December 29, 2004

Death knell for Mongolia's garment industry will ring on Jan 1, 2005, when decades-old global quota system is to end, freeing American and European fashion campanies and retailers, in long run, to buy as many clothes as they want from lowest-cost producers, notably China, India and Pakistan; effort at market liberalizing is expected to save American consumers as much as $6 billion a year, though higher tariffs imposed temporarily on China, as well as possible additional limits established in US and Europe, are expected to shave off some of those savings; new wave is still expected to upend world garment industry, shuffling millions of jobs in dozens of world's poorest countries; buyers are expected over time to shift their purchases to largest and cheapest producers; social and economic impact in Mongolia could be severe; map; photos (M)

Growing number of American veterans who need cash are signing over their military pensions to financial services companies; Federal law prohibits retired military people from signing over future pension payments to others; companies offering deals say they are arranged to avoid restriction; law has not been enforced or consistently interpreted; Pentagon spokeswoman says Defense Department's payroll centers routinely handle paperwork that diverts pension payments, even though veterans are warned 'to exercise cuation in these arrangements'; small but persistent band of financial companies using military-sounding names continue to offer these so-called pension advances to retired military people over Internet and in military newspapers; consumer lawyers are getting calls from people facing lawsuits and bankruptcy after signing over future pension payments to these comamies; former Georgia Gov Roy Barnes is challenging military pension advances in court; Sen Bill Nelson is pressing Defense Department for information on military pension advances; photos (M)

Florence Fabricant describes making New Year's Eve celebration featuring Spanish dishes; recipes; photos (L)

Pentagon Plans to Reduce F/A-22 Fighter Program To offset escalating deficits and the growing costs of the war in Iraq, the Pentagon said that it planned to sharply cut the Air Force's F/A-22 aircraft program. The fighter, known as the Raptor, costs about $258 million a plane. That is based on an overall cost of $71.8 billion, and the Air Force's plans to buy 277 Raptors. [Page A14.] Blockbuster Threatens Hostile Bid Shares of Blockbuster fell 6 cents, to $9.33, after the company threatened to make a $700 million hostile takeover offer for Hollywood Entertainment. Blockbuster demanded access to Hollywood Entertainment's books and said that it would start a tender offer to buy the shares for $11.50 each if the company does not cooperate. Shares of Hollywood Entertainment rose 7 cents, to $13.16. [C3.] Adelphia Proposes Settlements Adelphia Communications has proposed paying $300 million to resolve lawsuits by the Securities and Exchange Commission and the Justice Department. [C2.] Associated Press Sued for Photos Six members of the Navy Seals and two of their wives sued The Associated Press and a reporter for distributing photographs taken by one of the Seals showing apparent mistreatment of prisoners in Iraq. [A16.] F.D.A. Backs Bone Growth Device The Food and Drug Administration approved the use of electrical stimulation of bone growth to improve the success rate of spinal fusion operations in the neck. [C3.] Court Bars Web Phone Control A federal appeals court upheld a lower court ruling that prohibits Minnesota from regulating Internet-based phone calling as if it were a traditional telecommunications service. [C3.] Head of Edward Jones to Step Down Douglas E. Hill, left, will step down as managing general partner of Edward D. Jones at the end of 2005, and will pay about $3 million of a $75 million settlement with the Justice Department over claims tied to the company's mutual fund sales practices. The S.E.C. found the firm created a conflict of interest by failing to disclose a revenue-sharing deal with seven preferred mutual fund groups. [C2.] Court Asked to Dismiss Yukos Case Deutsche Bank has asked a bankruptcy court in Houston to dismiss the filing of Yukos because it has no Texas ties beyond a few million dollars in bank accounts. [C6.] Exporter Ends Ties With Distributor The Sichuan Changhong Electric Appliance Company, China's leading television maker, said it had ended its relationship with its American distributor, Apex Digital Inc., which Changhong says owes it $467.5 million. [C2.] Consumer Report Lifts Stocks The Standard & Poor's 500 jumped 8.62 points, to 1,213.54; the Dow Jones industrials gained 78.41 points, to 10,854.54; and the Nasdaq composite added 22.97 points, to 2,177.19. [C6.] The Conference Board's index of consumer confidence jumped to 102.3 in December, well above the 94 economists had expected. [C2.] Fannie Mae Auditor Noted Flaws Fannie Mae said KPMG had ''observed deficiencies'' in its third-quarter bookkeeping before being fired as its auditor. [C4.]

Postal Service says shortage of baggage handlers at US Airways, computer problem at Delta Air Line's Comair unit and snowstorms delayed delivery of 100,000 pounds of letters and packages over weekend; says much of mail was part of its priority service, in which customers pay additional fee for delivery in two to three days; delivery is not guaranteed; Postal Service spokesman Gerald McKiernan says post office is starting investigation to determine what role, if any, airline delays played in late mail delivery; Delta and Comair dispute any notion that their disruptions caused delays in mail delivery (M)