Ron Cook is a department manager at a Wal-Mart store in Atlanta. Maria Guzman is an undocumented worker from Mexico; she lives in Houston with her three children and cleans office buildings at night. Marty Lawson works for a large Minneapolis corporation. (The names have been changed to protect the privacy of the individuals.) What do these three people have in common? They are all regular fringe economy customers.

The term "fringe economy" refers to a range of businesses that engage in financially predatory relationships with low-income or heavily indebted consumers by charging excessive interest rates, superhigh fees, or exorbitant prices for goods or services. Some examples of fringe economy businesses include payday lenders, pawnshops, check-cashers, tax refund lenders, rent-to-own stores, and "buy-here/pay-here" used car lots. The fringe economy also includes credit card companies that charge excessive late payment or over-the-creditlimit penalties; cell phone providers that force less creditworthy customers into expensive prepaid plans; and subprime mortgage lenders that gouge prospective homeowners.

The fringe economy is hardly new. Pawnshops and informal high-interest lenders have been around forever. What we see today, however, is a fringe-economy sector that is growing fast, taking advantage of the ever-larger part of the U.S. population whose economic lives are becoming less secure. Moreover, in an important sense the sector is no longer "fringe" at all: more and more, large mainstream financial corporations are behind the high-rate loans that anxious customers in run-down storefronts sign for on the dotted line.

The Payday Lending Trap

Ron and Deanna Cook have two children and a combined family income of $48,000 -- more than twice the federal poverty line but still $10,000 below Georgia's median income. They are the working poor.

To make ends meet, the Cooks borrow from payday lenders. When Ron and Deanna borrow $300 for 14 days they pay $60 in interest -- an annual interest rate of 520%! If they can't pay the full $360, they pay just the $60 interest fee and roll over the loan for another two weeks. The original $300 loan now costs $120 in interest for 30 days. If they roll over the loan for another two-week cycle, they pay $180 in interest on a $300 loan for 45 days. If the payday lender permits only four rollovers, the Cooks sometimes take out a payday loan from another lender to repay the original loan. This costly cycle can be devastating. The Center for Responsible Lending tells the tale of one borrower who entered into 35 back-to-back payday loans over 17 months, paying $1,254 in fees on a $300 loan.

The Cooks take out about ten payday loans a year, which is close to the national average for payday loan customers. Although the industry claims payday loans are intended only for emergencies, a 2003 study of Pima County, Ariz., by the Financial services for the poor and credit-challenged are big business.

Southwest Center for Economic Integrity found that 67% of borrowers used their loans for general non-emergency bills. The Center for Responsible Lending found that 66% of borrowers initiate five or more loans a year, and 31% take out twelve or more loans yearly. Over 90% of payday loans go to borrowers with five or more loans a year. Customers who take out 13 or more loans a year account for over half of payday lenders' total revenues.

The Unbanked

Maria Guzman and her family are part of the 10% of U.S. households -- more than 12 million -- that have no relationship with a bank, savings institution, credit union, or other mainstream financial service provider. Being "unbanked," the Guzmans turn to the fringe economy for check cashing, bill payment, short-term pawn or payday loans, furniture and appliance rentals, and a host of other financial services. In each case, they face high user fees and exorbitant interest rates.

Without credit, the Guzmans must buy a car either for cash or through a "buy-here/pay-here" (BHPH) used car lot. At a BHPH lot they are saddled with a 28% annual percentage rate (APR) on a high-mileage and grossly overpriced vehicle. They also pay weekly, and one missed payment means a repossession. Since the Guzmans have no checking account, they use a check-casher who charges 2.7% for cashing their monthly $1,500 in payroll checks, which costs them $40.50 a month or $486 a year.

Like many immigrants, the Guzmans send money to relatives in their home country. (Money transfers from the United States to Latin America are expected to reach $25 billion by 2010.) If they sent $500 to Mexico on June 26, 2006, using Western Union's "Money in Minutes," they would have paid a $32 transfer fee. Moreover, Western Union's exchange rate for the transaction was 11.12 pesos for the U.S. dollar, while the official exchange rate that day was 11.44. The difference on $500 was almost $14, which raised the real costs of the transaction to $46, or almost 10% of the transfer amount. Without a checking account, the Guzmans turn to money orders or direct bill pay, both of which add to their financial expenses. For example, ACE Cash Express charges 79 cents per money order and $1 or more for each direct bill payment. If the Guzmans use money orders to pay six bills a month, the fees total nearly $57 a year; using direct bill pay, they would pay a minimum of $72 in fees per year.

All told, the Guzmans spend more than 10% of their income on alternative financial services, which is average for unbanked households. To paraphrase James Baldwin, it is expensive to be poor and unbanked in America.

