August 2010

Obama Economic Team Weighing New Wave Of Tax Cuts, Infrastructure Spending: WSJ

August 31, 2010

The Obama administration is considering a range of new measures to boost economic growth, including tax cuts and a new nationwide infrastructure program, according to people familiar with the discussions. … On the list of possible actions: additional tax cuts for small businesses beyond those included in a $30 billion small-business lending bill before the Senate. It’s not clear what those tax breaks would target or how much they might cost in lost revenue to the government. Also in the mix: a possible payroll tax cut for businesses and individuals, as well as other business tax breaks, according to people familiar with the discussions. Currently, income taxes are scheduled to rise with the expiration of Bush-era tax cuts at the end of this year.

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David Isenberg: Veterans 1, KBR 0

August 31, 2010

It is time once again to tune in to the latest epsiode, oops, I mean development, of the long running farce, oops, I mean legal case, involving KBR and Oregon National Guard soldiers. Yeterday there was significant pro-veteran ruling in the Oregon KBR Qarmat Ali litigation. I have previously written about this and open air burn pits KBR ran on dozens of U.S. bases in Iraq and Afghanistan in February , April and June . In a 29-page ruling the federal district court in Oregon considered the motion by KBR and co-defendants Overseas Administration Services, Ltd. and Service Employees International, Inc. to dismiss the suit for lack of subject-matter jurisdiction and rejected it. U.S. Magistate Judge Paul Papak wrote that on March 3, 2003 – before combat operations began in Iraq – the U.S. Army Corps of Engineers entered into a “Restore Iraqi Oil” (RIO) contract) with KBR. Under it, KBR and its subsidiaries agreed to provide services to the U.S. military in connection with efforts to restore the infrastructure underlying the Iraqi oil industry. Also under the RIO contract, the U.S. Army Corps of Engineers issued various “task orders” for KBR to perform. Combat operations in Iraq began on March 19, 2003. On March 20, 2003, the Corps of Engineers issued “Task Order 3,” which governed the services to be provided by KBR and its subsidiaries at Qarmat Ali and other facilities. Under Task Order 3, the U.S. military would declare a given worksite to be “benign” before KBR would begin operations there. A lot depends on what you mean by “benign.” In a footnote the judge wrote: The parties dispute the meaning of the term “benign” for purposes of Task Order 3. According to the deposition testimony of Robert Crear (retired Brigadier General of the U.S. Army Corps of Engineers) and of Gordon Sumner (retired U.S. Army Corps of Engineers Contracting Officer and regional director of contracting), “benign” referred to freedom from combatant activity and from nuclear or chemical weapons, and did not foreclose the possibility of environmental hazards, including hazardous (but not weaponized) chemicals. Support for this interpretation can be found in the provisions of Task Order 3, which suggest that pronouncement of a site as “benign” did not, for example, foreclose the need for environmental assessment. Nevertheless, defendants take the position that a “benign” designation necessarily meant freedom from known hazards, including environmental hazards, and support for defendants’ position may also be found in the language of Task Order 3, which indicates that a facility must be cleared of environmental and industrial hazards before it may be pronounced “benign.” Because I do not find this issue to be material to the analyses I am called upon to undertake in connection with the political question doctrine, the government contractor defense, or the combatant activities exception, the parties’ dispute over the definition of “benign” need not be resolved at this stage of these proceedings. In the underlying facts portion of his ruling the judge wrote: Task Order 3 provides that KBR was responsible for providing the Corps of Engineers with an environmental assessment of any facility in which it undertook operations. The obligation to provide such assessments included the obligation to report and evaluate any environmental hazards. According to Sumner’s and Gen. Crear’s deposition testimony, KBR was not merely permitted but required under Task Order 3 and the RIO contract to take all necessary precautions to safeguard personnel who might potentially be exposed to environmental hazards at worksites, including the wearing of protective gear and/or the closing down of operations at any unsafe site. In his analysis the judge noted that the defendants argue that this court lacks subject-matter jurisdiction by operation of the political question doctrine, by operation of the so-called “government contractor defense,” and by operation of the combat activities exception to the Federal Tort Claims Act. For background on this see my January post . The judge proceeded to detail other cases where district courts have found the political question doctrine inapplicable to tort actions brought against government contractors in the military context. In regard to KBR’s claims that various legal tests argue in favor of applying the political question doctrine he wrote that he found their arguments unpersuasive. He wrote, “the matter fundamentally at issue here is defendants’ performance of its contractual obligations to the government and to the plaintiffs rather than the advisability of any governmental policy-related decision.” But the guts of the decision, which is undoubtedly giving all PMC legal counsels’ nighmares, is this: Defendants here assert that their “provision of engineering and logistical support services at Qarmat Ali” took place pursuant to the specifications of a contract with the government, and that they did not exceed their authority under those specifications. On this basis, defendants argue that they were merely “executing the will of the United States” and are entitled to the benefits of derivative sovereign immunity. The evidentiary record belies both of defendants’ assertions. The rationale underlying the government contractor defense is easy to understand. Where the government hires a contractor to perform a given task, and specifies the manner in which the task is to be performed, and the contractor is later haled into court to answer for a harm that was caused by the contractor’s compliance with the government’s specifications, the contractor is entitled to the same immunity the government would enjoy, because the contractor is, under those circumstances, effectively acting as an organ of government, without independent discretion. Where, however, the contractor is hired to perform the same task, but is allowed to exercise, discretion in determining how the task should be accomplished, if the manner of performing the task ultimately causes actionable harm to a third party the contractor is not entitled to derivative sovereign immunity, because the harm can be traced, not to the government’s actions or decisions, but to the contractor’s independent decision to perform the task in an unsafe manner. Similarly, where the contractor is hired to perform the task according to precise specifications but fails to comply with those specifications, and the contractor’s deviation from the government specifications actionably harms a third party, the contractor is not entitled to immunity because, again, the harm was not caused by the government’s insistence on a specified manner of performance but rather by the contractor’s failure to act in accordance with the government’s directives. Assuming without deciding that the Ninth Circuit would apply the government contractor defense to the provision of the kinds of services KBR contracted to provide in Iraq under RIO and Task Order 3 – analysis of the RIO contract and of Task Order 3 fails to establish that the defendants’ actions alleged to have caused plaintiffs’ injuries were taken in direct compliance with any “reasonably precise” government directive. Quite to the contrary, defendants were contractually obliged to perform an environmental assessment of Qarmat Ali and to report any environmental hazards to the Army Corps of Engineers. Defendants were under no contractual obligation to put their employees or third parties providing security in connection with defendants’ operations into situations involving the risk of environmental harm, to refrain from requiring employees or third parties to use appropriate protective gear and clothing when placed into such situations, or to withhold material information regarding such risk from persons placed into such situations. Moreover, assuming arguendo that the government’s specifications regarding defendants’ obligations in connection with operations to be performed in an environmentally contaminated worksite were sufficiently precise to trigger the defense, plaintiffs have offered evidence tending to establish that the defendants violated those contractual duties, by failing to report the contamination at Qarmat Ali and by permitting the Oregon National Guard to perform duties at the site without appropriate protective gear. Because defendants did not conduct operations at Qarmat Ali in accordance with precise government specifications and without independent discretion as to the manner in which the operations were to be performed, defendants are not entitled to the government contractor defense. See Hanford Nuclear, 534 F.3d at 1000. Defendants’ motion to dismiss is therefore denied to the extent premised on the government contractor defense. In other words, the “we were just following orders” defense is looking even lamer than ever.

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3 Reps Under Further Investigation Over Alleged Bank Bribery

August 31, 2010

WASHINGTON — House investigators have recommended that three lawmakers be further investigated to determine whether political contributions were improperly linked to votes on the huge financial overhaul bill. The independent House Office of Congressional Ethics recommended that the member-run House ethics committee pursue potential rules violations by Republicans John Campbell of California and Tom Price of Georgia and Democrat Joseph Crowley of New York. The ethics office recommended no further investigation of five other lawmakers in the same probe: Democratic Reps. Earl Pomeroy of North Dakota and Mel Watt of North Carolina, and Republicans Jeb Hensarling of Texas, Chris Lee of New York, and Frank Lucas of Oklahoma. All offices of the lawmakers had received letters from the OCE by Tuesday and made the conclusions public. President Barack Obama signed the financial overhaul bill into law July 21. It aims to restrain Wall Street excesses with the most sweeping overhaul of financial rules since the Great Depression, clamping down on lending practices and expanding consumer protections to address failures that precipitated the 2008 meltdown that knocked the economy to its knees. The Democrats – Crowley, Pomeroy and Watt – voted for the final bill. The Republicans – Campbell, Price, Hensarling, Lee and Lucas – voted against it. Campbell said he was “perplexed by OCE’s decision, as they have presented no evidence that would suggest wrongdoing.” Campbell added that he “always complied with the letter and the spirit of the law. To suggest otherwise is unfounded and untrue. In addition, my voting record and opposition to a culture of taxpayer-funded bailouts has been and always will be unshakable.” Price said it was “truly a mystery” that his case was referred for further investigation. “There being no evidence of any wrongdoing or any inconsistency in my policy position, one can only guess as to the motive behind their decision or even why they chose to initiate a review in the first place,” he said. “My constant allegiance to a transparent and conscious divide between my official duties as a member of Congress and my actions as a candidate is without question.” Crowley’s office said in a statement that he “has always complied with the letter and spirit of all rules regarding fundraising and standards of conduct.” All three lawmakers referred for further investigation had fundraisers last December, around the time of crucial House votes. Price had two fundraisers, including a breakfast on Dec. 2 and a luncheon Dec. 10 billed as a financial services event. A special guest was Rep. Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee. Crowley had a cocktail reception Dec. 10. Campbell had fundraisers Dec. 8 and Dec. 9. Campbell and Price consistently opposed the regulation legislation. Crowley, after attending his fundraiser, returned to the House and voted against Democratic amendments aimed at toughening some financial regulations. In each case he joined more than 100 Democrats, including fellow New Yorkers, to vote against the proposed changes. ___ Associated Press writer Jim Kuhnhenn contributed to this report.

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Latest CMBS Data Show More Secondary Markets Doing Better Than Some Larger Markets

August 31, 2010

The summer has brought little relief to metro areas experiencing the most distress on loans held in the commercial mortgage-backed securities (CMBS) universe. However, two markets have seen a noted improvement in their respective levels of CMBS loan distress…

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Deloitte Leases 166,435 SF in San Francisco

August 31, 2010

Deloitte finalized its 15-year, 166,435-square-foot lease with Tishman Speyer at 555 Mission St. in San Francisco. The major international accounting and consulting firm will occupy nine full floors (four through seven and 10-15) with a move in date scheduled…

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Dan Solin: An Investment Strategy for the Next Depression

August 31, 2010

You can’t avoid the predictions of the “inevitable” depression. There’s plenty of ammunition to support them, including a slower than anticipated economic recovery, high unemployment, record foreclosures, declining housing prices and the prospect of runaway inflation (or deflation). Every day I get calls from investors who are absolutely certain we are headed for a depression. They want to know if I agree and what they should do to prepare. I have no idea whether we are headed for a depression or a recovery. Neither do those who make predictions so confidently. In 1987, one of the bestselling books was The Great Depression of 1990 , by Ravi Batra. In 1929, Irving Fisher, Professor of Economics at Yale University, famously stated: “Stocks have reached what looks like a permanently high plateau.” Jim Cramer told his viewers shortly before Bear Stearns filed for bankruptcy: “Bear Stearns is fine.” Hank Paulson advised us on May 7, 2008 that “The worst is likely to be behind us.” My personal favorite comes from financial expert Donald Luskin. On September 14, 2008 he wrote an article in the Washington Post stating “…anyone who says we’re in a recession, or heading into one — especially the worst one since the Great Depression — is making up his own private definition of “recession.” And probably for his own political purposes.” But I digress. Let’s assume we are headed for a depression. How would it affect your investments and your investment strategy? The best data we have relates to the Great Depression of 1929. I looked at the worst rolling periods during that time to see how different portfolios were affected. The time period I selected was July 1, 1929 to June 30, 1932. A globally diversified portfolio consisting 100% of stocks lost more than 87% of its value. Ouch! At the other extreme, a portfolio consisting 100% of bonds had a positive return of more than 8%. Before you rush out and buy bonds, you should focus on basic principles of asset allocation. I would not permit my clients to invest in an all stock portfolio unless they confirmed they had a time horizon of at least fifteen years before they would need 20% or more of their invested funds. When I extend the end date from June 30, 1932 to June 30, 1944, the total return on the all stock portfolio is more than 23%. Investors are focused on the wrong issue. The critical question is not: Will there be a depression? That’s a question no one can reliably answer. The financial media has an interest in making dire predictions because fear means more readers and viewers and that translates into advertising dollars. The real question is: Am I in the right asset allocation? The focus on asset allocation is the same whether you are investing for a depression or a recovery. Here are some general guidelines: If your time horizon is less than 5 years, you should have no exposure to stock market risk; If your time horizon is 8 years, you should have no more than a 60% exposure to stock market risk; If your time horizon is 15 years or longer, you can have a 100% exposure to stock market risk (but I would still encourage you to have at least 10% of your portfolio in bonds). On average, an asset allocation of 60% stocks and 40% bonds is suitable for most investors. Historical data tells us those who had the right asset allocation and didn’t panic withstood the ravages of the Great Depression. Unfortunately, historical data is not necessarily predictive, but it’s far more reliable than the musings of “financial astrologers”. The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog. Here is the trailer for my new book, Timeless Investment Advice .

