this year. The administration also has put forward programs to rescue banks and curb home foreclosures — big negative forces weighing on the economy.

Before Wednesday's weaker-than-expected report, many analysts were predicting the economy would shrink less in the current April-June period — at a pace of 1 to 2.5 percent — as Obama's stimulus begins to take hold. Analysts also were hoping the economy would start to grow again in the final quarter of this year.

However, the recent outbreak of the swine flu, which started out in Mexico and has spread to the United States and elsewhere, poses a new potential danger. If the flu stifles trade and forces consumers to cut back further, those negative forces would worsen the recession.

Before the flu outbreak, Fed Chairman Ben Bernanke said the recession could end this year if the government succeeds in stabilizing the shaky financial system and getting banks to lend again.

In recent weeks, Bernanke and his colleagues had cited "tentative signs" of the recession easing in some consumer spending, home building and other reports. Finance officials from the U.S. and other top economic powers meeting here last week also saw some hopeful signs for the global economy.

Fresh glimmers of hope emerged in the U.S. Tuesday. The Conference Board's Consumer Confidence Index rose far more than expected in April, jumping more than 12 points to 39.2, the highest level since November. And a housing index showed that home prices dropped sharply in February, but for the first time in 25 months the decline was not a record.

However, in the first quarter there was much weakness in those areas and others.

Spending on home building fell at a 38 percent annualized rate, the most since the second quarter of 1980. Businesses cut spending on equipment and software at a 33.8 percent pace, the most since the first quarter of 1958. Inventory reductions shaved 2.79 percentage points off overall first-quarter economic activity.

U.S. exports plunged at a rate of 30 percent, the biggest drop since the first quarter of 1969, reflecting the crimped appetite of struggling foreign buyers. The government also cut spending 3.9 percent, the most since the end of 1995.

Even if the recession were to end this year, the economy will remain feeble and unemployment will keep climbing, government officials and analysts say.

The jobless rate is now at a quarter-century high of 8.5 percent and is expected to hit 10 percent by the end of this year. It will probably rise a bit higher in early 2010 before starting to slowly drift downward. Still, the Fed predicts unemployment will stay elevated into 2011, and economists don't think it will return to normal — around a 5 percent jobless rate — until 2013.

More layoffs were announced this week. General Motors Corp. laid out a massive restructuring plan that includes cutting 21,000 U.S. factory jobs by next year. Clear Channel Communications Inc., the largest owner of U.S. radio stations, said it's cutting 590 jobs in its second round of mass layoffs this year amid pressure from the recession and evaporating advertising budgets. And bearings and specialty steels maker Timken Co. indicated it will cut about 4,000 more jobs by the end of this year after earlier suggesting about 3,000 jobs already had been targeted.

Elsewhere, construction equipment maker Bobcat Co. told nearly 250 workers at its two North Dakota plants they will be laid off indefinitely, executive search firm Heidrick & Struggles International Inc. announced plans to cut more jobs and reduce bonuses and salaries, and Lockheed Martin Corp. said it's cutting 225 jobs at a plant in upstate New York.

Aetna reports slight 1Q profit increase

INDIANAPOLIS – Managed-care company Aetna Inc. said Wednesday its first-quarter profit rose slightly due to membership gains and premium increases, even though the company saw higher-than-expected medical costs.

The Hartford, Conn.-based company became the fifth large health insurer to surpass Wall Street expectations for the quarter. But unlike bigger competitors UnitedHealth Group Inc. and WellPoint Inc., Aetna saw an increase in the percentage of premiums it spent on medical care in its commercial segment. It also bucked another trend and posted an increase in commercial membership.

"While Aetna continues to execute well, the company's (first-quarter) results are the weakest in the industry thus far," Wachovia analyst Matt Perry said in a research note.

Aetna said its profit rose 1 percent to $437.8 million, or 95 cents per share, compared with $431.6 million, or 85 cents per share, in the same quarter last year.

Revenue, which excludes investment losses, rose 11 percent to $8.6 billion.

Earnings per share increased 12 percent, as the company spent $277 million to repurchase more than 10 million shares in the quarter.

The company said operating earnings, which also exclude investment losses, were 96 cents per share. That topped Wall Street expectations.

Thomson Reuters said analysts, on average, expected earnings of 93 cents per share on $8.5 billion in revenue.

Medical costs rose 14 percent to $5.8 billion. Company officials attributed that to the impact of layoffs and membership increases due to the federal law commonly known as COBRA, which helps people who lose their jobs keep temporary health coverage from their employer.

A new federal subsidy that picks up 65 percent of the cost of COBRA coverage for people who lose their jobs began late in the quarter, but it's unclear whether that had an effect.

Aetna also saw its members use more medical services per person, but spokesman Fred Laberge said it was hard to determine whether that was tied to the recession.

Aetna's commercial medical benefit ratio, which is the percentage of premium revenue spent on medical care, rose to 81.7 percent from 79.8 percent.

Total medical membership rose 9 percent to more than 19 million people, led by gains in commercial business, which generally involves employer-sponsored health insurance. The insurer added large national accounts for Bank of America Corp. and Home Depot Inc. during the quarter.

"This is especially impressive in a weak economy where industry-wide employer-sponsored coverage is declining," Perry wrote.

Both Minnetonka, Minn.-based UnitedHealth and Indianapolis-based WellPoint reported commercial enrollment declines.

The insurer also said a previously announced increase in its pension expense partially offset first-quarter gains. Aetna said earlier this year it will record a pension expense of about 39 cents per share in 2009 due to the equity markets. The company didn't offer a quarterly breakdown of that expense.

Investment losses decreased to $4.8 million from $58.5 million in the first quarter last year.

Aetna also said Wednesday it remains confident in the guidance it issued earlier this year, when it said it expected 2009 operating earnings of $3.85 to $3.95 per share.

Analysts expect $3.85 per share.

GM, Chrysler in moves to avert bankruptcy

WASHINGTON (AFP) – General Motors and Chrysler are making last-ditch efforts to avert bankruptcy and keep government loans flowing by giving up big stakes in the ailing companies in exchange for debt obligations.

Chrysler, which faces a White House deadline this week for its viability plan, clinched a deal Sunday with the United Auto Workers Union that aims to meet the government's requirements for reducing its debt.

The terms of that deal were not immediately disclosed but the government has pressed the UAW to accept half of the 10.6 billion dollars owed by Chrysler for a trust fund for retiree health care in stock rather than cash.

Chrysler also struck a deal with Germany's Daimler AG to renounce its 19.9 percent stake in the US firm and to pay 600 million dollars in pension costs.

GM, which faces a June 1 deadline, is aiming to give the government a majority stake in the former world's biggest automaker and leave current shareholders with less than one percent of its stock under an accelerated overhaul plan announced Monday.

The new plan, which also calls for more job cuts and an end to the Pontiac brand, aims to get out of a crushing debt burden by converting much of that to stock -- a move giving a combined 89 percent of GM shares to the US Treasury and United Auto Workers union.

Bondholders would get 10 percent of the company stock through an exchange of 27 billion dollars in outstanding bonds, leaving the existing common stock holders with just one percent of GM.

GM and Chrysler have received a total of more than 17.4 billion dollars in government loans since December, in an effort to stave off collapse as the world's largest economy suffers its second year of recession.

President Barack Obama's administration has demanded they submit viable restructuring plans before further aid will be considered, and also has raised the prospect of bankruptcy with government support.

Some analysts remained skeptical about the ability of the two firms to avoid bankruptcy court.

"We do not view possible further government support as open-ended for either company, in light of the still weak outlook for light-vehicles sales globally," Standard & Poor's analysts said.

S&P said Chrysler would probably be liquidated under bankruptcy.

"We do not believe Chrysler would be likely to emerge from bankruptcy as one reorganized entity," S&P said. "A bankruptcy filing, should it occur in the next several weeks, would place additional stress on the supply base, in our opinion."