The Cooks and the Guzmans, along with people like Marty Lawson caught in a cycle of credit card debt (see sidebar), may not fully appreciate the economic entity they are dealing with. Far from a mom-and-pop industry, America's fringe economy is largely dominated by a handful of large, well-financed multinational corporations with strong ties to mainstream financial institutions. It is a comprehensive and fully formed parallel economy that addresses the financial needs of the poor and credit-challenged in the same way as the mainstream economy meets the needs of the middle class. The main difference is the exorbitant interest rates, high fees, and onerous loan terms that mark fringe economy transactions.

The Scope of the Fringe Economy

The unassuming and often shoddy storefronts of the fringe economy mask the true scope of this economic sector. Checkcashers, payday lenders, pawnshops, and rent-to-own stores alone engaged in at least 280 million transactions in 2001, according to Fannie Mae Foundation estimates, generating about $78 billion in gross revenues. By comparison, in 2003 combined state and federal spending on the core U.S. social welfare programs -- Temporary Aid to Needy Families (AFDC's replacement), Supplemental Security Income, Food Stamps, the Women, Infants and Children (WIC) food program, school lunch programs, and the U.S. Department of Housing and Urban Development's (HUD) low-income housing programs -- totaled less than $125 billion. Revenues in the combined sectors of the fringe economy -- including subprime home mortgages and refinancing, and used car sales -- would inflate the $78 billion several times over and eclipse federal and state spending on the poor.

There can be no doubt that the scope of the fringe economy is enormous. The Community Financial Services Association of America claims that 15,000 payday lenders extend more than $25 billion in short-term loans to millions of households each year. According to Financial Service Centers of America, 10,000 check-cashing stores process 180 million checks with a face value of $55 billion.

The sheer number of fringe economy storefronts is mindboggling. For example, ACE Cash Express -- only one of many such corporations -- has 68 locations within 10 miles of my Houston zip code. Nationwide there are more than 33,000 check-cashing and payday loan stores, just two parts of the fringe economy. That's more than the all the McDonald's and Burger King restaurants and all the Target, J.C. Penney, and Wal-Mart retail stores in the United States combined. ACE Cash Express is the nation's largest check-casher and exemplifies the growth and profitability of the fringe economy. In 1991 ACE had 181 stores; by 2005 it had 1,371 stores with 2,700 employees in 37 states and the District of Columbia. ACE's revenues totaled $141 million in 2000 and by 2005 rose to $268.6 million. In 2005 ACE:

* cashed 13.3 million checks worth approximately $5.3 billion (check cashing fees totaled $131.6 million);

* served more than 40 million customers (3.4 million a month or 11,000 an hour) and processed $10.3 billion in transactions;

* processed over 2 million loan transactions (worth $640 million) and generated interest income and fees of $91.8 million;

* added a total of 142 new locations (in 2006 the company anticipates adding 150 more);

* processed over $410 million in money transfers and 7.6 million money orders with a face value of $1.3 billion;

* processed over 7.8 million bill payment and debit card transactions, and sold approximately 172,000 prepaid debit cards.

Advance America is the nation's leading payday lender, with 2,640 stores in 36 states, more than 5,500 employees, and $630 million this year in revenues. Dollar Financial Corporation operates 1,106 stores in 17 states, Canada, and the United Kingdom. Their 2005 revenues were $321 million. Check-into-Cash has more than 700 stores; Check N' Go has 900 locations in 29 states. Almost all of these are publicly traded NASDAQ corporations.

There were 4,500 pawnshops in the United States in 1985; now there are almost 12,000, including outlets owned by five publicly traded chains. In 2005 the three big chains -- Cash America International (a.k.a Cash America Pawn and Super- Pawn), EZ Pawn, and First Cash -- had combined annual revenues of nearly $1 billion. Cash America is the largest pawnshop chain, with 750 locations; the company also makes payday loans through its Cash America Payday Advance, Cashland, and Mr. Payroll stores. In 2005, Cash America's revenues totaled $594.3 million.

The Association of Progressive Rental Organizations claims that the $6.6 billion a year rent-to-own (RTO) industry serves 2.7 million households through 8,300 stores in 50 states. Many RTOs rent everything from furniture, elec tronics, major appliances, and computers to jewelry. Rent- A-Center is the largest RTO corporation in the world. In 2005 it employed 15,000 people; owned or operated 3,052 stores in the United States and Canada; and had revenues of $2.4 billion. Other leading RTO chains include Aaron Rents (with 1,255 stores across the United States and Canada and gross revenues of $1.1 billion in 2005) and RentWay (with 788 stores in 34 states and revenues of almost $516 million in 2005).

