June 2010

Video: U.S. Loss to Ghana Is Most Watched Men’s Soccer Game: Video

June 28, 2010

June 28 (Bloomberg) — The U.S.’s 2-1 loss to Ghana in the World Cup’s round of 16 on June 26 was the most watched men’s soccer match in American history, according to Walt Disney Co.’s ESPN channel. Bloomberg’s Michele Steele reports. (Source: Bloomberg)

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Video: `Toy Story 3′ Tops Box Office; Coke Ads on Twitter: Video

June 28, 2010

June 28 (Bloomberg) — Bloomberg’s Deirdre Bolton reports on breaking media news in today’s edition of Media Monday. (Source: Bloomberg)

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Video: Robert Byrd, Senator Known for Longevity, Dead at 92: Video

June 28, 2010

June 28 (Bloomberg) — Robert Byrd, the U.S. senator who set records for longevity in Congress while becoming known for his powerful oratory and mastery of legislative rules and traditions, has died. The West Virginia Democrat was 92. Bloomberg’s Deirdre Bolton and Peter Cook report. (Source: Bloomberg)

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Video: Smith Says BP Russian Asset Sales `Not Going to Happen’

June 28, 2010

June 28 (Bloomberg) — Greg Smith, managing director of Fat Prophets, talks about the outlook for BP Plc as chief executive officer Tony Hayward meets Russian Deputy Prime Minister Igor Sechin today to discuss the company’s projects. Smith speaks with Andrea Catherwood on Bloomberg Television’s “The Pulse.”

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Video: EBF’s Ravoet `Deplores’ Lack of G-20 Unity on Bank Rules

June 28, 2010

June 28 (Bloomberg) — Guido Ravoet, secretary general of the European Banking Federation, talks about banking regulation proposals from the Group of 20 summit. Leaders meeting in Toronto yesterday said countries should adopt higher capital standards by the end of 2012, though banks can phase in capital increases during a transition period. He speaks from Brussels with Andrea Catherwood on Bloomberg Television’s “The Pulse.”

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DK Matai: G20 Toronto Digest – Key Tweets, Achievement & Result?

June 28, 2010

The highlights of The Fourth G20 leaders summit in Toronto are presented as a series of tweets. Canada’s PM Stephen Harper concludes G20 Toronto Summit Bank Capitalisation . In future banks should keep enough capital on their balance sheet to withstand aftermath of Lehman Brothers’ in 2008 http://ow.ly/23YYD Bank Levy . Market reform efforts to introduce a common tax on banks to shield taxpayers from bailouts in future splinter http://ow.ly/23YHM BP . Obama and Cameron agree BP must not collapse post Gulf oil gusher as company starts week with shares at 14yr low http://ow.ly/23Y1h China Revaluation . China gave in, set strongest yuan exchange rate in years on Monday after Beijing came under renewed pressure on w/e http://ow.ly/23Yvq Consequences . Europeans score win — Leaders agree to halve public debt by 2013 — What are the consequences for world recovery…? http://ow.ly/23Ye3 Deficit Reduction . Leaders Pledge To Halve Deficits By 2013: Wary of slamming on stimulus brakes too quickly; shaken by euro debt crisis http://ow.ly/23Ynx Differences Emerge . Differences on 1. exit strategy for global economic stimulus – US and India caution – and 2. universal tax to bail out banks http://ow.ly/23Yzp Economic Clash . An economic clash of civilisations — pits Obama’s stimulus efforts against European calls for austerity budgets http://ow.ly/23YCi Friendly Talks . British PM Cameron and US President Obama agree to differ in ‘friendly’ talks on economic policy, ie, spending cuts http://ow.ly/23RaI Nuclear Deal . Canada signs nuclear deal with India that’ll see uranium exported to India and wide-ranging pledge to increase trade http://ow.ly/23YU9 Oil Gusher . Toronto summit discusses BP oil gusher – recent accident shows the need for better marine environment protection http://ow.ly/23YKv Private Sector . S Korea wants to be bridge between G20 and non-G20 Govs and Orgs: Post Gov lead comes private sector lead in future http://ow.ly/23YF1 Quiet Diplomacy . UK PM Cameron, preaching austerity, brings new G20 style – Cameron prefers what he calls ‘quiet diplomacy’ http://ow.ly/23Yaa US-India . President Obama, ‘…when the Indian PM speaks people listen particularly because of his deep knowledge of economic issues…’ http://ow.ly/23YXj Vandalism . Torontonians try to make sense of vandalism: ‘To see this destruction is beyond unfortunate,’ Queen St businesswoman http://ow.ly/23Ytp Winners and Losers . Winners and losers at summit: Top priority to strengthen shaky economic recovery and clean up debt burdened finances http://ow.ly/240gG Background Established in 1999, following the Asian financial crisis in 1997, the G20 has convened annual meetings of finance ministers and central bank governors from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union. In 2008, G20 leaders met for the first time in Washington, DC, to develop a coordinated response to the global economic crisis or The Great Unwind manifest as the collapse of Lehman Brothers. The Washington Summit was followed by summits in London in April 2009, Pittsburgh in September 2009 and Toronto in June 2010, where leaders have designated the G20 as the premier forum for international economic cooperation. Achievement Over the course of the four G20 summits — Washington, London, Pittsburgh and Toronto — world leaders have crafted a co-ordinated global response to the financial and trade crisis, including The Great Unwind (2007-?) and The Great Reset (2008-?). They: 1. Implemented stimulus measures to restore confidence; 2. Agreed on actions to strengthen financial regulation; 3. Committed to reform international financial institutions; and 4. Agreed to promote trade and resist protectionism. Result? The G20 interventions are widely regarded as having been effective in mitigating the impact of the global economic crisis, while encouraging a quicker transition to recovery than could otherwise have been expected. The key question ringing in our ears is, “What are the consequences of synchronised world wide measures to cut sovereign budget deficits and debt going to be for the world economic recovery?” It remains to be seen how effective the Toronto G20 summit’s simultaneous embrace of austerity will prove to be in sustaining the green shoots of global growth. It is entirely plausible that draconian deleveraging measures implemented worldwide could stunt economic growth. As the Republic of Korea, G20 Chair for 2010, hosts the fifth summit in November in Seoul, the financial markets may have delivered a verdict!