Peter Cohan of the consultancy Peter Cohan & Associates said the two automakers are "scrambling to settle their broken promises to unions and bondholders before a bankruptcy judge does it for them. But their broken promises to customers and shareholders are the biggest threat to their long-term survival."

GM acknowledged that bondholders would take a "haircut" under the plan, but said they might get less or nothing if the company goes into bankruptcy court.

"The bond exchange needs to be successful for us to avoid bankruptcy," said Fritz Henderson, GM president and chief executive.

Henderson argued that bankruptcy remains highly probable given the reluctance of bondholders to accept a reduced value for the debt.

But if the plan succeeds, GM would eliminate some 44 billion dollars of its current debt level.

The plan is contingent on the US Treasury swapping 10 billion dollars in loans for common stock and the UAW accepting shares in exchange for a similar level of obligation to its health care funds.

"Our objective is to create an operating structure and strategy where we can win, not simply survive," Henderson said.

Obama's auto task force said the US administration "has made no final decision regarding the treatment of its current loan to GM or with respect to any future investments in the company."

Under its new plan, GM would shed an extra 7,000 to 8,000 production jobs to bring to 21,000 the number of blue-collar job cuts by the end of next year.

GM said it would phase out Pontiac by the end of 2010 and focus on four core brands in the US -- Chevrolet, Cadillac, Buick and GMC -- as it trims production.

The revised plan seeks to find a buyer or phase out the Saab, Saturn, and Hummer brands by the end of 2009, at the latest.

GM said that under the latest plan, it could break even in the North American market with an industry volume of 10 million total vehicles, well below the 15 to 17 million annual vehicle sales rates from 1995 through 2007.

Fed to maintain support for struggling economy

WASHINGTON (AFP) – The Federal Reserve is likely to stay on an aggressive course this week to support a struggling economy showing only tentative signs of recovery, analysts say.

Yet some argue that the Federal Open Market Committee, its two-day meeting is set to open in the next few hours, will be laying the groundwork to avoid a surge in inflation when the US economy does recovery.

This week's meeting is likely to signal no change in policy since its March gathering, when the Fed added over one trillion dollars to its arsenal to fight the economic crisis.

The FOMC statement due on Wednesday is expected to depict a weak economy that still needs extraordinary support, justifying its policy of near-zero interest rates and vast lending facilities to pump up credit availability.

"The Fed is likely in wait-and-see mode over the impact of the current program for at least the next month or so," said Sacha Tihanyi at Scotia Capital.

But Tihanyi said the market was mulling a report suggesting the Fed needed to pump in enough money into the system to equate to a base rate of minus 5.0 percent to support the economy,

"This does at least raise the specter of further unbridled monetary expansion at the Fed, as now an academic case can be made for such a policy extension," the analyst said.

Adolfo Laurenti, senior economist at Mesirow Financial said the Fed may acknowledge "green shoots" of recovery but not act on this.

"I don't think the Fed wants to create any excessive optimism," he said.

"I think the Fed is encouraged (by recent economic data) but it is too early to announce any turnaround."

Laurenti said the Fed led by chairman Ben Bernanke will be trying to manage expectations as financial markets await the impact of the central bank's massive stimulus effort.

The economist said the Fed must be ready with a plan to end the stimulus when the economy begins to recover, to avert a surge of inflation.

"Now is not the time to withdraw any stimulus," he said.

"At the same time they want to be ready with an exit strategy one year down the road. They do not want a return of inflation in another 12 to 15 months."

After its March 17-18 meeting, the Fed said it would buy up to 1.2 trillion dollars in government and agency debt in an effort to bring down a variety of interest rates it does not control.

Bernanke, who calls the effort "credit easing" instead of quantitative easing, nonetheless acknowledges the effort to effectively print vast amounts of money to help lift the economy out of its worst crisis in decades.

Peter Hooper, economist at Deutsche Bank, agrees that the Fed must look into the future to keep inflation in check after a recovery.

"Inflation risks remain very much to the upside for the longer term, and we expect that once the Fed does eventually begin to raise rates, it could move them up quickly," he said.

The US economy plummeted at a steep 6.3 percent pace in the fourth quarter of 2008 and it remains unclear whether the bottom has been hit.

The first official estimate for first quarter US output is due Wednesday, hours before the Fed concludes its meeting. Analysts expect gross domestic product to show a decline of 4.9 percent.

Treasury needs record $361B April-June borrowing

WASHINGTON – The Treasury Department said Monday it will need to borrow $361 billion in the current April-June quarter, a record amount for that period.

It's the third straight quarter the government's borrowing needs have set records for those periods.

Treasury also estimated it will need to borrow $515 billion in the July-September quarter, down slightly from the $530 billion borrowed during the year-ago period. The all-time high of $569 billion was set in the October-December period.

The huge borrowing needs reflect the soaring costs of the $700 billion financial rescue program and the recession, which is nearing a record as the longest in the post World War II period.

The slump has cut sharply into tax revenue and boosted government spending for benefit programs such as unemployment insurance and food stamps.

The administration is projecting the federal deficit for the entire budget year ending Sept. 30, will total a record $1.75 trillion. A deficit at that level would nearly quadruple the previous record of $454.8 billion set last year.

To cover the government's heavy borrowing needs, Congress in February boosted the limit for the national debt to $12.1 trillion as part of the legislation that enacted President Barack Obama's $787 billion economic stimulus program. The national debt now stands at $11.1 trillion.

The government released its estimate of borrowing needs for the quarter before a news conference Wednesday when officials are scheduled provide exact details of how much debt the government plans to sell next week and in what maturity levels as part of Treasury's regular quarterly debt auctions.

The $361 billion estimate for borrowing this quarter compared with borrowing needs of just $13 billion in the year-ago period. Normally the government's borrowing needs shrink sharply in the April-June quarter because of all the tax revenue being collected.

The government announced in February that it was bringing back the seven-year note and doubling the number of 30-year bond auctions it would hold each year to help finance the surging borrowing needs.

IRS says set to pursue "other banks" on tax evasion

The U.S. Internal Revenue Service (IRS) is preparing to pursue other foreign banks for allegedly facilitating tax evasion by wealthy Americans following its high-profile case against Switzerland's UBS AG (UBSN.VX) (UBS.N), an IRS official said on Monday.

UBS, Switzerland's largest bank, in February acknowledged that it helped U.S. clients conceal assets from the U.S. government. It agreed to pay a $780 million fine and identify some of its American clients.

But U.S. authorities are still going after the Swiss bank, seeking to access the data of another 52,000 Americans they say are hiding about $14.8 billion in Swiss bank accounts.

"We are developing John Doe summonses on other banks," Daniel Reeves, an agent with the IRS' Offshore Compliance division, told Reuters on the sidelines of a conference in Miami on offshore finance.

He was referring to the kind of subpoena filed by the IRS against UBS seeking to force the bank to turn over the names of clients suspected of evading U.S. taxes.

Reeves declined to say which, or how many, other banks could face cases filed by the IRS, but he confirmed the entities being investigated were foreign-based like UBS.

"We have identified other offshore banks that are engaged in similar activities," he earlier told the conference.

On April 2, U.S. authorities arrested and charged an accountant in Florida in the first of what they said could be a series of tax evasion prosecutions of American clients of UBS.

Almost two weeks later, a wealthy Florida yacht broker pleaded guilty to using an account with UBS to hide more than $3 million in assets from the U.S. government.

$100 BILLION EACH YEAR

The IRS has pushed ahead with the prosecutions at a time when political leaders both in the United States and elsewhere are calling for a crackdown on tax havens and offshore centers where individuals and companies can hide away funds.

"In the U.S., we're losing about $100 billion a year, because of tax evasion and other abusive practices," Robert Roach, counsel and chief investigator for the U.S. Senate Permanent Subcommittee on Investigations, said at the Miami conference.