These corporations represent the tip of the iceberg. Low-income consumers spent $1.75 billion for tax refund loans in 2002. Many lost as much as 16% of their tax refunds because of expensive tax preparation fees and/or interest incurred in tax refund anticipation loans. The interest and fees on such loans can translate into triple-digit annualized interest rates, according to the Consumer Federation of America, which has also reported that 11 million tax filers received refund anticipation loans in 2000, almost half through H&R Block. According to a Brookings Institution report, the nation's largest tax preparers earned about $357 million from fringe economy "fast cash" products in 2001, more than double their earnings in 1998. All for essentially lending people their own money!

The fringe economy plays a big role in the housing market, where subprime home mortgages rose from 35,000 in 1994 to 332,000 in 2003, a 25% a year growth rate and a tenfold increase in just nine years. (A subprime loan is a loan extended to less creditworthy customers at a rate that is higher than the prime rate.) According to Edward Gramlich, former member of the Board of Governors of the Federal Reserve System, subprime mortgages accounted for almost $300 billion or 9% of all mortgages in 2003.

While the fringe economy squeezes its customers, it is generous to its CEOs. According to Forbes, salaries in many fringe economy corporations rival those in much larger companies. In 2004 Sterling Brinkley, chairman of EZ Corp, earned $1.26 million; ACE's CEO Jay Shipowitz received $2.1 million on top of $2.38 million in stocks; Jeffrey Weiss, Dollar Financial Group's CEO, earned $1.83 million; Mark Speese, Rent-A-Center's CEO, made $820,000 with total stock options of $10 million; and Cash America's CEO Daniel Feehan was paid almost $2.2 million in 2003 plus the $9 million he had in stock options.

Fringe-economy corporations argue that the high interest rates and fees they charge reflect the heightened risks of doing business with an economically unstable population. While fringe businesses have never made their pricing criteria public, some risks are clearly overstated. For example, ACE assesses the risk of each check-cashing transaction and reports losses of less than 1%. Since tax preparers file a borrower's taxes, they are reasonably assured that refund anticipation loans will not exceed refunds. To further guarantee repayment, they often establish an escrow account into which the IRS directly deposits the tax refund check. Pawnshops lend only about 50% of a pawned item's value, which leaves them a large buffer if the pawn goes unclaimed (industry trade groups claim that 70% of customers do redeem their goods). The rent-to-own furniture and appliance industry charges well above the "street price" for furniture and appliances, which is more than enough to offset any losses. Payday lenders require a post-dated check or electronic debit to assure repayment. Payday loan losses are about 6% or less, according to the Center for Responsible Lending.

Much of the profit in the fringe economy comes from financing rather than the sale of a product. For example, if a used car lot buys a vehicle for $3,000 and sells it for $5,000 cash, their profit is $2,000. But if they finance that vehicle for two years at a 25% APR, the profit jumps to $3,242. This dynamic is true for virtually every sector of the fringe economy. A customer who pays off a loan or purchases a good or service outright is much less profitable for fringe economy businesses than customers who maintain an ongoing financial relationship with the business. In that sense, profit in the fringe economy lies with keeping customers continually enmeshed in an expensive web of debt.

Funding and Exporting America's Fringe Economy

Fringe economy corporations require large amounts of capital to fund their phenomenal growth, and mainstream financial institutions have stepped up to the plate. ACE Cash Express has a relationship with a group of banks including Wells Fargo, JP Morgan Chase Bank, and JP Morgan Securities to provide capital for acquisitions and other activities.

Advance America has relationships with Morgan Stanley, Banc of America Securities LLC, Wachovia Capital Markets, and Wells Fargo Securities, to name a few. Similar banking relationships exist throughout the fringe economy.

The fringe economy is no longer solely a U.S. phenomenon. In 2003 the HSBC Group purchased Household International (and its subsidiary Beneficial Finance) for $13 billion. Headquartered in London, HSBC is the world's second largest bank and serves more than 90 million customers in 80 countries. Household International is a U.S.-based consumer finance company with 53 million customers and more than 1,300 branches in 45 states. It is also a predatory lender. In 2002, a $484 million settlement was reached between Household and all 50 states and the District of Columbia. In effect, Household acknowledged it had duped tens of thousands of low-income home buyers into loans with unnecessary hidden costs. In 2003, another $100 million settlement was reached based on Household's abusive mortgage lending practices.

HSBC plans to export Household's operations to Poland, China, Mexico, Britain, France, India, and Brazil, for starters. One shudders to think how the fringe economy will develop in nations with even fewer regulatory safeguards than the United States. Presumably, HSBC also believes that predatory lending will not tarnish the reputation of the seven British lords and one baroness who sit on its 20-member board of directors.

What Can be Done?

