Financial thoughts

If you’re looking for confirmation that this stock market rally might actually be for real, look no further than the stodgy world of transportation.

The Dow Jones Transportation average hit a new high for the year in mid-August and has continued to climb since then, closing above the 4,000 level on Monday for the first time since November.

And some investing experts think this is an extremely encouraging sign for the economy at large.

Now you might wonder how relevant the transportation sector is these days. Railroad stocks? This is the age of Google, Facebook and Twitter, not the era of robber barons.

Of course, that’s true. But the transportation sector is still a vital part of the economy because it is a key gauge of consumer spending.

Without trains, boats, trucks and planes to ship all those netbooks and iPhones to warehouses and retailers, there would be no mobile gadgets available to buy and you wouldn’t be able to tweet and update your status on the go.

"If transportation stocks are getting tanked, that means people believe that nothing is getting shipped. The move higher may mean that the economy is bottoming — even though we’re not out of the woods yet," said Frank Ingarra, Jr., co-portfolio manager with Hennessy Funds, a money management firm with about $850 million in assets.

So the spike in the Dow Jones Transportation average, or the transports for short, is worth exploring. The transports consist of 20 key companies within the sector, including leading railroads Union Pacific (UNP, Fortune 500) and CSX (CSX, Fortune 500), airlines JetBlue (JBLU) and Southwest (LUV, Fortune 500), and several truckers and maritime shippers.

And according to a trading rule known as the Dow Theory, it’s often considered a bullish sign when the transports and their far more well-known counterpart, the Dow Jones industrial average, both are doing well.

Usually, investors look for one average to "confirm" the other, which means that if one of the two hits a new high for a certain period of time, the other average should also soon hit a new high if the rally has legs.

With the transports now comfortably above the January level of around 3,737, investors got the confirmation they were hoping for: The Dow 30 hit a new high back in late July and hasn’t looked back since.

One big reason that the transports have surged — the average is up more than 85% from the March lows — is that airline stocks are no longer being priced as if every carrier is on a one-way flight to Chapter 11.

The major airlines traded at extremely distressed levels earlier this year but have roared back on hopes that oil prices are stabilizing and that travel will pick up as the economy recovers absolutely free credit report.

But airlines aren’t the only group in the transport sector to improve on expectations of better times ahead. Last Friday, one of the largest components of the transports, shipper FedEx (FDX, Fortune 500), surprised Wall Street by saying that profits for the next two quarters would be better than expected.

That news helped push shares of FedEx more than 6% higher on Friday and lifted the stock of UPS (UPS, Fortune 500), its top rival and fellow Dow Jones Transportation component, by nearly 4.5%.

The upbeat outlook from FedEx could be a good omen for the broader economy since it may mean that consumers and businesses are becoming more willing to loosen up their purse strings.

John Kosar, director of research with Asbury Research in Chicago, said there are signs that this may be happening in other areas of the financial markets as well.

"A lot of people look at copper as an economic barometer since rising prices could mean that more goods are being made. The performance of the transports is letting you know if goods are being shipped. So that’s why they have significance and meeting," he said.

The better-than-expected retail sales for August also appears to confirm that there is a nascent consumer recovery.

Jason Seidl, an analyst with Dahlman & Rose, a boutique investment firm based in New York that covers the transportation, energy and agricultural industries, said he’s cautiously optimistic that business is turning around for railroads and truckers.

He said there has been a pickup in auto shipments thanks to the government’s Cash for Clunkers program and added that demand to ship chemicals and steel is increasing as well. But, he cautioned, sales and profits for transportation companies are still likely to be lower than a year ago over the next quarter or two.

"We’ve seen an uptick off the bottom but we’re not ready to declare victory yet. On an absolute basis, the numbers still don’t look great," he said.

So will this transportation rally continue? FedEx will release its full results on September 17, so it will be interesting to hear if executives are witnessing a real increase in demand or if its new profit guidance is being driven more by lower expenses.

If FedEx executives don’t sound too excited about their sales outlook, that could be a cause for concern.

Talkback: Is the recent increase in consumer spending a sign the recession may be over? Are you starting to spend more again? Share your comments below. 