This Senate subcommittee has been lobbying for more aggressive official action against tax havens and tax evasion, which Roach described as a "rats' nest of problems".

Switzerland, which is seeking to defend its long-standing tradition of strict bank secrecy, asked the United States at the weekend to drop the case against UBS in return for a new tax accord the two countries are about to negotiate.

Swiss President Hans-Rudolf Merz said the request was made to U.S. Treasury Secretary Timothy Geithner on the sidelines of the International Monetary Fund's semi-annual meetings in Washington.

Racial disparities persist in higher-paying jobs

WASHINGTON – Blacks and Hispanics lag behind whites for higher-paying jobs at the largest rates in about a decade as employment opportunities dwindled during the nation's economic woes and housing slump.

Census data released Monday show an increasingly educated U.S. work force whose earnings didn't always seem to match up with its potential.

"The lesson of most economic downturns is minorities are the last hired, first fired. They lose jobs more quickly, and they will be the last to recover," said Roderick Harrison, a demographer at the Joint Center for Political and Economic Studies, a think tank that studies minority issues.

Among those 25 and older last year, 86.6 percent had graduated from high school, up from 85.7 percent the previous year. It was the biggest increase since 1992, with record percentages of people earning diplomas across all racial and Hispanic categories.

The share of people with at least a bachelor's degree from college also increased, from 28.7 percent to 29.4 percent, continuing a decades-long rise.

Blacks overall slightly narrowed the gap in 2007 with whites in average salary, but the pay disparity widened for blacks with college degrees. Blacks who had a four-year bachelor's degree earned $46,502, or about 78 percent of the salary for comparably educated whites.

It was the biggest disparity between professional blacks and whites since the 77 percent rate in 2001, when the U.S. fell into a recession due to the collapse of the tech bubble and the Sept. 11 terror attacks. College-educated blacks had previously earned as much as 83 percent of the average salary of whites in 2005.

Hispanics saw similar trends.

Those with high school diplomas earned about 83 cents for whites' every dollar, largely unchanged from a decade ago. But Hispanics with bachelor's degrees had an average salary of $44,696, amounting to roughly 75 cents for every dollar made by whites with bachelor's degrees — the lowest ratio in more than a decade — after hitting a peak of 87 cents to every dollar in 2000.

The numbers highlight some of the barriers for minorities, said Mark Mather, a demographer for the Population Reference Bureau. He said the pay disparities could widen further since blacks and Hispanics tend to be relative latecomers to the professional world and thus more vulnerable to layoffs in the current recession.

In 2008, a record number of workers filed federal job discrimination complaints, with allegations of race discrimination making up the greatest portion at more than one-third of the 95,000 total claims.

"It's clear education alone is not the full reason for the pay gaps," said Sarah Crissey, a housing and economic statistician for the Census Bureau.

Other findings:

_For the second year in a row, the number of women with bachelor's degrees exceeded that of men. The share of women with the degrees — 29 percent — was also nearly equal to men. Still, women with at least a bachelor's degree earned an average salary of $43,127, about 60 percent the amount earned by comparably educated men.

_About 92 percent of white adults had at least a high school diploma, compared with 89 percent for Asians, 83 percent for blacks and 62 percent for Hispanics.

_Black adults in recent years narrowed the gap with white adults in earning high school diplomas, but the gap has generally widened for college degrees. About 33 percent of white adults had at least a bachelor's degree in 2008, compared with 20 percent for blacks and 13 percent for Hispanics.

_More than half, or 53 percent, of Asian adults had at least a bachelor's degree.

_Workers with a high-school degree earned an average of $31,286 in 2007, while those with a bachelor's degree earned an average of $57,181.

_Foreign-born U.S. residents, which include illegal immigrants, were three times more likely than native-born to lack a high school diploma.

The census data came from the Current Population Survey as of April 2008. The figures for "white" refer to those who are not of Hispanic ethnicity. Since the government considers "Hispanic" an ethnicity and not a race, people of Hispanic descent can be of any race.

Court freezes assets of Pang, companies

WASHINGTON – Federal regulators have won a court order freezing the assets of financier Danny Pang, whom they accuse of defrauding investors of hundreds of millions of dollars.

The Securities and Exchange Commission said Monday the assets of Pang's two investment companies were also frozen. He was ordered to surrender his passports and bring back to the U.S. any assets sent overseas.

Pang, a Taiwanese immigrant, founded a $4 billion international investment firm and moved in A-list social circles in Los Angeles. The SEC has accused Pang of bilking investors by falsely portraying returns as coming from investments in timeshare real estate and life insurance policies of seniors when in fact he ran a Ponzi scheme — using money raised from newer investors to pay earlier ones.

Pang's companies, Private Equity Management Group Inc. and Private Equity Management Group LLC, are based in Irvine, Calif.

U.S. District Judge Philip Gutierrez in Los Angeles issued the asset freeze and appointed a receiver responsible for safeguarding assets held by Pang's firms.

Pang's attorney disputed the validity of the SEC move and said the agency sought the order Friday in federal court in Los Angeles without notifying his client, depriving him of a chance to respond.

"I'm troubled that the SEC sought to litigate this in secret," the attorney, David Schindler, said in a telephone interview. He said Pang is cooperating with the investigation.

In a civil lawsuit, the SEC alleged Pang and his companies have been engaged in the fraudulent offering of securities since 2003 or earlier, raising hundreds of millions of dollars from investors mostly living in Taiwan. In one case, investors were presented with a forged $108 million insurance policy to support a false claim that an investment was guaranteed, while the actual insurance policy was valued at $31 million, according to the SEC.

"We allege that Pang lured investors with false claims and even bogus documents to dupe them into believing their principal and interest were guaranteed and insured," SEC Enforcement Director Robert Khuzami said in a statement.

The SEC says its investigation is continuing. The agency is seeking unspecified civil penalties and restitution of allegedly ill-gotten profits from Pang and the firms.

The SEC also alleged Pang and his firms lured investors by falsely representing him as a former senior vice president and high-tech merger adviser from investment house Morgan Stanley with an MBA from the University of California at Irvine. In fact, Pang never worked at Morgan Stanley nor did he attend or obtain any degrees from UC Irvine, the SEC said.

A Wall Street Journal report earlier this month raised questions about Pang's resume and background, and cited a former president of Private Equity Management Group Inc. as saying Pang told him in 2007 that part of the business involved a Ponzi scheme.

On April 17, two days after the story was published, Pang voluntarily stepped aside as chairman and chief executive officer while a special company committee investigates the allegations by his former partner.

The former PEMGroup president, Nasar Aboubakare, has a pending $50 million breach-of-contract suit against the firm in which he claims that Pang misused millions in investors' funds and double-billed them for legal and insurance costs, and lied about his academic credentials.

The SEC's complaint against Pang "seems to be predicated solely" on the accusations made by Aboubakare, Schindler said Monday. Schindler said that Pang returned voluntarily to the U.S. from a vacation in China over a week ago and has indicated his willingness to cooperate and provide information to the SEC.

What you need to know about swine flu

WASHINGTON - A never-before-seen strain of swine flu has turned killer in Mexico and is causing milder illness in the United States and elsewhere. While authorities say it's not time to panic, they are taking steps to stem the spread and also urging people to pay close attention to the latest health warnings and take their own precautions

"Individuals have a key role to play," Dr. Richard Besser, acting chief of the Centers for Disease Control and Prevention, said Monday.

Here's what you need to know:

Q: How do I protect myself and my family?

A: For now, take commonsense precautions. Cover your coughs and sneezes, with a tissue that you throw away or by sneezing into your elbow rather than your hand. Wash hands frequently; if soap and water aren't available, hand gels can substitute. Stay home if you're sick and keep children home from school if they are.

Q: How easy is it to catch this virus?

A: Scientists don't yet know if it takes fairly close or prolonged contact with someone who's sick, or if it's more easily spread. But in general, flu viruses spread through uncovered coughs and sneezes or — and this is important — by touching your mouth or nose with unwashed hands. Flu viruses can live on surfaces for several hours, like a doorknob just touched by someone who sneezed into his hand.

