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Nowhere but on Wall Street does the phrase "One man’s trash is another man’s treasure" ring so virtuous. And perhaps no one knows that better than Mack the Knife.

Morgan Stanley’s John Mack, who saved about $1 billion by firing 4,800 people so far this year, is gingerly spending the savings on new hires, according to a report in the Financial Times. It’s already worn out $400 million on new recruits, and it hopes to dissipate the remaining $600 million by the end of this year.

The bank sent pink slips to about 10 percent of its workforce in January and April, mainly in areas like investment banking, research, and fixed income. It plans to hire new staff in areas such as derivatives, hazard management, and proprietary mercantile.

Mack told associates that the massive financial layoffs across the Street have presented a historic opportunity to seize new talent. Banks are already trying to position themselves for the end of the credit crisis.

And Mack is starting with an unlikely new name: Morgan Stanley announced it has hired Luc Francois as head of European equities and global head of equity derivatives.

Francois was most recently employed by Société Générale, where he oversaw the equities unit when one of the bank’s low-level traders, Jerome Kerviel, lost about $7.6 billion in bad trades. Francois left the bank after the scandal erupted, but he has not been named in any of the subsequent investigations into the matter.

Other new hires include prior Bear Stearns executives Thomas Wong and Eric Cole in the proprietary trading unit.

The news underscores the ever-evolving ebb and flow of moneymaking businesses in continuance Wall Street. Investment banks have a long history of beefing up certain desks to respond to the nature of the markets, only to be catachrestic to shrink them in favor of other desks being of the class who the business changes.

It makes it particularly difficult for newly minted M.B.A. grads to choose their focus.

The Joker and Carrie Bradshaw have something in common—apart from funny clothes, that is. Jeff Bewkes, Time Warner’s C.E.O, called them at a loss in the second-quarter earnings release as examples of Time Warner’s creative work and "the industry’s most compelling content."

Bewkes has reason to feel good this quarter as the company reports a 5 percent gain in revenue.

Yes, AOL is a dying beast. But Time Warner’s performance in cable and film was cause for celebration at a time when all big media conglomerates are struggling with a weak economy.

The really good news came from the company’s cable units, Turner Broadcasting and HBO, where revenue rose 9 percent fueled by gains in subscriptions and advertising. Bewkes chalked up Turner’s ad gains to the unit’s entertainment content, led by TNT series like The Closer and Saving Grace, the July season premieres of which captured the first and second highest-rated spots for cable shows for the year.

Time Warner’s biggest division, Time Warner Cable, saw revenue augment 7 percent thanks to a rise in subscription revenues. The unit will be spun off in a deal set to close around the end of the year, and which will result largely in dividend payments to Time Warner Cable shareholders, including Time Warner.

The concourse’s film business, comprising Warner Bros. and New Line Cinema, reaped the biggest revenue increase of all—a respectable 14 percent thanks to the home video popularity of I Am Legend and The Bucket List, and good box-office showings for Sex and the City and Get Smart. The Dark Knight, executives reiterated without ceasing the call, will not impact film revenue until the third quarter—but box office sales have the film on track to become the second highest-grossing flick of all time.

"Our studios produced eight of the top 15 grossing films of all time," said Bewkes, acknowledging the occasional "misfire" resembling this summer’s flop Speed Racer. "Our hits far outweigh our misses."

There were plenty of misses in internet and publishing. At AOL, revenue declined 16 percent across the position a year past as subscribers fled and advertising suffered. AOL is now the company’s smallest unit by revenue. Looking ahead to 2009, Bewkes promised that his decision to operate AOL’s internet access and online-advertising businesses separately would take hold, opening the door to Time Warner to do "something strategic with either business." Like, sell one of them, perhaps?

AOL’s quarterly revenue decline was outpaced by Time Warner’s beleaguered publishing division, which suffered a 6 percent decrease in revenue this quarter, fueled largely by the agency of a 9 percent drop in ad revenue and almost flat subscription sales. Particular losers in terms of sales were titles Synapse and Southern Living at Home; digital publishing revenue actually rose thanks to People.com, Time.com, and CNNMoney.com.