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The collapse of Lehman Brothers was "unfortunate" but spurred the global policy coordination that ultimately saved the financial system, former Bear Stearns chief executive officer Alan Schwartz said in his first interview since Bear’s fall last year.

Schwartz, who is now executive chairman at investment firm Guggenheim Partners, defended regulators’ decision to allow Lehman’s failure a year ago. He said that while Lehman was a "great institution" whose collapse saddened him, saving the firm "could have caused ripple effects" that would have been criticized as well.

"The quarterback that has to call the play … has the hardest job," Schwartz told CNNMoney.com’s Poppy Harlow in an exclusive video interview. The two were joined by Dick Parsons, the chairman of Citigroup (C, Fortune 500) and former CEO of Time Warner, which owns CNNMoney.com and Fortune.

Schwartz said making Federal Reserve emergency loans available to Bear Stearns might have forestalled its collapse in March 2008. But he admitted that the firm might not have survived the "once-in-a-generation tsunami" that swept the capital markets last fall, overwhelming Lehman and prompting the government to prop up Fannie Mae, Freddie Mac and AIG.

"I had hoped that the policies post-Bear Stearns would keep that from happening to any other institution," Schwartz said, referring to government policies that enabled investment banks for the first time to borrow directly from the Federal Reserve. "I felt awful that [Lehman] was going through a situation that I knew they couldn’t control."

Lehman filed for bankruptcy the morning of Sept. 15, 2008, after then Treasury Secretary Henry Paulson and other policymakers failed in their efforts to broker a sale of the investment firm to a better capitalized partner such as Barclays or Bank of America (BAC, Fortune 500).

Within days, all hell broke loose in the financial markets. Shares of a top money market fund that had been speculating in commercial paper — the short-term loans issued by highly rated corporations — "broke the buck," falling below $1 after Lehman’s default left the fund with millions of dollars of losses.

Soon thereafter, federal officials extended an $85 billion emergency loan to prevent insurer AIG (AIG, Fortune 500) from following Lehman into bankruptcy, and the Federal Reserve hastily converted the two remaining independent investment banking firms — Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) — into bank holding companies to make sure they wouldn’t run out of cash.

By the end of the month, the nation’s sixth-largest bank, Washington Mutual, had failed, and a bigger rival, Wachovia, was being shopped to prospective buyers by the Federal Deposit Insurance Corp. It ended up being sold to Wells Fargo (WFC, Fortune 500) in a deal without taxpayer assistance.

"No one anticipated the results of the Lehman collapse," said Parsons.

Lehman’s failure came six months after Bear ran out of money and was sold with Federal Reserve support to JPMorgan Chase (JPM, Fortune 500). Schwartz, who appeared on CNBC just days before that emergency sale to claim the firm had adequate cash on hand, told CNNMoney.com he believes the firm was a victim of what he called "collusion" among those betting against Bear but admitted that "no one can prove it."

"We believed our liquidity was sound," Schwartz said. "Whether there was collusion involved, nobody knows."

Whatever his regrets about Bear, Schwartz — who had replaced longtime Bear chief Jimmy Cayne as CEO just two months before the firm’s implosion — did see a silver lining in the Lehman fiasco.

Until the firm’s failure, he said, European regulators were loath to join their American and U.K. counterparts in loosening monetary policy and providing emergency aid to the financial sector. But after the freeze of credit markets that followed Lehman’s bankruptcy, global coordination started — and not a moment too soon.

"I think that was a necessary ingredient for saving the financial system," he said.  

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U.S. import prices spiked 2% in August as the cost of oil rose, the Labor Department said on Friday.

The increase, twice what analysts polled by Reuters had expected, was the fifth rise in the last six months. It followed a July drop of 0.7%.

Excluding petroleum, import prices increased a much milder 0.4% in August after falling 0.3% in July. Petroleum prices were up 10.5% and fuel import costs were up 9.8% — both the sixth increases in the past seven months.

Overall import prices dropped 15% from August 2008, and non-petroleum imports were down 6.5%.

