August 2010

Cornerstone, Kettler Sell Pentagon City Multifamily for $125M

August 25, 2010

Cornerstone Real Estate Advisers LLC and Kettler sold the Metropolitan at Pentagon City, a 325-unit multifamily complex at 901 S. 15th St. in Arlington, VA, to Invesco for $125 million. Invesco paid $111.7 million, or about $343,700 per unit, for the…

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Video: LGT’s Kumada Says He Remains Cautious on Chinese Banks: Video

August 25, 2010

Aug. 26 (Bloomberg) — Mikio Kumada, a senior market analyst at LGT Capital Management in Singapore, talks about the outlook for Chinese banks. Chinese bank shares have slipped this year as the industry regulator clamped down on loans to local-government financing vehicles and property speculators, and ordered them to move off-balance-sheet debts back onto their books. Kumada, who also discusses the outlook for the U.S. economy, speaks with Linzie Janis on Bloomberg Television’s “Global Connection.” (Source: Bloomberg)

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Matti Kahkonen Appointed New President and CEO of Metso

August 25, 2010

HELSINKI, FINLAND–(Marketwire – August 26, 2010) – The Board of Directors of Metso has appointed Mr. Matti Kähkönen, M.Sc. in Engineering, as the new President and Chief Executive Officer of Metso Corporation and Metso Group. Matti Kähkönen will start in his new position on March 1, 2011.

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Despite Reform, Banks Have Room For Risky Deals

August 25, 2010

When Congress passed a new financial regulation bill last month, it sought to prevent federally insured banks from making speculative bets using their own money. But that will not stop banks from making bets that some critics deem risky, even as the rules go into effect over the next few years. That is because many such bets — on the direction of the stock market or the price of coal, for example — are done on behalf of clients. So, the banks say, they will continue to be allowable despite the new restrictions.

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Dan Dorfman: More Tanking Ahead in Banking

August 25, 2010

The housing dousing just won’t quit. As we all know, housing, the culprit behind the recent recession, was bombed again last month, with July’s existing and new home sales — versus those in June — tumbling 27.2% and 12.4%, respectively. One fella pretty much saw this coming. A few days prior to the release of those abysmal housing numbers, Michael Larson, associate editor of the Safe Money Report , a generally bearish investment newsletter out of Jupiter, Fla., fired off a commentary to subscribers in which he took note of the continuing real estate risks and also warned of more chaos in banking. Given the timeliness of his astute real estate observations, I figured an update was in order. His views merit an especially respectful hearing, what with Larson — a non-household name — having sounded early warnings before most of the Wall Street herd about an impending credit crisis, a housing bust and a big decline in the stock market. The last time I caught up with him he told me a double-dip recession was fast approaching (many say it’s already here) and predicted the Dow would soon break its June low of 9,600 and wrap up 2010 at around 8,000. That’s still his thinking. So what bugs him about the banks, 114 of which have failed so far this year? For starters, Larson, sees rougher days ahead for both banks and bank shares, pointing, in particular, to falling loan demand and mounting loan losses. Looking at an integral part of bank operations, the home mortgage business — which he says is dead in the water — Larson takes note that housing starts are stagnating in the well below average 550,000 range, while building permits just slumped to a 15-year low. Further, the National Association of Home Builders’ confidence index has dropped to a 17-month low, while the Mortgage Bankers Association’s loan index is hovering around its worst levels since 1997. Updating his thinking on commercial real estate — which he views as an increasingly ominous risk for banks — Larson points to a soaring number of souring CRE loans, up, according to the Federal Deposit Insurance Corp., a stunning 155% in the first quarter. Further, 17% of construction and development loans — the bread and butter loans that banks make — were non-current. That’s more than double year earlier levels. Equally alarming, observes Larson, is the shrinking demand for C&I loans, which, according to a Federal Reserve survey of senior loan officers, has shrunk at small banks for a record 16th quarter in a row. Further, demand at medium- and large-sized banks has fallen in every quarter but two over the past four years. The tidings are equally ugly for banks in the all-important area of consumer credit (credit cards, auto loans and the like). It shrank 1.5% in the second quarter, bringing the cumulative decline to 6.5% since late 2008. The latest numbers show consumer credit is now at the lowest level in eight years. Making bank problems even worse is margin shrinkage, namely collapsing net interest margins. Banks make a sizable chunk of their income by borrowing at lower, short-term interest rates and lending or investing at higher, long-term rates. When the spread between short and long rates is wide and rising, banks can coin money. But when it’s narrow and falling, like now, it’s the kiss of death; the profit then on each dollar lent or invested can collapse. Meanwhile, slumping loan demand and souring loans have produced hundreds of bank failures over the past couple of years. And the problem, says Larson, is getting worse. For example, the FDIC now has 775 “problem” institutions on its watch list. That’s more than double the 305 banks the FDIC was closely watching a year earlier. What does it all mean? Larson’s advice: Get the heck out of any financial stocks you may own. Ditto any other sectors vulnerable to a renewed financial and real estate slump, including real estate investment trusts. Obviously, many investors are doing just that. Take the KBW Bank index of 24 leading U.S. banks. It can’t get off the mat and recently collapsed to a multi-month low. If you’re tempted to go bargain hunting, the word from Larson is don’t. His view: It’s time to preserve assets, not gamble them away. What do you think? E-mail me at Dandordan@aol.com

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Eight Takeaways on the Current State of Distress Opportunities

August 25, 2010

Since the start of 2009, buyers and sellers have transacted about $16.5 billion in distressed commercial real estate sales. Certainly more are expected to follow. Banks and CMBS special servicers are currently dealing with nearly $290 billion in distressed…

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Bank Watch: Regulators Close Seven Banks with $4.4 Bil. in Assets

August 25, 2010

The Federal Deposit Insurance Corp. (FDIC) lined up five buyers for seven newly closed banks this past week. Together the seven failed banks reported distressed commercial real estates of nearly $548 million combined. Summary of the seven banks deals…

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This Week in Retail: NFL’s Ray Lewis Looks To Be ‘All Business’ Off the Field Too

August 25, 2010

Baltimore Ravens star linebacker and likely Hall-of-Famer Ray Lewis has drafted a new team, RL52 Realty, a full service commercial real estate advisory firm. While the firm will help advise clients on decisions affecting all property types, the official…

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Aaron Shapiro: The Great App Bubble

August 25, 2010

When I recently received my new iPhone 4, I took great delight in organizing my apps into folders, finding new apps in the app store, and seeing how beautiful various apps looked on the new screen. Then I used it for a couple of days and realized, not counting pre-loaded Apple software, I use exactly five apps: the New York Times , Dropbox, Pandora, MenuPages and Skype. Why am I wasting time collecting and organizing all these apps? We’re in an app bubble. My app library — littered with exactly 87 apps I used once and never touched again — now reminds me of a graveyard of defunct company logos from the dot-com boom. Like the go-go days of 1999 when everyone had to have a Web site, today everyone wants an app. iPhone, iPad, Android apps for all, plus Blackberry for the very ambitious. Here are eight signs we’re in an app bubble: Apps don’t generate profit for developers. Apple CEO Steve Jobs has said the App Store has generated more than one billion in revenue for developers. That sounds like a big number. But in this context it’s not. One billion dollars in revenue for the approximately 225,000 apps is $4,444 per app — significantly less than an app costs to develop. In a well-thought-out analysis of the economics of iPhone apps, authors Tomi T. Ahonen and Alan Moore paint a bleak picture. A typical iPhone app costs $35,000 to develop. The median paid app earns $682 per year after Apple takes its cut. With these calculations for the typical paid app, it takes 51 years to break even. It’s not any better for free apps. A free app also costs about $35,000 to develop. But there are so many free iPhone apps that at a rate of twoseconds per app, it would take approximately 34 hours for someone to check out each one. That’s not great odds for a revenue-model based on advertising. Apps aren’t very profitable for Apple either. According to Apple Insider, “Apple has long maintained that the App Store isn’t meant to be a profit generator, as much as a means of attracting customers to the iPhone and iPod touch.” The App Store’s gross profits amount to just one percent of Apple’s total gross profits. iPhone users don’t find their apps very valuable. In 2009, analytics start-up Pinch Media reported that people barely use the majority of apps they download. Only 20 percent of consumers utilize a free app the day after they download it. By 30 days out, less than 5 percent of consumers are still using it. Paid apps (page 13 of the company’s fascinating 33-page slideshow) have a slightly better performance record, but they still get hit with a steep drop in usage within a period of 11 days. The value of most apps may be in satisfying the curiosity of what the app can do, not in its usefulness or relevance in a user’s daily life. Apple brags more about the value of their app mass than the value of the apps themselves. This is the case both on the App Store page, iPad advertising and in a recent keynote speech where Steve Jobs said people have downloaded five billion apps in the last two years. Meanwhile, only a handful of apps have been featured for their usefulness. Ditto for Android advertising. I feel like I’m back in the days when Alta Vista bragged about spidering more Web pages than Lycos. Marketers are spending money on iDevice apps at the expense of improving their mobile Web sites that everyone with a smart phone can access. According to Ahonen and Moore, iDevice app development actually costs 10 times more and reach is 50 times worse. Sex appeal will only trump pragmatic reach for so long. Venture capital is flooding into the app economy in spite of the questionable ROI proposition. Prior to the iPad launch, venture-capital firm Kleiner Perkins Caufield & Byers doubled the size of its “iFund investment pool” to 200 million, Reuters reported. Recently CNET , an E! Online co-founder, and a couple of other partners teamed up to form AppFund, a company that provides funding and direction for app developers. And there are plenty more Internet funds spending much of their bankroll on app startups. There are so many apps, finding the one you want takes time and effort — time and effort that could be spent getting the information in a faster way. The iPhone 4 can display 2,149 apps. That’s 2,144 more than I need; 1,969 more than could be displayed via iOS3; and 2,001 more apps than could be displayed by earlier versions of the operating system. Graph out this increase in app display capacity, and it looks like an obelisk. But still 2,149 is only 0.96 percent of the 225,000 available iDevice apps. Steve Jobs has said 15,000 apps are submitted to the App Store each week. With this many apps to sort through, finding new, useful ones to download can be a painstaking task. Then on my phone, if I want to find an app I don’t regularly use or a new one, I need to use the search function to find it. Can you think of a faster way to get information? The browser. Once mobile Internet gets faster, apps as the key to on-the-go information and tools will be on the outs. Does this mean companies should stop making apps? Unfortunately, no. Until the bubble bursts, apps are the only mobile game in town. And without a doubt the future of digital is the ubiquitous, pocket-sized screen. What’s needed are apps tied to real business models that have real ROI. And,companies should build apps with their eyes open about what they should realistically expect to accomplish with what they develop. Having an app for an app’s sake is not enough.

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David Isenberg: GAO PSC Interview Transcripts Online

August 25, 2010

Thanks to the Federation of American Scientists Project on Government Secrecy the transcripts of twenty three interviews done by the Government Accountability Office, prepared pursuant to its July 2005 report ” Rebuilding Iraq: Actions Needed To Improve Use of Private Security Providers ,” are now online in a single, searchable document. These are the same transcripts I posted and blogged about previously, one by one, between June 12 and July 30. But back then I typed them in. Here they have been scanned in so you can see them in their original formatting. The transcripts are in chronological order from earliest to latest. They are in one PDF file, 106 pages, (nearly 8 MB ) which can be downloaded here . The Project also OCR’d the transcripts so the PDF is word-searchable. It is possible that one or more pages of the original did not get reproduced correctly. So, for example, the very last page of the document seems to be cut off abruptly. But most of it, by far, is there.