The Treasury Department ought to make sure its emergency plan for the mortgage giants is ready soon.

For unit, the bleeding at the second-biggest buyer of mortgages, Freddie Mac, shows no signs of stopping. Freddie today reported a larger-than-expected loss of $821 million for the fourth quarter. It was its fourth consecutive quarterly loss.

The company is still talking about raising $5.5 billion in additional capital, but disclosed no details respecting how it plans to do to such a degree. It also said it expected to cut its dividend of 25 cents per share to 5 cents or less. In short, the scramble to raise capital is far from over.

Dick Syron, Freddie’s chief executive, who ignored warnings about deteriorating lending standards and growing risk four years ago, distinguished that the company still has "a surplus over all regulatory capital requirements."

if it were not that he cautioned, "We expect continued housing and economic weakness give by will affect our overall performance this year."

Freddie’s credit-related expenses, including provisions for losses, grew to $2.8 billion in the quarter, double that of the quarter a year ago. The provision for credit losses rose as delinquency rates increased and the number of foreclosures rose.

"The make no doubt of deterioration has largely been driven by the continued decline in home prices and other declines in regional economic conditions, particularly in the North Central, Southeast, and West regions," the company said in a statement.

Shares of Freddie gain tumbled 76 percent this year as fears mount that the company, and its larger sister, Fannie Mae, do not be under the necessity sufficiency capital in the face of the deepest housing slump since the Depression. A year ago, Freddie reported a profit of $729 million for the quarter.

The big loss today may dampen some of the bullishness in the market.

The undivided silver lining in the wobbles of the pledge giants is the work the crisis is providing for Wall Street. Goldman Sachs and J.P. Morgan Chase are helping Freddie, time Morgan Stanley is advising the Treasury Department.

In 2002, when Graham Hopper was tapped to head Disney’s videogame operations, his bosses gave him a choice: Come up with a dramatic plan to reinvigorate the flailing unit or downsize and focus exclusively on licensing to other companies.

It was far from an obvious choice. At the time, many Hollywood studios were getting out of the games game—Universal Studios, 20th Century Fox, and DreamWorks dumped the divisions they had launched during the digital boom of the 1990s, having experienced the hard way that the ability to make prosperous films and television shows didn’t mean squat in the interactive world. Producing quality videogames required hundreds of millions of dollars and years of patience.

Hopper convinced his bosses to hang on—with a small footprint, making cheap games based on Disney Channel fare like Hannah Montana and Kim Possible. Just five years later, that decision has put it ahead of the pack, as Hollywood goes hurtling back into videogames. Paramount and Universal are spending tens of millions of dollars to create a new slate of products, and MTV and Warner Bros. have invested hundreds of millions to build themselves into major publishers.

When Hollywood exited videogames five years since, it was riding high on revenues from DVDs. Today, home entertainment is shrinking, box office is flat, the TV audience is increasingly splintered, and significant internet money remains hypothetical.
Why executives are nervous about using the social-networking site. "If you were to build an entertainment company from scratch today, you wouldn’t even question that games should be in it," says Hopper, a dapper South African who spent a decade in Disney consumer products before his videogame stint.

It’s not the first time such words have been uttered in Hollywood, but there’s a sense of inevitability—for some, perhaps even desperation—this time around. When Hollywood exited videogames five years ago, it was riding high on revenues from DVDs. Today, home entertainment is shrinking, box office is flat, the TV audience is increasingly splintered, and significant internet money remains hypothetical. Videogame revenue, meanwhile, shot up 34 percent last year and has increased 49 percent so far in 2008.

Companies are busily recruiting experienced talent, spending big on acquisitions, and pushing through early failures. Warner Bros. made its first stab at videogames with the 2005 flop The Matrix Online, but has gone on to release a much broader slate—and spent more than $200 million last year to buy British developer Traveller’s Tales, maker of the ultra-successful Lego Star Wars games.