Exports prices rose 0.7% in August, compared to falling 0.3% in July. Exports, excluding agricultural goods, rose 0.8%, the largest increase since July 2008. 

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Export-focused Italian jewelers are looking at emerging markets to help lift sales hammered by the global economic crisis.

Italy, the world’s leading jewelry exporter, is expected to see jewelry sales at home and abroad fall 20-30 percent lower this year but they may bottom out in 2010.

“We need to go where consumers are: Brazil, Russia, India, China, Mexico, Middle East where economies will recover quicker than in Europe and the United States,” said Massimo Carraro, chief executive of jeweler and watch maker Morellato & Sector.

Morellato & Sector, which makes about 50 percent of sales abroad, already sells “accessible luxury” items in China and India and plans to expand in Brazil, the Middle East and Russia, Carraro said at a trade fair.

Limited exposure to the U.S. market has helped his group to outperform peers this year when Morellato & Sector expects its sales to fall 5 percent or even be stable on 2008, he said.

Exports of Italian jewelry to the key U.S. market plunged nearly 40 percent in the first four months of this year, while exports to the United Arab Emirates — which in 2008 replaced the United States as the biggest by-value market for Italian jewelry — fell 12 percent, according to industry data.

Italy used to sell about a quarter of its output in the United States. But its share of the world’s biggest jewelry market has shrunk in the past few years due to competition from China, India and Turkey.

Some Italian jewelers have decided to focus elsewhere free online credit report.

Consumers have warmed to Italian jewelry in Latin America, a potentially big market previously overlooked by the sector, said Domenico Girardi, general manager of the Vicenza fair, organizers of the international jewelry fair.

Upmarket jeweler Picchiotti’s deputy chairman Filippo Picchiotti said Russia, Ukraine, Kazakhstan and Azerbaijan have replaced the United States as its main export market.

But the U.S. market would retain its key role for the Italian jewelry sector and it was hoped to stage a recovery next year, Girardi told reporters at the fair.

There has been a “muted and fragile” pick up in demand from U.S. jewelry consumers, especially for Italian pieces, Maurice Golderberg, a wholesale buyer, told Reuters.

“MORE ACCESSIBLE” SILVER

Roberto Coin, designer of bespoke diamond and gold jewelry with a lion’s share of sales coming from the United States, said he was prepared to see an about a 20 percent fall in U.S. revenue this year but sales volumes should remain stable.

“We have made more accessible products … and we have kept our clientele in these difficult times,” said Coin who this year launched an “anti-crisis” Capri Plus collection which offers pieces of identical design made with materials ranging from gold to silver to ebony and from diamonds to semi-precious stones. 

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Cadbury turned up the heat in its defense against a takeover from Kraft as its Chairman Roger Carr said it was an “unappealing prospect” being absorbed into Kraft’s low growth conglomerate business model.

In the letter to Kraft’s Chairman and CEO Irene Rosenfeld on Saturday, Carr reaffirmed the British confectionery group’s rejection of Kraft’s bid, initially valued at 10.2 billion pounds ($17 billion), as it fundamentally undervalued Cadbury.

“Under your proposal, Cadbury would be absorbed into Kraft’s low growth, conglomerate business model, an unappealing prospect which contrasts sharply with our strategy to be a pure play confectionery company,” Carr said in the letter seen by Reuters.

U.S. food giant Kraft launched its cash and shares bid for Cadbury Monday in an attempt to create the world’s largest confectionery group. It offered Cadbury shareholders 745 pence a share, but the value of the bid has fallen as Kraft shares have slipped and the dollar has weakened against the pound.

Carr said Kraft’s proposal for his shareholders was to exchange shares in a pure-play confectionery group for cash and shares in a company with a considerably less focused business mix and historically lower growth.

“We are committed to the delivery of optimum value to our shareholders and our board remains convinced that this is achieved through continuing to deliver our standalone pure play confectionery strategy,” Carr added in his letter.

“In addition, the proposal is of uncertain value for Cadbury shareholders as underlined by the movement in the Kraft share price since your announcement,” he said.