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Video: Bank of Korea’s Kim Says Commodities May Stoke Inflation: Video

August 25, 2010

Aug. 26 (Bloomberg) — Bank of Korea Governor Choongsoo Kim talks about South Korea’s economy and central bank monetary policy. The Bank of Korea’s 25-basis-point rate increase in July may not be sufficient to fight inflation and the government plans measures to control it, Kim says. He speaks from New York with Susan Li on Bloomberg Television. (Source: Bloomberg)

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Naomi Wolf: Banks Complicit in Fraud — Is it Systemic?

August 25, 2010

Well, just when I thought my ‘ Banks Siding Against the Customer in Bank Fraud ‘ story couldn’t get any more shocking — it did. I had assumed that when I posted the account this week of how WaMu and now Chase were apparently systematically stonewalling customers — myself included — who had experienced bank fraud, I might hear from a handful of other consumers. I had hoped thus to see if, indeed, as the insider emails that were handed to me by accident by a WaMu official seem to indicate, this practice is systemic, deliberate and driven — as actuary (and bank fraud victim) Geoff Kischuk pointed out to me — by a great deal of profit…for the banks. I was unprepared, however, for the sheer volume of the stories that readers across America have sent me detailing experiences in which banks collude with fraud, cover it up, protect the identity of the scammer, even from police, or even manipulate customers’ bank accounts themselves. These cover-ups are indeed systemic, highly profitable for the banks, and getting worse. The stories are heart-wrenching: fraud, and banks’ collusion with it, ruining young people’s credit at twenty-one — no matter how many efforts they make to clear the record; bed-bound, frail elderly being harassed by banks to pay for fraud the banks know has been perpetrated by scammers; and small businesses finding, as actually Geoff Kischuk himself did, that forty, fifty or sixty thousand dollars have vanished electronically from their business accounts — and that they must then fight tooth and nail simply to close the accounts, even as fees rack up. I had thought I was alone in experiencing a bank — WaMu, and now Chase — that refused to release video of the one writing forged checks on my account, to the police. When I was handed the inside emails by accident, I saw that their fraud department had actually made note of the person’s appearance — one that confirmed details I had given to the police — even as they were telling the police the video did not exist! But to my horror I heard from several other consumers that their banks had done the same thing, even in the face of a police investigation. I had thought I was alone in having a bank that kept passing fraudulent checks even after I had placed a fraud alert on the account — but several other consumers wrote in confirming that not only had a bank employee opened false accounts in a relative’s name — but after they had called the bank on it, the bank kept clearing their stolen checks! Well, I certainly now felt less alone — but far more outraged and alarmed, on behalf of all of us, especially those most economically vulnerable; for the big picture, put together, looks far, far uglier than even my own disturbing experience had prepared me to see. There now appears to be a major business of banks profiting to the point of colluding with fraud (bank fraud and identity theft is over a billion-and-a-half dollar “business” every year); this is made even more alarming because it is so insidious — many banks now manipulate customers’ withdrawals in time sequence and give customers a misleading balance figure that does not show their recent withdrawals. Thus, in both ways, the bank can and does hit the customer with far more overdraft fees. This is not a mini-industry, as I reported earlier this week; I now see this is a mega-industry. ‘Go green!’ urges your bank. But an IT expert wrote me warning that I should let people know that they should not use Windows to do online banking unless they are very computer-savvy: “Banks and mutual funds encourage you to do your finances online because it benefits them but it puts your account at risk,” he cautioned. He directed me to this Washington Post investigation . “This terrifying link explains technologically what happened to Kischuk, to me and so many others: hackers can easily wipe out tens of thousands of dollars from your account, and even cover their tracks; and, since the banks are making so much money from this and other forms of fraud, it is not in their interest to alert you to how easily this is done, once you are banking online.” Many others who wrote to me have also been charged by their banks for the fraud that the banks know was committed against them. ‘Economike’ encountered fraud — and his bank charged him the legal fees incurred, as well as hundreds of dollars for the fake duplicate ATM card involved. ‘Indyfem’ writes that “A few years ago…someone stole my checkbook from WaMu and wrote a check to themselves for $500.” She notes that the signature looked nothing like hers, and where the amount was supposed to be written in (‘Five hundred and no/100 dollars’) the forger wrote ‘Basketball.’ B UT WAMU cashed the check and then refused to reimburse her. ‘Peacein09′ notes that Chase is now giving him problems in this regard; and indeed, a whole website, Chasesucks.org , has arisen to detail Chase’s mistreatment of customers in these and comparable ways, and to warn them of new scams. ‘Jerrygates’ writes that “WaMu and JPMorganChase have destroyed my confidence in banking…permanently.” He adds,”I do corroborate her [that is, my] citation as sound and truthful. I have been there.” ‘Peacekitten’ had to fight for years to get back the “thousands and thousands over a period of years” wiped out from her account at Wells Fargo. I thought I was the only one who had ever had to fight to close a corrupted account — but many other consumers had had the same experience. ‘TNLcaller’ also found that “my bank wouldn’t let me close the account” after fraud had been identified. Another reader wrote to me that when she tried to close an account with twenty dollars in it at CitiBank, “they fought me tooth and nail to NOT CLOSE the account…” ‘Davmyy’ wrote that a Wells Fargo (notice any recurrent names, everyone?) banker whom his son knew opened two accounts in his son’s name without his son’s permission, committed fraud, and his son not only got no action from the bank regarding the fraud, which they were not contesting, but later saw the same employee in a new position in another branch! This to me, in a sense, is the most chilling of the accounts I received, since it dovetails with my own otherwise-inexplicable experience of the bank actively protecting their own employees at WaMu who had kept cashing forged checks on my account for months after I had alerted the bank to the fraud. It may explain the weirdly relaxed tone of ” sure, we know that someone messed with this customer’s account, whatever, have a nice weekend ” in the insider WaMu emails I received and that Chase is now trying to shrug off. It is stories like this that illustrate the nature of corruption and how it spreads within an organization; you start with passively benefiting from others’ wrongdoing — but if the money is good enough, you develop subtle systems that slowly let you collude more actively in the wrongdoing, the profit, and…the cover-up. Could it be that policy-approved ‘passive’ stealing or proxy stealing — by enabling fraud to continue, and encouraging customers to switch to an easily hacked bank medium without warning them — is so systemic that banks have, consciously or not, developed a culture of protecting actual thieves in their ranks — thieves who might blow the whistle on all these practices, if called out? A secondary but still major issue I discovered through readers’ alerts — that of people’s accounts being manipulated by the banks themselves to raise their level of overdraft fees — is so prevalent that that legal firm Zimmerman Reed devotes a whole part of its practice to it now. According to their website , banks are routinely reordering your charges on ATM or debit cards so that the largest comes first, even if you made it last: that is, if you have a hundred dollars in your account, and make purchases of ten, fifteen, thirty, fifty and ninety dollars, the bank will switch the order so that instead of facing one $40 overdraft fee, you face four. ‘Iric’ writes that Chase gave him a balance showing an amount that left out his withdrawals made many days before; he reasonably enough believed the money was there; then they processed the withdrawals, out of order, hitting him for fees. ‘Thmsnnn’ wrote that “I have had similar experiences with delayed credit posts to my account”; this customer has been charged hundreds if not thousands in extra fees in the course of five years. ‘Trgrampictures’ notes that “Wachovia systematically holds deposited checks for up to fourteen days” and that “B of A delays and then accelerates transactions that result in overdraft fees….Wachovia intentionally holds checks too in an effort to initiate overdraft fees.” Others note that they have not been able to get their banks to show them the rates on their accounts. ‘Harry Wallace’ notes that banks can increase mortgage payments by a few dollars on the anniversary date, but that banks are stealthily raising mortgage payments by twenty or thirty dollars several times a year; he notes that when one makes payments on the principle of a mortgages, it may not be recorded. “And the bank won’t show records unless you are in court.” ‘Joe Dex’ notes that every time you put in to modify a loan, the bank gets $500 — which explains why banks ask you to resubmit the application four or five times. And so on. Other readers astutely point out something I can confirm in my recent visit to Europe: pretty much every EU bank customer now uses an ATM card with a chip, PIN number and photograph that make it almost impossible for a third party to misuse it (indeed US bank debit cards, without those security systems built in, are not accepted in many places in Europe for that reason, even if it is drawn on a global bank with local branches). Why do we not have access to such secure debit cards here? Why indeed: look to the bank lobby, that influences our legislation in a way it cannot in Europe. Banks in Europe lose, along with the customer, when there is fraud; banks here? It’s a billion plus dollar party annually, and the banks have invited themselves. What is the takeaway? Many readers directed me to the movement away from big banks, Moveyourmoney.org , and to the benefit of small local credit unions. That is powerful; but just as powerful is knowing the aggregate of all these stories; as awful as it is to learn the truth about the big picture, it is good to warn others — and best of all to know that none of us is alone. It will take quick action to prevent this situation from worsening, especially as banks are now frantically working to skirt new regulations put into place over the past year and a half. Consider potential legislation in Oregon , proposed by the Oregon Bankers Association last session and sent by an industry insider, that would have given fraudulent powers of attorney the benefit of the doubt in fraud claims unless the customer — rather than the bank — could prove fraud had occurred. Needless to say, this is a near impossible task for average consumers. Surely Oregon isn’t the only state where banks have similar ideas (a similar policy also exists in California, per CA probad code Sec. 4303, which allows third parties to rely on anything that appears to be notarized — an easily forged act).

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Video: Grinnan Sees `Nice Upside’ for China Telecom Stocks: Video

August 25, 2010

Aug. 26 (Bloomberg) — Tucker Grinnan, head of Asian telecommunications research for HSBC Securities Asia Ltd., talks about China Telecom Corp.’s financial results and the outlook for China’s telecommunications industry. The country’s biggest fixed-line carrier posted second-quarter profit that beat analyst estimates after the company almost doubled the number of users at its mobile-phone unit. Grinnan talks with Susan Li on Bloomberg Television. (Source: Bloomberg)

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David Isenberg: Hardly an Unalloyed Virtue: PMSC in Afghanistan