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Lloyd Chapman: An Open Letter to First Lady Michelle Obama from American Small Business League President Lloyd Chapman

August 31, 2010

I am writing to you today because I am hoping you will help save millions of American small businesses from bankruptcy. I realize that you, as a mother and as someone who came from a hardworking middle class family, could not only sympathize, but also help with the situation we are currently in. I am very concerned, as I am sure you are, about the state of our nation’s economy. And while I know that President Obama is trying to stay positive, all of the economic indicators are alarming, and there is certainly evidence that we could slip into another recession. Our country is in the worst economic crisis in 80 years, and the situation appears to be degrading. Yet, as I watch what the government has done over the last few years, it does not make much sense to me. I think everyone agrees that small businesses create the overwhelming majority of net new jobs in America. According to the U.S. Census Bureau, businesses with less than 20 employees create over 97 percent of net new jobs . The Small Business Administration (SBA) Office of Advocacy statistics indicate that small businesses create over 90 percent of all net new jobs. Yet, even though Small businesses create almost all of the net new jobs in America, the government gives the majority of small business contracts to large corporations. That simply does not make sense. What I am trying to do, and would like your help with, is very logical. I don’t think the government should award small business contracts to Fortune 500 firms and some of the biggest corporations from around the world. I believe that 99 percent of all Americans would agree with me, particularly in this current economic climate, that the government should not be diverting billions of dollars in contracts to large corporations that by law are supposed to be going to small businesses. Since 2003, there have been over a dozen federal investigations, which have found Fortune 500 firms and thousands of large companies around the world as the actual recipients of federal small business contracts. The SBA’s Inspector General has listed this problem as the number one management challenge facing the agency for the past five consecutive years. One of the most powerful stimulus bills ever written was the Small Business Act, which currently states that small businesses are to receive a minimum of 23 percent of the total value of all federal contracts, but that is not happening. On Friday, the SBA released its fiscal year (FY) 2009 small business contracting data and claimed to have awarded over $96 billion, or 21.89 percent, in federal contracts to small businesses. In reality, of the top 100 recipients of small business contracts, 60 were large businesses that received 65 percent of the total contract dollars. Some of the firms included as small businesses were: Lockheed Martin, Boeing, British Aerospace (BAE), Rolls-Royce, Raytheon, Dell Computer, General Electric and Honeywell International Corporation. If the Obama Administration were to simply do as federal law mandates and ensure that 23 percent of all federal contracts actually went to small businesses, it would create millions of jobs and could potentially be our strongest defense against a double dip recession. I have helped draft a bill titled, H.R. 2568, the Fairness and Transparency in Contracting Act. It was introduced by Georgia Congressman Hank Johnson (D-04) and currently has 26 cosponsors. This legislation is deficit neutral, and will do more to help create jobs than anything proposed to date. I wanted to bring this to your attention in the hope that you will help us with this important cause. As our economy continues to falter, and American families are faced with heartache and despair; action needs to be taken quickly before thousands of more lose their jobs and their homes. A real and simple solution exists in the form of H.R. 2568, which could begin to rescue our economy from the precipice. I am simply asking for you help, to use your influence to do anything you think would be appropriate to convince President Obama to fulfill the campaign promise he made in February 2008 to, “End the diversion of federal small business contracts to corporate giants.”

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Video: Reinhart Says Slower Growth, Higher Jobless `New Normal’: Video

August 31, 2010

Sept. 1 (Bloomberg) — Vincent Reinhart, a resident scholar at the American Enterprise Institute in Washington and a former Federal Reserve monetary-affairs director, talks about the outlook for the U.S. economy and Fed monetary policy. Some Fed officials were concerned that a decision to keep securities holdings unchanged would inadvertently signal an intention to resume large-scale asset purchases, minutes of the Aug. 10 meeting showed. Reinhart talks with Susan Li on Bloomberg Television. (Source: Bloomberg)

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Rabbi Shmuley Boteach: Status Symbols and the American Express Black Card

August 31, 2010

As a seventeen-year-old student at Rabbinical college, a riddle was put to me. A beggar is invited to a billionaire’s home for dinner. The homeless man has never had such scrumptious food. He throws his entire being into slopping down his soup and devouring his chicken. Meanwhile, the rich man puts a napkin on his lap, sticks out a pinky, and eats with meticulous etiquette. The question, which of the two men is more attached to the food? I answered, ‘Why, the poor man, of course. He’s wolfing the stuff down as if it’s his last meal.’ ‘Wrong,’ my teacher told me. ‘The rich man is much more attached. Want proof? Try taking the food away from each. For the poor man its easy-come-easy-go. He ate on the street yesterday, he’ll find a way to make do today. But the rich man? Just try taking away his meal. His butler will assault you, the police will be called, his lawyer will sue…’ You get the picture. As America endures its worst recession since the great depression, a cleansing of sorts is taking place. All the status symbols that give our lives meaning — designer clothes, fancy cars, expensive jewelry — are becoming outside our reach. Now status symbols are strange things. Who would have thought Dolce and Gabbana on our backside, Prada on our feet, and a $9,000 Birkin bag on our shoulder would make us feel so good about ourselves. But, curiously, we spend our lives pursuing these ephemeral and flimsy objects that somehow lend significance to our lives. Descartes may have said, “I think, therefore I am.” But in America we respond, “I have, therefore I am.” But in this recession, our status symbols are under threat. How attached have we become to these things? Will our egos survive their absence? Most importantly, will we finally fill the void with new status symbols of greater depth and more lasting endurance? Tiger Woods just lost his wife. His career is also going down the toilet. Which makes him feel worse? The answer, of course, depends on which was the real pillar of his self-esteem, his money and celebrity or his family. Values, of course, create character. A love of money creates a greedy character while a love of people creates a nurturing character. But what is often overlooked is how values also determine a culture’s status symbols. A culture that values wealth will develop super-expensive cars and gold encrusted watches that people compete to purchase. And a culture that values virtue will develop status symbols based on public service. After Ted Turner pledged $1 billion in 1997 to the UN, he made the valid point that the Forbes 400 list prevented many of his friends from following suit. They feared that if they gave away a large portion of their wealth they would fall off the list. For many, status is attained through the hording of wealth. But a little over a decade later Bill Gates and Warren Buffet obliterated that model by creating a new status symbol: giving away half your assets in your lifetime, making it almost embarrassing to remain on the Forbes list with all your assets intact. A conversation last week with an executive assistant to American Express CEO Ken Chenault, gave me an epiphany about my own susceptibility to shallow symbols of status, even though I decried all such nonsense in my 2009 book about the near-collapse of the American economy, The Blessing of Enough: Rejecting Material Greed, Embracing Spiritual Hunger . In 1994, while serving as Rabbi at Oxford University, I took my wife for our wedding anniversary to the Winter Olympics in Lillehammer. After an evening event we found ourselves in a freezing village late at night with no way to get back to our hotel in Oslo. I saw a bus passing and it stopped to pick us up. Turns out there were several British executives from American Express on board. One was charged with launching a new card — a black card — in the UK as a pilot. The Centurion Card was meant to be American Express’s most elite card and, though the necessary earnings and spending were completely outside my reach, the executive and I became friendly and, having heard that my organization regularly hosts world leaders lecturing to Oxford’s students, he found what I do interesting and offered me the card. Since it was a few years before the card made it into the US, it was a novelty to all who saw it. I was reluctant to ever show it off. Still, I knew I had it in my wallet. Turns out that amid the status it was far from the blessing I thought it would be. Every year American Express raised the membership fee it until it was completely outside our budget (unbelievably, the policy is to keep the fee even if they cancel the card). Were they crazy? And especially for the abysmal service it offered. A concierge that was often incompetent, travel ‘professionals’ who were well-meaning but so often inept. Account managers who were impossible to reach. I complained numerous times and was apologized to by the head of Centurion in the US, who acknowledged the poor service I had received and promised to make it better. Regardless, the mistakes continued and the service remained highly substandard. Matters came to a head when a temporary hold was put on the card because of a bicycle I bought from my brother’s business and American Expresses’ simple inability to distinguish between me, the cardholder, and my brother, an American Express merchant of many years. The hold was, of course, quickly removed but rather than the apology I had requested from Mr. Chenault’s office, so that he be made aware of the considerable problems with Centurion, what followed was a painful and arrogant phone call from an insufferable corporate type in the CEO’s office which only reinforced for me all the negative stereotypes that Americans have about credit card companies and their contemptuous treatment of those who make their businesses possible. It was then that I had my epiphany. The next day, as I discussed my unfortunate experiences with another of Chenault’s executive assistants, she asked me, given my abysmal experience with the card, why did I even want it? I went silent. I wished to give her an honest response. So here it is. For all the books and columns I had written about how the viper of materialism had coiled itself around the American soul, and for all the lectures I had given to audiences around the world about how we are drowning our children in an ocean of excess, and for all the resources I am prepared to put into giving each of my nine children a Jewish education in religious schools so that they have a values-based education, I somehow found this silly piece of metal edifying. I could not admit it to myself but, having fallen into a club outside my means, I had also fallen victim to a simple marketing ploy that told me that possessing a rarity reserved for exclusive members – however ridiculously exorbitant and useless – somehow made me special. Lois XIV, of France, the Sun King, confronted a dilemma as sovereign. Kings earned the loyalty of Dukes and Barons by granting large tracts of land. But the grants depleted the holdings of the Crown and the taxes they brought in. How could he sustain the loyalty of his most powerful subjects without giving away the realm? He came up with an ingenious solution: create a new status symbol that will cost him nothing and will simultaneously display the subordination of the barons to the King. Thus was born the almost laughable spectacle in Versailles of the daily royal dressing, know as the levee (rising). The King would awaken and the nobles of the realm would compete to take away his chamberpot, remove his nightshirt, and dress him with his britches. Incredibly, the nobles actually purchased the privilege of grande entrée, which commenced when the king’s nightshirt was pulled over his head. When it comes to status symbols you can make anyone your sucker. My black American Express had become my own royal chamberpot. My experience immediately called to mind a recent, brilliant op-ed by Peggy Noonan in the Wall Street Journal entitled, ‘We Pay them to Abuse us,’ which followed Steven Slater’s meltdown on JetBlue where passengers were subjected to his profanity-laced harangue after paying JetBlue to fly on the plane. Here, I was the sucker who had strained to pay a membership fee to be subject to corporate America’s shocking arrogance and to endure degrading phone calls from their executive offices. In the 1980′s American Express conducted a smear campaign against the celebrated orthodox Jewish banker and philanthropist Edmond Safra, brilliantly chronicled by renowned journalist Bryan Burrough in his best-seller ‘Vendetta: American Express and the Smearing of Banking Rival Edmond Safra.’ Safra, who was a major supporter of my work at Oxford University and sponsored an annual lecture for my organization that each year featured a Nobel Peace Prize Winner, including Elie Wiesel and Mikhail Gorbachev, won an apology and $8 million from American Express, all of which he donated to charity. The case, with its insinuations of anti-Semitism from what was perceived at the time to be a Waspy American Express, did much to tarnish the reputation of the bank and ultimately led to a change in management. In 2001 Chenault became only the third African-American CEO of a Fortune 500 company. That is, of course, something to be admired. But it would be nice to know that the executives of America’s most important companies change not only their personnel but their attitudes as well. Every company has the right to promote their status symbols and we, the public, have a right to either buy into them or rise above them. But in this age of Wall Street greed, corporate aloofness, and abusive employees, it would be nice to see companies that still believe, and insist, that the customer is king and should be treated with simple courtesy and respect. Rabbi Shmuley Boteach is the host of ‘The Shmuley Show’ on 77 WABC in NYC, America’s most listened-to talk radio station. He is the international best-selling author of 23 books and was the London Times Preacher of the Year at the Millennium. As host of ‘Shalom in the Home’ on TLC he won the National Fatherhood Award and his syndicated column was awarded the American Jewish Press Association’s Highest Award for Excellence in Commentary. Newsweek calls him ‘the most famous Rabbi in America.’ He has just published ‘Renewal: A Guide to the Values-Filled Life.’ Follow him on Twitter @RabbiShmuley.