Kraft’s bid is worth 300p in cash and 0.2589 new Kraft shares for each Cadbury share. This valued Cadbury at 745p or 10.2 billion pounds ($17 billion) at the time, but this had fallen to around 707p late Friday due to the weakness in Kraft shares and the dollar compared to Cadbury’s close Friday at 775-1/2p.

The deal would bring together Cadbury, the world’s second largest confectionery group after privately-owned Mars-Wrigley, with its Dairy Milk chocolate and Trident gum, together with Kraft’s portfolio of Milka and Toblerone chocolates, Oreo biscuits and Philadelphia cheese.

Analysts say there is compelling logic to a potential deal adding Cadbury’s high growth emerging market business into Kraft’s wide ranging distribution system, with few overlaps which might prompt any anti-trust concerns.

Most independent analysts at brokers not involved in the bid expect Kraft to raise the bid price to between 850-900p, while some believe a bigger cash element is needed to attract Cadbury’s shareholders into acceptance.

(Reporting by David Jones; editing by Andy Bruce)

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If you’re a house hunter in Florida, prepare to haggle. The Sunshine State is the easiest place to negotiate a price cut on your new home.

Of the 25 cities with biggest median discounts in August, 14 of them were in Florida, according to a report released Thursday by Zillow.com.

But hurry, because negotiating a better deal is getting harder. Nationwide, buyers got a median discount of 3.3% — or $7,039 off the last listing price — on homes they purchased in July. But in June, the discount was 3.5%. Back in January, the median cut was worth 4.6%.

"The strong summer selling season in 2009 has led to a decreasing difference between the last listing price and final sale price, but most buyers are still getting some additional discount at selling time," said Stan Humphries, Zillow’s chief economist.

The city where sellers offered the deepest price cuts was Vero Beach, Fla. Buyers there negotiated prices down by 10 equifax free credit report.2%, a savings of $23,500.

Other Florida hot spots were Sarasota (8.2% discount), Naples (7.8%) and Daytona Beach (7.5%).

"The fact that many Florida markets are still showing comparatively higher differences between the last listing price and final sale price suggests that inventory levels are still relatively high, keeping considerable downward pressure on prices and encouraging buyers to seek large discounts off the listing price," said Humphries.

The dollar size of the discount was biggest in Stamford, Conn., where high home prices meant the median discount of 5.9% translated into $32,099. Naples, Fla., buyers got $27,233 off their purchases, and Atlantic City, N.J., buyers slashed what they paid by a median of $23,082. 

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A freeze in consumer spending, abysmal same-store sales, and a swath of retail bankruptcies have taken a serious toll on your local mall.

Nationwide, mall vacancy rates hover at 8.4%, their highest level since commercial real estate research firm REIS started collecting the data almost a decade ago. To keep their storefronts full, mall operators are starting to get creative when it comes to their definition of a tenant.

At Concord Mall in Elkhart, Ind., a 4,900-square-foot space formerly occupied by KB Toys sat basically vacant for more than four years until the evangelical Fresh Start Church moved in. Located right next to Jo-Ann fabrics, the church has seating for 150 and is known for its frequently changing window displays.

The mall’s retailers might not see a noticeable increase in sales since the church moved in, but mall manager Robert Thatcher and Fresh Start’s Pastor Rick Harris (a.k.a. the "Mall Pastor") say the food court’s business is up; members of the congregation tend to grab a bite on Sundays after church lets out.

In Nashville, Tenn., One Hundred Oaks Mall welcomed a new kind of tenant in February: the Vanderbilt Medical Center, a sprawling facility that, at 436,000 square feet, takes up almost half the mall.

When owner Tony Ruggeri and a partner bought the space in 2006 the mall faced a dire 55% vacancy rate with a second floor that was virtually dead. Now the health care facility, which had its main opening in February, brings in almost 1,000 employees and just as many patients every day.

And when Crestwood Court in St. Louis lost Macy’s (M, Fortune 500) earlier this year, rather than try to find another anchor tenant it did the same thing it did when Dillard’s (DDS, Fortune 500) vacated two years ago: it turned the empty space in its wing into an artists’ colony until it can renovate. Local artists can rent these empty storefronts — turning them into a dance studio and theater, for instance — at a seriously discounted rate.

