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"...an ongoing national effort by Republicans to steal elections they can't win." -- California Governor Gray Davis, characterizing his state's upcoming recall election Ever since a surgeon general's report said 61% of American adults and 13% of kids are overweight, lawyers have been chewing on ways to hold food companies responsible. Leading the charge is John Banzhaf III, a George Washington University law professor who successfully challenged Big Tobacco.

To take on Kraft Foods (KFT), Banzhaf will focus on nutritional labeling of kids' foods, BusinessWeek has learned. Banzhaf claims it's deceptive for Kraft to use adult nutrition guidelines on children's food labels. "It's a deliberate misrepresentation," he says.

The label on Kraft's popular Lunchables pepperoni pizza, for example, says the meal has 10 grams of saturated fat, or 50% of the daily max. But kids under 10 need fewer calories, so 10 grams is 56% of their limit. Morton Hortwitz, a Harvard University law professor, says it's a "no-brainer" that such labels are inadequate.

Kraft spokeswoman Kathy Knuth says providing extra information would be "impractical and certain to lead to confusion." The U.S. Food & Drug Administration does not require separate labels for children older than four, but says it plans to review its guidelines. All the sparring between regulators and Wall Street over analyst research may be overdone. Investors can profit from analysts' advice -- as long as they do the opposite.

After Wall Street's 10 top firms agreed to a $1.4 billion settlement with regulators in April, equity research groups have simplified their stock ratings. In September, Citigroup's (C) Smith Barney analysts will use just buy, hold, and sell. Prudential, Merrill Lynch (MER) Legg Mason, and A.G. Edwards (AGE) have made similar changes. Already, sell recommendations account for 11% of ratings, up from less than 1% in May, 2000.

Simplicity does not beget accuracy. Eric Shkolnik, president of analyst rating service MarketPerform.com, studied the top firms during the year ending Aug. 8, 2003. He found that investors who buy stocks hit with a "sell" did better than those who purchase stocks awarded a "buy." At Morgan Stanley (MWD) the "buy" upgrades yielded 13.5%. But the "sell" downgrades gained 32%. No firm did better with "buys" than "sells." Note to analysts: Call recommendations what you will -- just call them right. Whoever emerges as California's governor after the state's recall election will face a languishing economy, falling bond ratings, and a huge budget deficit. All of which raises a question about the Republican front-runner, Arnold Schwarzenegger: Does the action star know anything about finance?

A look at his finances, which reporters were allowed to view briefly, shows there's more than brawn there. The 65 pages list tons of investments and nearly as many financial advisers to handle them. Overall, Arnold is worth more than $100 million, much of it in Los Angeles' booming real estate market. He also took home some $3.9 million in 2001 from interest, dividends, and bond proceeds. "He's a conservative investor," says his financial adviser, Paul Wachter.

But Arnold is not very hands-on. He briefly ran and then sold a Santa Monica restaurant. He marketed the 25th-anniversary edition of his bodybuilding documentary, Pumping Iron, and owns 50% of an annual fitness convention in Columbus, Ohio -- a $350 pass includes a photo with Arnold. He also helped design an Ohio shopping mall of which he owns 20%.

Still, the muscular superstar makes most of his money in front of the camera: $57 million in the past two years. If he becomes governor, he'll be glad he has other income: The job pays $175,000. Former Vice-President Dan Quayle may have said it best a decade ago: "If we do not succeed, then we run the risk of failure." But failure has been good to Quayle. It's what vulture investors like New York's Cerberus Capital Management feast upon -- and how Quayle, as chairman of global operations, earns a paycheck.

The ex-Veep recently popped back into the public eye as a potential bidder in the sale of troubled mobile-home maker Clayton Homes (CMH) One of Clayton's institutional investors has since sued, claiming the $1.7 billion sale was rigged to favor Warren Buffett's Berkshire Hathaway (BRK)

Quayle visited Clayton management just days before the July 31 shareholder vote approving the sale to Buffett. "We asked Dan to go make sure [Clayton] knew we were serious," says Cerberus COO Mark Neperont. Cerberus, with $9 billion in assets, declined to bid within the tight deadline. Neperont says Quayle, who was unavailable for comment, is actively involved in all deals.

Thanks to the recession, Quayle has had plenty of deals to look at. U.S. companies have put $2 trillion in defaulted bonds and bankruptcy assets up for grabs -- a record. And Cerberus, named for the mythical three-headed dog that guards Hades, has been on a buying binge. This year it has spent more than $1 billion on distressed companies such as Formica, Fila (FLH) and ANC Rentals. The island nation of Niue may be just a speck in the middle of the Pacific, but it's a speck with a new claim to fame. Niue is the first country to offer free wireless access nationwide.

It hasn't been easy to get wireless up and running across Niue's 100 square miles. For six years, a band of Netheads have battled isolation, lightning storms, an erratic power system, and a telecom monopoly that refused to grant a license for a wireless transmitter. That inspired island resident Richard St. Clair to craft some low-power solar transmitters -- no license required -- to carry signals. Now, St. Clair is consulting with geeks in the Philippines, Central America, and Africa, all hoping to rig similar systems. Looks like coconut wireless has met its match. It's not an issue many music execs ever face: How to promote the final album of a terminally ill artist. But that is exactly what the folks at Artemis Records have had to figure out as they prepare for the Aug. 26 release of Warren Zevon's last album, The Wind.

The 56-year-old musician, best known for songs such as Werewolves of London and Excitable Boy, disclosed last summer that he had a rare form of lung cancer and just three months to live. He has outlived that prognosis, although he is under 24-hour care. "To promote this as the final work would have been in bad taste," says Artemis founder and longtime Zevon friend Danny Goldberg. So Artemis has kept things low-key with little advertising. Instead, the budget on the album was increased by an extra $75,000 for production. Of course, the groundswell of media coverage of Zevon's illness has helped create awareness of his last album.

Artemis may not have wanted to exploit Zevon's fate, but the artist has no qualms himself. In keeping with his biting sense of humor, Zevon has requested that the first single released to radio be his cover of Bob Dylan's Knockin' On Heaven's Door.


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