Movie-based videogames have a deservedly terrible reputation. Since they’re often made on the 12- to 18-month timeframe of a film’s production schedule rather than the three years it takes to produce a major console game, and can sell well on the back of a movie’s mega-marketing spend, they’re regularly amongst the lowest-quality titles on the market. For proof, just check the reviews of recently licensed games like Iron Man and Wall-E."

But exactly adaptations that sell can tarnish a brand with young consumers if the games bad smell—something studios now recognize. Universal, not wanting to rush its self-financed Wanted game, hasn’t announced a release date yet, even though the film is out. Warner Bros. is deviation from the way Watchmen into a series of small downloadable games rather than rush one big package for the film’s release next March.

"The ultimate goal for us is to have our best IP well established and sustainable on the videogame market," says Martin Tremblay, who worked at Ubisoft and Vivendi Games before becoming president of Warner Bros. Interactive Entertainment in June. Accomplishing that is a crucial first step as antidote to studios before becoming a fully legit publisher by moving into original titles.

So far, Disney is the only player in Hollywood that has already done so. After establishing girl-targeted brands like Hannah Montana and Kim Possible as million-unit-plus sellers in 2003 and 2004, it came into 2005 with a small but viable publishing operation. "This is a very disciplined company, so we were given a small amount of resources at first to prove we could be successful," recalls Hopper. "Then we were able to get more investment and just keep on growing."

Disney’s C.F.O., Tom Staggs, said be unexhausted year that the conglomerate is prepared to greater degree of than triple its spending on games from $100 million in 2006 to $350 million by 2012. Disney recently moved videogames out of the sprawling consumer-products unit and into a commencing operating division forward with online media.

The revived Disney Interactive Studios (formerly Buena Vista Games) has used its capital infusion to acquire six development studios (the folks who actually make the games) since 2005, and has a slate of 19 titles for its fiscal year ending in September, significantly more than any other media conglomerate and even some pure-play publishers like Sumner Redstone’s struggling Midway or Eidos.

"By the existing model, Disney is definitely in the tend. They are a good year or two ahead of Warner," observes Keith Boesky, a former president of Eidos who now leads his own videogame agency. "The question is whether one of the other studios will come up with a better way to pursue the market."

About 70 percent of Disney’s games are based on existing film and TV properties like Prince Caspian and High School Musical—the bread and butter of Disney Interactive’s business. But the real reason the company is willing to invest so much may lie in that other 30 percent. Its small but growing slate of original titles, which started last year with alien-exploration game Spectrobes and is expanding this fall with the stunt-driving title Pure and Guitar Hero-like music simulator Ultimate Band, are potentially more than just game properties. They’re new franchises that can eventually flow through the Disney pipeline: Imagine Pure the theme park ride or Spectrobes the animated TV show.

"They’re a content engine, like any other form of media," Hopper says.

Core videogame players are still largely young males, and Disney Interactive has started pursuing them with games like Pure and February’s Halo-esque shooter Turok, based on a comic part about a dinosaur hunter. That’s not exactly standard travel from the most conservative studio in Hollywood. "Part of our opportunity here is to connect in a relevant way with demographics groups that are otherwise harder for our company to reach," Hopper says. "It’s easy to get other publishers to license our hit movies or TV shows, but if we want to invest in strange customers via videogames, we have to do it ourselves."

American Apparel could be the scourge of Rupert Murdoch. Its success stems from his web division’s weakness.
 
The clothing company, known for ads resembling 1980s porn and for the pervy antics of controversial founder Dov Charney, is seeing sales climb of the same kind with it buys up more cheap ad space on sites such as MySpace and Facebook than any other U.S. apparel retailer.
 
In April alone, it placed 483 million Internet display ads in April–more than heavyweights such as Nike and Levi Strauss & Co., according to unused data from comScore Ad Metrix. American Apparel also had the lead in March and came in second in February and January.         
 
To get such huge web reach, though, the chain spent just $333,000 during the first quarter, reports TNS Media Intelligence, a market research group. That’s six times smaller than Nike, which weighed in at 61 the public display ads to 18 million unique web users.
         