Crestwood mall operator Jones Lang LaSalle says business at restaurants picks up when the theater is putting on a show, and stores like Children’s Place (PLCE) see more traffic from parents when their kids are in dance lessons.

All told, at least 63 churches, 244 medical facilities, and 172 schools moved into retail space in the second quarter of 2009 alone, according to CoStar Group.

The motto of the moment is "tenant retention," says retail real estate consultant Steven Greenberg. Mall operators are also doing whatever they can to keep existing tenants in place, like agreeing to shorter leases and rent relief. (Asking rent for non-anchor tenants is down 3% from a year ago, says research firm REIS.) In some cases they’re accepting regional retailers and nontraditional mall stores like Costco (COST, Fortune 500).

Critics say some of these alternative uses may fill space, but they don’t help the customer experience. William Taubman, the COO of mall REIT Taubman Centers (TCO) (son of company founder A. Alfred Taubman, who was convicted in 2001 of price fixing while chairman of Sotheby’s) says the company left a space next to a Louis Vuitton store at its Beverly Center property in Los Angeles vacant for two years rather than fill it with just any tenant.

"Customers come to the mall to eat and to shop and to hang out," he says. "Uses more tangential to that are really not as productive."

That may be so for Taubman Centers, which owns some of the most coveted malls around the U.S. But for others, putting church pews next to the food court may be the only way to stay alive. 

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Parents who bring their kids to Dr. G. Andrew McIntosh for the chicken pox vaccine are out of luck.

The family physician, who has a solo practice in Uniontown, Ohio, doesn’t offer that shot because he can’t afford it. Most insurers won’t sufficiently cover the cost.

"It doesn’t do me any good. I am losing money on [them]," he said. The chicken pox vaccine runs about $115, but insurers only cover between $68 to $83 of that.

McIntosh has also cut back on a handful of other critical childhood vaccines for the same reason — including the measles, mumps and rubella, known as the MMR vaccine.

It costs him about $58 to buy an MMR shot, he said, while insurers pay about about $40.

So McIntosh keeps a lot less of the MMR on hand. If a patient needs the shot and he doesn’t have it, he sends them to a nearby public health clinic.

"I’m not happy to do that," he said. "The clinic is far, the service isn’t great and my patients aren’t happy to go there."

Although he says he "feels compelled" to take care of people, he adds, "I can’t save the world and pay for my staff," he said. "As we say, ‘no margin, no mission.’"

"I’ve lost a fair number of kids [at the practice] because I’ve had to send them elsewhere for their shots," he said.

Alarming numbers

It’s not clear exactly how widespread vaccine cutbacks are, but in a recent industry survey, 5% of pediatricians and 11% of physicians indicated that they’re seriously considering no longer offering immunizations. Currently there are about 350,000 pediatricians and family physicians in the U.S.

"These are fantastically alarming numbers," said Dr. Richard Lander, a Livingston N.J.-based pediatrician who chairs a committee on administration and practices at the American Academy of Pediatricians. (AAP)

"It’s an example of how health care is being driven by managed care in the United States," Lander said.

Doctors have to absorb any costs that insurance doesn’t cover because in most states insurance contracts prohibit providers from charging patients the difference.

Dr. Jim King, a family physician in Selmer, Tenn. is another medical professional who is dropping expensive vaccines because of "insufficient" reimbursement from insurers.

"The vaccine for shingles is fairly expensive, about $75 to $150 per vaccine," said King, who is also board chair of the American Academy of Family Physicians.

"The profit margin on it is very small, so we’re not giving that. If we lose money on one, we need to administer nine to break even," he said. Like McIntosh, doctors at King’s practice are referring patients to public clinics for shots that they no longer administer.

The economics work a little better in the case of influenza vaccines, which can cost between $7 to about $33 per vaccine, according to the Center for Medicare and Medicaid Services. So King is stocking up on the flu vaccine.

The threat to public health

Public health experts are particularly worried about doctors dropping vaccinations.