August 25, 2010

The recent news that President Hamid Karzai has ordered a four-month phase out of all private military and security companies (PMSC) in Afghanistan has occasioned much commentary, but there has been a lack of hard facts. For example, who exactly is working there now and which companies would have to leave?. Press reports stated there were 52 PMSC registered with the Afghanistan Ministry of Interior but gave no details as to who there were. Burt, as it happens, the UN Working Group on the use of mercenaries as a means of violating human rights and impeding the exercise of the right of peoples to self-determination, investigated that very subject. In a report dated June 14, it noted: The Government of Afghanistan has also stressed the need for prompt adoption of procedures to regulate and monitor the activities of these companies, saying that the lack of rules governing the activities carried out by PMSCs created a culture of impunity dangerous for the stability of the country. Civil society had a negative perception of the large presence of PMSCs, in particular with regard to the difficulty of differentiating the legal army and police from foreign troops, PMSCs or even illegal armed groups. A comprehensive regulation [more on this below] was adopted by the Council of Ministers in February 2008 and is still in force today. The Regulation led to the licensing of 39 Afghan and foreign companies1 and the registration of their personnel and weapons. The Regulation, if properly implemented, is an important step to ensuring monitoring and accountability of PMSCs. In a footnote the report notes “The Working Group was informed during its regional consultation with the Asia Group on 26-27 October 2009 that the Government of Afghanistan had recently extended the number of licensed companies to 52, with 27 national and 25 international PMSCs.” According to the report, “It is difficult to estimate with accuracy the number of PMSCs in Afghanistan as there are reportedly some Afghan PMSCs not registered with the MoI. According to the information received, the estimated number of PMSCs operating in the country until early 2008 varied between 60 and 90 companies. In addition to local companies, foreign PMSCs were in the majority registered in the United States and the United Kingdom, with some in Canada, Germany, South Africa and the Netherlands. Third-country nationals are also being recruited by international PMSCs. The number of PMSCs may increase given United States troop surges and NATO operations.” Many commentators have speculated that Karzai’s call for phasing out PMSC is primarily a political move to relieve pressure on his administration for various alleged corruption. That may be so, but the UN report provides evidence that PMSC are a legitimate security concern: The presence and activities of PMSCs in Afghanistan are very much interconnected with the large number of unauthorized armed groups of various kinds on Afghan territory. The Ministry of the Interior (MoI) has estimated that no fewer than 2,500 unauthorized armed groups were operating in those provinces under governmental control, which represent less than half the territory of the country. Many de facto non-State armed groups have used the regularization process for PMSCs to disguise their groupings as private security companies, reinforcing the perception that PMSCs were a threat to stability. Existing PMSCs — especially local companies but also some international ones — became a “reservoir” for adoption and legalization of armed individuals with military skills who in the recent past had belonged to unauthorized military groupings. … In Jalalabad, for example, the Working Group was informed that the Afghan National Police in the province of Nangarhar had counted 500 private security entities operating in the eastern region which were not registered with the MoI. These illegal entities, with a minimum of five men, fall under the definition of illegal armed groups and should be dismantled. By comparison, there were only six PMSCs registered with the MoI operating in the area. Another example would be this: The Working Group received information about the involvement of PMSC contractors in robberies, kidnapping, interrogation, torture of detainees and irregular and abusive house inspections. The MoI confirmed cases of excessive use of force.. In one case, local private security contractors are alleged to have shot seven adult males and injured one child in what appear to have been extrajudicial killings. On 27 October 2008, the international military forces (IMF) and Anti-Government elements (AGEs) engaged in an exchange of fire in the Haft Asyab area, Saydabad District, Wardak Province, which killed 11 AGEs and injured 12 others. During the fighting, private security contractors working for the RWA Road and Construction Engineering Company entered Hakim Khail village in the Haft Asyab area and, according to witnesses, entered a house, forced out the adult males inside and shot them one by one. A child who tried to run away was allegedly shot in the back. Other reports state that five people were killed by IMF air strikes during the operation. No information has been provided on whether this incident has been fully investigated and anyone prosecuted. Considering the fragile state of Afghanistan one can see that having more people with guns is a source of concern, regardless of the intended purpose. Exactly how many PMSC there are and how many guns they have is unknown. The report states: The exact number of PMSC personnel is difficult to ascertain and the Government was not able to provide the Working Group with statistics. According to academic studies, the estimated number of PMSC personnel varied from 18,000 to 28,000 before the adoption of the Regulation. The Regulation imposed a cap of 500 personnel per registered company, although it seems that was not rigorously enforced, with a number of companies employing a higher number of personnel. This number is likely to increase in the coming months given increased insecurity due to the growing insurgency attacks. The number of PMSCs will also increase to match the deployment of additional military forces as announced by the American President with the new United States strategy for Afghanistan. Already by August 2009, the total number of PMSC personnel contracted by the United States Department of Defense had increased by 19 per cent. At the end of October 2009, the Working Group was informed by the Government of Afghanistan that, with the increase in registered companies from 39 to 52, 24,690 personnel were operating in Afghanistan, of whom 19,928 were nationals and 4,772 international employees. … According to data of the Kabul Police, 35 private security companies possessed 4,968 units of registered weapons of various types in 2008 (registered under the names of 1,431 employees). The police authorities informed the Working Group that private security companies possess no fewer than 44,000 registered and unregistered weapons. A total of 17,000 weapons were confiscated by the Ministry of the Interior (MoI) within the framework of the DIAG (Disbandment of Illegal Armed Groups) programme, while another 18,000 were officially registered as belonging to 39 licensed companies. The Comprehensive Regulation adopted in February 2008 led to the licensing of 39 Afghan and foreign companies and the registration of their personnel and weapons. Of the 39 companies, 18 were Afghan owned and 21 were foreign or international, with 10 registered in the United States, 8 in the United Kingdom and 3 in other countries. Who are the companies? They are: Country of origin/ Name of company Afghan (18) ARGS, Asia Security Group (ASG), Burhan Security Service, Commercial Security Group (Guards Service) CSG, Good Knight Security Services, IDG Security, ISS (also known as SSI) – International Specialized Services, Kabul Balkh Security Services, Khorasan Security, NCL Holdings LLC., PAGE Associates, Pride Security Services, Shield, Siddiqi Security, SOC – Afg, Tundra SCA, WATAN Risk Management, White Eagle Security Services UK (10) Aegis Defense Services Ltd, ArmorGroup Services, Blue Hackle, Control Risks (CR), Edinburgh International, Global Risk Group, Hart Security, Olive Group, Saladin Security Afghanistan, TOR US (8) Xe Services/Blackwater USA, DynCorp International, EODT Technologies Inc./GSC, Four Horsemen/ARC, REED Inc., RONCO, Strategic Security Solution International Afghanistan (SSSI), US Protection and Investigations (USPI) Other (3) Australia: Compass Canada: GardaWorld (as Kroll) Dubai: UNITY-OSG Interestingly, or perhaps better put, ironically, considering the example and claims of some other PMSC trade associations who love to talk about the high ethical standards they require of their member companies, the report notes: Following the example of Iraq and the establishment of a Private Security Company Association of Iraq (PSCAI) “to discuss and address matters of mutual interest and concern to the industry conducting operations in Iraq”, the main international companies in Afghanistan have been grouped together in a Private Security Company Association of Afghanistan (PSCAA). However, the PSCAA Chairman told the Working Group that PSCAA had not been registered formally as an association or an NGO in accordance with national laws and remained more of an informal club or network of international security companies. Its influence and role have remained limited to preserving the interests of the companies and it has not adopted a code of conduct for the industry and does not monitor the conduct of its members.

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Richard Barrington: What’s Up (or Down) With Bank Fees?

August 25, 2010

While many industry observers have been forecasting the demise of free checking accounts as tighter regulations limit opportunities for bank profits, the latest data from the MoneyRates.com Bank Fee Survey finds that free checking is still plentiful, and that monthly maintenance fees have actually declined since the

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Video: Lashinsky Sees U.S. Home Prices Falling `Little More’: Video

August 25, 2010

Aug. 25 (Bloomberg) — Patrick Lashinsky, chief executive officer at ZipRealty Inc., talks about the outlook for the U.S. housing market. Lashinsky says he sees home prices falling “a little bit more.” He speaks with Matt Miller on Bloomberg Television’s “Street Smart”. (Source: Bloomberg)

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Damien Hoffman: 12 Steps to a U.S. Recovery — Step #1: Buy Local

August 25, 2010

The US is in deep shit . However, if we’re willing to take the necessary steps, we can recover from the mess we made. The mainstream media is filled with emotionally-driven, over-simplified proposals for fixing a very complicated problem. We are inundated with single-brain-cell solutions such as deporting illegal immigrants, defending the Bush tax cuts, or simply changing political parties in November. Newsflash: none of these things will fix our economy . This is all noise to increase media ratings and career minded politicians. If we are really serious about resurrecting our economic power, we need a 12-step program to address the core of our problems, addictions, and bad habits. Today I will cover Step #1… Step #1: Buy Local By far, one of the biggest cancers in our economy is the trade deficit . Every day we purchase goods or services from foreign sources, we are giving them our powerful wealth in exchange for a short-lived experience. For example, when we fill our gas tanks with foreign oil, we send our personal wealth to another country and all we have to show for it is a car ride to the grocery store. In this example, our wealth pays foreign salaries to people who buy stuff in their local communities, in turn creating a positive feedback loop within that economy at the expense of ours. On the flip side, the tank of gas in the US disappears. The same holds true for the cheap crap goods we buy from China: they are ready for a landfill in a mind-boggling rate of time. So, at the end of this bargain we end up with either nothing or worthless junk, and the other country ends up with real wealth which goes into their economy. Basically, they bleed us to death. Although global trade is very valuable, we must rigorously pursue a proper balance between buying foreign goods/services and buying local goods/services. Currently, we send far too much more of our wealth to other countries than they are sending to us. This is what we academically refer to as the trade deficit. However, we should start calling it the Black Hole of Economic Death . Maybe people will think twice about buying the cheapest possible item if they know it’s literally bankrupting our economy . Maybe people will pay the extra buck to buy local knowing that this will create solid communities with stable jobs . Then again, maybe not. However, we’ve got to start somewhere. And the only way to heal our economy long-term is to first stop the bleed which has made the leaches our masters. It may seem nice to have cheap gas and super stores. But we are now borrowing back our own wealth with interest from our trading “partners” because it’s been sucked into the Black Hole of Economic Death . I’m not advocating harsh protectionism or tariffs. I’m simply proposing we get back to a point of sane moderation where we eliminate the trade deficit and learn how to build strong local economies. Many parts of the US are supporting local farmers and food. Let’s take it one step further and support local everything. Stay tuned for Step #2 …

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Dean Baker: Senator Simpson: He’s Not Just Offensive, He’s Ignorant

August 25, 2010

Former Wyoming Senator Alan Simpson, the co-chairman of President Obama’s deficit commission, has sparked calls for his resignation after sending an offensive and sexist note to Ashley Carson, the executive director of the Older Women’s League. While such calls are reasonable — Simpson’s comments were certainly more offensive than remarks that led to the resignation of other people from the Obama administration — the Senator’s determined ignorance about the basic facts on Social Security is an even more important reason for him to leave his position. I was also a recipient of one of Simpson’s tirades. As was the case with the note he sent to Carson, Simpson attached a presentation prepared for the commission by Social Security’s chief actuary. Simpson implied that this presentation had some especially eye-opening information that would lead Carson and myself to give up our wrong-headed views on Social Security. While I opened the presentation with great expectations, I quickly discovered there was nothing in the presentation that would not already be known to anyone familiar with the annual Social Security trustees’ report. The presentation showed a program that is currently in solid financial shape, but somewhere in the next three decades will face a shortfall due to an upward redistribution of wage income, increasing life expectancy, and slow growth in the size of the workforce. The projected shortfall is not larger than what the program has faced at prior points in its history, most notably in 1982 when the Greenspan Commission was established to restore the program’s solvency. It was disturbing to see that Simpson seemed surprised by what should have been old hat to anyone familiar with the policy debate on Social Security. After all, he had been a leading participant in these debates in his years in the Senate. Simpson’s public remarks also seem to show very little knowledge of the financial situation of the elderly or near elderly. He has repeatedly made references to retirees driving up to their gated communities in their Lexuses. While this description may apply to Simpson’s friends, it applies to very few other retirees, the vast majority of whom rely on Social Security for the bulk of their income. Cutting the benefits of the small group of genuinely affluent elderly would make almost no difference in the finances of the program. Furthermore, the baby-boom generation that is nearing retirement has seen most of its savings destroyed by the collapse of the housing bubble that both wiped out their housing equity and took a big chunk of the limited money they were able to put aside in their 401(k)s. Simpson shows no understanding of this fact as he prepares to cut benefits for near retirees. He also doesn’t seem to have a clue as to the type of work that most older people are doing. While it is possible for senators to continue in their jobs late in life, nearly half of older workers have jobs that are either physically demanding or require they work in difficult conditions . Simpson seems totally clueless on this point when he considers proposals to raise the retirement age. The key facts on Social Security are not hard to understand. The shortfall is relatively minor and distant. Most retirees have little income other than their Social Security, and most workers would find it quite difficult to stay at their jobs in their late 60s or even 70. We might have hoped that Senator Simpson understood these facts at the time when he was appointed to the commission, but we should at least expect that he would learn them on the job. His determined ignorance in the face of the facts is the most important reason why he is not qualified to serve on President Obama’s commission. Someone who is co-chairman of such an important group should be able to critically evaluate information, not just insult and demean his critics.