Q: In Mexico, officials are handing out face masks. Do I need one?

A: The CDC says there's not good evidence that masks really help outside of health care settings. It's safer just to avoid close contact with someone who's sick and avoid crowded gatherings in places where swine flu is known to be spreading. But if you can't do that, CDC guidelines say it's OK to consider a mask — just don't let it substitute for good precautions.

Q: Is swine flu treatable?

A: Yes, with the flu drugs Tamiflu or Relenza, but not with two older flu medications.

Q: Is there enough?

A: Yes. The federal government has stockpiled enough of the drugs to treat 50 million people, and many states have additional stocks. As a precaution, the CDC has shipped a quarter of that supply to the states to keep on hand just in case the virus starts spreading more than it has so far.

Q: Should I take Tamiflu as a precaution if I'm not sick yet?

A: No. "What are you going to do with it, use it when you get a sniffle?" asks Dr. Marc Siegel of New York University Langone Medical Center and author of "Bird Flu: Everything you Need To Know About The Next Pandemic." Overusing antiviral drugs can help germs become resistant to them.

Q: How big is my risk?

A: For most people, very low. Outside of Mexico, so far clusters of illnesses seem related to Mexican travel. New York City's cluster, for instance, consists of students and family members at one school where some students came back ill from spring break in Mexico.

Q: Why are people dying in Mexico and not here?

A: That's a mystery. First, understand that no one really knows just how many people in Mexico are dying of this flu strain, or how many have it. Only a fraction of the suspected deaths have been tested and confirmed as swine flu, and some initially suspected cases were caused by something else.

Q: Should I cancel my planned trip to Mexico?

A: The U.S. did issue a travel advisory Monday discouraging nonessential travel there.

Q: What else is the U.S., or anyone else, doing to try to stop this virus?

A: The U.S. is beginning limited screening of travelers from Mexico, so that the obviously sick can be sent for treatment. Other governments have issued their own travel warnings and restrictions. Mexico is taking the biggest steps, closings that limit most crowded gatherings. In the U.S., communities with clusters of illness also may limit contact — New York closed the affected school for a few days, for example — so stay tuned to hear if your area eventually is affected.

Q: What are the symptoms?

A: They're similar to regular human flu — a fever, cough, sore throat, body aches, headache, chills and fatigue. Some people also have diarrhea and vomiting.

Q: How do I know if I should see a doctor? Maybe my symptoms are from something else — like pollen?

A: Health authorities say if you live in places where swine flu cases have been confirmed, or you recently traveled to Mexico, and you have flulike symptoms, ask your doctor if you need treatment or to be tested. Allergies won't cause a fever. And run-of-the-mill stomach bugs won't be accompanied by respiratory symptoms, notes Dr. Wayne Reynolds of Newport News, Va., spokesman for the American Academy of Family Physicians.

Q: Is there a vaccine to prevent this new infection?

A: No. And CDC's initial testing suggests that last winter's flu shot didn't offer any cross-protection.

Q: How long would it take to produce a vaccine?

A: A few months. The CDC has created what's called "seed stock" of the new virus that manufacturers would need to start production. But the government hasn't yet decided if the outbreak is bad enough to order that.

Q: What is swine flu?

A: Pigs spread their own strains of influenza and every so often people catch one, usually after contact with the animals. This new strain is a mix of pig viruses with some human and bird viruses. Unlike more typical swine flu, it is spreading person-to-person. A 1976 outbreak of another unusual swine flu at Fort Dix, N.J., prompted a problematic mass vaccination campaign, but that time the flu fizzled out.

Q: So is it safe to eat pork?

A: Yes. Swine influenza viruses don't spread through food.

Q: And whatever happened to bird flu? Wasn't that supposed to be the next pandemic?

A: Specialists have long warned that the issue is a never-before-seen strain that people have little if any natural immunity to, regardless of whether it seems to originate from a bird or a pig. Bird flu hasn't gone away; scientists are tracking it, too.

GM offers final survival plan

DETROIT (Reuters) – General Motors Corp on Monday offered its final plan to reorganize outside bankruptcy by slashing bond debt, cutting over 21,000 more U.S. jobs and emerging as a nationalized automaker under majority control by the U.S. government.

GM Chief Executive Fritz Henderson said the automaker would file for bankruptcy protection if an offer to exchange bonds for company equity failed to cut $27 billion in bond debt by about 90 percent or other changes faltered.

Analysts doubted the debt exchange offer would succeed, setting up GM to restructure in Chapter 11.

GM's bondholder's blasted the terms of its debt-exchange as a back-room deal designed to protect the interests of its major union the United Auto Workers, a group that campaigned for President Barack Obama in last year's election.

Representatives of the bondholders said GM and the Obama administration were gambling on a risky and "legally questionable" strategy for a company that once ranked as an icon of American industrial and economic strength.

The White House said on Monday the U.S. government had no desire to run a domestic automaker despite the potential controlling interest.

"We strongly back an auto industry that we believe can and should be self reliant," White House spokesman Robert Gibbs told reporters. "It is not our desire to either own or run one of the auto companies."

GM's new strategy, which will also jettison the Pontiac brand and shut down production of Saturn brand cars this year, underscored how quickly and far it has fallen since last summer when executives, including Henderson, were insisting that the automaker could restructure under a program of "self help."

Separately, Chrysler lenders were expected to receive a new offer from the U.S. Treasury as early as Monday in the wake of cost-cutting deals the U.S. automaker has reached with unions in the United States and Canada.

Chrysler faces an April 30 deadline to reach a deal with creditors and cement an alliance with Italy's Fiat SpA and continue to receive U.S. government emergency support.

The automaker was working "diligently" to complete the Fiat deal and restructure its business by the deadline and maintain government emergency loans, Chief Executive Bob Nardelli said in a memo to staff obtained by Reuters.

Chrysler cleared another hurdle in its reorganization on Monday when Daimler AG reached a deal to divest the nearly 20-percent stake it had held since selling Chrysler to Cerberus Capital Management LP in 2007.

Canadian Industry Minister Tony Clement said it was now more likely Chrysler would not have to go into liquidation following an agreement with the Canadian union that Fiat has concluded is cost-effective.

GM: 60-DAY BANKRUPTCY POSSIBLE

GM's new offer to bondholders would leave them with a 10 percent ownership of the restructured automaker, a sharply lower payout than the nearly 40 percent given to the UAW.

"The offer is unlikely to be accepted by bondholders, who are in effect being asked to sacrifice most of their claims in order to help GM satisfy commitments to the UAW," Barclays Capital analyst Brian Johnson said.

Henderson, GM's CEO, told reporters that it was possible for GM to complete the bankruptcy process within a 60-day period, but called the success of the bond exchange critical for the automaker to stay out of court.

"The bond exchange needs to be successful for us to avoid bankruptcy," Henderson said. "It's not impossible, but bankruptcy is now more probable."

The new GM that would emerge from the restructuring would be 89 percent-owned by the U.S. government and the UAW, provided workers and officials approve the plans. Current GM stockholders would have 1 percent.

GM shares closed nearly 21 percent higher at $2.04. GM bonds also moved higher.

Still, Standard & Poor's equity analyst Efraim Levy maintained a "sell" rating on GM shares.

"Whether there is a bankruptcy filing or not, we see it as lose-lose for shareholders via dilution from equity issuance or loss of value via a filing," Levy said.

Responding to criticism that its prior turnaround plans had been too slow-moving, GM also outlined deep cuts by the end of 2010: reducing U.S. plants to 34 from 47, slashing U.S. factory jobs by about 21,000 to a total of 40,000, and cutting its dealer network to 3,605 from 6,246 stores.

The Obama administration's autos task force, which has been overseeing GM's planning for the past month, said the steps showed the automaker was making progress toward viability.

