The Associated Press reports that tests on 1,200 children's products -- most of which are available for sale -- revealed that 35% contain more lead than allowed by federal recall standards used for lead paint. Lead poisoning can cause irreversible learning disabilities and behavioral problems and, at very high levels, seizures, coma, and even death

Of the toys tested from the shelves of Wal-Mart Stores Inc. (NYSE: WMT), Toys "R" Us and Babies "R" Us, here are three that had particularly high lead levels:

• A Hannah Montana card game case,
• a Go Diego Go! backpack; and
• Circo brand shoes.

Unfortunately for parents out there preparing for the upcoming holiday season, this past year's toy recalls have to be a constant reason for concern, and today we get news of another recall. By now we are pretty adjusted to reading news of recalls due to high levels of lead paint, but today's recall involves something a little more alarming ... a date rape drug!

Yes, you read that right, it has been announced that millions of toy products in North America and Australia have been taken off the shelves after it was discovered that they contained chemicals that, when digested, convert into the date rape drug gamma hydroxy butyrate (street name of GHB). The toys in question are toy beads that go by the name Aqua Dots, and are considered a highly popular holiday item, which is distributed by Toronto-based Spin Master Toys. For Australian consumers, the toy sells under the name of Bindeez.

Just how popular is this toy line? This year in Australia it was named toy of the year. Just how dangerous is the ingestion of the drug? If swallowed, one of these beads can induce unconsciousness, seizures, drowsiness, coma and death.

Most mergers are driven by the notion, sometimes wildly mistaken, that the combination will bring both a competitive advantage. Some pairs of companies, however, seem so intuitively right for one another, no bottom-line considerations should be allowed to interfere with their matrimony. Like a toddler and a sleeping cat, the interactions of these two seem inevitable.

Poor Mattel, Inc., (NYSE: MAT). The company with fun as its main product has been repeatedly hammered with product recalls for lead-contaminated toys, just as the Christmas season toy stock build-up is in full swing. Santa won't be lining up this year for Mattel's lead-painted Barbies, Pixar Cars, Fisher-Price toys or "It's A Really Big World" sets. The company's supply chain needs a couple of extra links: China to Mattel to Retailer to Mattel to The Dump. Some see this as tragic, but I see an opportunity for integration.

Waste Management Inc. (NYSE: WMI) has a solid grasp on a seemingly limitless American resource: trash. From the curbside to the rapidly growing U.S. mountain ranges of disposed goods, the company thrives on our discards.

We have another toy recall on our hands today. This one involves one of our most beloved icons, Winnie the Pooh.

Today's recall involves around 90,000 items, 70,400 of which were imported by J.C. Penney Company (NYSE: JCP) and feature the beloved Walt Disney (NYSE: DIS) character Winnie the Pooh. The culprit is, once again, excessive levels of lead paints. The actual products J.C. Penney was forced to recall were Winnie the Pooh playsets and decorative ornaments with a horse-theme, as well as art kits made in Taiwan and Vietnam.

The good news is that many retailers like J.C. Penney are doing their best to try to keep these toxic toys from landing in the hands of children. Earlier this summer, the company decided to hire an independent laboratory to run tests on all of its painted toys. These independent evaluations, which started in August, are credited with catching today's recalled toys.

As some of you have probably already noticed, this year's holiday shopping season has started a little earlier than usual. For those of you who have not noticed the early arrival of the season, don't worry, you aren't blind, you are just proof that retailers have been successful in their attempt to start the holiday shopping without anyone noticing.

Typically, we can at least expect retailers to wait until we get past Halloween to start the hard hitting marketing campaigns, but this year is a bit different. Retailers usually expect strong sales leading up to the holidays, but this year there are economic jitters weighing on the minds of consumers, along with fear related to the massive Chinese toy recalls that we have witnessed this year, and are likely to continue to hear about.

This holiday season parents will need to choose between buying American and getting the toys their kids want. According to USA Today, That's because 80% of all toys sold in the USA are made in China. Some internal toy-industry estimates show only about 10% are actually made here.

Not only are few toys made in the U.S. but the ones that are don't appeal to the typical American child. That's because 10% of toys that are U.S.-made are wooden, old-fashioned "nostalgia" toys, such as blocks or puzzles, that may not hold the interest of kids older than toddlers. As noted in my post last month, there's Slinky, the twisty-wire-walking toy from the 1950s, and some plastic toys like K'Nex construction sets.

And here's the bad news about U.S. toys -- while they're safer than those made in China, they have some problems of their own. For example, U.S.-made toys were the subject of four of the 40 toy recalls the Consumer Products Safety Commission (CPSC) announced in the 2006 fiscal year, or 10%. Chinese-made toys were the subject of 28, or 70%. The other recalls were divided among toys made elsewhere in Asia and Europe.

If you have advice for parents seeking safe American toys that their children will actually want to own, please comment below.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

During the recent recalls of Chinese toys due to high lead content, toymaker RC2 (NASDAQ: RCRC) has been forced to recall close to 2 million products from its Thomas & Friends product line. In an effort to make up for the mistakes, the toy maker decided to give a little something back to to consumers involved in the recalls, and you guessed it... the gifts were more products with excessive lead paints!