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Video: Spence Says G-20 Silence on Structural Change `Worrying’

June 28, 2010

June 28 (Bloomberg) — Michael Spence, co-winner of the Nobel Prize in economics in 2001 and a consultant at Pacific Investment Management Co., talks about the agreement at the Group of 20 meeting in Toronto to improve fiscal stability and financial regulation. Spence speaks from Milan with Andrea Catherwood on Bloomberg Television’s “The Pulse.”

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Video: PwC’s Gray Says Bank Survey Shows Regulatory Concerns

June 28, 2010

June 28 (Bloomberg) — Andrew Gray, head of the U.K. financial services consulting practice at PricewaterhouseCoopers LLP, talks about its quarterly survey of the financial services industry. Almost two thirds of financial services companies in the U.K. anticipate a rise in business volumes for the coming quarter, the most positive result since December 1993, according to a survey by the Confederation of British Industry and PricewaterhouseCoopers. Gray speaks with Maryam Nemazee on Bloomberg Television’s “Countdown.”

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Walter Shorenstein, Real Estate Mogul, Dies at 95

June 28, 2010

Commercial real estate entrepreneur Walter H. Shorenstein has passed away. He died of natural causes at his home in San Francisco on Thursday, June 24, at age 95. Shorenstein grew The Shorenstein Co. from a regional brokerage firm 60 years ago to a…

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Brett King: BANK 2.0: Branch Networks under threat!

June 28, 2010

I’ve spent the better part of the last three months meeting and talking to some of the best and brightest bankers in Australia, Asia, UK and the USA and what I’ve learned is fairly predictable, and just a little disappointing. Direct banking (mostly Internet and Mobile) is going off everywhere I go, but most banks are still saddled with an unhealthy attachment to their branch networks. I decided to try and figure out where Branch banking is really going and surmise the strategic options for Retail banks. Branch Networks under pressure In the US last year branch growth was non-existent, well to be technically correct branch growth was 0.39% , but that is the lowest it has been in 14 years and the trends are clear – there will be no more branch growth in the USA. In the UK branch growth has declined on average 24% in the last 5 years. In Australia, after fits and starts, branch decline has definitely set in, with 2010 being the 4 th year running that branches have declined in numbers. In Sweden last year, 88% of Swedes didn’t even visit a branch . In the annual American Banker’s Association survey on channel preferences, the branch continues to suffer (41% decline in just 3 years) as Internet Banking has become the dominant day-to-day channel of choice. So does this spell doom and gloom for banking? No. There is some good news, in fact some may say excellent news on the horizon. What UBank and ING Direct tell us In Australia, UBank , an exercise in direct banking for NAB has rapidly paid dividends. Within just 3 years UBank has become the 8 th largest bank by deposits in Australia. But where can UBank go from here after such a strong start? While UBank has faced some leadership challenges in recent times , I spoke to Sam Plowman , Executive GM of Direct Banking at NAB, last week and I was delighted to hear that UBank is a big part of their forward-looking strategy, with a host of new products planned over the next few months. This must be the only sensible move for NAB given their current market share and the unbridled success of UBank. In fact, UBank would probably have to be considered the single most successful initiative NAB has launched in the last 5 years, wouldn’t it? Sam’s colleague Simon Terry is currently working on the launch of the Oracle-powered NextGen platform that will power future innovation in customer experience. Between Sam and Simon, they hold the future of the bank in their hands. If UBank continues to perform so well though, what happens to NAB itself? The key lesson from UBank’s success must be that direct banking is at the very core of NAB’s business moving forward – if NAB falls into the trap of thinking it’s a one-hit deposit taking wonder, they would be missing the point; Customer Behaviour has already shifted. How do you deal with the runaway success of a new direct banking brand when you run a $100m branch network? Tough question… Is UBank an isolated case? ING Direct recorded profits of US $101m profit (EUR 75m) last year up 70.5% year-on-year, this in the tail of the global financial crisis. Rabo Bank, Jibun, Shinshei and PayPal have all had similar results as either Internet-only or mobile-based models of banking and payments. But it’s not just profitability. Branch networks are contracting as customer behavior shifts In their annual customer satisfaction survey, UK-based consumer sentiment research group Which? polled over 15,000 UK members to see what they thought about the relative performance of the various high street and direct banks. First Direct and Smile were top of the ranking this year, with scores of 89% and 87% respectively. Mobile increases the threat to Branch Mobile is now a huge area of investment. Bank of America has more than 4 million customers actively using their mobile banking platform currently, making it the most successful mobile bank in the USA. BofA say they’ve added more than 150,000 new customers just because of their mobile platform. But mobile is more than a transactional channel for BofA as this excerpt from a recent Bloomberg article shows: Bank of America Corp. went from buying an occasional mobile campaign to paying Phonevalley , the agency run by Publicis’ Mars, a $1 million annual retainer, said Kathryn Condon, a vice president of digital marketing at the bank. Google’s AdMob is among the ad-placement companies used by Bank of America, the largest U.S. bank by assets. With Direct and Internet banking at all time highs in terms of adoption rates, with the breakout success of mobile Internet banking in recent times, and customer channel preferences clearly shifting for the bulk of retail segments, where can we go from here? Where to from here? There are three scenarios for Branch Networks: All the trending data is wrong and the branch is about to face a resurgence in popularity because people seek a return to high quality, face-to-face engagement Nothing will happen – branch population will neither grow nor decline in the next few years All the trending data is right and we are seeing a shift in customer behaviour that will increasingly see branch-based banking at risk When retail distribution specialists are looking at the positioning of branch real-estate there are a number of considerations, but the foremost consideration is where physically to put a branch to enable the most visits – essentially, how convenient it is to get to a branch. But these days, the branch simply isn’t the most convenient channel to use – Internet, Mobile and ATMs are far more ‘convenient’. Key segments like Mass Affluent, and key product areas like mortgages, wealth management and loans are just too easy to position and service through direct channels. Branches better start figuring out how they’re going to make money over the next 5 years, and they better do it fast. The first thing banks need to do is reorganize their organization structure to be channel agnostic. The days of ‘alternative’ channels are gone – Internet, mobile, direct are mainstream. Thus, the organization structure should reflect the same – Head of Branches, Head of Internet, Head of Mobile, Head of Social Media should be equals in the retail team- why? Because that’s how customers think. The second thing is banks need to get better at measuring where the money comes from. A customer might end up at the branch, but how does he get there? Does he get there because of a compliance procedure (“Can you come into the branch to sign this?”) or does he end up there because he wants a face to face discussion? By better understand the behavioral drivers, we can determine those branches which will remain profitable and those that no longer cut the mustard, as they say.