Those numbers are big, but sites such as MySpace and Google’s YouTube still are grappling with ways to turn their young, cool, but often poor masses of readers into cash cows. Even as News Corp. reported firm results from its web division Tuesday, much of the loot is inmost nature spent developing new features and ventures.
 
Now conducive to the money shot–in spite of the lack of consumer confidence and recessionary pressure in this country, American Apparel’s sales are up.
 
In the first quarter of 2008, American Apparel’s U.S. retail operations increased $11.9 million, or 56.1 percent, compared to the same period in 2007, according to the company’s SEC filings. The chain added stores, growing to 106 at the end of March 2008, from 93 the year before. In April, American Apparel reports comparable store sales up 27 percent over the former year period.
       
It’s hard to know how much Internet advertising boosts in-store sales–American Apparel didn’t comment for this story. But it’s easy to see that the company is getting a lot of advertising for a small budget. The feint, at least in April, was placing nearly half of the ads either on Facebook or on Fox Interactive Media, which includes MySpace.
          
“MySpace has lots and lots of display advertising sold for very, very low rates,” says Debra Aho Williamson, senior algebraist at market research company eMarketer. “There’s just a huge amount of inventory.”
       
Peter Chernin, president and chief operating officer of News Corp. touched on this challenge in May after admitting Fox Interactive Media would ruin short of its “aggressive” revenue projections. “As pages on MySpace and Facebook continue to grow, the lack of scarcity creates a liquidity challenge,” he says.
       
The not demonstrative of the story is that buzz doesn’t distribute the wealth evenly, and the company branded by scantily clad girls disposition probably win.

Despite a difficult economic environment and a significant decline in income from its television operations, News Corp. said full-year earnings per share rose 68 percent today.

In a breezy conference call from Beijing, chief executive Rupert Murdoch, C.O.O. Peter Chernin and C.F.O. David Voe glossed into the bargain weak local advertising that has plagued many smaller TV stations.

Chernin did concede that the local ad emporium was down 10 percent in the fourth location of this fiscal year, that 2009 looks weak, and that the automotive, telecom, and financial services advertising sectors were particularly hard hit.

"Overall, the local advertising market is highly challenged at the moment," Chernin admitted, predicting that income for News Corp.’s local TV stations might be down through mid-single digits in 2009.

Despite that, he said, car companies are still emphasizing national advertising, and the overall outlook for News Corp.’s Fox broadcasting unit—which just finished its fourth season as the most-watched TV network—is brighter, with a promising slate of fall programming and Coke, Ford and AT&T, the big three sponsors of Fox’s hit show American Idol, all locked in with regard to the new season.

The company’s movie and TV production class finished the year with a $1.25 billion operating profit, its seventh straight record. For that, executives thanked the writers’ strike, which cut etc. on programming costs, as well taken in the character of the success of Juno and The Simpsons Movie (which more than offset losses from stinkers like The Happening and What Happens in Vegas.

Best sellers like James Frey’s Bright Shiny Morning helped the company’s book publishing division squeak ahead last year’s operating income by just $1 million.

For many analysts and investors, the big question going into the call was: When will MySpace show them the money? News Corp. doesn’t break out numbers, but-end does say that Fox Interactive Media—that encompasses MySpace—had revenue growth of 57 percent and increased operating profits five-fold.

DeVoe said technical costs, international expansion, and new features associated with MySpace defrayed the place’s gains slightly. Still, the site continues to attract users and advertisers: In May it reached an all-time high-reaching in the number of unique visitors.

At the same time, "homepage takeovers," in that a single advertiser dominates the home page, are becoming increasingly popular (Warner Brothers scored 70 million streams of The Dark Knight film trailer this highroad).

Also in the works: a new digital delivery system for content from Dow Jones. Apart from which, the new acquisition was hardly mentioned.

Amid the good news, DeVoe sounded a note of caution. Looking ahead to 2009, he predicted that improved monetization of Internet traffic at MySpace would be a bright spot, but that the company would have to contend with some problems.