The fringe economy is one of the few venues that creditchallenged or low-income families can turn to for financial help. This is especially true for those facing a penurious welfare system with a lifetime benefit cap and few mechanisms for emergency assistance. In that sense, enforcing strident usury and banking laws to curb the fringe economy while providing no legal and accessible alternatives would hurt the very people such laws are intended to help by driving these transactions into a criminal underground. Instead of ending up in court, non-paying debtors would wind up in the hospital. Simply outlawing a demand-driven industry is rarely successful.

One strategy to limit the growth of the fringe economy is to develop more community-based lending institutions modeled on the Grameen Bank or on local cooperatives. Although community banks might charge a higher interest rate than commercial banks charge prime rate customers, the rates would still be significantly lower than in the existing fringe sector.

Another policy option is to make work pay, or at least make it pay better. In other words, we need to increase the minimum wage and the salaries of the lower middle class and working poor. One reason for the rapid growth of the fringe economy is the growing gap between low and stagnant wages and higher prices, especially for necessities like housing, health care, pharmaceuticals, and energy.

Stricter usury laws, better enforcement of existing banking regulations, and a more active federal regulatory system to protect low-income consumers can all play a role in taming the fringe economy. Concurrently, federal and state governments can promote the growth of non-predatory community banking institutions. In addition, commercial banks can provide low-income communities with accessible and inexpensive banking services. As the "DrillDown" studies conducted in recent years by the Washington, D.C., nonprofit Social Compact suggest, low-income communities contain more income and resources than one might think. If fringe businesses can make billions in low-income neighborhoods, less predatory economic institutions should be able to profit there too. Lastly, low and stagnant wages make it difficult, if not impossible, for the working poor to make ends meet without resorting to debt. A significant increase in wages would likely result in a significant decline in the fringe economy. In the end, several concerted strategies will be required to restrain this growing and out-of-control economic beast.

Howard Karger is professor of social work at the University of Houston, and author of Shortchanged: Life and Debt in the Fringe Economy (Berrett-Koehler, 2005).

The value of the RMB has risen nearly 3.86 percent since China decided to revalue its currency in July 2005.

The central parity of the RMB against the other four major currencies announced on Friday by the Trading Center were as follows: 10.2665 yuan to one euro, 6.5630 yuan to 100 Japanese yen, 1.00467 yuan to one HK dollar and 15.3232 yuan to one pound.

According to Ye Yaoting, a forex analyst from the Bank of Communications, commercial banks needed to sell their dollars at the end of the fiscal year.

"The move drove up demand for the RMB and helped further increase the value of the local currency," Ye said.

The National Association of Realtors reported sales of existing homes was 0.6 percent in November to a seasonally adjusted annual rate of 6.28 million units, after a 0.5 percent rise in sales in October.

That is the first back-to-back increase in sales of existing homes since the spring of 2005 and followed news Wednesday that sales of new homes rose 3.4 percent last month.

The better-than-expected showing for both new and existing home sales could be a sign this year's severe slide in housing is starting to bottom out, analysts said.

However, they cautioned not to expect a sharp rebound. They said prices will continue falling for several more months as sellers are forced to trim their asking prices more because of near-record levels of unsold homes.

Meanwhile, the Conference Board reported Thursday that consumer confidence rose sharply to an eight-month high of 109.0 in December.

That was only slightly below last April's 109.8, when confidence had hit the highest point in four years before soaring gasoline prices and a slumping housing market took their toll on Americans' perception of the future.

The rise in the consumer confidence readings was a good sign that the housing slowdown was not more seriously affecting consumers' willingness to spend money, analysts said.

The fear had been that the severe slump in housing would cause people to stop spending and possibly contribute to an outright recession, much as the bursting of the stock market bubble in 2000 helped trigger the 2001 downturn.

For October, the median price for an existing home fell for a record fourth consecutive month, dropping to 218,000 U.S. dollars, down 3.1 percent from a year ago.

There was good news on jobs Thursday as the Labor Department reported that the number of laid off workers filing applications for unemployment benefits rose by only 1,000 last week to 317,000. That is a level that analysts said indicated the job market was remaining strong in spite of the slowdown in overall economic growth.

However, market showed little reaction to the report as the United States is experiencing an unusually mild winter, which lower demand for heating fuel.

New York's main contract, light sweet crude for delivery in February, rose 19 cents to 60.53 dollars per barrel.

In London, Brent North Sea crude for February delivery climbed 10 cents to 60.62 dollars.

"Our challenge now is to continue to meet our security needs while striking a better balance with how we welcome foreign visitors," Ridge said.

Entry requirements will be tightened further as of Jan. 23, when everyone entering the United States by airplane from Canada, Mexico, South or Central America and the Caribbean will be required to present a passport.

The number of business travelers to the United States fell 10 percent in 2005 from the previous year, according to World Travel Market, a London-based trade-show group. The Discover America Partnership - the group Ridge is working with, an organization of business executives working to improve America's image abroad - says its survey of foreign travelers found that the U.S. entry process was rated the "worst" by a margin of more than two to one.