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Samuel H. Williamson: The Macro Economics Social Security – Part Three

August 31, 2010

From the comments on the previous postings, I see that I am still not getting my points across to everyone. SirWillae does not like comparing Social Security to insurance, because “Getting old is the rule, not the exception. Therefore, it makes no sense to insure against getting old.” I guess I could reply that not everyone gets old, but everyone dies, so why buy life insurance? Also But SirWillae should remember realize that the official name of Social Security is: Old Age and Survivor’s Insurance (OASI). As I explained, if everyone had to take care of their parents in old age, then some would end up with great expenses and others, whose parents died just as they retired, would have none. Both my parents died when they were in their late 80s 88, so I benefited. I have a friend who is my age and his parents were killed in a car crash when he was in his 30s so he did not get the same benefit, but we did not know this when we started working. So as he and I paid into Social Security, we were buying potential benefits for our parents, not knowing if they would collect. Jackson, who is 23, says “I can’t help but to trust individuals more to save for their own retirement than the federal government, which has taken what should have been savings and lent it… to itself.” But This statement has two problems.; First, most of the money paid to Social Security has not been saved, but passed on to folks such as his grand parents. Jackson should ask them if they appreciate getting those benefits, and he should ask himself if he would like to have his grandparents dependent on his salary to eat. The second problem is to whom the Social Security trust fund should loan these funds if not the government? The fact that everyone else from hedge funds to the Chinese want to lend money to our government would seem to validate this choice. I personally am happy that the trust fund was not invested in real estate the past four years. But I do not want to get into the debate about the size of the federal debt and deficit; though I do think there is a bit of an exaggeration as to how big a problem it is. I will discuss in another posting the question of what would happen if we abolished Social Security so that everyone chose for himself or herself when they retire. If we were ever to go that way, it would take a long time. But for now, before we decide that there needs to be changes in Social Security, we as a society must decide how much of the nation’s output is to be shared with the dependent part of our population. Instead of trying to manipulate the age that people retire for fiscal reasons, let us decide how much leisure we want at the end of life. The per capita income in the United States is higher than every nation in the world except Norway. If we choose, we can have fewer older workers and more people retired. This would mean less output and more leisure time. When politicians say the retirement age should be raised, is it because: (1) They think we will not have enough workers, particularly those over 60? (2) They think we will not have enough output to share with our dependent population unless we all work more years? I doubt these are their answers, but until we address these questions first, our public retirement insurance program is not the place to manipulating the retirement age.

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Ramon DeLeon’s Journey: Former Pizza Delivery Guy’s Inspiring Story

August 31, 2010

For want of a belt, Ramon DeLeon almost didn’t get the part-time job delivering pizzas that launched his remarkable career at Domino’s. Fortunately for us, he overcame this hurdle just as he has so many before and since, becoming a highly successful businessman, not to mention the most effective practitioner of social media I’ve yet to meet.

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Video: Bensignor Says U.S. Stock Market at `Critical Place’: Video

August 31, 2010

Aug. 31 (Bloomberg) — Rick Bensignor, chief market strategist at Execution Noble Ltd., talks about the performance of U.S. stocks and the outlook for equities. Bensignor talks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

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Robert Reich: Why a Civil Society Extends Unemployment Benefits

August 31, 2010

I have the questionable distinction of appearing on Larry Kudlow’s CNBC program several times a week, arguing with people whose positions under normal circumstances would get no serious attention, and defending policies I would have thought so clearly and obviously defensible they should need no justification. But we are living through strange times. The economy is so bad that the social fabric is coming undone, and what used to be merely weird economic theories have become debatable public policies. Tonight it was Harvard Professor Robert Barro, who opined in today’s Wall Street Journal that America’s high rate of long-term unemployment is the consequence rather than the cause of today’s extended unemployment insurance benefits. In theory, Barro is correct. If people who lose their jobs receive generous unemployment benefits they might stay unemployed longer than if they got nothing. But that’s hardly a reason to jettison unemployment benefits or turn our backs on millions of Americans who through no fault of their own remain jobless in the worst economy since the Great Depression. Yet moral hazard lurks in every conservative brain. It’s also true that if we got rid of lifeguards and let more swimmers drown, fewer people would venture into the water. And if we got rid of fire departments and more houses burnt to the ground, fewer people would use stoves. A civil society is not based on the principle of tough love. In point of fact, most states provide unemployment benefits that are only a fraction of the wages and benefits people lost when their jobs disappeared. Indeed, fewer than 40 percent of the unemployed in most states are even eligible for benefits, because states require applicants have been in full-time jobs for at least three to five years. This often rules out a majority of those who are jobless — because they’ve moved from job to job, or have held a number of part-time jobs. So it’s hard to make the case that many of the unemployed have chosen to remain jobless and collect unemployment benefits rather than work. Anyone who bothered to step into the real world would see the absurdity of Barro’s position. Right now, there are roughly five applicants for every job opening in America. If the job requires relatively few skills, hundreds of applicants line up for it. The Bureau of Labor Statistics says 15 percent of people without college degrees are jobless today; that’s not counting large numbers too discouraged even to look for work. Barro argues the rate of unemployment in this Great Jobs Recession is comparable to what it was in the 1981-82 recession, but the rate of long-term unemployed then was nowhere as high as it is now. He concludes this is because unemployment benefits didn’t last nearly as long in 1981 and 82 as it they do now. He fails to see — or disclose — that the ’81-’82 recession was far more benign than this one, and over far sooner. It was caused by Paul Volcker and the Fed yanking up interest rates to break the back of inflation — and overshooting. When they pulled interest rates down again, the economy shot back to life. The Great Jobs Recession is far more severe. It’s continuing far longer. It was caused by the bursting of a giant housing bubble, abetted by the excesses of Wall Street. Home values are still 20 to 30 percent below where they were in 1997. The Fed is powerless because consumers cannot and will not buy enough to bring the economy back to life. A record number of Americans is unemployed for a record length of time. This is a national tragedy. It is to the nation’s credit that many are receiving unemployment benefits. This is good not only for them and their families but also for the economy as a whole, because it allows them to spend and thereby keep others in jobs. That a noted professor would argue against this is obscene. This post originally appeared at RobertReich.org .

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SEC Threatens Credit Rating Agencies With Fraud Charges

August 31, 2010

WASHINGTON — The Securities and Exchange Commission has declined to seek fraud charges against Moody’s Investors Services over its ratings of risky investments that led to the financial crisis. But the SEC said it decided against seeking civil charges only because it determined it lacked authority to charge a foreign affiliate of Moody’s. Instead, in a report on its investigation, the SEC warned all credit rating agencies that they could face charges if they mislead investors with deceptive ratings. Investors rely on the statements these agencies make in their applications and reports to the SEC, Robert Khuzami, the SEC enforcement director, said in a statement. “It is crucial that (rating agencies) take steps to assure themselves of the accuracy of those statements and that they have in place sufficient internal controls over the procedures they use to determine credit ratings,” he said. The warning is the latest step by the SEC to address the conduct of major financial firms that contributed to the Wall Street meltdown. Goldman Sachs & Co. agreed in July to pay $550 million to settle civil fraud charges related to its sales of mortgage investments. And Citigroup Inc. agreed to pay $75 million to resolve charges it misled investors about billions of dollars in potential losses from subprime mortgages. The financial overhaul law enacted in July calls for reducing the influence of the big three rating agencies – Moody’s, Standard & Poor’s and Fitch Ratings. They were discredited in the financial crisis for giving high ratings to risky mortgage securities. The financial overhaul law also gave the SEC authority to pursue alleged fraud by foreign affiliates of U.S. rating agencies that could have a significant effect within the U.S. The SEC accused Moody’s of failing to disclose ratings misconduct by a European affiliate when it registered with the agency, as required by law at that time. Because the alleged misconduct occurred before the financial overhaul law took effect, the SEC said it lacked jurisdiction to pursue an enforcement case against Moody’s. According to the SEC report, a Moody’s analyst found in 2007 that a computer error at the European affiliate had resulted in certain bonds receiving ratings that downplayed their level of risk. A Moody’s rating committee later voted against changing the rating, partly out of concern that it would harm the firm’s reputation, the SEC said. A January 2007 e-mail quoted in the report, from a member of the rating committee to the panel’s chair, said: “In this particular case we seem to face an important reputation risk issue.” Even “the possibility of a hint that the (computer) model has a bug” should be avoided, the panel member urged. The committee’s conduct violated Moody’s risk practices as described in its application to register with the SEC, the agency said. The report says the SEC will pursue antifraud actions involving deceptive ratings, including cases overseas. Moody’s spokesman Michael Adler said the firm was pleased that the matter was resolved and the SEC wasn’t pursuing enforcement action. “We fully support the (SEC’s) message that every rating decision must be based only on credit considerations, and we are committed to maintaining robust procedures to ensure that our internal company policies are followed,” he said. The rating agencies’ grades of public companies and securities can affect a company’s ability to raise or borrow money and how much investors will pay for securities. The big agencies assigned AAA ratings to securities tied to risky subprime mortgages that later went bad and helped cause the housing bust. Afterward, the agencies had to downgrade many of the bonds as home-loan delinquencies soared and the value of those investments sank.

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Northwest Pipe Announces Addition to Board of Directors

August 31, 2010

VANCOUVER, WA–(Marketwire – August 31, 2010) –  Northwest Pipe Company ( NASDAQ : NWPX ) announced today that James E. Declusin, former CEO of Oregon Steel Mills, Inc. and Evraz Inc. NA, has joined its board of directors.

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JPMorgan Will Shut Propietary Trading Desk In Response To Volcker Rule: Bloomberg

August 31, 2010

Aug. 31 (Bloomberg) — JPMorgan Chase & Co., the second- largest U.S. lender by assets, told traders who bet on commodities for the firm’s account that their unit will be closed as the company begins to shut down all its proprietary trading, according to a person briefed on the matter.