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Video: Fathom’s Gabay Says Deflation Becoming `Primary Concern’

June 28, 2010

June 28 (Bloomberg) — Danny Gabay, managing director of Fathom Financial Consulting, talks about the risk of a renewed recession and delays in banks writing down losses. Gabay speaks with Francine Lacqua on Bloomberg Television’s “Countdown”

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Cenk Uygur: Why Washington Is More Right-Wing Than the Rest of the Country

June 28, 2010

We recently had John Avlon on the program and he is a devout “centrist.” That used to mean that you were somewhere on the political spectrum between the left and the right. It now means that you set up false equivalencies between the left and the right and call everything even no matter what. I’m an actual centrist. I used to be a liberal Republican from the North East. Of course, no such thing exists anymore. I’m against affirmative action. I’m a deficit hawk (except I believe we should balance the budget by not just cutting “entitlements” but also by cutting the Pentagon and raising taxes). I was for the Persian Gulf War but against the Iraq War. I am against Bush or Obama violating civil liberties or abusing executive authority. So, in the country I’m right in the middle of the political spectrum. There is hardly a national poll that doesn’t agree with my political position. Hence, I am now considered a raging liberal in Washington. Apparently, I am so far left now that Obama is significantly to the right of me. How does that make sense? It doesn’t, in any place outside of DC. But what’s maddening is that no one acknowledges two things: 1. How far to the right of the country Washington is. 2. How far the political spectrum has moved to the right. Why is Washington more right-wing than the rest of the nation? Because that’s where power and the establishment reside. Power is by nature conservative — it wants to protect its current privileged position. That’s not nefarious, it’s natural. But not acknowledging that is silly. The establishment loves the status quo, because that’s what got them their current position. Why would they want to change that? And how can anyone consider themselves a political analyst and not see how far to the right we have moved as a country? Eisenhower warned us of the military industrial complex. If he had said that now, people would say he’s weak on national security and doesn’t support the troops. And he was a Republican. Truman ran on single payer healthcare — Obama wouldn’t even consider that. Nixon started the Environmental Protection Agency. Reagan sold arms to terrorists, negotiated with the evil empire, raised taxes eleven times , ran from Lebanon. Are you absolutely sure that Obama is to the left of Reagan? Watch this debate with John Avlon, the author of Wingnuts, How the Lunatic Fringe is Hijacking America , and see if you really think there is such a thing as the hard left in this country and whether they are anywhere near as extreme as the hard right: One other thing that we touched on in this conversation was the idea of corporatism . Being against corporatists doesn’t mean you’re anti-business. There is this absurd myth that liberals are anti-business. What does that mean? Liberals don’t want there to be any more businesses? Does anyone really believe that? Liberals, centrists and conservatives have no problem with business as long as they are not taking our taxpayer money! Do conservatives want trillions of taxpayer money going to Wall Street banks? My understanding was that they hated the bailouts. Do conservatives want taxpayers rather than BP to pay for the clean up of the oil spill in the Gulf? Well, I hope not. Maybe some of the conservative leaders who take money from oil companies want that to happen — but that’s the whole point. The politicians aren’t working for us anymore, liberals or conservatives. They are not driven by ideology. They’re driven by whoever pays them, which is the lobbyists. Seventy percent of campaign contributions come from corporations. Now who do you think the politicians are going to work for? Being against corporate control of our democracy shouldn’t be a liberal position. It should be a universal position. It’s not that multi-national corporations are evil, it’s just that they’re amoral. They are unconcerned with American taxpayers or citizens; they are concerned only with profits. That is what they have to be by law. It’s absurd to argue otherwise. Yet, the conventional wisdom in DC is that people who are worried about corporatist influence on American politics are far left crazies. They’re not crazy, they’re awake. And they’re not even liberals, they’re every American who is sick of their politicians being bought by the highest bidder. That’s all of us, except the “centrists” in DC. Watch The Young Turks Here

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Video: Renaissance’s Jennings Sees BP `Credibility’ in Russia

June 28, 2010

June 28 (Bloomberg) — Stephen Jennings, chief executive officer of Renaissance Capital, talks with Bloomberg’s Ryan Chilcote about BP Plc’s assets in Russia. Jennings, speaking in Moscow, also discusses U.S.-Russia relations and the outlook for the Mongolian economy.

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Video: Rennie Sees Signs China’s Economic Momentum `Flagging’: Video

June 28, 2010

June 28 (Bloomberg) — Robert Rennie, head of currency research at Westpac Banking Corp., talks with Bloomberg’s Linzie Janis from Sydney about the outlook for China’s economy. A Chinese government official said the nation’s pledge for a more flexible yuan will slow China’s exports this year, adding to difficulties that include the European debt crisis and rising costs. Rennie also discusses the U.S. economy and global currency market. (Source: Bloomberg)

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Video: Westpac’s Rennie Sees Opportunity to Sell Euro at $1.25: Video

June 28, 2010

June 28 (Bloomberg) — Robert Rennie, head of currency research at Westpac Banking Corp., talks about the outlook for currencies following the Group of 20 leaders summit in Toronto. Rennie, speaking in Sydney, also discusses the Chinese and U.S. economies. He talks with Linzie Janis on Bloomberg Television’s “Global Connection.” (Source: Bloomberg)

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Video: China Experiencing Its `Henry Ford Moment’: William Pesek

June 27, 2010

June 28 (Bloomberg) — Bloomberg columnist William Pesek speaks from Tokyo with Bloomberg’s Rishaad Salamat about the impact of labor disputes in China on the nation’s economy. Widening labor unrest has forced auto parts makers to raise wages in China, increasing production costs for Toyota Motor Corp. and Honda Motor Co. Boosting salaries will help the government increase domestic consumption and move the economy away from a reliance on exports for growth. (William Pesek is a Bloomberg News columnist. The opinions expressed are his own. Source: Bloomberg)

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Video: DeWoskin Says China-Taiwan Economic Relations `Deep’: Video