"Today's bond exchange filing represents an important step in GM's effort to restructure," the task force, headed by former investment banker Steve Rattner, said in a statement.

GM, which last week took $2 billion of emergency U.S. government loans to bring its total to $15.4 billion so far, was told by the Obama administration in late March it had until June 1 to dig deeper and move faster for continued support.

The automaker said it would phase out the Pontiac brand by the end of next year and could stop production of its Saturn models by the end of 2009. A sale of the Hummer SUV brand is still a "reasonable likelihood," Henderson said.

The steps would leave GM, formerly the world's largest automaker, reliant on four core brands -- Chevrolet, Cadillac, Buick and GMC -- and a network of international alliances as it looks to sell off its European unit Opel.

GM to cut 21,000 US factory jobs, shed Pontiac

DETROIT – General Motors Corp. could be majority owned by the federal government under a massive restructuring plan laid out Monday that will cut 21,000 U.S. factory jobs by next year and phase out the storied Pontiac brand.

The plan, which includes an offer to swap roughly $27 billion in bond debt for GM stock, would leave current shareholders holding just 1 percent of the century-old company, which is fighting for its life in the worst auto sales climate in 27 years.

GM is living on $15.4 billion in government loans and said Monday in a filing with the U.S. Securities and Exchange Commission that it envisions receiving an additional $11.6 billion. But if GM's restructuring plan can't satisfy the government by June 1, the struggling company could go into bankruptcy protection.

GM said that it will ask the government to take more than 50 percent of its common stock in exchange for canceling half the government loans to the company as of June 1. The swap would cancel about $10 billion in government debt.

In addition, GM is offering stock to the United Auto Workers for at least 50 percent of the $20 billion the company must pay into a union run trust that will take over retiree health care expenses starting next year.

If both are successful, the government and UAW health care trust would own 89 percent of GM stock, with the government holding more than a 50 percent stake, CEO Fritz Henderson said in a news conference at GM's Detroit headquarters.

President Barack Obama's administration said in a statement that the bond exchange filing is an important step in GM's restructuring but the administration has not made a final decision about taking stock for part of its loans.

"The interim plan that GM laid out in this filing reflects the work GM has done since March 30 to chart a new path to financial viability. We will continue to work with GM's management as it refines and finalizes this plan and with all of GM's stakeholders to help GM restructure consistent with the president's commitment to a strong, vibrant American auto industry," the statement said.

Henderson said that although the government would own a majority of GM's outstanding common shares, the Treasury "hasn't demonstrated interest in running the company," but would have someone on the board looking out for the taxpayers' interest. The task force has directed current board chairman Kent Kresa to replace several board members.

"The shareholders, the VEBA (health care trust) and the government would want to have a someone on the board of directors," he said.

Deals with the UAW and the Treasury have yet to be finalized, he said.

The struggling automaker said it will offer 225 shares of common stock for every $1,000 in notes held by bondholders as part of a debt-for-equity swap. Henderson said the objective is to reduce GM's $27 billion of outstanding public debt by about $24 billion. The company estimates that after the exchange, bondholders would own 10 percent of the company.

That would leave current common stockholders with only 1 percent, GM said. Still, GM shares rose 34 cents, or 21 percent, to $2.03 in midday trading.

The plans, if successful, would reduce GM's debt by $44 billion from the present figure of about $62.4 billion.

"We would be substantially less-leveraged as a company," Henderson said.

Kip Penniman Jr., an analyst with KDP Investment Advisors Inc., predicted the exchange offer would fail and GM will file for bankruptcy. The value of all of GM's outstanding stock is about $1.27 billion, so if bondholders get about 10 percent of the equity, the offer is only worth about 5 cents per dollar of GM bonds, he said.

GM's plan depends on 90 percent of bondholders exchanging their debt, and "there is no chance that GM will get anywhere near that participation rate," Penniman said in a research note.

Henderson said if the debt exchange isn't successful, he would expect GM to file for bankruptcy protection somewhere around June 1, but such a filing would be unlikely very long before the deadline. Bondholders have until May 26 to accept the exchange offer.

Henderson said the company still prefers to restructure outside of court, but he acknowledged that the prospect of bankruptcy is more likely now that it was a few weeks ago.

"The task at hand in terms of what we need to get done is formidable," Henderson said. "But it can be done."

GM said it would speed up six additional factory closings that were announced in February, although it did not identify the locations. Additional salaried jobs cuts also are coming, beyond the 3,400 in the U.S. completed last week.

Henderson said there would be three more factory closures in 2010 beyond the six that were previously planned. He expects to identify them by publicly in May. They will include assembly, engine and transmission and parts-stamping factories, he said.

Including previously announced plant closures, the restructuring will leave GM with 34 factories at the end of next year, 13 fewer than the 47 it had at the end of 2008.

Besides the U.S. job cuts, General Motors Canada said it plans to slash its hourly work force to from 10,300 currently to 4,400 by 2014 years.

The company also said it plans to reduce its dealership ranks by 42 percent from 2008 to 2010, cutting them from 6,246 to 3,605. When asked how GM would accomplish that, Henderson would say only that the company would be making offers to the dealers in the coming weeks.

Mark LaNeve, vice president of North American sales and marketing, said a big chunk of the dealership reduction — about 450 — would come with the elimination or sale of Saturn, Hummer and Saab. GM would then look to end relationships with dealers that do only a small volume of business with GM, and then move on to other dealers, he said.

"We've got a cadence plan to it," he said. "I don't want to get rid of any dealers," LaNeve said, but acknowledged that that GM has had more dealers than it needs for quite some time.

Henderson said the new plan lowers GM's break-even point in North America to an annual U.S. sales volume of 10 million vehicles. That's slightly more than the current sales rate, but most economists expect an uptick in the second half of the year.

"This lower break-even point better positions GM to generate positive cash flow and earn an adequate return on capital over the course of a normal business cycle, a requirement set forth by the U.S. Treasury," GM said in a statement.

The company said it would phase out its storied Pontiac brand no later than next year, and the futures of Hummer, Saturn and Saab will be resolved by the end of this year by either selling them or phasing them out.

For Pontiac, the decision means the death of a brand known for its muscle cars including the Trans Am made famous in movies and the GTO, the subject of a nostalgic song by Ronny and the Daytonas.

Henderson said in a news conference that the company was spread too thin to make Pontiac work.

"We didn't think we had the resources to get this done from a product perspective," or marketing, he said.

He said the decision was very tough for many at GM because of the 83-year-old brand's heritage.

Henderson said talks continue with potential parties to buy a stake in Opel and are expected to continue through the end of May. He said the company would continue to have a presence in Europe as a stakeholder. He said Chevrolet is one of the fast-growing car segments in Eastern Europe and Russia.

One of the conditions to get aid from Germany is to have a private investor take a stake in Opel, he said.

GM could become leaner, government-owned company

DETROIT – General Motors, once the colossus of American capitalism, will become a leaner, government-owned company if the Obama administration goes along with the automaker's plan to slash jobs, close plants and eliminate the legendary Pontiac brand.

As GM laid out the proposal Monday, new agreements fell into place between Chrysler and its unions in the United States and Canada, making it apparent that the future of both companies now rests with their creditors.

General Motors CEO Fritz Henderson said the company would offer the Treasury Department more than 50 percent of its stock to absolve GM of $10 billion in government loans.

The automaker also proposed that the United Auto Workers take GM stock for at least half the $20 billion the company owes to a union-run trust that will assume retiree health care expenses starting next year.

Combined, the union and government would own 89 percent of the century-old automaker, which has been bleeding red ink and is saddled with more than $62 billion in debt.

"It is unprecedented, but it signifies the importance of the automobile industry," said David Lewis, a retired professor at the University of Michigan who taught business history for 43 years.

Although the government has loaned money to corporations in the past, including to Chrysler in the 1970s, Lewis could not recall a time when it had taken a majority stake in a company.