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Video: Governor Herbert Says Utah `Doing More With Less’: Video

August 31, 2010

Aug. 31 (Bloomberg) — Utah Governor Gary Herbert talks about the challenges facing his state’s economy. Herbert speaks with Carol Massar and Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Stratigent Makes Its Next Strategic Move by Appointing President and COO

August 31, 2010

CHICAGO, IL–(Marketwire – August 31, 2010) –  Stratigent ( www.stratigent.com ), a digital analytics agency specializing in web analytics and marketing optimization consulting, today announced two new leadership appointments. Bill Bruno is to serve as the company’s President and Jennifer Veesenmeyer is to serve as the company’s Chief Operations Officer.

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Video: U.S. Stocks Rise on Consumer Confidence, Home Price Data: Video

August 31, 2010

Aug. 31 (Bloomberg) — Bloomberg’s Elizabeth Faublas reports on the performance of the U.S. equity market today. Stocks rose, trimming the biggest August slump since 2001, as regulators approved a Chinese investment in Morgan Stanley and gains in home prices and consumer confidence tempered concern the economy is faltering. Bloomberg’s Pimm Fox also speaks. (Source: Bloomberg)

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Video: Knapp Expects September to Be `Tough’ for U.S. Stocks: Video

August 31, 2010

Aug. 31 (Bloomberg) — Barry Knapp, the chief U.S. equity strategist at Barclays Capital Inc., talks about the outlook for the U.S. stock market. Barry Knapp, speaking with Matt Miller, Carol Massar, Julie Hyman and Dominic Chu on Bloomberg Television’s “Street Smart,” also discusses Federal Reserve policy, investor sentiment and the U.S. economy. PTI Securities & Futures LP’s Daniel Haugh also speaks. (Source: Bloomberg)

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Chris Guillebeau: How to Stand Out in Any Job

August 31, 2010

Regardless of what kind of work you do, it’s usually not difficult to set yourself apart by going beyond the status quo of being average. All too many working environments are filled with all kinds of people who are just ambling through their jobs. Many don’t want to be there at all, and never miss a chance to let everyone know how much they’d rather be somewhere else. Others are embarrassingly opportunistic, focused entirely on themselves and “what’s in it for them.” Their every move is built on pleasing the people they think will determine their future. Still others in most workplaces base their time and energy on the goal of just getting by. They do what they need to do, for the most part, but they rarely take risks and rarely excel. Sadly, these characterizations are true even in a lot of “helping” professions — in academia, in non-profit organizations, in the clergy, and so on. Setting a goal of doing the least amount expected of you may have started in the corporate cubicle world, but the norms of mediocrity have since spread throughout most professions. Fortunately, there is a clear alternative to ambling through your workday. The alternative is to be excellent, to make a huge difference in your working environment, help others do better, and increase your own workplace stock along the way. Focus on these eight principles to become a superhero in pretty much any job: Never turn down a project by saying, “That’s not in my job description.” We’re often taught that high achievers carefully select the tasks and projects that they work on. This is true in the long run, but when you’re getting established somewhere, you shouldn’t be so selective. Instead, do the things that need to be done but that no one wants to do. You can always point out later that you’ve done everything you’re supposed to do and a lot more, but don’t whine about your projects while they’re underway. If someone asks you to do something, it’s usually because they think you’ll do it well. Impress them and do it even better. Focus externally and continually ask for feedback. Ask your boss, your colleagues, and your subordinates the same question every couple of weeks: “What can I do better?” If they don’t give you a straight answer, they’re usually just being polite. Ask again. Also ask all of these people, “How can I help you?” Spend time every day focusing on the people around you. Think about their needs and preemptively help them. Make it clear you’re not helping them so they can help you later; just make their lives easier and help them look good to others. Build a strong team even if you’re not the boss, and be a leader no matter what your title is. You don’t need to be in charge to be a team-builder. Just start doing it. Take notes at meetings and email them out to the participants. Begin asking follow-up questions: “Who will take responsibility for this? When will it be done?” Leadership rarely involves telling people what to do. Instead, it’s usually about helping people and teams create synergy and accomplish great things by working together. You can do that without any title at all. When the time comes where you do need to tell someone what to do, they’ll listen to you if you have taken the time to build the team well. You know you’ve been successful when people start looking to you for the answers even when more experienced or more senior people are around. If you’re not at a meeting and people notice your absence, that’s a good start. If they wait to begin the meeting until you can be located, that’s even better. Propose and Support Amazing Ideas… Think about how you can make your organization or your workgroup great. Think really big, but also think small–sometimes the most effective changes require relatively small shifts in behavior or perception. Ask others for ideas. Most people have them, but they often don’t know how to present them, or they feel shut down from a previous negative experience. Get the best ideas out of the best people, and start pitching for them. …but don’t pitch your biggest ideas in a group meeting. Your ideas will “travel” further if they have the support of others, and it’s much easier to get buy-in through individual meetings. This is why the “meeting before the meeting” is usually more important than the meeting. Test out your best ideas. Give them time to settle with others. Go to each key decision maker to share your idea before the real meeting starts. Then at the meeting, introduce the idea by saying, “I mentioned this to a couple of people earlier…” Everyone you talked with earlier will feel validated that they were involved before the big meeting, so talk to as many people as possible. After you’ve established some credibility, start a small but meaningful rebellion. Make sure you pick something that is easy to win but still makes a positive difference for most of your colleagues. Good ideas are dress codes, mandatory but useless meetings, and any long-standing practices that don’t make sense. Start violating these norms, slowly but boldly. Because you’ve taken the time to establish credibility, your rebellion will be closely watched. And because you’ve picked something that’s easy to win but meaningful to others, you’ll have good support for it. After you achieve the change you were seeking, share the credit and plan your next rebellion. Don’t get tangled up in long email threads. Never be a slave to your Outlook folder. Check it twice a day, turn off the “ding” sound that alerts you to new mail, and set up an Action folder to process important items instead of continually looking through your Inbox. As an inexperienced leader who derived too much self-worth from my Outlook addiction, someone said to me once, “Chris, don’t try to be the fastest person to reply to these long email threads. Just take your time, listen to other people, and then contribute something meaningful.” Work smarter and harder. Yes, you should find ways to work smarter and avoid repetitive, monotonous tasks. But you should also work really hard. Show up early and leave late. After you’ve established some authority, you can get back to pacing yourself. It’s a lot better to have a reputation as a hard worker from the beginning. When you relax a little later, no one will notice. If you feel threatened by someone, don’t show it. Most people who lead by intimidation are quite insecure. Don’t reinforce their insecurity by pandering to it. Even when it’s working for them and you feel intimidated, never let them know. Instead, do your job, keep excelling, keep looking out for others, and eventually the tide will turn. You may even end up as their boss one day — it happens all the time. *** These general tips below will also help: Share Credit, Accept Blame. Many people try to pass the blame to others. It’s very different to say, it’s my fault. I’m sorry. Try sending an email with the subject “Hey everyone, I’m sorry” sometime and see what happens. Compliment others every day. Do it by email, phone, notes, any way you can. Find out how people like to be complimented and do it the same way. Don’t make it trite. Most people know when you’re being genuine. Go above and beyond. Deliver more than what’s expected. Don’t do it to be rewarded; do it because it really adds value. *** Be excellent, and a remarkable thing will happen: by helping others look good and improving your overall environment, you’ll look good as well. You’ll do it without backstabbing and without doing stuff that has no real value. Instead, you’ll inspire others. And then you’ll be a leader, just like John Quincy Adams said: “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” This is real leadership for any generation and any workplace. If you don’t yet know how you’ll change the world, this is a great way to start.

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Video: Biggs Holds `Fair Amount of Risk,’ Sees No Recession: Video

August 31, 2010

Aug. 31 (Bloomberg) — Barton Biggs, co-founder of Traxis Partners LP, talks about his investment strategy and the likelihood the U.S. economy will fall back into recession. Biggs also discusses the possibility that JPMorgan Chase & Co. will close its proprietary trading unit, regulation of the financial industry and U.S. economic policies. He talks with Carol Massar and Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Video: Soodik Says Joint Dodger Ownership Claim Not Plausible: Video

August 31, 2010

Aug. 31 (Bloomberg) — Lynn Soodik, a family law attorney, talks with Bloomberg’s Stephanie Stanton about the divorce trial of Jamie and Frank McCourt. McCourt’s claim to be the sole owner of the Los Angeles Dodgers was challenged today by his estranged wife. (Source: Bloomberg)

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Video: Soodik Says Joint Dodger Ownership Claim Not Plausible: Video

August 31, 2010

Aug. 31 (Bloomberg) — Lynn Soodik, a family law attorney, talks with Bloomberg’s Stephanie Stanton about the divorce trial of Jamie and Frank McCourt. McCourt’s claim to be the sole owner of the Los Angeles Dodgers was challenged today by his estranged wife. (Source: Bloomberg)

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FOMC Minutes: Fed Officials Pondered Further Stimulus

August 31, 2010

WASHINGTON — Federal Reserve officials signaled at their August meeting that they would consider going beyond a modest program to purchase government debt if necessary to boost the economy. Minutes of the Fed’s discussions from the Aug. 10 meeting show the central bank recognized that the economy could need further stimulus beyond the debt purchases. Those are intended to lower interest rates on a range of consumer and business loans. The minutes, which were released Tuesday, did not spell out what new steps might be taken. But they do indicate that the officials focused attention on the modest move the Fed did take at the meeting, which would invest a small amount of proceeds from its huge mortgage bond portfolio in Treasury securities. Some Fed officials argued that reinvesting proceeds from the Fed’s holdings of mortgage securities “could send an inappropriate signal to investors about the committee’s readiness to resume large-scale asset purchases,” the minutes said. One member objected and said making the change could complicate the Fed’s eventual exit from its period of aggressive credit easing, which began more than two years ago as the country plunged into a deep recession. The minutes are not verbatim and do not identify speakers but analysts said they provided an indication that the central bank engaged in an extensive debate over the issue before agreeing to provide nearly unanimous support for Federal Reserve Chairman Ben Bernanke. In the end, the Federal Open Market Committee, the panel of Fed board members and regional bank presidents who set interest rates, voted 9-1 to support the modest easing move. The only dissent came from Kansas City Federal Reserve Bank President Thomas Hoenig. Fed policymakers took the step at a time when economic growth is slowing and many are concerned the country could slip back into a recession. After the recession began in December 2007, the Fed tripled its balance sheet to help bolster economic growth and steady the housing market. In addition to buying Treasury debt, it purchased $1.25 trillion in mortgage-backed securities. For most of this year the central bank had discussed exiting the program. But at the August Fed meeting, the central bank said it would use the proceeds from the mortgage program to purchase Treasury bonds. The goal would be to keep its total holdings of securities at around $2.05 trillion. The minutes said that the committee believed that the most likely outcome for the economy was that it would continue to grow and would avoid a destabilizing bout of deflation – when prices and wages decline. But the panel said it was prepared to go further to guard against either a return to recession or deflation. The minutes said the Fed panel agreed it would “need to consider steps it could take to provide additional policy stimulus tools if the outlook were to weaken appreciably further.” Mark Zandi, chief economist at Moody’s Analytics, said it was significant that the minutes showed Fed officials were willing to consider various steps to bolster growth. Zandi said the Fed could begin significantly expanding its balance sheet by buying large amounts of Treasury securities if the unemployment rate begins to rise on a sustained basis. The jobless rate stood at 9.5 percent in July with the government scheduled to release the August report on Friday. However, other economists said they did not believe the central bank was close to resuming a large-scale effort to buy securities. They predicted that the central bank will keep its target for overnight bank loans at zero to 0.25 percent, where it has been since December 2008. But it will not launch other major credit easing efforts unless the economy weakens significantly. “The Fed doesn’t believe we will have a double-dip recession. But if there is a significant deterioration in the economy, then all bets are off and they will act more aggressively,” said David Jones, head of DMJ Advisors, a Denver-based economic consulting firm. The minutes showed the discussions on Aug. 10 lasted for more than five hours. Many analysts said the amount of time spent on a relatively modest change showed the central bank is not close to approving a large-scale operation. “The Fed will only restart its asset purchases if economic conditions deteriorate markedly from where we are now,” said Paul Ashworth, an economist at Capital Economics. Bernanke discussed a range of options that could be employed at a Fed conference Friday in Wyoming including resumption of large-scale purchases of Treasury securities. In that speech, Bernanke said he believed that the economy would continue to grow modestly in the second half of this year and then rebound to stronger growth in 2011.