June 27, 2010

June 28 (Bloomberg) — Kenneth DeWoskin, a director of Deloitte LLP’s China Research and Insight Center, talks with Bloomberg’s Rishaad Salamat about trade negotiations between China and Taiwan. Taiwan and China aim to sign three agreements in a sixth round of cross-strait talks that will be held later this year, Chiang Pin-kung, chairman of the Taipei-based Straits Exchange Foundation, said. Cross-strait negotiations resumed in 2008 after a nine-year halt during which former Taiwan president Lee Teng-hui described the talks as “state-to-state,” a term Beijing rejected. China claims the self-ruled island as its territory and has threatened force to impose Taiwan’s unification with the mainland. (Source: Bloomberg)

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Video: Loh Expects Minor Revisions to Australia’s Resources Tax: Video

June 27, 2010

June 28 (Bloomberg) — Adrian Loh, associate director at DnB NOR ASA in Singapore, talks with Bloomberg’s Rishaad Salamat about the outlook for Australia’s proposed tax on mining profits and its impact on the resources industry. Australian Prime Minister Julia Gillard’s willingness to compromise on a mining tax proposed by her predecessor may prevent opposition leader Tony Abbott from reaping gains in elections likely to be held later this year. (Source: Bloomberg)

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Video: Sportingbet’s Sullivan Says Brazil Is World Cup Favorite: Video

June 27, 2010

June 28 (Bloomberg) — Michael Sullivan, chief executive officer of online bookmaker Sportingbet Australia, talks with Bloomberg’s Susan Li from Sydney about betting on the World Cup. Three-time champion Germany beat England 4-1 yesterday to reach a the quarterfinal against Argentina, a 3-1 winner against Mexico. Both games were overshadowed by controversial decisions from match officials. (Source: Bloomberg)

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Video: Kirkegaard Sees Europeans as `Winners’ of G-20 Summit: Video

June 27, 2010

June 28 (Bloomberg) — Jacob Kirkegaard, a research fellow at the Peterson Institute for International Economics in Washington, talks with Bloomberg’s Susan Li about the Group of 20 leaders’ plan to cut deficits and pursue higher capital requirements for banks once their economic recoveries take root. Kirkegaard, speaking from Washington, also discusses the shift in China’s currency policy. (Source: Bloomberg)

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People Didn’t Drown The Markets; A Bad System Did

June 27, 2010

The temptation is to see the 2008 Wall Street implosion that helped trigger the broader economic crisis as the consequence of individual idiocy and avarice. That thesis is emotionally appealing — nowadays everyone loves to hate and, better still, feel superior to wealthy Masters of the Universe. It is intellectually appealing, too. Blaming the crisis on human error is a lot easier than trying to work out the systemic problems it laid bare. But just because something is easy doesn’t make it accurate. Call it the Michael Lewis fallacy. His book The Big Short deserves its place on the best-seller lists; it offers the best insight yet into the lunacy of subprime borrowing and the intricate world of structured financial products used to bet on those dreadful home loans. But the fabulous human stories of greed and stupidity Lewis tells are a seductively dangerous basis for understanding the global economic meltdown.

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Marc Gunther: Modern-day slavery: Alive and Well

June 27, 2010

Modern-day slavery is not just about sex workers or poor people in faraway places. Some farmworkers in the U.S., for all practical purposes, work as slaves. Laborers with few or no rights, working under inhumane conditions, typically far home, have produced such products as blueberries, organic milk, personal computers or cell phones and garments imported from India, a new report says. Consider: An estimated 12 to 27 million people are victims of slavery, and other forms of forced labor around the world. In the United States alone, 10,000 or more people are being forced to work at any given time. The report, called Help Wanted: Hiring, Human Trafficking and Modern-Day Slavery in the Global Economy (PDF for download, here ), was published by Verite, a non-profit based in Amherst, Mass., that monitors and reports on labor rights abuses around the world. (It was funded by Humanity United , a nonprofit focused on peace and human rights started and chaired by Pam Omidyar.) Over the years, Verite has helped identify and clean up the supply chains of such global brands as Timberland, Gap, Levi Strauss, Apple, Disney and HP. I met with Verite’s executive director, Dan Viederman, last week in Washington to talk about the report, and what can be done to deal with slavery. Dan, who is 46, explained to me that Verite has begun a initiative called Well Made to help companies, governments, investors and advocates deal with modern-day slavery. Companies, for examples, are given sets of questions to put to their suppliers. Shareholders are advised to bring pressure on companies they own. Here it must be said that today’s slaves are not the equivalent of those in 19th century America; in theory, at least, they have legal rights, at least in theory. In fact, many of the stories in the report come from workers who managed to escape dire conditions, on their own or with help. But these modern-day slaves, who can be found in such places as Taiwan, the Persian Gulf, India, Malaysia and, yes, here in the U.S. of A., do have some experiences in in common with the American slaves who picked cotton in the antebellum South: They typically work far from where they grew up, they were trafficked from their homes to their workplaces by labor brokers (slave ships in the old days), and they don’t have the freedom or organize or look for work elsewhere. This makes it relatively easy to uncover forced labor. “The presence of foreign migrant workers is a significant indicator of exploitative labor conditions,” Dan told me. Many employers like to bring in workers from abroad. “You get a cheaper and more compliant workforce if you bring in people who don’t understand their legal rights and can’t turn to social support systems,” he said. Because the migrant workers frequently pay recruitment and transportation fees to get jobs in faroff places, they can find themselves in what’s called “debt bondage.” They are bound to their new employer, sometimes because they need the money to pay debt, other times because they have traveled on a work visa that ties the migrant to a single employer. Some labor brokers endeavor to act responsibly–the global company Manpower Inc . is an industry leader–but many are unscrupulous. “It’s by an large and unregulated industry,” Dan said. The Verite report, which is extensive, looks at four sectors and locales: the migration of adults from India to the Gulf Cooperation Council (GCC) States of the Middle East for work in construction, infrastructure and the service sector; the migration of children and juveniles from the Indian interior to domestic apparel production hubs; the migration of adults from Guatemala, Mexico and Thailand to work in U.S. agriculture; and the migration of adults from the Philippines, Indonesia and Nepal to the Information Technology sector in Malaysia and Taiwan. Verite’s Well Made website puts a human face on the problem. Here’s an example of a worker who was trafficked from Guatemala to Georgia to Connecticut: Fortunately, some governments and companies are paying attention. The U.S. State Department this month published its own report finding that more than 12 million people worldwide are victims of “trafficking in persons” — trapped in forced labor, bonded labor or prostitution. If you read deep into Apple’s corporate responsibility report, you find this dense but revealing passage: Some of our suppliers work with third-party labor agencies to source workers from other countries. These agencies, in turn, may work through multiple subagencies: in the hiring country, the workers’ home country, and, in some cases, all the way back in the worker’s home village. By the time the worker has paid all fees across these agencies, the total cost may equal many months’ wages and exceed legal limits–and many workers need to incur significant debt to pay these fees. Apple’s Code has always strictly prohibited all forms of involuntary labor . As such, we classify recruitment fee overcharges as a core violation of voluntary labor rights, and we require each supplier to reimburse overpaid fees. As a result of our audits and corrective actions, foreign workers have been reimbursed more than $2.2 million in recruitment fee overcharges over the past two years. To Apple’s credit, it has not only required its suppliers to reimburse workers but issued a “standard for Prevention of Involuntary Labor, which limits recruitment fees to the equivalent of one month’s net wages.” But Dan tells me: “Only a handful of companies are now paying attention to the problems of migrant workers.” Sad to say, modern-day slavery can be very profitable. Labor brokers make a good living. The employers get a docile workforce and essentially outsource the job of recruiting and hiring people. Workers also can benefit, to a degree. Today’s New York Times has an excellent story about the impact of global migration which says, among other things, that Migrants sent home $317 billion last year — three times the world’s total foreign aid. In at least seven countries, remittances account for more than a quarter of the gross domestic product. Of course, if the workers had the freedom to move from one employer to another, or to organize themselves, they could obtain or negotiate higher wages and send even more money home. The bottom line is that lots of the things we consume and enjoy at low prices exact a high cost on others who are out of sight and out of mind. Disclosure : My wife Karen Schneider recently joined the board of Verite, but since I’ve written about the organization’s work before (see this from 2006 and this from 2008), I see no reason to stop now. Photo credit: Sandy Huffaker/Getty Images