The National Foreign Trade Council estimates that the entry rules cost U.S. businesses $31 billion in lost sales and higher expenses from 2002 to 2004.

But more broadly, U.S. business groups say, foreign travelers choosing other destinations might fuel the growth of rival commercial and financial centers.

International travel "has expanded in Dubai, Budapest, Dubrovnik, not Washington, Philadelphia and Boston," said William Hanbury, president and chief executive of the Washington Convention and Tourism Corporation.

Companies are pressing their case with the U.S. State Department. Visa regulations were a topic at a meeting Dec. 6 involving the under secretary for management, Henrietta Fore; assistant secretary for consular affairs, Maura Harty; and executives from companies including Boeing, Walt Disney and Marriott International.

With no major changes in sight, executives at Exxon Mobil are meeting with a "significant" number of foreign customers, business partners and employees in Europe and Singapore, said Dan Nelson, who heads the company's legislative strategy team in Washington.

Pixelworks, with no time to appeal visa denials for some 20 employees in China, sent the workers to a Canadian branch office for training, said Chris Bright, a spokesman for the semiconductor maker.

At Ingersoll-Rand, a travel troubleshooter, Elizabeth Dickson, tells the story of the Indian engineer who had to make three trips to the U.S. consulate in Madras, an 18-hour trek, because of U.S. government mistakes. Those included first issuing him the wrong type of visa and then refusing to give him the correct visa, she said.

Since learning that all of the Sept. 11 hijackers had entered the country on visas, the United States has required every visa applicant to be interviewed in person and fingerprinted. Previously, many were able to get visas through the mail.

Even if U.S. officials can argue that a need for heightened security justifies their actions, they are ignoring the negative image that such programs create, business travel groups say.

"We do have a perception out there that it's a difficult country to enter, this whole 'Fortress America' idea," said Kevin Mitchell, chairman of the Business Travel Coalition, a group of frequent foreign and U.S. business travelers.

Bush administration officials respond that problems with visas and customs clearance are the exception.

Since the Sept. 11 attacks, the State Department has added 520 employees to process visas and has worked to automate procedures and reduce the waiting time for interviews, which used to be as long as five months in India, the deputy assistant secretary of state for visa services, Tony Edson, said.

Still, "if people don't think the U.S. is welcoming international travelers, it's as important as what America is actually doing with world travelers," he said.

On average, Customs and Border Protection officers handle 1.1 million people coming into the United States every day, denying entry to only 860, or fewer than 1 percent, said Kelly Klundt, an agency spokeswoman.

Aware of the public's negative perception, Customs and Border Protection has begun a training program to make officers more sensitive to the foreigners they are questioning.

"We understand and are acutely aware that the vast majority of travelers are legitimate," Klundt said.

Slovenia's small size - its population is just 2m - means that the impact of its entry will be hard to separate from the usual spike in demand for cash around Christmas and New Year, according to Antti Heinonen, head of the European central bank's bank notes directorate. So what has driven rapid growth in euro notes?

After the 2002 launch, the rate of increase slowed, but has remained at or above 10 per cent a year. The exact reasons are unclear; even central banks do not know where their notes are or for what purposes they are used.

Mr Heinonen suggests several explanations. Within the eurozone, citizens may still be adjusting to the new currency. In terms of population, the eurozone, with 315m inhabitants, is larger than the US. Low interest and inflation rates have "reduced the opportunity cost of holding cash, rather than putting your money in a bank account", he says.

Eurozone citizens anyway like to hoard some cash, perhaps more than their US counterparts, especially if they have difficulty getting to an automated cash dispenser. Electronic payment systems remain far from universal.

Robust eurozone growth, which has matched that in the US in recent quarters, could have added to demand.

Other clues come from the popularity of different euro notes. In volume terms, €500 notes have seen the fastest growth; their number in circulation was rising at an annual rate of almost 14 per cent in November. The volume of low-denomination dollar notes means that in terms of individual notes in circulation, the dollar leads the euro, and the dollar has retained its title as "cash most used outside of its borders", says Mr Heinonen.

The popularity of high-value euro notes might result from their use by criminals, although the ECB does not put too much weight on such factors. "Clearly cash is used by criminals because it is an anonymous instrument," adds Mr Heinonen. "But to say that it would be more difficult to commit a crime if we didn't have high denomination notes would be to confuse cause and effect. If we didn't have the higher denominations, criminals would use the lower denominations - or other global currencies, such as the US dollar or Swiss franc."

The overseas demand for euro notes is clearer to see. Tourists travelling outside the eurozone are likely to have taken euro notes with them and not brought so many back. The notes have also become popular in European Union member states that hope to one day to join the eurozone. Kosovo and Montenegro have adopted the euro as their national currency, even though they are not yet EU members. In countries such as Russia and beyond, euros have gained acceptance.