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Video: Citi’s Press Recommends South Korea, Taiwan Stocks: Video

August 25, 2010

Aug. 25 (Bloomberg) — Jason Press, a strategist at Citigroup Inc., talks about his investment strategy for emerging-market stocks. Press talks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

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Video: Bloomberg Businessweek’s Farzad Discusses Investing: Video

August 25, 2010

Aug. 25 (Bloomberg) — Bloomberg Businessweek’s Roben Farzad talks about his advice for retail investors. Farzad speaks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

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West Virginia Mine Explosion Investigator: Methane May Be Bubbling Up

August 25, 2010

CHARLESTON, W.Va. — Methane gas may be bubbling up in a flooded area of West Virginia’s Upper Big Branch mine where 29 men died in an April 5 explosion, a federal mine regulator said Wednesday. Kevin Stricklin, an official with the federal Mine Safety and Health Administration, said several feet of water have kept investigators from searching that area of the Massey Energy mine near where nine of the victims were found. Stricklin said the bubbling water probably signals the presence of methane. But he cautioned that methane is frequently found seeping from coal seams in underground mines and that the explosion may not have begun there. Officially, the cause of the explosion hasn’t been determined, but MSHA said it suspected methane and coal dust in a preliminary report delivered last April to President Barack Obama. Investigators have mapped about 90 percent of the mine even though water has kept them from searching two underground areas, said Stricklin, MSHA’s administrator of coal mine safety and health. Both areas are lower than surrounding areas of the mine and haven’t been pumped out since the April 5 blast, he said, adding authorities hope to begin draining the larger of the two areas this week in seeking clues to the disaster. The mine has about 12 miles of underground workings. The agency has signaled much work remains in the investigation, including about 50 more interviews and testing on electrical equipment. MSHA said it has interviewed 197 witnesses, collected hundreds of pieces of evidence, taken more than 3,000 photographs and tested 1,800 dust samples.

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Gail McGovern: Corporate and Non-Profit Collaboration Is the Best Recipe for Disaster Response

August 25, 2010

While disasters are inevitable, unfortunately, effective response to them isn’t. With the fifth anniversary of Hurricane Katrina upon us, we’re reminded of the increasingly large role the private sector is playing in disaster relief worldwide, joining forces with non-profit organizations to aid regions hit by natural and man-made disasters. Katrina challenged corporations, the American Red Cross and the nation as a whole, and provided an important opportunity to improve how we as a nation respond to disasters. While the American Red Cross and our nation are better prepared to handle disasters of this scale today, we all need to do even more to protect our families and make our communities ready. Both business groups and non-profits agree on the importance of preparedness and establishing strong cross-sector and public-private partnerships before a disaster strikes. By working together in advance we can better ensure that we’re ready to respond to a major disaster and can help get affected communities up and running as soon as possible. While the private sector has a variety of vital resources that dramatically impact relief efforts — from basic necessities to communications and technical expertise – the challenge is how to best channel that expertise to do the most good. After the 2004 Asian tsunami, CEOs saw a need to better coordinate how the private sector works with relief agencies to respond to catastrophes, and the Partnership for Disaster Response was born. Formed by Business Roundtable, an association of more than 180 CEOs of leading U.S. companies, the Partnership for Disaster Response harnesses member companies’ expertise and capabilities to accelerate on the ground disaster relief. Later, in the wake of Katrina, Business Roundtable also developed a unique public/private partnership called the Gulf Coast Workforce Development Initiative (GCWDI), conceived and led by Riley Bechtel, CEO of Bechtel Corporation and co-chaired by DuPont. GCWDI helped recruit and train 20,000 critically-needed new construction workers in the Gulf Coast region, providing education, long-term construction jobs and essential infrastructure development. GCWDI is a prime example of various sectors — including government agencies such as FEMA, community trade organizations, academic institutions (notably community colleges) and the business community — merging and leveraging resources and talents to respond to disasters. Although there’s no question the Gulf and our nation are better prepared today than before Katrina, there is still much work to be done in building resilient communities and readiness ahead of disasters of all kinds. A key lesson the Red Cross learned from Katrina is that no organization, no matter how strong, can go it alone, and as result, it has strengthened partnerships with a number of national and community-based organizations. The Red Cross and Business Roundtable joined forces in 2007 through the Partnership for Disaster Response, and our relationship continues to serve as a model of business and non-profit sector collaboration. This collaboration includes several activities designed to help the private and non-profit sectors work together to strengthen the nation’s disaster response system. Another Red Cross-business joint effort involves expanding the Red Cross’ model workplace volunteer program, “Ready When the Time Comes,” in which the Red Cross trains employees of local businesses who can then mobilize as a community-based volunteer force when needed. After Katrina, many businesses were asking what their people could do to volunteer, but the employees simply weren’t trained. The Red Cross recognized that even more trained volunteers would be needed to accomplish its vital mission. With W.W. Grainger, Inc., the founding sponsor, and support from numerous other companies across the country, the “Ready When the Time Comes” program has recruited more than 10,000 trained volunteers from nearly 450 businesses and organizations in 40 communities nationwide. These volunteers and their companies have become true partners with their local Red Cross chapters, working to find new ways to enable the Red Cross to be better prepared to respond to community needs. We want to keep this momentum going by galvanizing the business community, encouraging companies to contribute their vast resources to lay the groundwork ahead of disasters. The best way to look at this is to think of preparedness like a web, starting with individuals, fanning out to local businesses and schools, moving to local, state, national government, then to national non-profits and the largest corporations. And having a paper plan is not enough. Businesses, governments, non-profits and other groups all must commit to practice our plans, communicate and work as a team to meet the threats to our communities. Better prepared communities will create a better prepared nation. The passion to help is there; We just have to make sure we harness it properly. Putting the time, money and training in now — together — will save many more lives in the future.

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Video: Hindery Says China Yuan Undervalued by About 40 Percent: Video

August 25, 2010

Aug. 25 (Bloomberg) — Leo Hindery, managing director at InterMedia Partners LP, talks about China’s currency and trade policy. Hindery speaks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

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11 Very Reasonable Places Your Stimulus Dollars Went

August 25, 2010

Republican leaders insist , despite all the evidence to the contrary, that President Obama’s $800-billion-or-so stimulus package from last year hasn’t accomplished anything. (This is driving top White House economic adviser Jared Bernstein absolutely crazy .) Progressive groups — and most leading economists — say the problem with the stimulus was that it didn’t do enough, because it wasn’t nearly as big as it should have been. Lost amid those arguments is what exactly the American Recovery and Reinvestment Act did accomplish — which, by comparison to almost anything except the massive output gap it was supposed to fill, is a lot. On Tuesday, the nonpartisan Congressional Budget Office estimated that the act added from 1.4 million to 3.3 million jobs during the second quarter of 2010. In addition to $288 billion in tax cuts, the Recovery Act funded all sorts of worthy projects that created jobs, backstopped a number of safety-net programs, and made huge investments in infrastructure, energy independence, mass transit and other public goods. Here are 11 projects that got stimulus money. Do you think they deserved your tax money? (With research assistance by Jeremy Binckes.)

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Jared Bernstein: The Republicans’ Increasingly Awkward Dance Around the Truth

August 25, 2010

Ever since the Recovery Act passed last February, Congressional Republicans who opposed this economic rescue plan have had to do an awkward dance around the truth. After all, when you declare from the beginning that the Recovery Act won’t create a single job, you’re going to be forced to do a little two-step around the facts as week after week leading economists, the nation’s governors, and even your own constituents say otherwise. But yesterday, when Representative Boehner declared that “all this ‘stimulus’ spending has gotten us nowhere” on the same day the nonpartisan CBO said the program has created or saved as many as 3.3 million jobs nationwide and his own home state’s Department of Transportation said nearly 9,500 construction workers were on the job in July just on Ohio Recovery Act transportation projects alone… well, let’s just say that dance got a little more… awkward. Now, Representative Boehner was one of the first to declare the Recovery Act dead on arrival — the day it was signed into law, he declared it would “do little to create jobs.” But as soon as June 2009, as funding for Recovery Act transportation projects began to flow into Ohio, he said those dollars would be used for — get this — ” shovel-ready projects that will create much-needed jobs. ” And then when the nonpartisan CBO, Congress’s top watchdog and an institution widely respected on both sides of the aisle, began weighing in on the job impact of the Recovery Act, the dance got a little more complicated. Check out these quotes from Rep Boehner, followed by the facts: August 2009: Maintains that stimulus hasn’t created any jobs: “You know, after the1 trillion dollars stimulus bill that didn’t create any jobs.” [ Hugh Hewitt Show , 8/29/09] November 2009: The nonpartisan CBO announces the Recovery Act created or saved as many as 1.6 million jobs through September 2009. [ CBO Report , 11/30/09] January 2010: Says the stimulus “clearly hasn’t worked”: “Their trillion-dollar stimulus plan from a year ago clearly has not worked.” [ NPR , 1/27/10] February 2010: The nonpartisan CBO announces the Recovery Act has created or saved as many as 2.1 million jobs nationwide through December 2009. [ CBO Report , 2/23/10] May 2010: Still asking where the jobs are: “Where are the jobs?” [ Boehner Statement , 5/7/10] May 2010: The nonpartisan CBO says the Recovery Act created or saved as many as 2.8 million jobs through March 2010. [ CBO Report , 5/25/10] And then, of course, yesterday was the most difficult dance step of all: on the very same day that he declares in a major speech that the Recovery Act has “gotten us nowhere,” first,the nonpartisan CBO announces that the Recovery Act has created as many as 3.3 million jobs nationwide and lowered the unemployment rate by as much as 1.8 percent through March of this year , and then the Ohio Department of Transportation announces that nearly 9,500 construction workers were on the job on Ohio Recovery Act transportation projects in July, the highest monthly total since it began. I suspect those nearly 9,500 Ohio construction workers and 3.3 million Americans at work thanks to the Recovery act would disagree with Rep. Boehner’s statement that the Recovery Act has “gotten us nowhere.” And then to make his dance even more complicated, leading economist Mark Zandi said today that the Congressman from Ohio was “just wrong” that the Recovery Act has “gotten us nowhere:” Asked about Rep. Boehner’s claim that “all of this ‘stimulus’ spending has gotten us nowhere,” Mark Zandi, chief economist of Moody’s Analytics said “that is just wrong, the stimulus has been very helpful.” And let’s keep in mind who we are talking about here. This is the same Republican leader that actually said he wanted all of those people to lose their jobs earlier this month when he called for stopping the Recovery Act – a claim that got him in some hot water with independent fact-checkers who rated his rhetoric flat-out false . The true facts of the case are that this economy has undergone a major turnaround from the very deep recession that greeted President Obama when he took office, and the Recovery Act has been a major factor in that reversal. Yes, we’ve still got a long way to go, but we’re moving in the right direction. While it’s bad enough that Rep Boehner refuses to accept these facts, what’s worse is that he and his Republican colleagues have only one solution: a return to the same Bush economic policies that got us into this mess. As the head of their campaign committee, Rep. Pete Sessions, said, if they take control of Congress, they will go back to “the exact same agenda” they were pushing before President Obama took office. Mr. Boehner and his colleagues may well be the only Americans nostalgic for the economic policies of the Bush era. But we can’t go backwards. We need to recognize the positive impact of the Recovery Act and build on the momentum we’ve established. Jared Bernstein is Deputy Assistant to the President on Economic Policy This post originally appeared at the White House Recovery Act Blog .