White House press secretary Robert Gibbs said the administration does not want to own GM or any other auto company.

"This administration has no desire to run an auto company on a day-to-day basis," Gibbs said. "We strongly back an auto industry we believe can, and should, be self-reliant of government funding."

But GM's plan depends on persuading unsecured bondholders who have loaned GM $27 billion to forgive that debt in exchange for a 10 percent stake in the company.

Current GM shareholders would own only about 1 percent.

GM's announcement sent its shares up 21 percent to $2.04 Monday, meaning bondholders would get about 46 cents on the dollar. But that does not take into account dilution of GM's shares once the government and the union get their giant piece of the pie.

Analysts estimated that the value was closer to 5 cents on the dollar.

General Motors is surviving on $15.4 billion in government loans, and said Monday in a filing with the U.S. Securities and Exchange Commission that it envisions getting an additional $11.6 billion.

GM Chief Financial Officer Ray Young said that's all the company will need under its new plan.

But if GM's restructuring plan cannot put all the pieces in place by June 1, the struggling company could go into bankruptcy protection.

Meanwhile, Chrysler is surviving only because of $4 billion in government aid. The company has until Thursday to adopt a partnership with Italy's Fiat Group SpA and to devise a restructuring plan that satisfies the government so it can get an additional $6 billion.

Just hours before GM gave its progress report, Chrysler announced it had a tentative concession agreement with the UAW that had been blessed by the government. United Auto Workers President Ron Gettelfinger said the union's factory-level leaders voted unanimously Monday night to recommend that members approve concessions that could give a union-run trust 55 percent ownership of a restructured Chrysler LLC.

Union leaders say ratification votes across the nation should be finished by Wednesday. The deal, designed to keep the automaker out of bankruptcy, would see workers no longer get most of their pay if they are laid off but instead receive supplemental pay from the company equal to 50 percent of their gross base pay.

The Chrysler deal almost certainly will be the template for GM, although Young said negotiations with the union had not yet resumed in earnest. In addition, both companies have deals with the Canadian Auto Workers.

If successful, the plan for the government to own a majority of GM's outstanding common shares would wipe out $44 billion of GM's $62.4 billion debt. Bondholders have until May 26 to accept the offer, which is contingent on the deals with the government and the UAW falling into place.

Young said the Treasury Department always expected some of the government debt to be exchanged for GM stock, but the government issued a statement saying it had not decided to do it.

The company still prefers restructuring outside of court, but Henderson acknowledged bankruptcy is more likely now than a few weeks ago.

"The task at hand in terms of what we need to get done is formidable," Henderson said. "But it can be done."

GM said it would speed up six factory closings announced in February and close three additional facilities in 2010. Henderson expects to identify the plants in May and said they will include assembly, engine, transmission and parts-stamping factories.

GM will also cut 21,000 hourly jobs in the U.S. by 2010 — 7,000 more than what the company outlined just two months ago.

With the factory cuts, GM will be a mere fraction of its old self. At the end of 1991, the company had 304,000 hourly workers in the U.S.; by the end of 2010, it would have 40,000.

Also, General Motors Canada said it plans to slash its hourly work force from 10,300 to 4,400 by 2014. Young said the reduction follows previously announced plant closures.

In addition, GM plans to cut additional U.S. salaried jobs beyond the 3,400 cuts completed last week, and it plans to reduce dealerships 42 percent by 2010.

Mark LaNeve, vice president of North American sales, said many of the 450 dealers to be cut would be dropped with the elimination or sale of the Saturn, Hummer and Saab brands by the end of this year.

GM also said it will end its storied Pontiac brand no later than next year, killing a brand known for muscle cars such as the Trans Am and the GTO.

David Westcott, a Burlington, N.C., Pontiac dealer who also holds Buick, GMC and Suzuki franchises, was saddened, but not surprised.

"The bad thing is they make some great, great products," said Westcott, who has been selling Pontiacs for more than a decade. "But over the last few years, the volume has been decreasing."

UAW leaders recommend approval of Chrysler deal

STERLING HEIGHTS, Mich. – The United Auto Workers union will own 55 percent of a restructured Chrysler LLC and its retiree health care trust will get a seat on the board if union members vote to approve contract concessions this week.

Chrysler stock could even be traded publicly again, as there are mechanisms for the UAW to sell shares to fund the health care trust.

Factory-level union leaders voted unanimously Monday night to recommend approval of concessions that union President Ron Gettelfinger said would help keep the automaker out of bankruptcy.

A summary of the revised Chrysler-UAW contract says that Italian automaker Fiat Group SpA eventually will own 35 percent of a restructured Chrysler, with the remaining 10 percent stake divided between the U.S. government and secured lenders, mostly banks and hedge funds.

The Obama administration required that equity fund at least 50 percent of Chrysler's $10.6 billion obligation to a union-run trust that will take over retiree health care costs starting next year, according to the summary.

It also said that under the agreement, workers will no longer get most of their pay if they are laid off. Instead, they will get supplemental pay from the company equal to 50 percent of their gross base pay.

Union leaders say ratification votes across the nation should be finished by Wednesday. That's one day before Chrysler's government-imposed deadline to restructure or the government will cut off aid and send the company into liquidation.

Chrysler is living on $4 billion in U.S. government loans and must win concessions from its unions, swap equity for debt and ink a partnership deal with Fiat. If Chrysler can pull the package together in time, the government has said it will loan a new Chrysler-Fiat partnership up to $6 billion more. Chrysler also could get $500 million to stay afloat through April.

Fiat has been in discussions with Chrysler to take a 20 percent stake in the Auburn Hills, Mich., automaker in exchange for Fiat's small-car technology.

Under the UAW deal reached with Chrysler, Fiat and the U.S. Treasury Department, cost-of-living pay raises will be suspended through the contract's expiration in 2011, and it adds a provision for binding arbitration on a new contract through 2015. If no agreement can be reached on a new contract, the arbitrator must base total hourly labor costs on a rate comparable to Chrysler's U.S. competitors, including foreign-owned manufacturers.

The union also agreed to consolidate nonskilled labor job classifications into a team concept at all factories. Performance and Christmas bonuses will be suspended this year and next to help pay health care costs.

As part of the deal, Fiat committed to manufacturing a small car in one of Chrysler's U.S. facilities, but the summary doesn't say where. In addition, Fiat will share key technology with Chrysler, including as all of its vehicle underpinnings and a 1.4 liter, four-cylinder engine.

The health care trust will select one member of Chrysler's board, with the UAW's consent.

"We fought to maintain our wages, our health care and our jobs," Gettelfinger and Vice President General Holiefield said in a letter to workers. "In the face of adversity, we secured new product guarantees, and we negotiated new opportunities for UAW involvement in future business decisions."

In addition to the stock, the company will pay its remaining $4.6 billion obligation to the health care trust in cash annually through 2023. Payments will start next year and in 2011 at $300 million, rising to $400 million in 2012, and $600 million in 2013. After that, it goes to $650 million per year in 2014 through 2017 and to $823 million in 2019 through 2023.

Under the health care trust, retirees will no longer have dental and vision coverage, according to the summary sheet. The union says it likely will have to make additional benefit cuts in 2010 and 2011 because of uncertainty over the value of the Chrysler stock.

However, if the stock gains in value, benefits could be restored, the summary sheet says.

The local leaders recommended approval of the deal after a three-hour meeting at a suburban Detroit hotel.

The deal likely will serve as the template for a pact with General Motors Corp., which also is receiving federal aid. Ford Motor Co. already has signed a deal with the UAW, but has said it will see parity if Chrysler and GM get better terms.

Also Monday, Germany's Daimler AG said it reached a deal to get rid of its remaining 19.9 percent stake in Chrysler, severing the last tie between the two automakers that was formed more than a decade ago.