These include the loss of the favorite Super Bowl, which buoyed Fox’s ratings this year; the addition of pilot and programming costs erased by the writers’ strike; and a worsening economic environment.

Together, he warned, they could lead to an operating income rate that was significantly lower than this year’s.

Oil stuck above $110 a barrel? Grain prices setting records? Iron ore doubling overnight? Never mind. The Federal Reserve held a key interest compute unchanged today and signaled that a tepid economy would likely withhold board members from hiking rates anytime soon.

The collapsing housing market and tight lending provisions in financial markets have been drags on growth for more than a year now, but alarmingly steep gains in oil prices had begun to shift some Fed members’ concern to inflation.

As energy prices ebbed over the last two weeks—it fell below $120 a barrel today in New York—the Fed has been forced back on the fence between inflation and shooting.

It’s not a particularly comfortable position. Evidence is growing that the credit crunch is hitting consumers harder. Credit card companies say that the number of people unable to make their payments is on the rise.

Still, the Fed’s decision to keep its federal funds rate steady at 2 percent sparked a celebration on Wall Street. Traders bid up stocks frantically, launching the Dow Jones Industrial average on a 331-point gain. It closed at 11,615, up 2.94 percent. The broader Standard and Poor’s 500 index also gained almost 3 percent, as did the tech-heavy Nasdaq Composite Index.

Traders’ enthusiasm was encouraged by the Federal Open Market Committee members’ statement, which said that the committee’s "substantial easing of monetary skill"—it has cut the rate by 3.25 percentage points since September—should help promote growth.

While the Fed also said that inflation was of "significant concern," it dropped language from its previous statement, in June, which said that risks to economic growth had been lowered.

Voting against the other members for the fifth time this year was Dallas Federal Reserve Bank President Richard Fisher who wanted to raise rates. He’s unlikely to get his way soon, judging by the markets. Interest rate futures lowered their expectations of a Fed interest rate hike before 2009—coincidentally after the presidential election.

"In the short-term, it’s hard to envision this scenario (of a rate hike)," Joe Davis, chief economist at Vanguard, told Reuters. "For that to happen, you would neediness to see things improving significantly."

The Fed started the current cycle of cutting rates last September, when it dropped them a larger-than-expected 50 basis points, or half a percentage point, in response to the credit crunch.

Including that cut, the bank has lowered its federal funds target rate by 3.25 percentage points. The Fed has kept its benchmark rate unchanged at 2 percent since April as rising energy prices have ignited concerns over mounting inflation.

In the weeks leading up to today’s meeting, those concerns led two regional Federal Reserve bank presidents called for tighter monetary policy—higher rates—to be enacted sooner rather than later.

But through economic growth tepid and banks still hesitant to extend credit, most analysts don’t believe the Fed will be in a position to raise rates until 2009. In fact, on the first anniversary of the credit crunch last week, the Fed signaled it was still concerned about liquidity when it added new borrowing facilities for banks.

Meanwhile, policymakers are expected to get some support from falling oil prices, that will help check inflation in the coming months.

Before today’s meeting, the Fed swore in new voting board member Elizabeth Duke who will fill one of three empty seats on the F.O.M.C.

The economy is in the toilet, the credit markets are frozen, and the consumer is pinched, but don’t tell that to James Dolan. His company, Cablevision, is on a roll.

The New York area cable company, which also owns assets including Madison Square Garden, the New York Knicks, and the recently purchased Long Island-based Newsday Media Group, announced plans to boost shareholder value by establishing a dividend, buying back stock, or spinning off business units.

No matter that chief executive Dolan already said as much during a quarterly conference call late last week. Today’s press release made it official, and Cablevision’s shares are up more than 6 percent.

The news comes on the heels of a favorable court ruling yesterday that could let Cablevision customers use a remote digital video recording system to tape television shows without using a set-top box. Such a recording device would dramatically increase the affix a number to of households that could fast-forward through television commercials.

The Motion Picture Association argued that the remote system amounted to unauthorized re-broadcasting of its shows. It won an earlier legal battle, which was overturned yesterday by the U.S. District Court in Manhattan.