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FOMC Minutes: Fed Officials Pondered Further Stimulus

August 31, 2010

WASHINGTON — Federal Reserve officials signaled at their August meeting that they would consider going beyond a modest program to purchase government debt if necessary to boost the economy. Minutes of the Fed’s discussions from the Aug. 10 meeting show the central bank recognized that the economy could need further stimulus beyond the debt purchases. Those are intended to lower interest rates on a range of consumer and business loans. The minutes, which were released Tuesday, did not spell out what new steps might be taken. But they do indicate that the officials focused attention on the modest move the Fed did take at the meeting, which would invest a small amount of proceeds from its huge mortgage bond portfolio in Treasury securities. Some Fed officials argued that reinvesting proceeds from the Fed’s holdings of mortgage securities “could send an inappropriate signal to investors about the committee’s readiness to resume large-scale asset purchases,” the minutes said. One member objected and said making the change could complicate the Fed’s eventual exit from its period of aggressive credit easing, which began more than two years ago as the country plunged into a deep recession. The minutes are not verbatim and do not identify speakers but analysts said they provided an indication that the central bank engaged in an extensive debate over the issue before agreeing to provide nearly unanimous support for Federal Reserve Chairman Ben Bernanke. In the end, the Federal Open Market Committee, the panel of Fed board members and regional bank presidents who set interest rates, voted 9-1 to support the modest easing move. The only dissent came from Kansas City Federal Reserve Bank President Thomas Hoenig. Fed policymakers took the step at a time when economic growth is slowing and many are concerned the country could slip back into a recession. After the recession began in December 2007, the Fed tripled its balance sheet to help bolster economic growth and steady the housing market. In addition to buying Treasury debt, it purchased $1.25 trillion in mortgage-backed securities. For most of this year the central bank had discussed exiting the program. But at the August Fed meeting, the central bank said it would use the proceeds from the mortgage program to purchase Treasury bonds. The goal would be to keep its total holdings of securities at around $2.05 trillion. The minutes said that the committee believed that the most likely outcome for the economy was that it would continue to grow and would avoid a destabilizing bout of deflation – when prices and wages decline. But the panel said it was prepared to go further to guard against either a return to recession or deflation. The minutes said the Fed panel agreed it would “need to consider steps it could take to provide additional policy stimulus tools if the outlook were to weaken appreciably further.” Mark Zandi, chief economist at Moody’s Analytics, said it was significant that the minutes showed Fed officials were willing to consider various steps to bolster growth. Zandi said the Fed could begin significantly expanding its balance sheet by buying large amounts of Treasury securities if the unemployment rate begins to rise on a sustained basis. The jobless rate stood at 9.5 percent in July with the government scheduled to release the August report on Friday. However, other economists said they did not believe the central bank was close to resuming a large-scale effort to buy securities. They predicted that the central bank will keep its target for overnight bank loans at zero to 0.25 percent, where it has been since December 2008. But it will not launch other major credit easing efforts unless the economy weakens significantly. “The Fed doesn’t believe we will have a double-dip recession. But if there is a significant deterioration in the economy, then all bets are off and they will act more aggressively,” said David Jones, head of DMJ Advisors, a Denver-based economic consulting firm. The minutes showed the discussions on Aug. 10 lasted for more than five hours. Many analysts said the amount of time spent on a relatively modest change showed the central bank is not close to approving a large-scale operation. “The Fed will only restart its asset purchases if economic conditions deteriorate markedly from where we are now,” said Paul Ashworth, an economist at Capital Economics. Bernanke discussed a range of options that could be employed at a Fed conference Friday in Wyoming including resumption of large-scale purchases of Treasury securities. In that speech, Bernanke said he believed that the economy would continue to grow modestly in the second half of this year and then rebound to stronger growth in 2011.

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September Stock Slump Coming? Investors Brace For A Traditionally Bad Month

August 31, 2010

CHICAGO — The economy is weakening, home sales are plunging and stocks are on a long slide. Now comes something even scarier for investors – the beginning of what is traditionally the worst month in the market. Could stocks be headed for another September swoon? “If history is any guide, for it’s never gospel, we may be in for another rough ride,” says Sam Stovall, chief investment strategist at Standard & Poor’s. Mutual fund managers tend to clean house after Labor Day, taking profits on winning stocks and weeding out portfolios before putting out the rosiest possible end-of-quarter reports for their clients. Workers coming back from summer breaks are also inclined to sell stocks as they get their financial affairs in order. Any festering issues with the economy or stocks during the summer, when trading volume is light, tend to get put off until fall. The result: September is usually a dog of a month for the market. It typically starts with solid market increases, then tails off, says Jeffrey Hirsch, editor-in-chief of the Stock Trader’s Almanac. “There’s just a general selling bias in the month of September,” he says. Four times in the past decade alone, the S&P 500 shed at least 5 percent in September. The average September decline since 1950 is 0.6 percent, according to the Stock Trader’s Almanac. February is the next worst, with an average 0.2 percent loss, and December and November are the best, averaging 1.6 percent gains. Of course, investors haven’t forgotten that the financial world collapsed in September just two years ago. And the Sept. 11 attacks, which delivered a devastating blow to the stock market, remain a painful memory. This year, there’s a lot to frown about. The S&P 500 index is down 14 percent from its high in April, and was down 5 percent for the month of August. Stocks have fallen because the economic recovery is faltering. The economy has slowed to anemic growth, home sales the last three months are the worst on record, consumer spending is lackluster and unemployment is stuck near 10 percent. The slew of weak economic data sapped the market of what little midsummer momentum it had and further shook the confidence of already wary investors. “I don’t think it would take a whole lot to get investors to start selling and consumers to start pulling back again,” says Mark Zandi, chief economist at Moody’s Economy.com. “The collective psyche is on edge.” Federal Reserve Chairman Ben Bernanke said last week that the central bank is ready to take additional steps to boost the economy, including buying more debt or mortgage securities in order to keep interest rates low. But with the benchmark interest rate already near zero, any Fed action is unlikely to provide the oomph of past measures. Congress doesn’t appear to have an appetite for another stimulus package. Also hanging over the market is an air of heightened uncertainty because the November elections will determine which party controls Congress for the next two years. The S&P 500 has declined an average 1.7 percent in the September before midterm elections since 1930. Not that September isn’t bad enough already without all of this year’s baggage. It’s one of only three months, along with February and June, when stock prices typically decline. The uncertainty is a serious consideration for financial advisers such as Dominick Vetrano of Fountainhead Financial in Chicago. He holds off putting more money into stocks beginning in August, even though he thinks the September market dips are usually psychological. “There is little to gain by investing right before September and a lot to lose, so why risk it?” he says. “The September effect is well-documented.” Some experienced market participants, however, dismiss the significance of the trend and say it would be a mistake to try to time market decisions based on seasonal data from past years. Investors ultimately should be guided by the financial health of the companies they’re considering investing in. Hirsch, the market historian, agrees that history shouldn’t guide investing alone. After all, the S&P 500 advanced 4 percent last September. But he maintains that the numbers are too meaningful to dismiss entirely. “You should have a general idea of what the market’s rhythm and tendencies are,” he says. “And you respond accordingly.”

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September Stock Slump Coming? Investors Brace For A Traditionally Bad Month

August 31, 2010

CHICAGO — The economy is weakening, home sales are plunging and stocks are on a long slide. Now comes something even scarier for investors – the beginning of what is traditionally the worst month in the market. Could stocks be headed for another September swoon? “If history is any guide, for it’s never gospel, we may be in for another rough ride,” says Sam Stovall, chief investment strategist at Standard & Poor’s. Mutual fund managers tend to clean house after Labor Day, taking profits on winning stocks and weeding out portfolios before putting out the rosiest possible end-of-quarter reports for their clients. Workers coming back from summer breaks are also inclined to sell stocks as they get their financial affairs in order. Any festering issues with the economy or stocks during the summer, when trading volume is light, tend to get put off until fall. The result: September is usually a dog of a month for the market. It typically starts with solid market increases, then tails off, says Jeffrey Hirsch, editor-in-chief of the Stock Trader’s Almanac. “There’s just a general selling bias in the month of September,” he says. Four times in the past decade alone, the S&P 500 shed at least 5 percent in September. The average September decline since 1950 is 0.6 percent, according to the Stock Trader’s Almanac. February is the next worst, with an average 0.2 percent loss, and December and November are the best, averaging 1.6 percent gains. Of course, investors haven’t forgotten that the financial world collapsed in September just two years ago. And the Sept. 11 attacks, which delivered a devastating blow to the stock market, remain a painful memory. This year, there’s a lot to frown about. The S&P 500 index is down 14 percent from its high in April, and was down 5 percent for the month of August. Stocks have fallen because the economic recovery is faltering. The economy has slowed to anemic growth, home sales the last three months are the worst on record, consumer spending is lackluster and unemployment is stuck near 10 percent. The slew of weak economic data sapped the market of what little midsummer momentum it had and further shook the confidence of already wary investors. “I don’t think it would take a whole lot to get investors to start selling and consumers to start pulling back again,” says Mark Zandi, chief economist at Moody’s Economy.com. “The collective psyche is on edge.” Federal Reserve Chairman Ben Bernanke said last week that the central bank is ready to take additional steps to boost the economy, including buying more debt or mortgage securities in order to keep interest rates low. But with the benchmark interest rate already near zero, any Fed action is unlikely to provide the oomph of past measures. Congress doesn’t appear to have an appetite for another stimulus package. Also hanging over the market is an air of heightened uncertainty because the November elections will determine which party controls Congress for the next two years. The S&P 500 has declined an average 1.7 percent in the September before midterm elections since 1930. Not that September isn’t bad enough already without all of this year’s baggage. It’s one of only three months, along with February and June, when stock prices typically decline. The uncertainty is a serious consideration for financial advisers such as Dominick Vetrano of Fountainhead Financial in Chicago. He holds off putting more money into stocks beginning in August, even though he thinks the September market dips are usually psychological. “There is little to gain by investing right before September and a lot to lose, so why risk it?” he says. “The September effect is well-documented.” Some experienced market participants, however, dismiss the significance of the trend and say it would be a mistake to try to time market decisions based on seasonal data from past years. Investors ultimately should be guided by the financial health of the companies they’re considering investing in. Hirsch, the market historian, agrees that history shouldn’t guide investing alone. After all, the S&P 500 advanced 4 percent last September. But he maintains that the numbers are too meaningful to dismiss entirely. “You should have a general idea of what the market’s rhythm and tendencies are,” he says. “And you respond accordingly.”