And at least when it comes to overseas use, the ECB has some indications about the scale of demand. Using statistics on the net the value of euros shipped by financial institutions, the ECB estimates that the stock held outside the eurozone must be worth at least €55bn, and that is almost certainly too low an estimate given the net outflow accounted for by tourists.

The ECB estimates that between 10 and 20 per cent of the €600bn euro notes in circulation are held outside the eurozone.

According to various estimates, here's what happens to your clothing giveaways. In most cases, a small amount of the items, the best quality castoffs -- less than 10 percent of donations -- are kept by the charitable institutions and sold in their thrift shops to other Americans looking for a bargain. These buyers could be people who are hard up, or they could be folks who like the idea of a good deal on a stylish old item that no longer can be found in regular stores.

The remaining 90 percent or more of what you give away is sold by the charitable institution to textile recycling firms. Bernard Brill, of the Secondary Recycled Textiles Association, told ABC News: "Our industry buys from charitable institutions, hundred of millions of dollars worth of clothing every year."

So, at this point, the charity you have donated clothes to has earned money off of them in two ways -- in their shops and by selling to recyclers. Then the recycler kicks into high gear. Most of the clothes are recycled into cleaning cloths and other industrial items, for which the recyclers say they make a modest profit.

Twenty-five percent, however, of what the recycling companies purchase from charities is used not as rags, but as a commodity in an international trading economy that many American may not even know about. Brill, from the textile association, picked up the story. "This clothing is processed, sorted and distributed around the world to developing countries," he said.

Take that pair of bluejeans you may have recently donated. Your jeans are stuffed with others into tightly sealed plastic bales weighing about 120 pounds and containing about 100 pairs of jeans.

The bales are loaded into huge containers and sold to international shippers who put them on ships bound for Africa and other developing regions. Again, the price of your old jeans has increased a bit because the shipper had to buy them.

By the time the bale of jeans is unloaded from a container here in Accra, Ghana, it is worth around $144. That's $1.30 per pair of jeans. But when the bale is opened up and the jeans are laid out for sale in the so-called "bend over" markets, customers bend over and select their purchases from the ground for an average price of $6.66 per pair of jeans. That's a 500 percent increase in value just by opening up the bale of clothes.

So now you know that about 70 percent of your old donated jeans are being used as cloths to wipe oil off of engine parts and the remaining 20 to 25 percent of pants that left your closet with no value are ultimately sold in Africa, where American clothes are extremely popular, for an average price of about $7 per pair. That's a bargain for African shoppers -- most of them are low-income earners who cannot afford to buy newly made U.S. clothes.

And jeans are by no means the only American charity clothing items on sale here. I saw everything from T-shirts with U.S. logos like "General Motors" to major league baseball caps, name brand dresses, sports shoes and even underwear. All of them used.

There are two ways to look at all this. One view is that it is wrong for entrepreneurs to profit from what you give away to charity, and that by dumping huge amounts of cheap U.S. clothing on the streets here, African textile industries are closing their factories and laying people off because they cannot make clothes as cheaply as those American items found in the bend over markets.

Bama Athreya, deputy director of the International Labor Rights Fund in Washingtron D.C., told ABC News: "Many of these countries in Africa used to have a fairly well-developed indigenous market for textiles and clothing and particularly for hand-crafted or hand-tailored clothes. And we've seen those markets virtually disappear over the last decade or two."

Athreya concedes that the African market for used U.S. clothing is not the only reason African workers have lost jobs. ABC News has spoken to various sources who point out that Africa also lags in production techniques and suffers from lack of infrastructure, job training and from corruption that undermines efficiency. But, added Athreya, "There is no question that the secondhand clothing market has had a significant impact on domestic African clothing production. The tailors, the small producers have been put out of business. Those were good jobs for Africans and there are no jobs taking their place. This is a trade that feeds on the poor rather than benefits the poor."

And if Africans can't keep their factories open in order to make clothes, they can't make clothes to export to the United States, thus they continue to suffer economically.

Neil Kearney, general secretary of the Brussels based International Textile, Garment and Leather Workers Federation says the practice is exploitative, "It is neo colonialism in its purest form. It's exporting poverty to Africa, a continent that is already exceedingly poor."

This state of affairs upsets AnnMarie Resnick, a woman we met in Manhattan while she was donating clothes, who told ABC News: "It stinks. I don't like it, but I would still give. There are a lot of people who are going to constantly profit, because this is probably happening with really nice people. With us -- and we profit too -- we get a tax deduction. If I knew how to send to Africa myself, I would."