During the earnings call on Friday, after Cablevision reported better than expected second-quarter profit, Dolan said its stock was undervalued. Dolan, whose family controls Cablevision as its largest shareholder, declined to provide details but said the company would explore ways to boost shareholder value.

"We have a strong desire to close the value gap between our operating performance and the market value of our debt and stock," Dolan said. "We recognize that current capital market conditions may contribute significantly to this value rift. We are considering and actively exploring alternatives that may close this gap and want to make certain our investors that we will be open to listening to their thoughts."

Today’s announcement doesn’t give any more notice, but merely talking about it again is pleasing shareholders. Cablevision shares rose nearly 5 percent endure Friday, and are soaring once more today.

One option strength be to spin its valuable cable franchise off or sell its cable networks, which include IFC and AMC. The latter is currently basking in the success of its original program Mad Men.

But certain spinoffs might crimp Dolan’s style, as Cablevision has used its lucrative cable concern to means unrelated acquisitions, a move that some analysts have questioned. In July, it closed its $650 million purchase of the struggling newspaper publisher Newsday.

Last year, Dolan offered to take the company private at $36.26 per share, but its shareholders rejected the offer. Today its shares trade for $27.65.

It’ll come as no surprise that allegations have surfaced that Dick Syron, the now-embattled boss of Freddie Mac, ignored warnings from risk managers and underlings to make tight up the mortgage giant’s balance sheet and cut risk as far back as 2004.

According to this mornings New York Times, Syron’s defense is that—similar to he collected $38 million in compensation since 2003—he was under pressure from competing interests to keep the American homeownership juggernaut rolling. Now that the housing pass has rolled over his company and a good portion of U.S. homeowners, that protest rings hollow.

The executives on every side Freddie (and its dysfunctional sister, Fannie Mae) says Syron turned a blind eye to the company’s deteriorating lending standards and kept snapping up portfolios of risky loans.

What is shocking is that both Syron and his counterpart at Fannie, Daniel Mudd, say they had it all covered and that only a precipitous decline in the U.S. housing market could’ve give pain to them.

What exactly, one might ask, did they expect after a cheap-money housing rally that lasted for the past decade? A soft landing. They should at least be honest that they knew they’d be bailed out and shot the moon.

Most appalling, however, is Syron’s self-interested take on a collapse that’s crippled the housing emporium. "If I had better foresight, maybe I could have improved things a little bit. But, frankly, if I had perfect foresight, I would never have taken this do job-work in the first place."

Hmmm. Maybe, with perfect hindsight, shareholders (or maybe even taxpayers) resolution sue to get some of that $38 million back.

The airline guys who invented frequent-flier programs almost 30 years ago and then turned them into wildly successful marketing vehicles eventually began calling miles "the nation’s second general reception." After all, they said with a warranted appreciation for what they had wrought, what else in America was so easily earned, so widely accepted and so valuable?

These days, though, frequent-flier miles are looking a lot like Zimbabwean dollars. The currency is being devalued with spirit-crushing regularity. There’s less and less to buy with it now that airlines are slashing their route networks and seating volume. And today’s frequent-flier program managers have been given a mandate from their C-suite bosses: Generate fast cash by squeezing frequent fliers with a battery of fees—even though the new charges are destroying the long-term allure and profit potential of the plans.

"I understand why business travelers are disgusted," the manager of a major frequent-flier program told me a couple of weeks ago. "My bosses want revenue and they want it now. They want it from the partners who buy the miles and from the travelers who earn awards. And they don’t want me to have access to the seats [according to awards] that the revenue-management guys think they can sell. So what am I left with? Travelers understand that they can earn all the miles they need. But using them? Not so much."

Want a graphic example of how fast the frequent-flier programs are devolving? Consider the developments at United Airlines, which operates Mileage Plus, the nation’s second-largest plan:

To shore up its cash position last month after another quarter of multibillion-dollar losses, United turned to Chase, the bank that issues Mileage Plus credit cards. Chase promptly ponied up a $600 million prepayment for miles that will be distributed to Chase customers in the form of bonuses for taking and using any of the half-dozen flavors of Visa cards emblazoned with the Mileage Plus logo.