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G-20 Leaders Pledge To Halve Deficits By 2013

June 27, 2010

TORONTO — Wary of slamming on the stimulus brakes too quickly but shaken by the European debt crisis, world leaders pledged Sunday to reduce government deficits in richer countries in half by 2013, with wiggle room to meet the goal. Leaders of 20 major industrial and developing countries generally sided with cutting spending and raising taxes, despite warnings from President Barack Obama that too much austerity too quickly could choke off the global recovery. “Serious challenges remain,” they cautioned in a closing statement. “While growth is returning, the recovery is uneven and fragile, unemployment in many countries remains at unacceptable levels, and the social impact of the crisis is still widely felt,” according to the document from the Group of 20 major industrial and developing nations. Obama told a news conference he was satisfied with the outcome, saying he recognized that countries had to proceed at their own pace in either emphasizing growth or budget austerity. “We can’t all rush to the exits at the same time,” Obama said after three days of economic summitry. Summit participants navigated a careful course between Obama’s emphasis on growth and fellow leaders such as German Chancellor Angela Merkel who advocated spending cuts and even tax increases. “Advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016,” according to the statement. The gross domestic product, or GDP, measures the value of all goods and services, and is considered the best gauge of economic health. At the same time, the statement called for following through on “existing stimulus plans,” heeding Obama’s concerns. Japan was given an exemption from meeting the debt targets because of years of a stagnant economy, and the fact that its huge debt is largely owned by Japanese and not overseas investors. Canadian Prime Minister Stephen Harper, the summit host, told reporters that deficit reduction “is not an end in itself” and that there is “an ongoing role for stimulus in the short term.” As the summit wrapped up, conditions on the streets of Canada’s biggest city remained tense. Police, responding more aggressively than the day before, raided a university campus and rounded up protesters in an effort to quell further violence after youths rampaged through the city the night before, smashing windows and torching police cruisers. Police said they arrested more than 600 demonstrators. Harper blamed “thugs” for the violence and suggested the destruction and fires on the streets justified the $900 million that Canada spent for summit security. World leaders also took note of the devastating oil spill in the Gulf of Mexico in their statement, which recognized “the need to share best practices to protect the marine environment, prevent accidents … and deal with their consequences.” The April 20 explosion on the BP-leased Deepwater Horizon rig unleashed the worst offshore oil spill in U.S. history. BP is London-based and the disaster has contributed to strains between the U.S. and Britain. Britain’s new conservative prime minister, David Cameron, told reporters BP was working hard to cap the well, “clean up the mess” and compensate victims. At the same time, “what we all want is for this important company to be strong and stable for the future,” he said. The G-20 statement limits the deficit-reduction goal to the most industrialized nations and offers governments flexibility on when to start balancing their books. French President Nicolas Sarkozy pointed out that “France has made even more stringent promises to its European partners on deficit-cutting.” Asked if summits were necessary, Sarkozy admitted that they can be exhausting. “We end these summits empty, tired, but it’s our duty to participate,” he said. European countries, in particular, have been rattled by the near-default of Greece on its government debt. The document doesn’t endorse a bank tax advocated by Europe and the U.S. to set up a fund to pay for future bailouts. Canada, Australia and Japan, whose banks did not fail in the crisis, oppose the levy. Instead, it says all countries should make sure taxpayers are not stuck with the bill when banks fail, and leaves it up to individual countries to decide how they want to do that. Canada’s Harper urged leaders to “send a clear message that as our stimulus plans expire, we will focus on getting our fiscal houses in order.” He said global economies needed to walk a “tightrope” between deficit spending this year, ensuring the fragile recovery continues and then switching to deficit reduction programs. The G-20 includes the world’s major industrial countries – the United States, Japan, Germany, France, Britain, Canada, Italy and Russia – plus major developing nations such as China, India and Brazil. Some countries will find it more difficult than others to meet the new deficit targets. The United States ran a record deficit of $1.42 trillion last year, or 10 percent of its GDP. Private economists expect the deficit will decline only slightly to $1.3 trillion this year, which would amount to 9 percent of GDP. Obama’s budget plan from February would cut the deficit in half by 2012, as a percentage of GDP. He’s also named a commission to examine how to trim the deficit further, to 3 percent of GDP – a level economists generally view as sustainable. Republicans have suggested it is unlikely that Obama will be able to meet his own deficit-reduction targets and say the White House has yet to put forward a credible plan. And critics complain that the deficit commission Obama set lacks the power to make Congress consider its recommendations. Yet, the U.S. stands a generally good chance of meeting the targets, assuming a strengthening economy between now and then. Britain is in worse shape. Its deficit this year is over 10 percent of GDP in 2010. “For European countries with high budget deficits, especially for the U.K. with the highest budget deficit in the G-20, we have got to make our contribution to that sustainable growth by showing the world that we can live within our means,” said British Treasury chief George Osborne. In a BBC interview, Osborne said that means stiff cuts in government spending. Britain last week put forward a tough emergency budget, raising taxes and cutting spending by levels not seen since World War II. On the other end of the spectrum, Canada’s federal budget deficit will be less than 3 percent of GDP this year. Ottawa’s plan aims to balance the budget by 2014-15. As he opened the final session, Harper boasted that Toronto was “home of the most solid financial sector in the world.” Its banking system was barely affected by the financial meltdown of 2008. The deficit targets that the G-20 countries adopted had been outlined by Harper in a letter he sent to fellow leaders this month. But there were disagreements over them right through a dinner on Saturday night. Treasury Secretary Timothy Geithner met Sunday for the first time with Japanese Finance Minister Yoshihiko Noda and stressed the importance of the G-20′s call for strengthening rules for banks to set aside money as cushions against potential losses, according to a Treasury Department official. Obama had urged the G-20 countries to avoid the costly mistake made during the 1930s, when countries reduced government support too quickly and ended up prolonging the Great Depression. The joint statement made only a passing reference to the need for “greater exchange rate flexibility” and made no specific mention of China’s recent announcement that it would allow its exchange rate to rise against the dollar. That was a victory for the Asian superpower, which has repeatedly said it did not want to be lectured by other powers on exchange rates. However, Obama, at his news conference, said: “The United States welcomes China’s decision to allow its currency to appreciate in response to market forces. We will be watching very closely in the months ahead.” ___ Associated Press writers Emma Vandore, Jane Wardell, Darlene Superville, Jeannine Aversa, Foster Klug and Martin Crutsinger contributed from Toronto. ___ Online: Summit site: http://g8.gc.ca/home/