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Olin Urged To Keep Jobs In Illinois

August 25, 2010

EAST ALTON, Ill. — Two federal lawmakers urged Olin Corp. on Wednesday to reconsider its possible plans to move 1,000 jobs from its ammunition-making operation in Illinois to Mississippi, cautioning the company to be mindful of their efforts in Washington to steer business in its direction. Democratic Sen. Dick Durbin and Rep. Jerry Costello, in a letter to Olin President and CEO Joseph Rupp, pressed for a meeting to discuss the company’s plans to shift its Winchester ammunition division’s Centerfire production from East Alton, a village 20 miles northeast of St. Louis, to Oxford, Miss. The legislators suggested they deserved the courtesy, saying they worked hard on Capitol Hill to help Olin get sizable government contracts. Those deals included supplying Winchester munitions to the Army and a $54 million deal the lawmakers called “the largest ammunition contract in the history of federal law enforcement,” the letter said. “Whenever Winchester needed help in Washington, we were quick to respond with good results,” Durbin and Costello wrote. “That is why the preliminary decision to close the facilities came as a surprise to us and local stakeholders, many of whom have been working with or for the company for decades.” The lawmakers questioned the need to relocate, insisting “the Winchester division appears to be far from struggling” in light of Olin’s recent announcement that the unit recently posted its second-best quarterly earnings in its history. During the latest April-through-June period, the company reported Winchester sales of $147.7 million, up $7 million over the same span last year. Clayton, Mo.-based Olin, which also makes specialty chemicals, announced the possible move earlier this month with little public elaboration, stunning Illinois lawmakers and the operation’s union-represented workers. Valerie Peters, a spokeswoman for Olin’s Winchester division, said Wednesday that no decision has been made as to when or if the division would move. She said talks were continuing between the company and “key stakeholders,” including union workers. She added that Olin would be willing to discuss the matter with Durbin and Costello. Durbin and Costello warned that moving the Centerfire line and the jobs could further erode the job scene in East Alton, home to about 7,000 residents, and the rest of Madison County, where unemployment already surpasses 10 percent. Word that the Centerfire jobs may be heading south prompted East Alton’s mayor, along with other elected and business leaders, to scramble to meet with state officials to pinpoint any assistance for Olin that would encourage the Winchester operation to stay put. It wouldn’t be the first time Olin moved jobs out of Illinois. Several years ago, the company shifted the manufacturing of its Rimfire line – the .22-caliber devices that propel power tools such as nail guns – to Mississippi, along with 150 jobs. The company claimed it was a cost-saving measure.

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Video: U.S. Stocks Advance Despite Housing, Durable Goods Data: Video

August 25, 2010

Aug. 25 (Bloomberg) — Bloomberg’s Courtney Donohoe reports on the performance of the U.S. equity market today. U.S. stocks rose, with the Dow Jones Industrial Average recovering from an early 102-point slide, as investors speculated that recent declines in equities overshot the potential damage from a slowdown in the economy. (Source: Bloomberg)

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Mary Bottari: Will Perpetrators of Financial Crimes Ever Face Justice?

August 25, 2010

Some will rob you with a six gun and some with a fountain pen – Woodie Guthrie Like mushrooms popping up in a damp basement, a slew of court settlements have been registered recently involving the big banks and their role in the financial crisis. An informal review of settlements over the last two years reveals about 16 multi-million dollar payouts from the big banks amounting to some $1.6 billion in fines and restitution and $13 billion in buybacks of auction-rate securities that were represented to be as safe as cash. Sounds impressive, doesn’t it? But when fines are stacked up against an elite white-collar crime spree worth trillions, it is a little less impressive. Broad Array of Crimes Revealed A review of the settlements shows an array of fraudulent and illegal actions. * Predatory, deceptive and abusive lending related to mortgages * Securities fraud, including creating investment vehicles designed to fail * Accounting fraud * Brokerage fraud * Bribery of government officials * Undisclosed conflict of interest in financial analysis and advice * Lying to shareholders and investors * Robbing consumers with abusive overdraft fees * Robbing homeowners by overcharging them by hundreds or thousands of dollars, when they were already in bankruptcy and foreclosure A pattern is emerging: no admission of wrongdoing, earnest promises to do a better job and a fine representing a fraction of the infraction. Because the fine is paid by shareholders, no one is held accountable and the whole incident is swept under the rug. Last week, a federal judge reviewing a proposed settlement between the Securities and Exchange Commission (SEC) and Citigroup sounded off. “Why isn’t the government getting tough with the banks?” Judge Ellen Segal Huvelle demanded of government lawyers. The SEC wanted to fine Citigroup $75 million for failing to disclose to shareholders some $50 billion in subprime mortgage investments that were deteriorating during the financial crisis and ultimately crippled the bank. This is the third time that a federal judge has weighed in with regulators to demand stiffer penalties against the banks. Incompetence and Indifference Allows Elites to Avoid Accountability In these cases there is no jury. The judge acts as a stand-in for the public interest. While we can hope that judges are getting tougher on these settlements, the whole process lets the people who committed the crimes avoid the public rage and personal accountability that helps to deter future crimes. Recently, Judge Emmet G. Sullivan sharply questioned one settlement with Barclays Bank telling government lawyers that the public might see the settlement as a “free ride” and noted that “requiring banking officials to stand before federal judges and enter pleas of guilty might be a powerful deterrent to this type of conduct.” But now, two years after Wall Street’s fraudulent and reckless behavior collapsed the economy, costing average Americans trillions in lost wages, savings and housing wealth and throwing eight million people out of work and some six million families out of their homes, not one Wall Street banker or predatory lender is behind bars. “The failure of the Bush and Obama administrations to imprison a single CEO of the nonprime mortgage lending specialists that led what the FBI aptly named an ‘epidemic’ of mortgage fraud in 2006 — four years ago — demonstrates a level of incompetence and indifference to the crimes of the elites that is staggering,” says University of Missouri law Professor Bill Black, a former federal regulator during the Savings and Loan crisis of the 1980s. Even Drug Money Laundering Tolerated America’s largest banks apparently can engage in the most flagrantly criminal activity and emerge unscathed. While average Americans would be given a stiff jail term for laundering even small amounts of drug money, this summer Bloomberg News broke the story that Wells Fargo/Wachovia had been caught laundering billions in Mexican drug cartel money, but got away with a slap on the wrist. The Justice Department charge sheet against the bank indicates that between 2003 and 2008, Wachovia handled $378.4 billion for Mexican currency exchanges, “the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history.” According to Bloomberg , the sum is equal to one-third of Mexico’s current gross domestic product. Yet the bank’s penalty for laundering over $380 billion in drug money is going to be a promise not to ever do it again and a $160 million fine. Given that the firm’s top officers were alerted to this activity, which fuels Mexico’s murderous drug war, shouldn’t someone have to stand trial? Unequal Justice The perception of unequal justice — one set of rules for the average Joe, and another for the elites on Wall Street — erodes the public’s faith in the criminal justice system and our political system as a whole. “Our prisons have tens of thousands of blue collar thieves. If one added up the cumulative financial damage they caused it would not represent one-hundredth of one percent of the losses caused by a single fraudulent large nonprime specialty lender,” says Black, who hopes that someday a leader will emerge with the courage (and common sense) to prosecute the elite criminals that cause our recurrent, intensifying financial crises. Bank of America ex-CEO Kenneth Lewis and ex-CFO Joe Price, are facing fraud charges connected to their personal involvement in the of a $3.6 billion dollar bonus package to[Merrill Lynch executives shortly before the bank took over the investment firm in 2008. This time, it’s not federal agencies pressing charges but the New York Attorney General’s office. Baring a dismissal, these two bankers may yet find themselves before a judge this fall. But it is highly unlikely that this one prosecution will satisfy the nation’s hunger for justice. TAKE ACTION: Click here to send a note to the FBI and the Department of Justice and tell them to pick up the pace. These firm may be too big to fail, but their executives are not too big for jail. LEARN MORE : See our informal tally of recent settlements below. *************************************************************** BIG BANKS SETTLEMENTS The Firm: Goldman Sachs 1. The Company/Subsidiary: Goldman Sachs/Litton Loan Servicing LP The Settlement Amount: $60 million The Settlement date: May 10, 2009 The Court or Federal Agency: The Massachusetts attorney general’s office The Complaint: Goldman paid the fine to end the Massachusetts AG’s investigation into allegations that it engaged in predatory lending practices in the state. The settlement will be used to reduce the mortgage payments of 714 Massachusetts residents who had secured subprime mortgages funded by Goldman Sachs. Source: Wayne Leslie, ” Goldman Pays to End State Inquiry Into Loans,” The New York Times , May 11, 2009. 2. The Company/Subsidiary: Goldman Sachs The Settlement Amount: $550 million ($300 million to the U.S. government and $250 million to investors The Settlement date: July 15, 2010 The Court or Federal Agency: The Securities and Exchange Commission The Complaint: In April 2010, the bank was accused of securities fraud in a civil suit by the SEC that claimed the bank had created and sold mortgage investments that were secretly devised to fail. Though Goldman did not formally admit to the SEC’s allegations, it agreed to a judicial order barring it from committing intentional fraud in the future under federal securities laws. Source: Gretchen Morgensen, “SEC Accuses Goldman of Mortgage Fraud,” The New York Times , April 16, 2010. The Firm: Wells Fargo 1. The Company/Subsidiary: Wells Fargo The Settlement Amount: $1.4 billion The Settlement date: November 18, 2009 The Court or Federal Agency: California’s attorney general The Complaint: “The brokerage arm of the bank marketed the securities, which resemble corporate debt and whose interest rates were regularly reset by auctions, as an alternative to cash for years, even after analysts warned that the market could freeze up. In February 2008, banks stopped participating in the auctions and effectively locked up investors’ cash. Under the terms of the settlement, Wells Fargo agreed to buy back at par value by April 2010 all auction-rate securities bought through its brokerage unit by investors before the market froze up.” Source: Cyrus Sanati, “Wells Fargo to Repurchase $1.4 Billion of Securities ,” The New York Times , November 18, 2009. 2. The Company/Subsidiary: Wells Fargo/Wachovia Bank The Settlement Amount: $160 million The Settlement date: March 17, 2010 The Court or Federal Agency: The United States District Court for Southern District of Florida The Complaint: Under the agreement, Wachovia will forfeit $110 million, representing the proceeds of illegal narcotics sales that were laundered through the bank, the United States attorney’s office in the Southern District of Florida said. The bank will pay an additional $50 million fine to the Treasury. A deferred prosecution agreement with the Justice Department resolved charges that the bank had willfully failed to establish a program to guard against money laundering. It also resolved Wachovia’s admitted failure to identify, detect and report suspicious transactions in third-party payment processor accounts. Source: REUTERS, ” Wachovia and U.S. Settle a Money Laundering Case, ” The New York Times , March, 17, 2010. 3. The Company: Wells Fargo The Settlement Amount: $1.5 million The Settlement Date: July 21, 2010 The Court or Federal Agency: The United States District Court, AZ The Complaint: Surprise alleged that the financial institution invested the city’s money in a risky, off-shore company backed by subprime mortgages and home-equity loans. Surprise officials last week said Wells Fargo Bank would pay $1.5 million in a settlement agreement to the city. Source: “Surprise City Council accepts Wells Fargo’s Offer on Settlement,” The Arizona Republic , July 28, 2010. 4. The Company/Subsidiary: Wells Fargo The Settlement Amount: $203 million The Settlement date: August 10, 2010 The Court or Federal Agency: The United States District Court for the Northern District of California The Complaint: “A federal judge on Tuesday ordered Wells Fargo to pay California customers in restitution for claims that it had manipulated transactions to maximize the overdraft fees it charged. Instead of processing transactions in the order in which they were received, Wells Fargo put through the largest to smallest. In a stinging 90-page opinion, United States District Judge William Alsup wrote that the practice was unfair and deceptive.” Source: Andrew Martin and Ron Lieber, “Wells Fargo Loses Ruling on Overdraft Fees,” August 10, 2010. The Firm: JP Morgan Chase 1. The Company Subsidiary: JP Morgan Chase/Bear Stearns Companies The Settlement Amount: $28 million The Settlement date: September 9, 2008 The Court or Federal Agency: Federal Trade Commission The Complaint: The Bear Stearns Companies and its mortgage servicing unit agreed to pay $28 million to settle federal charges it had deceived subprime borrowers and had engaged in abusive loan practices before the investment bank’s collapse. Source: ” Bear to Pay $28 Million to Settle Loan Complaint ,” The New York Times , September 9, 2008. 2. The Company/Subsidiary: JP Morgan Securities Inc. The Settlement Amount: will pay a penalty of $25 million, make a payment of $50 million to Jefferson County, and forfeit more than $647 million in claimed termination fees. The Settlement date: November 4, 2009 The Court or Federal Agency: The Securities and Exchange Commission The Complaint: “JP Morgan Securities Inc. settled charges with the Securities and Exchange Commission for two former managing directors’ alleged roles in an unlawful payment scheme that enabled them to win business involving municipal-bond offerings and swap-agreement transactions with Jefferson County, Ala.” Source: Fawn Johnson and Michael Aneiro, “J.P. Morgan Unit Settles Alabama Case,” November 5, 2009. The Firm: Morgan Stanley 1. The Company/Subsidiary: Morgan Stanley The Settlement Amount: $7.2 million The Settlement date: March 25, 2009 The Court or Agency: FINRA The Complaint: Morgan Stanley & Co. will pay more than $7 million to resolve allegations of misconduct by two former brokers accused of misleading Rochester, N.Y., area employees of Eastman Kodak Co. and Xerox Corp. to take early retirement and invest retirement assets with them. Source: “Settlement for Morgan Stanley,” Crain’s New York Business , March 25, 2009. 2. The Company/Subsidiary: Morgan Stanley The Settlement Amount: $102 million The Settlement date: June 23, 2010 The Court or Federal Agency: Attorney General of the Commonwealth of Massachusetts The Complaint: Morgan Stanley will pay $58 million to affected Massachusetts borrowers and $23 million to the state’s pension fund to make up for the investment losses it suffered, and will return $19.5 million to the state’s taxpayers. Source: REUTERS, “Morgan Stanley to Settle Case Over Subprime Loans,” The New York Times , June 24, 2010. The Firm: Bank of America 1. The Company/Subsidiary: Bank of America The Settlement Amount: $4.7 billion The Settlement date: October 9, 2008 The Court or Federal Agency: Securities and Exchange Commission and the New York attorney general The Complaint: “The Bank of America Corporation has agreed to buy back as much as $4.7 billion in auction-rate securities to settle charges that it misled thousands of customers about the risky investments, federal and New York state regulators said Wednesday.” Source: THE ASSOCIATED PRESS, “Bank of America Agrees to Buy Back Auction-Rate Securities,” The New York Times , October 9, 2008. 2. The Company/Subsidiary: Bank of America/Merrill Lynch The Settlement Amount: $26.5 Million The Settlement date: September 9, 2009 The Court or Federal Agency: Texas State Securities Commissioner The Complaint: “Merrill Lynch & Co. agreed to pay $26.5 million in a national settlement stemming from Texas’s claims that the brokerage firm allowed sales assistants to sell securities without being properly registered.” Source: Kevin Kingsbury, “Merrill to Pay $26.5 Million to Settle Sales-Practice Probe,” Wall Street Journal, September 9, 2009. 3. The Company/Subsidiary: Bank of America/Countrywide Financial Corp. The Settlement Amount: $108 million The Settlement date: June 6, 2010 The Court or Federal Agency: Federal Trade Commission The Complaint: “Bank of America Corp. agreed Monday to pay $108 million to settle U.S. claims that Countrywide, the mortgage lender it acquired two years ago, cheated hundreds of thousands of customers facing foreclosure on their homes.” Source: Thomas Catan, “BofA to Pay $108 Million in FTC Case,” Wall Street Journal, June 8, 2010. 4. The Company/Subsidiary: Bank of America/Merrill Lynch The Settlement Amount: $150 million The Settlement date: February 22, 2010 The Court or Federal Agency: Securities and Exchange Commission and the New York attorney general The Complaint: Southern District of New York Judge Jed S. Rakoff “reluctantly” gave his conditional approval Monday morning to a $150 million agreement between the Securities and Exchange Commission and Bank of America Corp. to settle allegations that the bank failed to make required disclosures relating the $3.8 billion dollar bonus package paid to Merrill Lynch executives when BofA took over the investment firm in 2008. The Judge succeeded in getting the settlement raised from $33 million to $150 million. Source: “Judge approves SEC Deal with Bank of America,” New York Times , February 22, 2010. The Firm: Citigroup 1. The Company/Subsidiary: Citigroup Inc. The Settlement Amount: $7 billion The Settlement date: Dec. 11, 2008 The Court or Federal Agency: the Securities and Exchange Commission, New York Attorney General Andrew Cuomo and state securities regulators The Complaint: Under final settlements announced Thursday with regulators that include the Securities and Exchange Commission, New York Attorney General Andrew Cuomo and state securities regulators, the two banks agreed to buy back billions of dollars of illiquid auction-rate securities from hundreds of customers. Those customers have been unable to sell the securities, which they thought were as good as cash. Source: Liz Rappaport, “CitiGroup, UBS Settle Deal on Payback,” Wall Street Journal , Dec 12, 2008. 2.The Company/Subsidiary : Citigroup The Settlement Amount: $75 million The Settlement date: July 29, 2010 The Court or Federal Agency: Securities and Exchange Commission The Complaint: “Citigroup agreed on Thursday to pay $75 million to settle federal claims that it failed to disclose vast holdings of subprime mortgage investments that were deteriorating during the financial crisis and ultimately crippled the bank. The commission singled out two Citigroup executives– Mr. Crittenden agreed to pay a $100,000 fine; Mr. Tildesley will pay $80,000.” Source: Eric Dash and Louise Story, “Citigroup Pays $75 Million to Settle Subprime Claims,” The New York Times , July 29, 2010.