Dr. Lance Rodewald, head of the Immunization Services Division at the Centers for Disease Control and Prevention, points to the consequences this trend has had on public health in the past.

"Between 1989 to 1991, a number of doctors stopped providing vaccinations to children because of financing issues," he said free credit reports.

Instead, doctors referred patients to public health clinics for shots like the MMR. But many parents failed to follow up on those shots, Rodewald said, and their toddlers were never immunized.

The result: The situation led to 55,000 cases of measles, 11,000 hospitalizations and 123 toddler deaths.

The CDC found that more than half of the children who had contracted the measles had not been vaccinated, even though many of them had seen a health care provider.

"This is why we are taking attitudes of doctors very seriously when they say they are delaying buying vaccines pending insurance coverage, or that they could stop vaccinating because of declining revenues," Rodewald said.

The CDC maintains that vaccination rates for most child and adolescent vaccines are currently about 80% in the United States.

Hidden costs

Vaccines of all kinds represent the largest operating expense for some doctors, according to the AAP.

The problem: Most insurers pay providers just the base cost of the vaccine. So if it costs $120 to buy a particular vaccine, insurance would pay back $120. But Lander points out that there are a lot more expenses that go into providing a vaccine, including the refrigeration, electricity and insurance required to store the shots. On average, doctors keep $100,000 to $150,000 worth of vaccines on hand each year.

The AAP estimates that the actual cost to providers to acquire vaccines could be 17% to 28% above the price of the vaccine itself.

"This is America. Running a private practice is a business," said Lander. "It’s not $120 but closer to $140 for me to break even," said Lander.

The insurance industry acknowledged that "there is always a natural tension between health plans and providers about payment," said Susan Pisano, spokeswoman for America’s Health Insurance Plans (AHIP).

Then there’s the cost to doctors of the office visit to administer a shot. Lander maintains that a majority of insurers are inadequately paying doctors for this service, too.

"When a patient comes to my practice for shots, a nurse will explain what shots will be given, hand out pamphlets and complete paperwork," he said.

Reimbursements for administration fees range anywhere between 60% to 100% of the cost depending on a doctor’s contract with the insurer.

"Managed care had decreased [overall] access to health care because of poor pay to providers," Lander said.

McIntosh agreed. "I enjoy seeing kids. It’s joyful to see a baby and watch them grow up healthy," McIntosh said. "But I am giving that up because I can’t give them the shots they need."

He said more of his patients now are the elderly. "It makes me sad how the dynamics of my practice have changed," he said.

Talkback: Have you or a doctor that you know left the medical profession mid-career to start a new career outside of the health care industry? E-mail your story to realstories@cnnmoney.com and you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here.  

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California sent out its last IOU on Thursday. The "lucky" recipient: Yellow Cab Co. of Sacramento, the oldest and largest taxi company in California’s capital city.

Yellow Cab’s historic warrant was for $41.60, covering a trip taken by a California Department of Fish and Game worker. The IOU hasn’t yet arrived in Yellow Cab’s office, but when it does, it will have plenty of company. In the two months that California relied on warrants to pay its bills, Yellow Cab collected 62 of them, totaling $16,435.68.

"It hurts with cash flow, but it hasn’t hurt that much," Yellow Cab President Fred Pleines Jr. said of his growing IOU collection. "If it went on for a long time, it would be a problem, but $16,000 — that’s livable."

Yellow Cab has been through this before with California and its perennial budget woes. Founded in 1917 and owned by the Pleines family since 1951, Yellow Cab received a stack of IOUs from California in the early ’90s, the last time the state’s cash coffers ran dry.

California began issuing IOUs on July 2 to cover some of its payments due to individuals and businesses. The vouchers carried an initial redemption date of Oct. 2, but the state controller moved that date forward to Sept. 4 after California lawmakers reached a budget agreement. Those holding IOUs can begin redeeming them on Friday.

Each IOU carries a 3.75% annual interest rate. The state issued 449,241 warrants, totaling $2.6 billion. If every one is cashed, the interest payments will total $9.68 million.