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Dianne Calvi Joins Village Enterprise Fund

August 31, 2010

Microfinance Organization Hires Seasoned Professional for New Growth

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Dianne Calvi Joins Village Enterprise Fund

August 31, 2010

Microfinance Organization Hires Seasoned Professional for New Growth

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Fred Whelan and Gladys Stone: Rejected Outright for the Job Because of Their Online Image

August 31, 2010

Business strategist and Webby Award winner David Allen Ibsen (runs business consultancy 5 Meetings Before Lunch ) was helping one of his start-up clients with their organizational needs. Specifically, they were looking to make a couple of key hires. Ibsen tapped into his business/social network on LinkedIn to search and identify potential candidates. “LinkedIn is great because you have the person’s resume right in front of you.” He then gave the short list of candidates to his client who “Googled” each person’s name to do a background check. The client put the names into two buckets: “People with a positive web presence” and “Not”. The positives were called in for interviews, the rest were rejected outright. While these people had professional LinkedIn profiles, they were dinged because of what they had on other social networking sites. A professional profile is great but it doesn’t mean you’ll get a pass on them checking Facebook, Twitter or blogs you may have written. According to Ibsen, these people should consider taking a look at their personal brand. “Just like my corporate clients who covet their brand reputation, individuals need to look at what type of story is being told about them online and make sure it matches who they are and how they want to be perceived.” So, where should you start if you have a less than favorable web presence? Facebook – Look at your profile photo. Is this how you would want to be judged by a potential employer? We know it’s supposed to be just for friends, but the reality is that your photo along with your profile’s “likes” and “dislikes” are open to public review. Give your likes and dislikes the same scrutiny. If you happened to be “tagged” in a photo, that picture could also make its way to a hiring manager or recruiter. Let your friends know that you would rather not be tagged. Twitter – Whatever you tweet can get retweeted, on and on. It’s like the old Faberge shampoo commercials , “I told two friends, who told two friends” and before you know it, it’s out there in a big way. Tweets do fall off Google searches rather quickly, which is the good news. If you need to do some damage control on something you’ve tweeted, then tweet a number of positive things. LinkedIn – A way to rebrand yourself here would be to raise your profile by answering questions in your area of expertise. Also, review your profile for keywords and positioning. That can make a difference in how people find you and perceive you. We coached a woman who was a professor, author and speaker. Her profile emphasized her academic background, when she really wanted to focus on her writing and speaking engagements. This was an easy fix and got her more attention in the areas she wanted. David Allen Ibsen: “The Internet and the rise of social media have changed the rules in terms of how prospective employers do background checks. Even though the rules have changed, one thing still holds true – building a good reputation is invaluable.” People make the mistake of viewing LinkedIn as their professional image and consider Facebook and Twitter as their personal ones. While you might make this distinction, hiring managers don’t. Ibsen: “Never post anything on the Internet you wouldn’t want your mother – or boss – to see.” Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

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Fred Whelan and Gladys Stone: Rejected Outright for the Job Because of Their Online Image

August 31, 2010

Business strategist and Webby Award winner David Allen Ibsen (runs business consultancy 5 Meetings Before Lunch ) was helping one of his start-up clients with their organizational needs. Specifically, they were looking to make a couple of key hires. Ibsen tapped into his business/social network on LinkedIn to search and identify potential candidates. “LinkedIn is great because you have the person’s resume right in front of you.” He then gave the short list of candidates to his client who “Googled” each person’s name to do a background check. The client put the names into two buckets: “People with a positive web presence” and “Not”. The positives were called in for interviews, the rest were rejected outright. While these people had professional LinkedIn profiles, they were dinged because of what they had on other social networking sites. A professional profile is great but it doesn’t mean you’ll get a pass on them checking Facebook, Twitter or blogs you may have written. According to Ibsen, these people should consider taking a look at their personal brand. “Just like my corporate clients who covet their brand reputation, individuals need to look at what type of story is being told about them online and make sure it matches who they are and how they want to be perceived.” So, where should you start if you have a less than favorable web presence? Facebook – Look at your profile photo. Is this how you would want to be judged by a potential employer? We know it’s supposed to be just for friends, but the reality is that your photo along with your profile’s “likes” and “dislikes” are open to public review. Give your likes and dislikes the same scrutiny. If you happened to be “tagged” in a photo, that picture could also make its way to a hiring manager or recruiter. Let your friends know that you would rather not be tagged. Twitter – Whatever you tweet can get retweeted, on and on. It’s like the old Faberge shampoo commercials , “I told two friends, who told two friends” and before you know it, it’s out there in a big way. Tweets do fall off Google searches rather quickly, which is the good news. If you need to do some damage control on something you’ve tweeted, then tweet a number of positive things. LinkedIn – A way to rebrand yourself here would be to raise your profile by answering questions in your area of expertise. Also, review your profile for keywords and positioning. That can make a difference in how people find you and perceive you. We coached a woman who was a professor, author and speaker. Her profile emphasized her academic background, when she really wanted to focus on her writing and speaking engagements. This was an easy fix and got her more attention in the areas she wanted. David Allen Ibsen: “The Internet and the rise of social media have changed the rules in terms of how prospective employers do background checks. Even though the rules have changed, one thing still holds true – building a good reputation is invaluable.” People make the mistake of viewing LinkedIn as their professional image and consider Facebook and Twitter as their personal ones. While you might make this distinction, hiring managers don’t. Ibsen: “Never post anything on the Internet you wouldn’t want your mother – or boss – to see.” Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

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Video: Heller Says Fed Policy Alone Can’t Revive U.S. Economy: Video

August 31, 2010

Aug. 31 (Bloomberg) — Former Federal Reserve Governor Robert Heller talks with Bloomberg’s Melissa Long and Michael McKee about minutes of the Federal Reserve’s Aug. 10 meeting. Some Fed officials were concerned their decision to maintain their balance sheet would send an unintended signal the central bank is ready to resume large-scale asset purchases, the minutes show. (Source: Bloomberg)

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Video: Heller Says Fed Policy Alone Can’t Revive U.S. Economy: Video

August 31, 2010

Aug. 31 (Bloomberg) — Former Federal Reserve Governor Robert Heller talks with Bloomberg’s Melissa Long and Michael McKee about minutes of the Federal Reserve’s Aug. 10 meeting. Some Fed officials were concerned their decision to maintain their balance sheet would send an unintended signal the central bank is ready to resume large-scale asset purchases, the minutes show. (Source: Bloomberg)

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Listener Driven Radio Adds Four to Engineering/Support Team

August 31, 2010

LOS ANGELES, CA–(Marketwire – August 31, 2010) –  Listener Driven Radio ( www.listenerdrivenradio.com ), the leader in interactive programming tools for broadcasters, announced today the addition of four industry veterans to its engineering and support teams. The new members of the LDR team are Brian Seeders , Blake Weber , Craig Bowman , and Gale Parmelee . This is the second announcement regarding team growth for LDR this summer, following the appointment of Greg Hunt as VP/Affiliate Relations in July.

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Listener Driven Radio Adds Four to Engineering/Support Team

August 31, 2010

LOS ANGELES, CA–(Marketwire – August 31, 2010) –  Listener Driven Radio ( www.listenerdrivenradio.com ), the leader in interactive programming tools for broadcasters, announced today the addition of four industry veterans to its engineering and support teams. The new members of the LDR team are Brian Seeders , Blake Weber , Craig Bowman , and Gale Parmelee . This is the second announcement regarding team growth for LDR this summer, following the appointment of Greg Hunt as VP/Affiliate Relations in July.

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Video: Fink Doubts Japan’s Policy Measures Can Weaken Yen: Video

August 31, 2010

Aug. 30 (Bloomberg) — Naomi Fink, a Japan strategist at Bank of Tokyo-Mitsubishi UFJ Ltd., talks about the value of the yen. The Bank of Japan held an emergency board meeting today as the yen’s surge to a 15-year high forces policy makers to find ways to support the nation’s slowing expansion. Fink speaks from Tokyo with Rishaad Salamat on Bloomberg Television. (Source: Bloomberg)

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Lisa Pickell Appointed Chief Operating Officer of Orren Pickell Designers & Builders

August 31, 2010

LAKE BLUFF, IL–(Marketwire – August 31, 2010) –  Orren Pickell Designers & Builders, the Midwest’s premier design/build firm, announced that Lisa Pickell , age 30, was appointed to Chief Operating Officer. Lisa joined Orren Pickell Designers & Builders in 2004 as head of the award-winning Orren Pickell Remodeling Group, overseeing all aspects of the company’s renovation process, from design through construction. Lisa’s quick learning curve helped her step into her next role as assistant sales manager and marketing director of Orren Pickell Designers & Builders. 

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Lisa Pickell Appointed Chief Operating Officer of Orren Pickell Designers & Builders

August 31, 2010

LAKE BLUFF, IL–(Marketwire – August 31, 2010) –  Orren Pickell Designers & Builders, the Midwest’s premier design/build firm, announced that Lisa Pickell , age 30, was appointed to Chief Operating Officer. Lisa joined Orren Pickell Designers & Builders in 2004 as head of the award-winning Orren Pickell Remodeling Group, overseeing all aspects of the company’s renovation process, from design through construction. Lisa’s quick learning curve helped her step into her next role as assistant sales manager and marketing director of Orren Pickell Designers & Builders. 

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Bank Profits Soar, Lending Falls As Banks Pay Next To Nothing For Funds

August 31, 2010

Bank profits jumped 21 percent last quarter to nearly $22 billion, the highest level in three years, as banks put away less money to cover future losses, fewer borrowers fell behind on payments and lenders paid the least for their funds in perhaps 50 years, a government report released Tuesday shows. Lending also dropped by about $96 billion, or 1.3 percent, as borrowers continue to remain skittish about the “slow recovery,” Federal Deposit Insurance Corporation Chairman Sheila Bair told reporters Tuesday in Washington. “Consumers and businesses need to have confidence in the recovery before they will start making decisions on credit,” Bair said, according to a transcript of her remarks. Meanwhile, despite the sector’s high profits, challenges remain: home prices are forecast to decline into next year while lenders continue to repossess homes at record rates; the commercial real estate market has yet to hit its nadir; community banks continue to fail; and the number of lenders on the FDIC’s confidential “Problem List” continues to grow. Nearly 830 banks are on the list, up from 775 at the end of March, the FDIC’s quarterly report shows. “Without question, the industry still faces challenges,” Bair said in a statement. “Earnings remain low by historical standards, and the numbers of unprofitable institutions, problem banks and failures remain high. But the banking sector is gaining strength… most asset quality indicators are moving in the right direction.” It also helps that banks’ cost of funds — the money they pay to garner deposits and other funds that are then used to lend, invest or trade — dropped to the lowest rate in 26 years of FDIC quarterly records. Banks paid 0.97 percent in interest for their funds, the first time they’ve paid less than one percent during a quarter since at least 1984, FDIC documents show. Historical records on commercial banks’ cost of funds going back to the inception of the agency in 1934 show that the last time banks paid less than one percent for the year was 1960. With the main interest rate effectively at 0.19 percent, savers suffer in a low interest-rate environment as banks pay less to attract deposits. The Federal Reserve’s policy-making body, the Federal Open Market Committee, has kept the rate at which banks lend to each other for overnight funds between 0 and 0.25 percent since December 2008. Elsewhere in the FDIC report, the agency noted that two of every three banks reported higher profits compared to last year as firms put away the least amount of money to cover losses since the January-March period of 2008. Money socked away for a rainy day would otherwise be recorded as profit. Though nearly two of every three banks increased their reserves for potential future losses, large banks cut theirs. Banks put away $40 billion, 40 percent less than during the same period last year, to cover future losses. Those with more than $10 billion in assets recorded $19.9 billion of the industry’s $21.6 billion of profit, or more than 92 percent. Also, lenders wrote off $49 billion in uncollectible loans, a small decline from a year earlier and the first year-over-year decline since 2006. Loan losses are stabilizing, the agency said. Commercial real estate loan charge-offs, though, saw an increase. Loans delinquent for at least 90 days but not yet written off also declined for the first time in four years, though they increased for banks with less than $1 billion in assets, the agency said. Loan balances continued their decline, led by real estate construction and development lending which dropped more than eight percent from last quarter, according to the FDIC. Loans to small businesses and farms dropped almost two percent, or more than $13 billion. Loans to large businesses, meanwhile, dropped just 0.4 percent. Bair noted that community banks “slightly” increased their lending — “to their credit,” she added. ************************* Shahien Nasiripour is the business reporter for the Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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Bank Profits Soar, Lending Falls As Banks Pay Next To Nothing For Funds