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.ORG, The Public Interest Registry Announced Today That Alexa Raad Has Resigned as President and CEO

August 25, 2010

RESTON, VA–(Marketwire – August 25, 2010) –  The Board of Directors of .ORG, The Public Interest Registry announced today that Alexa Raad, the President and Chief Executive Officer of PIR, has decided to resign from her positions with the company effective on September 24th, 2010. Her resignation concludes 3 1/2 years of service and leadership at PIR.

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Video: Sheldon Doubts `Dramatically Worse’ U.S. Labor Market: Video

August 25, 2010

Aug. 25 (Bloomberg) — Christopher Sheldon, director of investment strategy at Bank of New York Mellon Corp., talks about the outlook for the U.S. labor market. Sheldon also discusses U.S. stocks, corporate earnings and his investment strategy. He talks with Matt Miller, Adam Johnson, Dominic Chu and Julie Hyman on Bloomberg Television’s “Street Smart.” Stutland Equities LLC’s Dan Deming also speaks. (Source: Bloomberg)

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David Rosenberg: We’re In A Depression, Not A Recession

August 25, 2010

In his daily briefing to investors Tuesday, Gluskin Sheff economist David Rosenberg replaced the R-word with the D-word. The “current economic malaise” is a “depression, and not just some garden-variety recession,” said Rosenberg in a note to clients today, as reported by CNBC . Rosenberg, who’s been issuing warnings about a double-dip recession , was formerly the chief economist at Merrill Lynch. Like the Great Depression of the 1930s, the U.S. economy as of late has posted a series of quarterly GDP bounces and stock market gains, he noted. Yet, the tidbits of good news are the same kind of fluff that gave our 1930s predecessors a false sense of optimism amidst unsustainable growth, Rosenberg argues. As CNBC points out, Rosenberg wrote, “the 1929-33 recession saw six quarterly bounces in GDP with an average gain of 8 percent.” Rosenberg proposes that we may be reliving history: “If you’re keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3 percent.” In a separate report this morning (“Breakfast With Dave”), Rosenberg added this: “Look, we can understand the need to be optimistic, but it is essential that we recognize the type of market and economic backdrop were are in. The markets are telling us something valuable when, after a period of unprecedented government bailouts, incursions and stimulus programs, we have a 2-year note auction that sees the yield dragged to new record lows of 0.46%.” And Rosenberg offered us some more gloom on housing: “So let’s get this straight. Mortgage rates have tumbled nearly 100 basis points in the past year to a record low of 4.42% for the 30-year rate, yet existing home sales collapse a record 27% MoM to an all time low (data only back to 1999 for total sales) of 3.83 million units at an annual rate? Are you kidding me?” Is all this just a gloom and doom forecast or is it realism, as Rosenberg calls it? What do you think?

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Google Accepts Pot Ads Like The Ones Facebook Rejected

August 25, 2010

Google has accepted pro-pot-legalization ads similar to those rejected by Facebook, a spokesman for the Just Say Now coalition told HuffPost Wednesday, providing a confirmation email from a Google representative. Google also accepted ads attacking Facebook for blocking the campaign’s web ads. [UPDATE: Google will allow the ads to reference to controversy but not name Facebook specifically, for trademark reasons.] “Facebook’s concocted prissiness over political advocacy is more to be disparaged than imitated. Freedom of expression is made of sterner stuff. Google deserves applause for exposing Facebook to shame,” said Bruce Fein, former associate attorney general for President Reagan and a coalition member. The text ads are straightforward.”Proposition 19: Join the campaign to legalize marijuana in California,” reads one. A Facebook spokesman told HuffPost that the Just Say Now ads were banned – after initially being accepted – because they contained a pot leaf, which falls under a general ban on promoting smoking. No such ban is outlined in the advertising guidelines. The Libertarian Party was given a different reason for its ads being blocked after being initially approved. “We do not allow ads for marijuana or political ads for the promotion of marijuana and will not allow the creation of any further Facebook Ads for this product,” a Facebook representative wrote to the Libertarian Party. “Google’s decision to run the ads is an affirmation that the search network is mature enough to run ads that are clearly political speech,” said Michael Whitney of Firedoglake.com, an organizing member of the Just Say Now coalition. Google is also accepting image ads that include pot leaves, similar to those rejected by Facebook. UPDATE: A Facebook spokeswoman emailed HuffPost to clarify the policy. “We don’t allow any images of drugs, drug paraphernalia, or tobacco in ad images on Facebook. Sometimes our automated and manual processes miss these, but our policy has always been the same. Just Say Now, the Libertarian Party, and other organizations with similar objectives can continue to advertise on Facebook using different images,” she said.