Under the agreement, Daimler will forgive $1.9 billion in loans it extended to Auburn Hills, Mich.-based Chrysler, which it had already written off in its 2008 financial results. Daimler also agreed to pay $200 million into Chrysler's pension plan when the deal takes effect and in each of the two years afterward. The money will help fund the pensions of former DaimlerChrysler AG workers, Daimler said.

Daimler, who is slated to report quarterly results Tuesday, said the deal is expected to reduce its second-quarter earnings before interest and tax by about $700 million. The automaker has recorded billions in losses related to Chrysler since selling off most of its stake in the U.S. carmaker to New York-based private equity firm Cerberus Capital Management LP in 2007.

Suspected swine flu deaths in Mexico top 100

MEXICO CITY – The Mexican government is trying to stem the spread of a deadly strain of swine flu as a new work week begins by urging people to stay home Monday if they have any symptoms of the virus believed to have killed more than 100 people.

Officials have already closed schools in three states and canceled hundreds of public events. But as the number of suspected cases and deaths rose again on Sunday — and millions returning to work on Monday — they looked to other measures to control the outbreak.

Labor Secretary Javier Lozano Alarcon said employers should isolate anyone showing up for work with fever, cough, sore throat or other signs of the flu.

Fear of the disease caused most residents of Mexico's capital to hunker down at home on Sunday. The cardinal said Mass in a shuttered cathedral. Soccer teams played to empty stadiums. A television variety show filled studio-audience seats with cardboard cutouts bearing broad smiles on their faces.

For the first time in 300 years, the cathedral in Mexico City's main plaza pulled an icon of the Lord of Health from storage, and worshippers placed it on the principal altar.

The Rev. Cuauhtemoc Islas said it would remain there until the medical emergency is over, Mexico's government news agency Notimex reported.

But the bad news kept coming. Health Secretary Jose Angel Cordova late Sunday that the number of suspected swine flu cases in Mexico had climbed to 1,614, including 103 deaths.

Authorities were trying to confirm how many new cases were caused by the virus, which has been confirmed or suspected in at least a half-dozen other countries and has caused the U.S. to declare a health emergency.

But even as Mexican officials urged those with flu symptoms to seek medical help, some complained of being turned away.

In Toluca, a city west of the capital, one family said health authorities refused to treat a relative on Sunday who had full-blown flu symptoms and could barely stand. The man, 31-year-old truck driver Elias Camacho, was even ordered out of a government ambulance, his father-in-law told The Associated Press.

Paramedics complained that Camacho — who had a fever, was coughing and had body aches — was contagious, Jorge Martinez Cruz said.

Family members took him by taxi to a public hospital, but a doctor there denied Camacho was sick and told the trio to leave, Martinez said.

"The government told us that if we have these symptoms, we should go to these places, but look how they treat us," Martinez said. Camacho was finally admitted to the hospital — and placed in an area marked "restricted" — after a doctor at a private clinic notified state health authorities, Martinez said.

Jose Isaac Cepeda, who has had fever, diarrhea and joint pains since Friday, said he was turned away from two hospitals — the first because he isn't registered in the public health system, and the second "because they say they're too busy."

The streets of the capital were largely deserted Sunday. The city canceled its weekly cycling day, in which major boulevards are closed to cars. The city's two main chains of movie theaters announced they were closing temporarily. Restaurants and bars were empty.

"We normally get 200 diners over the course of the day," said waiter Eduardo Garcia, wearing a surgical mask as he presided over empty tables of an Italianni's restaurant in the Zona Rosa neighborhood. "Today's pretty bad. Nobody's coming out of their houses."

UAW, Chrysler and Fiat reach concession deal

DETROIT – Chrysler LLC cleared another major obstacle to its survival Sunday when it reached a tentative deal on concessions with the United Auto Workers union, helping it move closer to inking a vital alliance with Italy's Fiat Group SpA.

The troubled automaker is just days away from a Thursday U.S. government deadline to gain concessions from its unions and debtholders and link up with Fiat or face almost certain liquidation. White House economic adviser Larry Summers said Sunday the Obama administration is holding out hope that Chrysler can avoid bankruptcy court.

The UAW late Sunday called the concessions painful but said the deal takes advantage of the Obama administration giving Chrysler and its workers a second chance. The administration in February rejected Chrysler's restructuring plan and gave the Auburn Hills, Mich., automaker until April 30 to make further cuts and arrange to take on Fiat as a partner.

The UAW agreement is seen as a key piece of pulling Chrysler's plan together, and it's noteworthy that the UAW said Fiat was involved in the deal.

"The provisional agreement provides the framework needed to ensure manufacturing competitiveness and helps to meet the guidelines set forth by the U.S. Treasury Department," Chrysler Vice President of Labor Relations Al Iacobelli said in a statement. "As a result, Chrysler LLC can continue to pursue a partnership with Fiat SpA."

Separately, Canadian Auto Workers members on Sunday ratified a concessionary deal which CAW President Ken Lewenza said makes labor costs competitive with non-unionized Toyota in Canada. The two labor agreements now leave concessions from the holders of $6.9 billion in Chrysler secured debt and the alliance with Fiat as the remaining hurdles to Chrysler qualifying for additional government aid.

But debtholders, the company and the Treasury Department remain far apart on terms to swap equity in the company for much of the debt. A counteroffer to the debtholders from the Treasury is expected as early as Monday.

UAW Vice President General Holliefield said in a statement that UAW members and retirees are being asked to make extraordinary sacrifices to help Chrysler become viable.

"In order for the company to have a sustainable future, all stakeholders will have to show the same willingness to contribute to the common good that has been demonstrated repeatedly by our membership," he said.

Chrysler has been living on $4 billion in U.S. government loans and is expected to get another $500 million. Without government help, it would have gone out of business around the first of the year. The government has said it would be willing to loan Chrysler up to another $6 billion if it is able to complete its restructuring and ink the deal with Fiat.

After rejecting the February plan, the government had said the UAW and Canadian Auto Workers unions must make further concessions, including the UAW taking equity in the company for at least half of a $10.6 billion payment into a union-run trust that will take over retiree health care costs starting next year.

Details of the agreement were not available late Sunday. It will be presented to local union officials from across the country on Monday, with voting to wrap up by Wednesday.

But the UAW says its deal "meets the requirements of U.S. Treasury Department loans to the company," and includes changes to the health care trust.

"We recognize this has been a long ordeal for active and retired auto workers, and a time of great uncertainty," UAW President Ron Gettelfinger said in a statement. "The patience, resolve and determination of UAW members in these difficult times is extraordinary, and has made it possible for us to reach the agreement we will present to our membership."

Fiat CEO Sergio Marchionne was in the U.S. as talks continued for the automaker to take a 20 percent stake in Chrysler in exchange for its small-car technology.

Two people briefed on the Fiat negotiations said that if a debtholder deal can be reached, most of the Fiat deal has been finished and an announcement would come shortly after a debtholder agreement. The people didn't want to be identified because the talks are private.

Fiat may build the small cars at Chrysler factories in the U.S., but they wouldn't arrive until late 2010 or early 2011, according to industry analysts.

"We're hopeful that the negotiations, which have been proceeding with great energy, are going to conclude successfully," Summers said in an appearance on "Fox News Sunday." "You never know — with any negotiation — until the very end. There are some issues that have been worked out. There are some issues that remain to be worked out, but it's in everybody's interest to see these negotiations succeed and we're hopeful that they will."

World Bank: Economic crisis turning into calamity

The global financial crisis could become "a human and development calamity" for many poor countries, the World Bank said, urging donor nations to speed delivery of money they have pledged and consider giving more.

Developing countries, its main constituency, face "especially serious consequences with the crisis driving more than 50 million people into extreme poverty, particularly women and children," the bank said Sunday.

Bank President Robert Zoellick said some of the poorest economies are being hit by "second and third waves of the crisis." He said no one knows how long it will last or when recovery will begin.