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Robert Kuttner: It’s the Jobs, Stupid

June 27, 2010

The Americans wrapped up their meetings at the Toronto summit in an oddly contradictory posture. With much of the world afflicted with austerity fever, President Obama’s team found itself in the awkward position of pushing the Europeans not to abandon economic stimulus — while Obama himself is unable to get the U.S. Senate to approve even modest sums to extend expiring unemployment insurance for upwards of a million workers, or his $23 billion request for emergency aid to the states to spare 300,000 schoolteacher layoffs. The British, Germans, and Canadians, meanwhile were giving priority to deep budget cuts in their own countries — while smaller European nations were being made to extract even more severe cuts in exchange for guarantees of their government debt. Obviously, if every nation is cutting back, then economic recovery falters. But this seems far from obvious to the world’s leaders. In part, this general outbreak of austerity is the price that Obama is paying for giving too much attention to deficit-reduction at home, and not enough to jobs. The administration’s own embrace of austerity, in the form of a freeze on domestic spending after this fiscal year, as well as Obama’s fiscal commission, not only undercuts his credibility with the G-8. It gives ammunition to Senate Republicans and Democratic deficit hawks who refuse to appropriate another dime for jobs measures that are not “paid for” by tax increases or other spending cuts (which of course undercuts any stimulus effect.) One good piece of news is the departure of OMB director Peter Orszag, the leading deficit hawk inside the administration. Orszag was the architect of the fiscal commission and the domestic spending freeze, and the foe of even modest increased outlays on jobs. It’s not clear that his successor will be a great deal better, though some of the names leaked to the press — notably Laura Tyson or Gene Sperling — are less hawkish. If the Republicans make massive gains this November, the main reason will be the lingering economic slump, which now belongs to the incumbent Democratic administration. You could spin recent events to suggest that President Obama finally had a pretty good week. He showed presidential resolve in getting BP to part with $20 billion. He fired the insubordinate General Stanley McCrystal. And he persuaded Congressional Democrats to put aside House and Senate differences and agree to a conference bill on financial reform. But in all of these cases, the back story doesn’t reflect so well on Obama. McCrystal’s policy, which will continue, is a fantasy. He should have been fired for insubordination several months ago when he was trying to back the president into a corner with his public pronouncements. Had the new administration cleaned house at the Dick Cheney’s Interior Department early on, and not given BP safety waivers, the spill probably would not have occurred. And Obama hardly participated in the final deliberations on financial reform. For lack of progressive presidential leadership, the banking lobby gained back some of what it had lost on the Senate floor, in weaker provisions on derivatives, big loopholes in banks’ ability to continue risky trading activities, and looser limits on banks’ ability to invest in risky hedge funds and private equity. Polls show a continuing erosion in the public’s confidence in Obama and the Democrats. And none of the recent cases of presidential leadership touches on the real issue that is killing the Democrats, namely high unemployment. Speaking of polls, one of the oddities of the Administration’s reticence on the jobs issue is the reported counsel of the White House political staff that the public cares more about deficit-reduction than about jobs. In this account, the public sees deficit reduction as a sign that government is out of control and doesn’t believe that more government spending will help solve the jobs crisis. Political advisers who take such results at face value are fools. Yes, you can get poll respondents to say that the deficit is a serious concern, but it’s a far less salient one than worries about losing your job, your health insurance, your pension, or the value of your home. If Obama can persuade the American people that he is their champion on these immediate pocketbook issues, the abstract worry of the deficit evaporates. The political team also reportedly argues that Obama can’t get serious jobs measures through the Senate in any case, and therefore a major effort would only make him look ineffectual. But this is also the wrong reading. As I argued in a recent piece for The American Prospect , adapted from A Presidency in Peril , Obama needs to learn from the example of Harry Truman. In the summer and fall of 1948, when Republicans controlled both houses of Congress, and Truman was widely given up as a goner, Truman responded by deliberately sending ” the do-nothing 80th Congress ” legislation on housing and jobs that he knew they would defeat — to dramatize the difference between his own program and the Republican one. Truman not only won re-election in November 1948 in American history’s greatest electoral upset; his coattails were so attractive that 75 House seats went from Republican to Democrat, and the Democrats took back both houses of Congress. If today’s Republicans are blocking aid to spare 300,000 school teacher pink slips, and over a million unemployed workers who are losing their unemployment insurance and Cobra health coverage, Obama should be hanging that callous behavior around their necks, Truman style. And in that respect, there is one surprising piece of news on the polling front from a most unlikely quarter — the Peter G. Peterson Foundation. The Peterson Foundation, bankrolled at a billion dollars, is spending a small fortune to persuade the American people that the deficit is a more serious menace than economic collapse, and that Social Security and Medicare need to go on the chopping block. I have rebutted this view in a paper for the Scholar’s Strategy Network. One of the Foundation’s grantees is a closely linked organization called ” America Speaks ,” which is supposedly a representative sounding of public opinion on the Peterson Foundation’s favorite causes. The ” national town meeting ” just completed June 26th, involving thousands of Americans by satellite link. You have to read the press releas e very carefully to find these results, but after extensive deliberations, the America Speaks poll included these findings: 85 percent wanted to raise the cap on earnings subject to Social Security taxes–far more than the percent that wanted to reduce benefits or raise the retirement age. 85 percent wanted to cut military spending. 64 percent wanted a carbon tax. 61 percent wanted a financial transactions tax. 58 percent favored a new higher tax bracket for millionaires. And these surprisingly progressive conclusions came, despite the fact that the exercise was heavily funded by the nation’s most powerful propaganda organization that works to frighten Americans into believing that Social Security and Medicare are bankrupting the country! The people are often ahead of the leaders and the pundits. If the administration paid attention to where public opinion really is, we’d be hearing a lot more about jobs and a lot less about deficits.