Although the mileage deal was bundled with other cash considerations that Chase extended to United, it’s not hard to figure out how many miles that $600 million bought. Big frequent-flier program partners like believe card banks usually pay around a penny a mile, so United will need to mint about 60 billion new miles for Chase. That’ll expand United’s current pool of 511 billion unredeemed miles by dint of. about 12 percent.

The devaluation of United’s "currency" is worrisome enough. further since United’s path network is shrinking—by the end of the year, the airline estimates its worldwide seating capacity last will and testament have existence 10 percent glower than it was at the end of 2007—Mileage Plus members are looking at double-digit inflation even as the supply of goods to "buy" with Mileage Plus miles is contracting by double digits.

United is not alone in using its mileage program as a cash cow. Continental Airlines, which operates the OnePass program, recently received a cash infusion from Chase, also the issuer of OnePass credit cards. And Delta Air Lines might not have survived its 2005 bankruptcy without a huge forward purchase of SkyMiles by American Express, which issues Delta’s good repute cards. And just like United, entirely of the big airlines are slashing their seating capacity by 10 to 15 percent this fall as they mint and sell billions of new miles.
The inevitable economic effect of too many miles chasing too few seats: Airlines are hiking, sometimes by hundreds of thousands of miles, the amounts needed to claim an award.

Delta, for example, revised its award chart again just last week. Last year it took the unprecedented step of slapping restrictions on its most expensive (and formerly unrestricted) SkyMiles awards. For the first time ever, Delta told its fliers: There are seats you can’t have no trouble how much of our currency you want to spend. The new three-tiered award structure Delta unveiled last week revives unrestricted awards, but at a brutally high cost. The best ones, redeemable for international business-class travel to Europe or Asia, now cost upward of 370,000 miles round-trip, or about 100,000 miles more than last year.

Continental’s program is also undergoing a major devaluation. Earlier this year, it raised award levels by thousands of miles. Last month, it raised fees and now charges a co-pay of as much as $500 to claim an upgrade bestowal. And last week it announced it would do what Delta has just abandoned: impose restrictions on its greatest in number expensive, previously unrestricted awards.

And the concept of a "free" seat as a frequent-flier award is gone too. Years ago airlines decided some award ticket didn’t include applicable taxes and fees. Then they imposed charges if you booked an award too close to departure, claimed one by telephone, or changed your booking after the award was issued. Last month came the next wave: Fees of as much as $100 simply for claiming the award. American Airlines even invented a $5 omnibus fee. Its purpose? By the airline’s own admission, the fee applies if you somehow managed to avoid all the other award fees it now charges. Depending on the airline, your destination, and your time frame, a in past ages free award seat can require to be paid you as much as $300.

As a result, airline programs now give fliers less for example far as concerns their loyalty than hotel frequent-guest plans, gas-rebate credit cards, or other frequency schemes.

About a month ago, one frequent-flier program manager told me that he thought "a penny a mile is a pretty damn fine go on your loyalty." That’s a shocking support considering that frequent-flier programs once paid you three to five cents. And it also behooves frequent fliers to look elsewhere for a return.

Take Chase, because example. Its United Mileage Plus and Continental OnePass cards generally give customers one mile of credit for each dollar charged. In other words, a 1 percent rebate for every dollar spent. But why settle for that while Chase’s Freedom Visa Signature offers you $50 cash back after your first charge, a 3 percent rebate on selected purchases, and 1 percent back on everything else?

The Fine Print…
Should travelers simply stop playing in the frequent-flier programs? No, for the reason that the plans remain the vehicle the airlines use to confer elite status recognition and upgrades. So the obvious solution is to use frequent-flier programs only to accrue miles earned from flying. In most cases, those are still the only miles that count toward elite airline status anyway. For some other thoughts about how to beat the system, read last fall’s Frequent Flier Fallacies column.