Marc Kaplowictz, whom we also met while he was donating clothes in New York City, has mixed feelings: "And who ends up with the profit there? Big picture, obviously I would be against that. I am obviously the little guy in this process. I don't know. I don't think the answer is to have people stop donating."

The other view is that the donated clothing market is actually the American way, that your old clothing is used at every step to create new wealth and to help people who are less fortunate. First of all, charities like Goodwill Industries and The Salvation Army make clear on their Web sites that proceeds for charity and thrift shops, as well as from bulk sales to recyclers, go directly to support education, work and drug rehab programs for people who would otherwise suffer greatly. After all, isn't that the spirit in which you gave your clothes to begin with?

Brill, of the Secondary Recycled Textiles Association, told ABC News that it is a win-win situation. "It provides thousands of jobs here at home [in the U.S.] and it provides hundreds of thousands of jobs in Africa." And he added: "It also diverts waste material that would otherwise go to land fill. It goes to recycling, so it helps to protect the environment."

Both the Goodwill and the Salvation Army point out on their Web sites that much of the donated clothes are sold in their charity shops to raise money for a variety of good causes. But there is no mention of the fact that some donated items are sold overseas at a profit to private enterprises. One Goodwill source stressed that Americans should continue to donate their used clothing because U.S. charities need their cut of this market in order to help other Americans in need.

Most people we spoke with seemed to agree.

Lynn Novick, also donating in New York, told ABC News: "So someone's making money every time they are sold? At least they are not going in the garbage, and going totally to waste...I will continue donating."

And Valerie Adam, of Manhattan, said, "It is kinda the American way, isn't it? Somebody discovered something and turned it into a business. I will continue donating. We Americans we collect so much. We accrue so much."

And here on the streets of Ghana, Africans, for better or worse, end up buying a lot of what we give away.

A Mail investigation has uncovered such a baby factory in Athens run by the Albanian and Russian mafias, catering to the demands of wealthy Western women unable to have children of their own.

They come from Britain, Europe and as far afield as America, hand over a huge wad of cash and take the child back home.

The baby factory in Athens is doing a booming trade. The girls selected by the gangs for the production line are mostly Bulgarians and Romanian gipsies.

Consequently, there are very real fears that when Romania and Bulgaria join the EU next month, giving nationals from those countries an open door to Britain, the gangs will set up similar baby factories here.

Did Marie Golby, the 41-year-old British woman who hit the headlines this week after being accused of stealing a baby from a Romanian gipsy, come into contact with such a gang? The Romanian gipsy, Sophia Percula, has admitted to the police that she went to Greece earlier this month to sell her six-month-old daughter for 14,000 euros (around £9,500) in an illegal adoption scam arranged by a cousin.

She told police that she arranged to meet Golby in an Athens supermarket on Wednesday of last week, but Golby ran off with the child. Golby denies stealing the six-month-old girl - pictured here exclusively for the first time in the Mail - but admits taking her.

Sophia's father-in-law, Nikolai Percula, is said to have brought her over the border into Greece earlier this month.

Does Nikolai, who has a Rasputin-like appearance together with cartoonish attempts at a menacing manner during his appearances in court, have connections with the mafias running the baby factory?

Sophia certainly fits the mould of the beautiful, healthy young woman who has the misfortune to be desperately poor - perfect prey for the gangsters running the racket.

The police are keeping an open mind, but at this stage they suspect it was an 'independent' operation.

The Greek authorities admit the babies-for-sale racket is worsening. 'This is an escalating problem, the scale of which is impossible to grasp,' said Lieutenant Colonel Antonia Andreakou, director of the Greek police's public security division, which handles cross-border crime.

Ms Andreakou said her department had traced nine sales of Bulgarian infants in the first six months of this year and arrested 33 suspected mediators - 24 Bulgarians, seven Greeks (including doctors and lawyers) and two Albanians.

'This is just a fraction of the number of cases,' she said. 'We need to prove that money has exchanged hands, as this is what makes the transaction illegal, but that is very difficult to do.'

Last month, five Albanians were arrested near the Greek-Albanian border for the alleged sale of eight Roma infants. The gangs recruit the women in several ways. One, say police sources, is to seek out a young, attractive, healthy woman and tell her they can organise a false passport and papers to enable her to enter Greece.

Once this has been done, the girl is presented with a huge bill which she is unable to pay. She is then told that the debt will be written off if she gets pregnant and gives up her baby.

'The girls have no option but to comply,' says a police source. 'You would not want to upset these people.'

It is believed that these women are made pregnant by members of the gang - a man inevitably caught up in the other mafia 'businesses' of drug dealing and prostitution.

Another method of 'recruitment' is to prey on pregnant women who are drug addicts. They are offered money in return for their baby.

During the woman's pregnancy, she is well looked after. Not out of care or compassion, of course, but to ensure the baby has the best possible chance of being born healthy.