It blows my mind that the company has actually allowed this to happen yet again. The most recent of the company's product recalls took place last week and involved around 200,000 toys, and earlier this summer the toy maker was hit was a massive 1.5 million toy recall, so it makes sense that they would try to give something back to consumers. Unfortunately the gesture of good faith has blown up in their face.

We were alerted to this unfortunate event by The Consumerist where you can also find the official statement from the company regarding this most recent consumer slap in the face:

Unfortunately, the discovery that certain Toad vehicles could be potentially unsafe was made in August, after Toads had been sent as bonus gifts to some families. Many of the Toad bonus gifts are safe, however some may not be. If you received a Toad vehicle as a bonus gift from us, please check its underside for the tracking code 1656OW00 to determine if it is one of the recalled toys.

Mattel (NYSE: MAT) actually apologized to the Chinese government for making it appear that poor quality control by the country's manufacturers caused defects in its toys. The Associated Press reported that Thomas A. Debrowski, Mattel's EVP of global operations, said this at a meeting in China yesterday: "Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys."

The press and investors have not heard this kind of talk from the toy company before, and it was assumed that the factories that make toys for Mattel were at fault for using lead paint in several products.

Mattel's CEO was dragged before Congress earlier this week and beaten like a red-headed mule. Congress wants to know why the company did not catch problems earlier and had to recall over one million units.

The AP says that a large part of Mattel's profits result from outsourcing manufacturing to Chinese factories. With low labor costs in the country that is probably true. Moving production to another country could take a great deal of time and would pressure Mattel gross margins.

It would not be beyond the realm of possibility to think that the Chinese pressured Mattel into its statement. The US company may have given in rather than be forced out of relationships with its current suppliers.

If Mattel's new statement is accurate, and the company is at fault for all of the problems that caused the recalls, it is hard to imagine how all of the senior executives at the company still have their jobs.

Something about the incident does not make sense.

Douglas A. McIntyre is a partner at 247wallst.com.

Walt Disney Co. (NYSE: DIS) will begin to safety test toys made based on its characters. The move is novel because Disney had until now relied on manufacturers such as Mattel Inc. (NYSE: MAT) to make sure that the products its licenses were safe.

Disney, though, can no longer afford to count on others to defend its brands and reputation.

The move is deeply humiliating, especially to Mattel because it sends the signal that Disney cannot trust the large toy company. The New York Times was told by Andy Mooney, the chairman of Disney's consumer products division that "It sends the message that we are looking over their shoulders." Disney's tests will focus on about 2,000 toy makers and 65,000 products each year.

The Disney testing may turn out to be no more than window dressing to get its shareholders and customers to believe that it can police a huge industry which involves factories all over the world, especially in China, and tens of thousands of retail outlets.

But Disney feels it need to do something to protect its brands, even if it is almost entirely symbolic.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Click here for Mattel toy recall news

Peter Cohan: Is China hurting Disney's (DIS) reputation?
Sarah Gilbert: Mattel's third toy recall: Parents response ho-hum, could Barbie survive?
Zac Bissonnette: Toys 'R' Us joins the recall club -- and how you can capitalize
Brian White: Mattel toy recall: Wal-Mart (WMT) steps up toy inspection efforts
Michael Fowlkes: More children's products join the Chinese recall list
Beth Gaston Moon: Mattel (MAT): Looking into the latest recall
Michael Fowlkes: Chinese executive found hanged following Mattel (MAT) toy recalls
Hilary Kramer: Mattel, Inc. (MAT): Buy or sell after recall?
Tom Taulli: Mattel toy recall: Lessons for business owners

It seems like almost every day, when I turn on my computer, I read about yet another kids' product being recalled due to high lead content. Today was no different. Today's news involved another 300,000 or so Chinese made products that have been found to posses excess levels of lead paint and recalled.

You really have to wonder just how far does this problem stretch? How long has this been going on? I, for one, have a hard time believing that this problem has just started; it has probably been going on for a long time and only now is being watched. It is a scary thought to say the least.

Today's recall involves around a quarter million pairs of SpongeBob SquarePants address books and journals that contain harmful amounts of lead in their spiral bindings. The books were sold between June 2006 and July 2007 in stores across the U.S. Late is better than never, but for the kids who had bought the books LAST JUNE, I hate to say that the damage has probably already been done. Why did it take over a year to figure this out?

Maybe it's time to look under your kids' beds.

Fisher-Price, a division of toy-maker Mattel, Inc. (NYSE: MAT), is recalling nearly one million plastic pre-school toys because of unsafe levels of lead paint. The toys were painted by a Chinese vendor with whom the company has a long association.

The recall, the second-largest this year involving toys, involves 83 different products made from April 19 through July 6. Toy characters parents (and their pre-school children) will certainly recognize include Elmo, Dora the Explorer, and her pal Diego.

The U.S. Consumer Product Safety Commission has a full list of the recalled toys here.