August 31, 2010

Bank profits jumped 21 percent last quarter to nearly $22 billion, the highest level in three years, as banks put away less money to cover future losses, fewer borrowers fell behind on payments and lenders paid the least for their funds in perhaps 50 years, a government report released Tuesday shows. Lending also dropped by about $96 billion, or 1.3 percent, as borrowers continue to remain skittish about the “slow recovery,” Federal Deposit Insurance Corporation Chairman Sheila Bair told reporters Tuesday in Washington. “Consumers and businesses need to have confidence in the recovery before they will start making decisions on credit,” Bair said, according to a transcript of her remarks. Meanwhile, despite the sector’s high profits, challenges remain: home prices are forecast to decline into next year while lenders continue to repossess homes at record rates; the commercial real estate market has yet to hit its nadir; community banks continue to fail; and the number of lenders on the FDIC’s confidential “Problem List” continues to grow. Nearly 830 banks are on the list, up from 775 at the end of March, the FDIC’s quarterly report shows. “Without question, the industry still faces challenges,” Bair said in a statement. “Earnings remain low by historical standards, and the numbers of unprofitable institutions, problem banks and failures remain high. But the banking sector is gaining strength… most asset quality indicators are moving in the right direction.” It also helps that banks’ cost of funds — the money they pay to garner deposits and other funds that are then used to lend, invest or trade — dropped to the lowest rate in 26 years of FDIC quarterly records. Banks paid 0.97 percent in interest for their funds, the first time they’ve paid less than one percent during a quarter since at least 1984, FDIC documents show. Historical records on commercial banks’ cost of funds going back to the inception of the agency in 1934 show that the last time banks paid less than one percent for the year was 1960. With the main interest rate effectively at 0.19 percent, savers suffer in a low interest-rate environment as banks pay less to attract deposits. The Federal Reserve’s policy-making body, the Federal Open Market Committee, has kept the rate at which banks lend to each other for overnight funds between 0 and 0.25 percent since December 2008. Elsewhere in the FDIC report, the agency noted that two of every three banks reported higher profits compared to last year as firms put away the least amount of money to cover losses since the January-March period of 2008. Money socked away for a rainy day would otherwise be recorded as profit. Though nearly two of every three banks increased their reserves for potential future losses, large banks cut theirs. Banks put away $40 billion, 40 percent less than during the same period last year, to cover future losses. Those with more than $10 billion in assets recorded $19.9 billion of the industry’s $21.6 billion of profit, or more than 92 percent. Also, lenders wrote off $49 billion in uncollectible loans, a small decline from a year earlier and the first year-over-year decline since 2006. Loan losses are stabilizing, the agency said. Commercial real estate loan charge-offs, though, saw an increase. Loans delinquent for at least 90 days but not yet written off also declined for the first time in four years, though they increased for banks with less than $1 billion in assets, the agency said. Loan balances continued their decline, led by real estate construction and development lending which dropped more than eight percent from last quarter, according to the FDIC. Loans to small businesses and farms dropped almost two percent, or more than $13 billion. Loans to large businesses, meanwhile, dropped just 0.4 percent. Bair noted that community banks “slightly” increased their lending — “to their credit,” she added. ************************* Shahien Nasiripour is the business reporter for the Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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Chip Conley: A Burning Man Economy?

August 31, 2010

Last year, liberal filmmaker Michael Moore lamented the fact that the bankers were “burning down our economy” while earning obscene bonuses. Recently, some Tea Party conservatives have suggested that President Obama, with his gentle demeanor and misplaced upbeat perspective on the economy, wasn’t acknowledging “the auditorium is filling up with smoke.” On last night’s network news, the anchor suggested that people across the country were “burning mad” about the state of the economy. So, given all the references to fire and the economy, what’s to be learned from the annual Burning Man celebration in the “high” Nevada desert? The world’s largest active art exhibition begins this week as it does each year around Labor Day. Nearly 50,000 people come together to create a temporary utopian community based upon radical self-reliance and self-expression. Think Mad Max meets Lawrence of Arabia meets Hair. The mind-altering alchemy of art, spirituality, sex, and dancing under the stars is popular with the bobo (bourgeois bohemian) crowd and gets its share of snarky press, but maybe there’s something to be learned from some of the basic tenets of the quarter-decade old festival. First of all, this isn’t Hooverville during the Great Depression. This bedouin-like tent city’s participants are there by choice and this temporary tribe has bought into the associated economic principles that define Burning Man and could inspire an under-inspired White House economic team. Here’s three lessons that we might learn from the Burning Man economy: (1) Long Live The “Gift Economy.” The only thing you can buy at Burning Man is ice or coffee (with the exception of the entrance tickets). Everything else is gifted. In other words, in this utopian midsize suburb, you can get a haircut, a massage, hang out in your favorite pop-up bar, find an outrageous outfit, or listen to a lecture on global politics all for free. What would it be like if we de-commodified our relationships and truly lived the Biblical scripture that it is better to give than to receive? What if our pecking order of status in the United States was more based upon who gave away the most as opposed to who earned the most? (2) It Does Take a Village. Just like America was built on barn-raisings in its past, so does Burning Man tap into that communal spirit of civic responsibility. No country in the world is more enamored with its sense of manifest destiny and individual liberty than the United States, but our forefathers – whether they were venturing west through the wilderness or whether they were fighting the British – truly valued the essential nature of communal participation in our democratic society (and Alexis deTocqueville wrote quite a book observing this). Both Burning Man and America pride themselves on radical self-reliance, but neither would exist without a culture of volunteerism (or, in Burning Man’s case, “voluntourism”). Social psychologists have proven that those that are unemployed who volunteer their time during their work hiatus build self-esteem and tend to be hired for new for-pay work faster than those who don’t volunteer. How can the White House tap into this slumbering giant with nearly 20% of the country under-employed currently? (3) Leave No Trace. Some might suggest these three words describe the economic impact (or lack of one) of Obama’s stimulus package. But, these words also describe that this deserted desert is wiped completely clean of the collective fingerprints of this mass event due to a collection of simple rules that everyone buys into. We’ve spent a couple of hundred years milking what we can from our natural resources in this country without fully accounting for the cost of what externalities we create whether it may be oil spills, pollution, or human or animal health risks. Ironically, Burning Man exists because the U.S. Bureau of Land Management leases the “Playa” for this event each year, but with extremely strict regulations with respect to how it will be returned to its natural condition and the Burning Man economy absorbs that cost through the ticket price and the community policing. What if our government and businesses took that same “leave no trace” mentality with respect to how we used natural resources throughout our economy? No, this won’t likely play in Peoria, but there’s something to be learned from the allure of the Burning Man experience. At a time when Nevada leads the nation in homeowners being thrown out of their homes, Burning Man will break records this year for attendance as people create their temporary home in the desert. The most resonant thing I’ve heard in past years on the final days of each Burning Man as people go back to their “normal lives” is “Why can’t life be like this all the time?” Well, we’re adults, so summer camp only lasts so long, but that doesn’t mean we can’t adopt some of the Burning Man creed when it comes to our moribund economy. Nietzsche wrote that “the measure of a society is how well it transforms pain and suffering into something worthwhile.” The idea of burning a wooden effigy started out of the pain of Burning Man founder Larry Harvey trying to get over a failed romance. Maybe it’s time the White House took Rahm Emanuel ‘s channeling of Nietzsche more seriously (“never waste a good crisis”) before America fully loses its romance with Rahm’s boss.

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Chip Conley: A Burning Man Economy?

August 31, 2010

Last year, liberal filmmaker Michael Moore lamented the fact that the bankers were “burning down our economy” while earning obscene bonuses. Recently, some Tea Party conservatives have suggested that President Obama, with his gentle demeanor and misplaced upbeat perspective on the economy, wasn’t acknowledging “the auditorium is filling up with smoke.” On last night’s network news, the anchor suggested that people across the country were “burning mad” about the state of the economy. So, given all the references to fire and the economy, what’s to be learned from the annual Burning Man celebration in the “high” Nevada desert? The world’s largest active art exhibition begins this week as it does each year around Labor Day. Nearly 50,000 people come together to create a temporary utopian community based upon radical self-reliance and self-expression. Think Mad Max meets Lawrence of Arabia meets Hair. The mind-altering alchemy of art, spirituality, sex, and dancing under the stars is popular with the bobo (bourgeois bohemian) crowd and gets its share of snarky press, but maybe there’s something to be learned from some of the basic tenets of the quarter-decade old festival. First of all, this isn’t Hooverville during the Great Depression. This bedouin-like tent city’s participants are there by choice and this temporary tribe has bought into the associated economic principles that define Burning Man and could inspire an under-inspired White House economic team. Here’s three lessons that we might learn from the Burning Man economy: (1) Long Live The “Gift Economy.” The only thing you can buy at Burning Man is ice or coffee (with the exception of the entrance tickets). Everything else is gifted. In other words, in this utopian midsize suburb, you can get a haircut, a massage, hang out in your favorite pop-up bar, find an outrageous outfit, or listen to a lecture on global politics all for free. What would it be like if we de-commodified our relationships and truly lived the Biblical scripture that it is better to give than to receive? What if our pecking order of status in the United States was more based upon who gave away the most as opposed to who earned the most? (2) It Does Take a Village. Just like America was built on barn-raisings in its past, so does Burning Man tap into that communal spirit of civic responsibility. No country in the world is more enamored with its sense of manifest destiny and individual liberty than the United States, but our forefathers – whether they were venturing west through the wilderness or whether they were fighting the British – truly valued the essential nature of communal participation in our democratic society (and Alexis deTocqueville wrote quite a book observing this). Both Burning Man and America pride themselves on radical self-reliance, but neither would exist without a culture of volunteerism (or, in Burning Man’s case, “voluntourism”). Social psychologists have proven that those that are unemployed who volunteer their time during their work hiatus build self-esteem and tend to be hired for new for-pay work faster than those who don’t volunteer. How can the White House tap into this slumbering giant with nearly 20% of the country under-employed currently? (3) Leave No Trace. Some might suggest these three words describe the economic impact (or lack of one) of Obama’s stimulus package. But, these words also describe that this deserted desert is wiped completely clean of the collective fingerprints of this mass event due to a collection of simple rules that everyone buys into. We’ve spent a couple of hundred years milking what we can from our natural resources in this country without fully accounting for the cost of what externalities we create whether it may be oil spills, pollution, or human or animal health risks. Ironically, Burning Man exists because the U.S. Bureau of Land Management leases the “Playa” for this event each year, but with extremely strict regulations with respect to how it will be returned to its natural condition and the Burning Man economy absorbs that cost through the ticket price and the community policing. What if our government and businesses took that same “leave no trace” mentality with respect to how we used natural resources throughout our economy? No, this won’t likely play in Peoria, but there’s something to be learned from the allure of the Burning Man experience. At a time when Nevada leads the nation in homeowners being thrown out of their homes, Burning Man will break records this year for attendance as people create their temporary home in the desert. The most resonant thing I’ve heard in past years on the final days of each Burning Man as people go back to their “normal lives” is “Why can’t life be like this all the time?” Well, we’re adults, so summer camp only lasts so long, but that doesn’t mean we can’t adopt some of the Burning Man creed when it comes to our moribund economy. Nietzsche wrote that “the measure of a society is how well it transforms pain and suffering into something worthwhile.” The idea of burning a wooden effigy started out of the pain of Burning Man founder Larry Harvey trying to get over a failed romance. Maybe it’s time the White House took Rahm Emanuel ‘s channeling of Nietzsche more seriously (“never waste a good crisis”) before America fully loses its romance with Rahm’s boss.