"There is a widespread recognition that the world faces an unprecedented economic crisis, poor people could suffer the most and that we must continue to act in real time to prevent a human catastrophe," Zoellick said.

The bank will respond by tapping its healthy balance sheet to increase lending up to $100 billion over three years and launch initiatives in social protection, public works and agriculture, he said.

Zoellick spoke at a news conference that wrapped up weekend meetings of the World Bank and its sister institution, the International Monetary Fund, aimed at determining what additional action is needed to counteract the worst financial crisis in decades. The weekend kicked off with a meeting of finance ministers of the Group of Seven major industrialized nations that expanded into a meeting of the Group of 20 nations, bringing in such rising economic powerhouses as Brazil, India and China.

There was general agreement at the meetings that voting shares of those nations in the IMF and World Bank should be increased to reflect the changed global economic situation. Ministers pledged to examine ways to do that.

The closing news conference took an unexpected turn when Mexican Finance Minister Agustin Carstens, chairman of the World Bank policy-steering committee, outlined steps his government was taking to confront an outbreak of swine flu. He disclosed that the bank was providing a $25 million loan for medicine and logistical help and another $180 million for operational needs.

Zoellick said already-mobilized bank public health experts with experience dealing with SARS, or severe, acute respiratory syndrome, and Asian bird flu would provide practical help to Mexico.

In their communique, ministers at the bank meeting said "more needs to be done" as the financial crisis unfolds.

"We urge all donors to accelerate delivery of commitments to increase aid and for all to go beyond existing commitments," the ministers said.

While they met, small groups of protesters demonstrated near the headquarters of the two organizations three blocks from the White House. They chanted "IMF, tear it down. World Bank, tear it down."

Ministers attending the IMF-World Bank meetings said they saw signs that the world economy is stabilizing, but it will take until mid-2010 for the world to emerge from the worst recession in decades. They said stimulus packages, bank recapitalization and other actions taken by governments and central banks to deal with the crisis are beginning to show results.

"Carefully, cautiously, we can say that there is a break in the clouds," Egyptian Finance Minister Youssef Boutros-Ghali, chairman of the IMF's International Monetary and Financial Committee, said Saturday. He said some financial markets are trending up and other economic indicators are improving, "but there are still downside risks."

On Saturday, as protesters demonstrated in the streets, the finance ministers tried to work out details of the $1.1 trillion plan that President Barack Obama and his G-20 counterparts announced at their recent summit in London. There was much talk about how to come up with the fresh $500 billion infusion that the G-20 pledged to the IMF at the summit. More than $300 billion is already pledged by the U.S., the European Union, Japan, Canada, Switzerland and Norway. It remains unclear which countries will open their wallets wider — or at all.

To make up the shortage, the IMF agreed to sell bonds — something it's never done in its 65 years — to emerging economies such as China, Brazil and India. Those nations have said they want a greater voice at the IMF before they'll provide additional resources.

The bonds would help reach the goal announced at the G-20 in London, but provide shorter-term financing than the pledges made by the U.S., European Union, Japan and others.

Is swine flu 'the big one' or a flu that fizzles?

ATLANTA – As reports of a unique form of swine flu erupt around the world, the inevitable question arises: Is this the big one?

Is this the next big global flu epidemic that public health experts have long anticipated and worried about? Is this the novel virus that will kill millions around the world, as pandemics did in 1918, 1957 and 1968?

The short answer is it's too soon to tell.

"What makes this so difficult is we may be somewhere between an important but yet still uneventful public health occurrence here — with something that could literally die out over the next couple of weeks and never show up again — or this could be the opening act of a full-fledged influenza pandemic," said Michael Osterholm, a prominent expert on global flu outbreaks with the University of Minnesota.

"We have no clue right now where we are between those two extremes. That's the problem," he said.

Health officials want to take every step to prevent an outbreak from spiraling into mass casualties. Predicting influenza is a dicey endeavor, with the U.S. government famously guessing wrong in 1976 about a swine flu pandemic that never materialized.

"The first lesson is anyone who tries to predict influenza often goes down in flames," said Dr. Richard Wenzel, the immediate past president of the International Society for Infectious Diseases.

But health officials are being asked to make such predictions, as panic began to set in over the weekend.

The epicenter was Mexico, where the virus is blamed for 86 deaths and an estimated 1,400 cases in the country since April 13. Schools were closed, church services canceled and Mexican President Felipe Calderon assumed new powers to isolate people infected with the swine flu virus.

International concern magnified as health officials across the world on Sunday said they were investigating suspected cases in people who traveled to Mexico and come back with flu-like illnesses. Among the nations reporting confirmed cases or investigations were Canada, France, Israel and New Zealand.

Meanwhile, in the United States, there were no deaths and all patients had either recovered or were recovering. But the confirmed cases around the nation rose from eight on Saturday morning to 20 by Sunday afternoon, including eight high school kids in New York City — a national media center. The New York Post's front page headline on Sunday was "Pig Flu Panic."

The concern level rose even more when federal officials on Sunday declared a public health emergency — a procedural step, they said, to mobilize antiviral medicine and other resources and be ready if the U.S. situation gets worse.

U.S. Centers for Disease Control and Prevention officials say that so far swine flu cases in this country have been mild. But they also say more cases are likely to be reported, at least partly because doctors and health officials across the country are looking intensively for suspicious cases.

And, troublingly, more severe cases are also likely, said Dr. Richard Besser, the CDC's acting director, in a Sunday news conference.

"As we continue to look for cases, we are going to see a broader spectrum of disease," he predicted. "We're going to see more severe disease in this country."

Besser also repeated what health officials have said since the beginning — they don't understand why the illnesses in Mexico have been more numerous and severe than in the United States. In fact, it's not even certain that new infections are occurring. The numbers could be rising simply because everyone's on the lookout.

He also said comparison to past pandemics are difficult.

"Every outbreak is unique," Besser said.

The new virus is called a swine flu, though it contains genetic segments from humans and birds viruses as well as from pigs from North America, Europe and Asia. Health officials had seen combinations of bird, pig and human virus before — but never such an intercontinental mix, including more than one pig virus.

More disturbing, this virus seems to spread among people more easily than past swine flus that have sometimes jumped from pigs to people.

There's a historical cause for people to worry.

Flu pandemics have been occurring with some regularity since at least the 1500s, but the frame of reference for health officials is the catastrophe of 1918-19. That one killed an estimated 20 to 50 million people worldwide.

Disease testing and tracking were far less sophisticated then, but the virus appeared in humans and pigs at about the same time and it was known as both Spanish flu and swine flu. Experts since then have said the deadly germ actually originated in birds.

But pigs may have made it worse. That pandemic began with a wave of mild illness that hit in the spring of 1918, followed by a far deadlier wave in the fall which was most lethal to young, healthy adults. Scientists have speculated that something happened to the virus after the first wave — one theory held that it infected pigs or other animals and mutated there — before revisiting humans in a deadlier form.

Pigs are considered particularly susceptible to both bird and human viruses and a likely place where the kind of genetic reassortment can take place that might lead to a new form of deadly, easily spread flu, scientists believe.

Such concern triggered public health alarm in 1976, when soldiers at Fort Dix, N.J., became sick with an unusual form of swine flu.

Federal officials vaccinated 40 million Americans. The pandemic never materialized, but thousands who got the shots filed injury claims, saying they suffered a paralyzing condition and other side effects from the vaccinations.

To this day, health officials don't know why the 1976 virus petered out.

Flu shots have been offered in the United States since the 1940s, but new types of flu viruses have remained a threat. Global outbreaks occurred again in 1957 and 1968, though the main victims were the elderly and chronically ill.

In the last several years, experts have been focused on a form of bird flu that was first reported in Asia. It's a highly deadly strain that has killed more than 250 people worldwide since 2003. Health officials around the world have taken steps to prepare for the possibility of that becoming a global outbreak, but to date that virus has not gained the ability to spread easily from person to person.