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The 14th Banker: New Banks Needed

August 25, 2010

This week news flow continues to indicate an economy that is significantly weakening from an already anemic activity level. There are wide-ranging destructive effects on every sector of the economy, households, businesses, and government. Some of these effects threaten to spiral into negative feedback loops causing further destruction and unpredictable outcomes from economic depression and attendant extreme unemployment, to deflation, to hyperinflation, to currency devaluation. All of these are possibilities. So what to do about it? The current state of the society reflects the nature of society. I have posted before on the stratification of society into various interest groups which I have compared to the conditions before the revolution in France. We have profound ethical issues confronting us at every turn. There is a lack of trust. Cronyism here in America is alive and well. Until we attack these underlying causes and conditions in a meaningful way, it is foolish to expect that we will have sustained economic recovery and general prosperity. The seriousness of the situation can be measured by our hopes. What we hope for is a little stimulus, a little inflation, a shift in exchange rates that will make exports more competitive, a return of the consumer to excessive spending, credit expansion. Are these the things that prosperity is made of? No! Getting much attention in the news these days is the asset price cycle. The immediate manifestations are the recent sharp declines and possible further declines in the prices of residential and commercial property, the manic-depressive stock market, bond price bubbles and collapsing interest rates. Amid this backdrop, one of the critical factors in an economic recovery will be the availability of credit to worthy businesses and investors. Already there are high net worth investors buying distressed property. Credit terms are tight and buying distressed property is still a risky investment. It is high risk with high potential reward. Facilitating these purchases are record low interest rates for super qualified borrowers. The opportunity for such returns, as usual, is for the rich. Those with idle cash have the opportunity to profit on the distress of others. Further stratification of wealth will be the inevitable result. One blogger this week sought to find deeper solutions. Eric Haseltine suggests that we quit reacting to the panic of the moment and focus on building up our people in aggregate to create conditions for creative expansions. Unless we overcome our temporal myopia, we’ll continue to put band-aids on this economy and it will continue to deteriorate: in other words, we’ll continue to treat symptoms and never go for a complete cure. And what would such a cure look like? Let’s start by looking at disease that afflicts us. The fundamental problem with America’s economy is a decline in the capabilities and motivation of our workforce. True economic growth — not the artificial kind spurred by fiscal policy — stems from innovations such as Google’s search engine that create entirely new businesses and markets. Such innovations grow out of technological advances, which in turn emerge from earlier scientific discoveries. Alan Greenspan, former Chairman of the Federal Reserve Bank, reinforced this idea when he said “Capitalism expands wealth primarily through creative destruction — the process by which the cash flow from obsolescent, low-return capital is invested in high-return, cutting-edge technologies.” Ingrained in this approach is the requirement that creative destruction must be followed by investment in new technologies. That requires a functioning financial sector. John Hussman agrees and fleshes out the arguments further in a previous market update. If we as a nation fail to allow market discipline, to create incentives for research and development, to discourage speculative bubbles, to accumulate productive capital, and to maintain adequate educational achievement and human capital, the real wages of U.S. workers will slide toward those of developing economies. The real income of a nation is identical its real output — one cannot grow independent of the other. Again, note that we must accumulate productive capital. This is a function of effective financial intermediation. Too much financial intermediation has been directed to speculative activity benefitting from market volatility and to the creation and sale of complex and opaque financial instruments that allow high profits from the lack of developed competitive markets and exchanges and frankly the ignorance of the buyers of these instruments. This is exploitative and is not productive capital formation. So do we regulate such banks or do we start new ones? The first question is, can the banking sector, if it even chose to, provide for the capital needs of the economy. This point/counterpoint article addresses just that, among other topics of the day. Mish Shedlock in citing the Jerome Levy Forecasting Center and agrees with but refines these particular points in the linked article. There are various theoretical reasons given for the liquidity trap, but let’s just focus on what is happening now and what is likely to happen in the years ahead. Presently, excess reserves are not inducing lending for several reasons, and adding to them further will not make much difference. First of all, banks are capital constrained, not reserve constrained. Second, interest rates could not fall far enough during this business cycle to enable troubled debtors to refinance their way out of trouble, so now banks remain worried about the volumes of bad debt they are carrying and how future loan losses will impinge on earnings and capital. Third, deflationary expectations are beginning to work their way into banks’ loan evaluation process on a micro level; in more and more areas, loan officers are looking at households with shrinking incomes and firms with deflating revenues. Fourth, the private sector has too much debt, and many households and firms are trying to reduce debt, especially as more of them worry about deflation in their own incomes or revenues. Point numbers one and two above are key factors in the financial intermediation part of this economic problem. Banks are capital constrained. Balance sheets are loaded up with problem debt. Future losses are embedded in booked exposures. The banking sector is not sufficiently healthy to support economic expansion or to reverse deflationary pressures. So the question is how do we evolve? The government has propped up the banking sector, believing systemic impacts of bank failures would trigger a tidal wave of further liquidity contraction and trigger depression. The propping up has not worked. Yes, it has prevented a massive financial system collapse, but it has not supported economic growth. We need creative destruction in the banking sector. Let these existing banks reap the rewards of their policies. Create new banks with new fresh capital, unencumbered by toxic assets, headed by wise risk managers, but ready to lend. The FDIC may not like this because they do not want new competitors to pressure earnings of existing institutions. But the piddling cost of bank resolutions is nothing compared to the destruction of value in a squeezed economy. Fund up the FDIC and let these banks trickle towards failure. If new institutions are in place and ready to go, asset prices will reach clearing level and new investment will recycle assets into productive use. Many assets are already at or near clearing levels. As I said before, high net worth individuals are buying distressed assets. If you combine this recycling with vibrant human capital and a new sense of optimism, now there is something to work with. The new banks could also have new business models that are supportive rather than exploitative. But that is for another post.

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Don McNay: America’s Hangover from the Bailout Party

August 25, 2010

” Another day older and deeper in debt” -Merle Travis “Flounder: You _______ up – you trusted us.” -Otter in the movie Animal House. Let’s face it, we screwed up. In the decade before 2008, the financial world was like a presidential inauguration ball. On Inauguration day, there is a ball where only the closest insiders and Washington power players get invited. There are also a lot of parties around town, so just about everybody in Washington feels like they were part of the event. For a decade, Wall Street was playing funny money games. They were allowed to grant themselves multi-million dollar bonuses, and many Americans also felt like they were invited to the celebration. Real estate prices were soaring. People were flipping houses and condos. People with lousy credit and no income were living in nice houses. Almost anyone could get a loan for anything. Stock prices were going up and pension plans were getting fatter. State and local governments had lot of money to throw around and could cut taxes without anyone really noticing. We had easy money and reaped many benefits without hard work or sacrifice. We were living in fantasy land. The fantasy is over. We woke up to a nightmare. A nightmare that our nation has not yet dealt with. People with addictions go through a process called “bottoming out.” They reach a point where they realize their actions are hurting themselves or others. They get help and dramatically change their lives. Because of the Wall Street bailouts, America never got the chance to “bottom out.” Like a drunk who keeps “having a drink or two,” America has not really dealt with the problems that got us in the mess. Like an addict who keeps using, we are setting ourselves up for repeat failure. I’ve been reading Maria Bartiromo’s new book, The Weekend That Changed Wall Street. A better title might have been “The Weekend that Changed the World.” It was America’s chance to bottom out. We didn’t. To paraphrase Otter in Animal House, we screwed up. We mortgaged the future to make Wall Street happy today. I liked Bartiromo’s book. One of her insights jumped out at me. In talking about the fall from grace that some Wall Street insiders felt, she noted “When the wealthy falter, there is a deep shame that the average person cannot grasp. In that world, you are either in or you’re out.” That line explains everything. Wall Street was in. They had the right lobbyists and had an alumni association from Goldman Sachs, including Treasury Secretary Hank Paulson, doing their bidding in Washington. Those who came from Wall Street looked out for their own. They made sure their Wall Street cronies were paid back, 100 cents on the dollar. The rest of us were out. And we have stayed there. Unemployment remains around 10% and underemployment is even more chronic. Sales of existing homes are at a 15-year low, despite some of the lowest mortgage rates in history. It’s almost impossible for a Main Street business to get financing and state and local government entities are looking at severe cuts in revenues and services. We’ve spent trillions in bailout money and all we got was “One day older and deeper in debt.” Although it sounds gloomy, I’m not a gloomy person by nature. With focus, hard work and resiliency, people can overcome any obstacle. Including what Wall Street and Washington did to us. People can solve problems by taking a hard look at themselves and making changes. Washington is afraid to take that hard look or make real changes. Our political “leaders” won’t do anything that cuts off the campaign contributions and lobbying money that Wall Street provides. My next column will give a concrete plan for creating wealth without Wall Street. You can see signs of it. Concepts like Move Your Money, http://moveyourmoney.info/ are catching on. People are starting to pay down debt and look at creating their own businesses. We weren’t really invited to the big Wall Street party. But we sure wound up paying for it. Now it is time to recover from the hangover. Don McNay, CLU, ChFC, MSFS, CSSC of Richmond Kentucky is an award-winning financial columnist and Huffington Post Contributor. You can read more about Don at www.donmcnay.com McNay founded McNay Settlement Group, a structured settlement and consulting firm, in 1983, and Kentucky Guardianship Administrators LLC in 2000. You can read more about both at www.mcnay.com McNay has Master’s Degrees from Vanderbilt and the American College and is in the Hall of Distinguished Alumni of Eastern Kentucky University. McNay has written two books. Most recent is Son of a Son of a Gambler: Winners, Losers and What to Do When You Win The Lottery McNay is a lifetime member of the Million Dollar Round Table and has four professional designations in the financial services field.