Read the full article →

Jim Worth: The Taxing Debate Over Taxes

August 31, 2010

American’s perception of taxes is both perplexing and disturbing . Americans have difficulty grasping the effect taxes have on their lives. There are many reasons for their confusion. Taxes have become a political football with each side vehemently arguing their position in hopes of being reelected. The Bush Tax Cuts are set to expire at the end of this year and a decision must be made by Congress whether to extend them or let them sunset. If Congress does nothing taxes will return to the levels of 2002; the lowest being 15% and the highest moving back to 38.6, a 3.6% increase. It’s understandable, given the complexity of the current tax code and the political posturing that clouds the discourse of such a sensitive personal subject, that the average person doesn’t quite know which is best for them and the economy. What is the truth about taxes? Which are good and which are bad? This is the question we should be asking. Taxes are a very personal thing and, to put it quite frankly, everyone hates them; especially those taxes that touch them personally. There’s a widespread misconception about taxes — who they effect, their purpose, which ones will help and which will hurt the country, and their relationship to the economy. Mark Zandi, Chief Economist at Moody’s Economy.com addressed the issue in his New York Times Op-Ed, ” The Tax Cut We Can Afford ,” and presented a reasoned approach to the current tax dilemma. There is a fear by some, including Mr. Zandi, that increasing the marginal tax rate on the top two income brackets will dramatically slow the economy and possibly send us into the dreaded douple dip. But that fear may be unjustified if a double dip is imminent. Despite the possibility of a double dip, allowing those that caused this recession to slide another year is unacceptable. Phasing, as suggested by Mr. Zandi, is a great concept, one I’ve advocated for nearly 40 years. Phasing in taxes is a good idea, but it must begin immediately. Mr. Zandi would prefer to wait until 2012, but delaying the increase may also be destructive to an already sputtering economy and escalating deficit. The marginal tax rate on upper-income Americans is too low and has been for far too long. We have been at some of the lowest rates in our lifetime, and the Bush tax cuts have done little to stimulate the economy. They have only served to redistribute the wealth upward. Warren Buffet acknowledged the insanity of low upper tax rates on the wealthy when he declared something to the affect: “My chauffeur pays a higher tax rate than I do!” His reference to the ‘ effective tax rate ,’ the actual amount of tax that is paid after deductions, is much lower than the ‘ marginal tax rate .’ The average upper income family pays an ‘average rate’ of 18 to 20% after figuring their adjusted gross income. Raising the tax rate by 2% in 2011 would increase the actual taxes these individuals pay by about half a percent. Some feel raising the top two rates would slow consumer spending. Moody’s Chief Economist estimates that the group accounts for nearly a fourth of consumer spending. The question he, and other tax-extension advocates should be asking is — why? The answer should be obvious. Thirty years of redistribution of wealth has killed the middle-class — usurped their buying power — while elevating the elite to 1920′s excesses. Though they represent one quarter of consumer spending much of what the elite buy does little to help the economy of the other 98%; the ‘ real ‘ economy. The arguments on taxes are fraught with myths and lies. They distort the real issue confronting us: declining tax receipts and a rapidly rising deficit. Even the Tea Party, through their naivete, have muddied the ‘ real ‘ discussion we should be having over taxes. Republicans, still enamored by Ronald Reagan, conjure up the myth that his tax cuts created a thriving, robust economy. That’s a lie! And it’s repeated by all Republicans. Top Marginal Tax Rates during Reagan’s two terms were higher than the current rate for seven of his eight years in office. Even more devastating was his tripling of the national debt from $900 billion to nearly $2.67 trillion; an increase of 189%. His two band-aid terms forced George H.W. Bush to raise taxes during his administration to make up for Reagan’s economic insufficiencies. Bush raised the TMR to 31% from 28% and was vilified, losing reelection to Bill Clinton as a result. Clinton immediately raised it to 39.6% where it remained for 8 years and allowed President Clinton to leave George W. Bush a surplus which he promptly spent, then pushed the economy into untenable deficits. His tax cuts dramatically reduced the tax receipts collected each year which drove the national debt to $10.7 trillion; nearly doubling the $5.6 trillion when he came into office. It is easy to understand the confusion if talking points are all most voters get. This is evidenced by the deception of the estate tax. Frank Luntz’s suggestion to the Republicans to call it a ‘ death tax ‘ is unAmerican and should be an indictable offense. The Estate Tax has absolutely no affect on 97.5% of the people in this country, yet individuals making $100,000 a year are screaming about getting rid of the death tax. Sheep following a stupid idea. The confusion over the Capital Gains Tax and how it will hurt small business, delay someone from starting a business, or from hiring a needed employee is a diversion. So what is the right thing to do about taxes? As Mr. Zandi says, phase in the increases on the top two tax brackets. Start immediately: 35% Bracket — 2% in 2011, 1.5% in 2012, and 1% in 2013; 33% Bracket — 1.5% in 2011, 1% in 2012, and .5% in 2013. That would bring the rates to 2000 levels by 2013 and cause less pain. But we should consider something unique, something bold ! Let’s also lower the lowest three tax rates over the next three years. Current Tax Rate should be reduced to new lower levels by 2013: 10% Bracket : 9% in 2011, 8.5% in 2012, and 8.5% in 2013 15% Bracket : 14% in 2011, 13% in 2012, and 12.5% in 2013 25% Bracket : 23.5% in 2011, 22% in 2012, and 21% in 2013 This would put money in the hands of people that will spend all of it on necessities and other products that will stimulate the economy from the bottom up. Eight years of tax cuts have done nothing to help this dying economy. We’ve tried it at the top and it doesn’t work. It’s time to try it at the bottom and see if it works better. This has been a horrific recession and it is not yet over. We may have to feel more pain and level the playing field if we have any hope of recovering from this morass. Not only do people need to research taxes, but they must insist that their Congressional representatives fully explain their position rather than merely repeat talking points. The Internet has all the necessary tools to research taxes. If you want to be an American, get off your lazy asses and do some. With even a little research, the vote regarding the Estate Tax should be 95% to keep and raise it, and 5% to eliminate it. We need more than talking points to understand taxes. We need honest discussion. Our survival and the survival of this country depends on it!

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Jim Worth: The Taxing Debate Over Taxes

August 31, 2010

American’s perception of taxes is both perplexing and disturbing . Americans have difficulty grasping the effect taxes have on their lives. There are many reasons for their confusion. Taxes have become a political football with each side vehemently arguing their position in hopes of being reelected. The Bush Tax Cuts are set to expire at the end of this year and a decision must be made by Congress whether to extend them or let them sunset. If Congress does nothing taxes will return to the levels of 2002; the lowest being 15% and the highest moving back to 38.6, a 3.6% increase. It’s understandable, given the complexity of the current tax code and the political posturing that clouds the discourse of such a sensitive personal subject, that the average person doesn’t quite know which is best for them and the economy. What is the truth about taxes? Which are good and which are bad? This is the question we should be asking. Taxes are a very personal thing and, to put it quite frankly, everyone hates them; especially those taxes that touch them personally. There’s a widespread misconception about taxes — who they effect, their purpose, which ones will help and which will hurt the country, and their relationship to the economy. Mark Zandi, Chief Economist at Moody’s Economy.com addressed the issue in his New York Times Op-Ed, ” The Tax Cut We Can Afford ,” and presented a reasoned approach to the current tax dilemma. There is a fear by some, including Mr. Zandi, that increasing the marginal tax rate on the top two income brackets will dramatically slow the economy and possibly send us into the dreaded douple dip. But that fear may be unjustified if a double dip is imminent. Despite the possibility of a double dip, allowing those that caused this recession to slide another year is unacceptable. Phasing, as suggested by Mr. Zandi, is a great concept, one I’ve advocated for nearly 40 years. Phasing in taxes is a good idea, but it must begin immediately. Mr. Zandi would prefer to wait until 2012, but delaying the increase may also be destructive to an already sputtering economy and escalating deficit. The marginal tax rate on upper-income Americans is too low and has been for far too long. We have been at some of the lowest rates in our lifetime, and the Bush tax cuts have done little to stimulate the economy. They have only served to redistribute the wealth upward. Warren Buffet acknowledged the insanity of low upper tax rates on the wealthy when he declared something to the affect: “My chauffeur pays a higher tax rate than I do!” His reference to the ‘ effective tax rate ,’ the actual amount of tax that is paid after deductions, is much lower than the ‘ marginal tax rate .’ The average upper income family pays an ‘average rate’ of 18 to 20% after figuring their adjusted gross income. Raising the tax rate by 2% in 2011 would increase the actual taxes these individuals pay by about half a percent. Some feel raising the top two rates would slow consumer spending. Moody’s Chief Economist estimates that the group accounts for nearly a fourth of consumer spending. The question he, and other tax-extension advocates should be asking is — why? The answer should be obvious. Thirty years of redistribution of wealth has killed the middle-class — usurped their buying power — while elevating the elite to 1920′s excesses. Though they represent one quarter of consumer spending much of what the elite buy does little to help the economy of the other 98%; the ‘ real ‘ economy. The arguments on taxes are fraught with myths and lies. They distort the real issue confronting us: declining tax receipts and a rapidly rising deficit. Even the Tea Party, through their naivete, have muddied the ‘ real ‘ discussion we should be having over taxes. Republicans, still enamored by Ronald Reagan, conjure up the myth that his tax cuts created a thriving, robust economy. That’s a lie! And it’s repeated by all Republicans. Top Marginal Tax Rates during Reagan’s two terms were higher than the current rate for seven of his eight years in office. Even more devastating was his tripling of the national debt from $900 billion to nearly $2.67 trillion; an increase of 189%. His two band-aid terms forced George H.W. Bush to raise taxes during his administration to make up for Reagan’s economic insufficiencies. Bush raised the TMR to 31% from 28% and was vilified, losing reelection to Bill Clinton as a result. Clinton immediately raised it to 39.6% where it remained for 8 years and allowed President Clinton to leave George W. Bush a surplus which he promptly spent, then pushed the economy into untenable deficits. His tax cuts dramatically reduced the tax receipts collected each year which drove the national debt to $10.7 trillion; nearly doubling the $5.6 trillion when he came into office. It is easy to understand the confusion if talking points are all most voters get. This is evidenced by the deception of the estate tax. Frank Luntz’s suggestion to the Republicans to call it a ‘ death tax ‘ is unAmerican and should be an indictable offense. The Estate Tax has absolutely no affect on 97.5% of the people in this country, yet individuals making $100,000 a year are screaming about getting rid of the death tax. Sheep following a stupid idea. The confusion over the Capital Gains Tax and how it will hurt small business, delay someone from starting a business, or from hiring a needed employee is a diversion. So what is the right thing to do about taxes? As Mr. Zandi says, phase in the increases on the top two tax brackets. Start immediately: 35% Bracket — 2% in 2011, 1.5% in 2012, and 1% in 2013; 33% Bracket — 1.5% in 2011, 1% in 2012, and .5% in 2013. That would bring the rates to 2000 levels by 2013 and cause less pain. But we should consider something unique, something bold ! Let’s also lower the lowest three tax rates over the next three years. Current Tax Rate should be reduced to new lower levels by 2013: 10% Bracket : 9% in 2011, 8.5% in 2012, and 8.5% in 2013 15% Bracket : 14% in 2011, 13% in 2012, and 12.5% in 2013 25% Bracket : 23.5% in 2011, 22% in 2012, and 21% in 2013 This would put money in the hands of people that will spend all of it on necessities and other products that will stimulate the economy from the bottom up. Eight years of tax cuts have done nothing to help this dying economy. We’ve tried it at the top and it doesn’t work. It’s time to try it at the bottom and see if it works better. This has been a horrific recession and it is not yet over. We may have to feel more pain and level the playing field if we have any hope of recovering from this morass. Not only do people need to research taxes, but they must insist that their Congressional representatives fully explain their position rather than merely repeat talking points. The Internet has all the necessary tools to research taxes. If you want to be an American, get off your lazy asses and do some. With even a little research, the vote regarding the Estate Tax should be 95% to keep and raise it, and 5% to eliminate it. We need more than talking points to understand taxes. We need honest discussion. Our survival and the survival of this country depends on it!

Read the full article →