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Roger Hickey: In Deficit "Town Meetings," People Reject America Speaks’ Stacked Deck

June 27, 2010

On Saturday, the group known as America Speaks ( funded by Wall Street mogul Peter G. Peterson and two other foundations) brought together several thousand people in meetings in 60 cities. They gave participants misleading background information about the federal deficit and economic options to achieve fiscal “balance” and future prosperity. Peterson cannot be pleased with the participants’ mainly progressive policy choices, which will be presented on June 30 to the Deficit Commission that Peterson encouraged President Obama to create. According to America Speaks’ own press release , when a scientifically selected group of participants picked up their electronic voting devices, they overwhelmingly supported proposals to Raise tax rates on corporate income and those earning more than $1 million. Reduce military spending by 10 to 15 percent, Create a carbon tax and a securities-transaction tax. This pretty progressive set of solutions emerged from the process many feared would be skewed to the solutions of conservative deficit hawks. America Speaks was certainly not pushing the discussion in a progressive direction. The background materials — and policy options — provided to participants were anything but fair and balanced, as analysis by economist Dean Baker demonstrated. Most egregious were the following: Social Security. America Speaks gave participants no explanation of the fact that Social Security has its own source of funding, and thus does not contribute a dime to the deficit. Americans actually have been paying extra payroll taxes to create a trust fund that will make sure full benefits can be paid for decades into the future — and thus there is no rational reason to cut Social Security benefits (or raise the retirement age) in order to reduce the Federal deficit. But you wouldn’t know that from the America Speaks materials or explanations. The Social Security program is simply presented as another big spending program and participants were presented with various ways to cut benefits. Given all this, a majority endorsed raising the retirement age for full benefits to 69 — a benefit cut for future retirees. But they also chose the progressive plan to raise the cap on taxable earnings subject to Social Security taxes, thus producing income for the system from greater portion of higher income peoples’ wages. Medicare and Medicaid. The America Speaks background materials actually did acknowledge that the rising budgetary costs of Medicare and Medicaid are driven by the fact that our whole health care system is broken — and costing both the private sector and government programs much more per person than in countries that have much better health outcomes. They even acknowledged that thoroughgoing reform — like single-payer health care system — is the only way to control those rising costs. However, when it came to options the participants were allowed to vote on, they were all variations on how much people wanted to cut Medicare and Medicaid benefits. At this point in the proceedings, the America Speaks founder and President, Carolyn Lukensmeyer had to acknowledge a rebellion in the ranks. People were demanding to have the option of voting for “single-payer” reform instead of cutting Medicare and Medicaid, and when she announced a complicated process of writing in that alternative, a roar of approval went up from the crowd in several locations. Their press release doesn’t report how many people chose this difficult to select option, but the organization clearly had had to scramble to quell a revolt by participants. (Note: their press release states that people chose to “cut health care spending by at least five percent,” but the choice was really to cut government health programs five percent — and my reading of the charts online was that only 21 percent of participants chose that option, with 71 percent choosing “no change.”) Austerity vs Growth. Finally, the organizers had heard enough protests from the Economic Policy Institute and the AFL-CIO that they felt they had to assure the audience that they were not prioritizing deficit reduction over the need for economic stimulus to get the economy to start producing jobs. But after that ritual disclaimer, they went on to devote the vast majority of the day to deficits as our defining economic program. But David Dyen, an LA participant, wrote in a post on firedoglake , “While the cumulative effect of all this tends towards social safety net cuts rather than tax fairness, the crowd in Los Angeles, at least, wasn’t biting at first. In surveying the discussion groups, most people seemed more concerned about the desperate need for more stimulus spending to move the economic recovery forward… In the nationwide instant survey, taken by participants through electronic devices at all 19 America Speaks sites, 61% said the government needed to do more to strengthen the recovery, with only 25% opposed. Even with a push poll question asking if participants supported government programs to increase growth “if it increases the deficit,” got a majority, 51%, of the nation-wide group of participants. My next-day posting here — claiming participants mostly rejected conservative nostrums — is based on watching the process online, from reports from people who attended events around the country — and on a fairly sketchy press release put out by America Speaks on Thursday, just after the town meetings. But America Speaks billed these events as a nation-wide scientific experiment in finding out what the “American people” think about the economic way forward. They are thus duty bound to publish a full report on the details of every single question — and voting results — that participants were asked to make decisions about. It is especially important that they put out this comprehensive report because they are also scheduled to summarize their findings before a special public meeting of the White House Deficit Commission on June 30. Only then can the people who participated in the process judge whether their surprisingly progressive decisions are being accurately presented to the Commission.