The birth takes place in one of the factory's self-styled maternity wards. But there will be a doctor and midwife present at the birth to make sure the investment yields a viable product.

The woman takes care of her child for up to 40 days before it is handed over to the couple in exchange for a large envelope of cash. The gangs have doctors and midwives in their employ who will vouch that the baby is the adoptive woman's own for the purposes of obtaining a birth certificate.

It's a dirty business. Amid this backdrop of bribery, misery and menace, a child is bought by an affluent Westerner who will be entirely ignorant of the wretched circumstances of her child's conception. But what of the baby's natural mother?

'Once the woman has served her purpose, she is as good as dead,' a senior police source told me. 'The gang will force her into prostitution and drive her into the ground.' The location of the baby factory's HQ is unclear but it is likely some of its operations are carried out within Athens' red light district.

It is in one of the area's grubby hotels which operate as brothels that Sophia, whose young husband remained behind in Romania, is believed to have been staying in the past few weeks.

It's a long way from the wealthy enclaves of Europe and the U.S. So just how do these middle-class women make contact with Albanian and Russian gangsters?

'They don't go to them, the gangs go to the women,' explains Spiras Kloudas, a lawyer who specialise in human trafficking cases. 'The gangs are tipped off that the women are desperate for a baby and they make contact with them.'

For example, if the woman has had failed IVF treatment in hospital, a corrupt employee will inform the gang. It is also thought there may be staff at adoption agencies who tip off the mafia.

It is not yet clear how Golby, from a Leamington Spa, Warwickshire, made contact with Sophia Percula, but it is clear she was desperate to the point of going mad to have a baby.

At 17, she had had an operation to remove an abscess on her ovaries and was told she could never have children, but she did not give up hope.

Married three times, she has left a trail of bitter ex-husbands and boyfriends in her wake in her search for true love and a family.

Husband number one was Kevin Kawalkowski, a member of the U.S. Air Force stationed at Upper Heyford, near Oxford, in the late 1980s. Within three weeks, she informed him she was pregnant and three months after that, said she had lost the baby. Tests revealed the 'pregnancy' had not existed.

The marriage ended soon afterwards. It is believed there was a second brief marriage in America before Golby returned home in the early 1990s.

Husband number three was Michael Leonard, whom she married in 2002. Attempts to conceive through IVF treatment failed and the marriage broke down.

Last year, Golby went on holiday to the Greek island of Kefalonia, where she met Giorges Manentis, a 24-year-old restaurant owner. She fell in love with her handsome toyboy and decided to stay on.

As a result, she has been dubbed a real life Shirley Valentine, after the eponymous character in the 1989 film in which a disaffected British housewife finds love with a Greek waiter.

The couple did not live together, however. Golby set up home in the town of Skala, near the Veto bar where she worked, while Mr Manentis lived a few miles away in the village of Agia Irini.

Then, it seems, she decided to fake a pregnancy. Two months ago, during a trip back home to Britain, Mr Manentis says she called him to say she was having his baby and that she would be returning to Greece with the child.

On Wednesday of last week, Golby met up with Sophia Percula. As she told it to the police, she had not arranged to meet the mother, but came across her begging in the streets.

Her lawyer, Christopher Kaparounakis, says she felt sorry for the girl and bought her a cheese pie, then gave her some money to buy nappies.

The girl then disappeared. Instead of going to the police, however, Golby headed to Kefalonia with the baby.

Unfortunately, Mr Manentis thought she seemed rather large for a baby just a couple of weeks old.

'The baby girl is indeed beautiful, but when she brought it to Kefalonia I quickly suspected it was not mine. I could not accept to raise it.

'Marie was very anxious to have a child, to have a family, but she should have understood that I am much too young to take on such responsibilities.'

After Mr Manentis had told her he could not accept the child - and ended the relationship - Golby took her to a hospital on Kefalonia and requested that the baby be taken in for adoption because she did not have the means to raise her.

Because she had no documents to prove she was the mother, doctors called police and she was arrested.

She was taken to Athens, charged with 'direct involvement in the abduction of a child for illegal adoption or possible sale' and placed in custody. The offence carries a maximum sentence of ten years. Sophia and her father-in-law were also arrested for their part in the alleged scam.

As for the child, she is being cared for at a children's hospital in Athens and is likely to be put up for adoption.

Golby may have to wait up to a year before her trial begins. On Wednesday, she was freed on bail on condition that she remains in Greece.

On Thursday afternoon she boarded a ferry to Kefalonia, presumably to try to make things up with her boyfriend. There is little chance of that.

There is no happy ending to Marie Golby's story. And while many of those other women who come to Athens to adopt a baby through the back door get what they want, it comes at a huge cost to those benighted women who have been forced on to the production line of the Baby Factory.