State Controller John Chiang said California owes "a debt of gratitude" to the individuals and businesses that "were forced to bear the brunt of the State’s chronic fiscal mismanagement." The end of California’s IOU program doesn’t mark the end of its budget crisis: The state needs to borrow $10.5 billion to meet its cash needs for the next year.

"I urge the Governor and Legislature to continue their efforts to fix the State’s structural budget deficit and ensure we are never again forced to issue IOUs or delay payments to California families and small businesses," Chiang said in a written statement payday loans with no fax.

Yellow Cab is still holding most of the IOUs it was sent. Its bank, U.S. Bank (USB, Fortune 500), stopped accepting warrants in mid-July. Yellow Cab cashed in some before the deadline, but it’s been stuck with the rest, waiting for California to start its redemptions.

"’We’ve got them stored up," Pleines said.

Yellow Cab is a family-owned business with 30 employees and 70 drivers. Pleines, who took over as the company’s president when his father retired 20 years ago, has been involved in the business since he was a toddler. The recession has taken its toll this year: Fewer people are catching cabs, and Pleines says he’d welcome the chance to do more work for California — despite the state’s problems paying its bills.

"It takes a little while to get paid, but cab drivers love it," he said. "It’s a nice, safe passenger and an easy trip."

California’s landmark final IOU has historic value, but Pleines says he doesn’t plan to souvenir the voucher — or sell it off on eBay (EBAY, Fortune 500).

"It will be cashed in," he said. "We can use the money, and Laura and Nancy in our accounts receivable want their account balanced and paid in full."

Have you suffered a setback because of the economy? What are you doing to overcome it and get back on track? If you’ve been confronted with some challenge during this recession but are fighting back, send an email to realstories@cnnmoney.com and you could be profiled in an upcoming segment on CNN. For the CNNMoney.com Comment Policy, click here.  

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Kraft Foods said it was intent on pursuing Britain’s Cadbury, which soared in value after it snubbed a premium-rich bid from the U.S. group, reinforcing hopes of a broader-based pick-up in merger activity.

Analysts said North America’s biggest food group might have to raise its 10.2 billion pound ($16.7 billion) offer by up to 40 percent after shares in the world’s No.2 candy and chocolate maker increased by almost half on news of the approach.

The company’s biggest institutional shareholder, Legal & General Investment Management, said in a statement that it thought the approach materially undervalued Cadbury, and supported management in opposing the deal.

According to Reuters Estimates, Legal & General has a 5.4 percent stake in the company.

Cadbury’s stock closed up 38 percent at 783 pence, having peaked close to its all-time high at 808 and well ahead of Kraft’s 745 pence-per-share pitch.

The price spike reflected analysts’ views the combination would be a success, chances of a counterbid and bankers’ hopes that rallying equity markets and a brighter economic outlook were encouraging companies to view mergers and acquisitions (M&A) prospects with greater confidence.

“If the deal gets done, it sends a positive signal about the M&A market. There is not that much more consolidation to be done in confectionery, but a successful outcome would make global consumer companies more likely to pursue their own M&A targets,” said a senior banking source.

The two firms’ product portfolios are largely complementary.

Top brands at Cadbury, which had sales of 5.4 billion pounds ($8.8 billion) last year, include Bassett’s Liquorice Allsorts, Maynards Wine Gums and trademark chocolate bars while Kraft, which had turnover of $42 billion, is known for Maxwell House coffee, Oreo cookies and Ritz crackers.

Kraft’s cash-and-shares offer, outlined in a letter on August 28, represented a 31 percent premium to Cadbury’s closing share price from last Friday.

Kraft said on a conference call it was comfortable it could fund the cash part of the proposal with existing cash and debt. A source familiar with the situation said that Kraft has already had some discussions about financing the cash component of the deal and did not foresee that getting financing would be problematic.

The timing of the proposal was partly driven by the improvement in the debt markets, particularly for investment grade financing, that source said, and the company’s revitalization plan.

Kraft has been cutting costs and overhauling its portfolio over the past several years.

OPENING SALVO

“Our initial view is that this represents a competitively pitched offer, but something less than a knockout blow,” said Investec analyst Martin Deboo. 

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