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Mark Silver: Why Marketing Is A Critical Part of the Solution to Our Woes

June 27, 2010

At 1:10 p.m. I’m standing in line at the post office. I know it’s 1:10 p.m. because my iPhone prayer app lets loose with a resounding call announcing the time for the midday prayer. The three other people in the post office avoid looking at me. Or maybe it doesn’t bother them. I carry the awareness of the waiting prayer for two hours, until I make it back home to my office. I do the ritual washing of my hands, face, and feet, take out my prayer rug, and face northeast. Then I breathe. My prayer carries me through various positions, my forehead approaching, then touching, the floor, then rising up again. Because the midday prayer is done silently, the silence of the devotion carries me. I’m grateful for this, because my heart is trembling with grief. Struggling to Express Grief The gushing bleeding of oil in the Gulf of Mexico is not anything I can contain. I alternate between numbness, denial and grief. It’s simple: the lifestyle that we’re living, that I’m living, is unsustainable, and it’s killing many things in this world. We know this. It’s not a surprise, but it’s hard to keep that much pain present. I believe that our unexpressed grief is a significant fuel on the fire of our unsustainable lifestyle. Grief for the loss of life, the loss of the hope, the loss of beauty and connection. Have you heard of Farmville? It’s a virtual game within Facebook where you can run a virtual farm. Millions of people are playing this game on a daily basis. Even though it’s a free game, you can spend real money on it if you choose to. And people choose to. More than US$1 billion annually is spent on this game alone. What are we doing? Where are we putting our resources? This is not about blame. I don’t blame anyone for numbing out to what’s going on. Marketing Has Gotten Very Sophisticated Over the years, more and more psychological tricks have been implemented in marketing and product development. Add extra nicotine to cigarettes, put cheap, high-alcohol beer in convenience stores, make porn and video games and violent movies easily accessible. Put marketing messages everywhere so that they are nearly inescapable. And make those marketing messages full of the promise of a wealthy, sexy lifestyle that the vast majority of the world’s population can’t reach. The result? A loss of hope. A disconnection from the true source of our happiness and nourishment. An ever-increasing consumption of material goods. Resources, money and time, end up being funneled to the very things that continue to hurt us all so much. Our economy, our marketplace is deeply dysfunctional. Billions spent on war, chemicals and oil, a small fraction of that spent on things that really make a positive difference in our lives. And the rest spent on numbing out to the powerlessness that we all feel when facing it. Hey, Let Go of That Despair It’s important to face things as they are. Expressing grief is something I highly recommend. But don’t indulge in despair. Despair is just another way of avoiding grief. Despair is a decision that things will never work out, that there is no hope. Instead, think about marketing. Well, first indulge your heart in love, then think about marketing. Yes, I Said Marketing There are so many good people doing good things. Sauvie Island Organics here in Portland has a community-supported agriculture program, which means that up to 400 families buy a share in the farm, and then share in the harvest. Delicious, local, organic food delivered directly from the farm. They have openings. Huh? There are over 1.5 million people in the Portland area, and this farm hasn’t filled all 400 openings? So much of our attention is taken up in distraction by our dysfunctional economy. Fast food instead of fresh, organic vegetables, for instance. The healing work that amazing people are doing in sustainable food, in holistic health, in alternative energy, needs to take up a lot more of the attention and resources. Our local Hollywood Video store is being shuttered because the parent corporation, Movie Gallery, Inc. filed for Chapter 11 bankruptcy. I’m guessing that’s because the entertainment dollars have shifted to online downloads and Farmville, among other things. But wouldn’t it be amazing if they went bankrupt because all of those millions of dollars went to healers, coaches and practitioners of all stripes who were supporting people in regaining wholeness and connecting with each other in meaningful ways instead of zoning out in front of screens? Marketing Is a Piece of the Answer We find ourselves in urgent times. There is a desperate need for love, acceptance, and healing. The grief I feel at the distance between where we are and where my heart so longs to live is profound. If we are going to heal the world, we are going to do it one imperfect step at a time. We need political activism. We need internal healing. We need love and community. And we need the people doing the good work locally, sustainably, beautifully to be visible. To take up space. To be the recipient of the over-abundance of resources flowing through our culture. There is a way to do marketing with integrity. There is a way to do it with love and heart and be very effective. If you struggle with marketing or business even a little bit because of how you’ve seen marketing used, I’m with you. I share that pain.But please don’t abandon the airwaves to those hocking greed and dissatisfaction. Instead, open your heart to marketing. Open your heart to business. Business is in pain, it’s sick. Don’t abandon it. Bring your heart, engage with love and integrity, and let’s see if we can come together to claim the space and bring the healing we are all so desperate for. By the time my forehead has touched the ground for the final time at the end of my prayer, my heart has returned to love. It has found hope and inspiration once more. I remember that the weight of the world is not on my shoulders alone. You and I are in this together. Let’s take up the space the Divine has given us, and bring your good work out into air, where everyone can see it. Form your marketing in love, bring it out in inspired action, and connect with the people who need what you do so much more than the alternatives they’re faced with.

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Major Fundamentals Ahead, as Investors Are Waiting Income, Spending, Inflation, Manufacturing, and Employment Figures

June 27, 2010

Major Fundamentals Ahead, as Investors Are Waiting Income, Spending, Inflation, Manufacturing, and Employment Figures

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Asian markets lack central bank decisions

June 27, 2010

Asian markets lack central bank decisions

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Europe Ahead: UK 1Q GDP unrevised while unemployment in Euro Zone remains high

June 27, 2010

Europe Ahead: UK 1Q GDP unrevised while unemployment in Euro Zone remains high

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BAE wins $50m defense contract in US

June 27, 2010

BAE wins $50m defense contract in US

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Romania to raise VAT by 5%

June 27, 2010

Romania to raise VAT by 5%

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India liberates prices of gasoline, diesel

June 27, 2010

India liberates prices of gasoline, diesel

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Toyota to recall 17,000 Lexus sedans

June 27, 2010

Toyota to recall 17,000 Lexus sedans

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Iran announces new gas discovery

June 27, 2010

Iran announces new gas discovery

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