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Video: Wesbury Says U.S. Has Been in Recovery `About a Year’: Video

August 25, 2010

Aug. 25 (Bloomberg) — Brian Wesbury, chief economist at First Trust Portfolios LP, talks with Bloomberg’s Melissa Long about the outlook for the U.S. economy. Orders for durable goods in the U.S. increased less than forecast in July and sales of new homes unexpectedly dropped, increasing the risk of a renewed recession in the world’s largest economy. (Source: Bloomberg)

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Allen Stanford’s Execs Knew He Was Bilking Investors: Witness

August 25, 2010

HOUSTON — Executives who worked with Texas financier R. Allen Stanford were aware of problems at his now defunct Caribbean bank, including fabricated investment reports and that Stanford secretly used money from investors to fund loans to himself, two financial experts testified Wednesday. The accountants were questioned about Stanford’s financial dealings during a court hearing in which a federal judge was to decide if Stanford and two executives – under indictment on charges they bilked investors out of $7 billion in a massive Ponzi scheme – will continue having their legal bills paid for by an insurance policy. The insurer, Lloyd’s of London, says the policy doesn’t pay on charges of money laundering, one of the many counts Stanford and Gilbert Lopez, the ex-chief accounting officer, and Mark Kuhrt, the ex-global controller, face in a federal indictment. Stanford and the ex-executives say they are not guilty and that Lloyd’s should honor the policy, which so far has paid more than $15 million in legal fees to them in their criminal and civil cases. The hearing before U.S. District Judge Nancy Atlas, which began Tuesday and might last through the end of the week, is providing a preview of the upcoming criminal trials in the case. Stanford and the former executives are accused of orchestrating a colossal pyramid scheme by advising clients from 113 countries to invest more than $7 billion in certificates of deposit at the Stanford International Bank on the Caribbean island of Antigua, promising huge returns. Stanford’s businesses were headquartered in Houston. The two accountants, both certified fraud examiners, were hired by Lloyd’s to examine the bank’s records. One of them, Mark Berenblut, testified that in reviewing e-mails between Kuhrt and other company executives that contained copies of monthly investment reports, he found that the figures used to show investor income coming into the bank were being manipulated. Attorneys for Lloyd’s, mirroring claims by prosecutors, say the bank’s balance sheets were made up and the work of reverse engineering. “My belief is these numbers are artificial. They have been set with a predetermined objective in mind,” said Berenblut. Another examiner, Alan Westheimer, earlier testified that Kuhrt and Lopez told him they knew money deposited into the bank was being used to fund personal loans to Stanford and that this wasn’t being reported to investors. Prosecutors have accused Stanford of secretly diverting more than $1.6 billion in investor funds as personal loans to himself to pay for his lavish lifestyle. Westheimer, who interviewed Kuhrt and Lopez after being hired by their attorneys in preparation for the hearing, told attorneys for Lloyd’s the two men also told him Stanford had asked them to keep confidential a $63.5 million land purchase in 2008 the financier had made in the Caribbean. Prosecutors in the criminal case contend the value of the land purchase was later artificially inflated to $3.1 billion to boost the bank’s revenues and hide financial losses. Stanford has contended the land purchase was legitimate and he had planned to use it to build a super exclusive resort. Kuhrt and Lopez have tried to put the blame for what happened at the bank on James Davis, Stanford’s former chief financial officer, who has pleaded guilty in the case and is cooperating with prosecutors. Attorneys for Stanford have said the financier didn’t have direct involvement in the daily workings of his companies and was sometimes out of the loop. Westheimer said Kuhrt and Lopez told Davis about their concerns with the loans and that it was Davis’ idea to inflate the value of the $63.5 million land purchase. Stanford and the two ex-executives are not testifying at the hearing, asserting their Fifth Amendment right against self-incrimination. Stanford’s trial, being handled by another Houston federal judge, is set to begin Jan. 24. The others will be tried after that. Besides money laundering, Stanford and his one-time colleagues have also been indicted on charges of wire and mail fraud.

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Video: Kennedy Says Drilling Moratorium Costing Louisiana Jobs

August 25, 2010

Aug. 25 (Bloomberg) — Louisiana State Treasurer John Kennedy talks about the impact of the deep-water oil drilling moratorium on his state’s labor market.

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Carton Donofrio Partners Names Ellen Moore Chief Executive Officer

August 25, 2010

Former Chief Operating Officer Represents Third Generation of Leadership at Integrated Advertising Agency

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Video: Cohan Says Bond Underwriting Loss No Concern for Goldman: Video

August 25, 2010

Aug. 25 (Bloomberg) — Bloomberg contributing editor William Cohan talks with Julie Hyman and Mark Crumpton about Goldman Sachs Group Inc.’s loss of market share in underwriting corporate bonds. The most profitable firm in Wall Street history has slipped to 10th in helping the world’s companies raise debt, down from ninth last year and as high as third place in 2003, according to data compiled by Bloomberg. (Source: Bloomberg)

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Leo W. Gerard: Jobless Organize to Remove Republican Royalists From Their Jobs

August 25, 2010

Glenn Beck made it official on Fox News last week: He’s seeking the office of 21 st Century Marie Antoinette. The queen of France, beheaded during the revolution, attained infamy for insensitivity toward hungry peasants. Glenn Beck, the Fox talk show host, achieved celebrity for his callousness toward unemployed Americans. Beck leads a pack of royalist Republicans who have spent the summer mocking, vilifying and denigrating the nation’s 14.5 million unemployed workers. It is the moneyed class smacking down the working class in an attempt to disempower and disenfranchise them. Dispirited workers are less likely to vote – which could give Beck and his gang of royalist Republicans control of Congress. The unemployed, like France’s 18 th Century peasants, are fighting back, however. The Union of the Unemployed and Working America are organizing the jobless to vote this fall and to demand help from lawmakers. They’re not out to behead Beck and the royalist Republicans, just dethrone them. Two and a half years after wanton recklessness by Wall Street banksters crashed the economy, the official unemployment rate remains stuck at 9.5 percent. It rises to 17 percent when statisticians add part-time workers seeking full-time jobs and the jobless who’ve abandoned the search out of hopelessness. With the help of a taxpayer bailout, Wall Street has recovered, and those banksters are taking home multi-million dollar bonuses again. But on Main Street, there still are five unemployed workers for every job vacancy, so no matter how hard the jobless try, there are no openings for 80 percent of them. Routinely, crowds line up before dawn when job openings are announced. In June, in Longmont, Colo., hundreds queued up to vie for 100 low-paid clerk and stock jobs at a new SmartCo Foods. Hundreds of Louisville residents gathered in the dark on Aug. 9 at the Kentucky Exposition Center to apply for 450 state fair jobs paying $7.25 an hour and lasting a total of 20 days. In addition to jobs, the people on Main Street are losing their homes and life savings at increasing rates. Bankruptcy filings nationwide reached the highest level in five years between April and June. Banks repossessed 92,858 homes in July, up 6 percent from July 2009. For too many, the situation is so desperate that they’re discussing plans for suicide on an on-line forum for the jobless. Glenn Beck and the royalist Republicans don’t care about all that. Here’s Beck ranting about those who lose unemployment benefits at 99 weeks: “Have you heard of the 99ers? These people, some of which I, frankly, I bet you would be ashamed to call them Americans, they think 99 weeks of unemployment benefists are not enough. . .Two years is plenty of time to have lived off your neighbors’ wallets.” Video of Beck slamming the “99ers” begins at 2 minutes and 33 seconds into this clip. Beck went on to argue that the jobless who protested last week on Wall Street were not “regular people,” like him and his friends: “Are they just regular people? . . They are socialists and anti-capitalists.” Then, incongruously, Beck condemned a protestor seeking jobs for all unemployed workers with a sign asserting, “A job is a right.” “No, a job is not a right,” insisted Beck, making it clear that in his world, the unemployed are “un-American” for not landing jobs, but, simultaneously, it’s perfectly moral and fair that the American economy has failed to produce enough jobs for them to fill. Beck is the TV mouthpiece for the royalist Republicans who champion this view: a job is not a right, and it’s not right to aid the jobless. Republicans, virtually as a block, oppose extending unemployment benefits for the jobless while they support extending tax breaks for the moneyed class – themselves. They opposed legislation to save the jobs of 319,000 public servants – the people who educate our children and protect our lives — teachers, police officers, firefighters. Democrats in Congress paid to preserve those jobs by eliminating $11 billion in tax loopholes for corporations that ship jobs overseas — a provision that ultimately could create jobs in the United States. Like Beck, they’ve announced their loathing for the unemployed. Royalists Sharron Angle , Jon Kyl , Andre Bauer , Tom Corbett and Orrin Hatch have derided the unemployed as lazy, spoiled, stupid drug users. The jobless, however, are mad as hell and aren’t going to take it anymore. They’re organizing. The Union of the Unemployed and Working America, the community affiliate of the AFL-CIO, are mobilizing the jobless. The Union of the Unemployed is launching a “Bite Back” campaign, targeting those in Congress who tried repeatedly to cut off unemployment insurance and other aid to the jobless. “They will never see us coming,” the first Bite Back ad says, “After all, the politicians whose policies destroyed our lives think we’re ‘lazy’ ‘drug users’ and ‘hobos.’ They are counting on us to be docile as lambs and so depressed we’ll stay in bed on election day.” Working America, whose members are not in unions but align themselves with the political philosophy of the AFL-CIO, plans to organize hundreds of thousands of the jobless across the nation to vote in workers’ interests. Field organizers will ask the jobless to fill out “Help Wanted” petitions to send to their congressmen and senators asking exactly what they’ve done to create jobs and assist the unemployed. The jobless removing the royalists from their jobs – nothing could be sweeter, unless this revolution also included dispatching Glenn Beck to his unemployment office.

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AltiGen Communications Announces Plans for CEO Transition

August 25, 2010

SAN JOSE, CA–(Marketwire – August 25, 2010) –  AltiGen Communications, Inc. ( OTCQX : ATGN ) ( PINKSHEETS : ATGN ), the leading provider of integrated Microsoft-based Unified Communications solutions, has today announced that effective October 1, 2010, Gilbert Hu will transition from his role as CEO to President of Asia Pacific, in order to focus on accelerating the growth of AltiGen’s business in the Asia Pacific region. Mr. Hu will continue to lead AltiGen’s Board of Directors as the Executive Chairman of the Board. The company also announced that President & COO Jerry Fleming will assume the title of President and CEO and will work closely with Mr. Hu in the development of the company’s strategic direction. Mr. Fleming will also continue to serve as a member of AltiGen’s Board of Directors.

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Karen Luniw: Success in the City: Leveraging Your Brilliance – Part Two

August 25, 2010

Most people don’t know they possess brilliance. But they do. We all have brilliance. Many times it goes untapped. Even business owners leave much of what they have to offer untapped. Why? Oh, you know, those nasty cousins – Doubt and Fear, oh yeah, and the other cousin, Worry. I’m not going to spend a lot of time on the Trinity of Trouble today but know this – the most successful people that I know – multi-millionaires – have these three visit them regularly. They don’t slam the door shut on them and resist them because they know that what you resist, persists. Rather, they acknowledge them, thank them for their visit and make the decision to move forward anyway. This is one of the ways that they let their brilliance shine. You can do that, too. You see, right now, in whatever business you’re in right now, you have a story that makes you naturally attractive to more business. There is likely a reason that prompted you to do what you do. That’s what I want you to start to share with your customers. It’s this story that makes you more attractive to business but it’s likely that you’re not sharing your story as fully as you could. Years ago, I started to follow two people that I found absolutely compelling. I have a few passions, learning about and applying universal laws to life and business, business success, and internet marketing. (hmm, okay – there’s a ton more but we’ll go for these now) When it comes to internet marketing, even 5-7 years ago there was a lot of people to choose from but I decided on two – Corey Rudl (late) and Ali Brown. Why them? Because they seemed real and relatable to me. They shared their story about their journey to gaining the success they were gaining and I ate it up, hook, line and sinker. I thought, if they can do this, I can, too! Three and a half years ago, when I decided to start my first Law of Attraction Tips podcasts , I decided very firmly that I wanted to be real and say what I had to say. I told my story and that, along with a great topic, had people listening from the start from 18,000 downloads in the first month to an average of 50,000 downloads a week today. That’s how I leverage part of my brilliance. You can do that, too. It doesn’t have to be in a podcast (but I recommend it!) but there are plenty of ways to start sharing your story in a way that’s real, relevant and relatable to your potential customers. This alone will set you apart from your ‘competition’. In fact, it’s hard to have competition when your story is so different from other business doing something similar to you. Right now, people want to relate to you before they spend their money with you. There is a low trust level out there and it’s up to you to bridge that gap. Leveraging your brilliance is possible with what you have, now. Here’s the thing, in having a desire for your business to do well, you could not have that desire without the ability to make it happen. The Law of Polarity proves this. This law indicates that all things have an opposite or contrast to it. For instance, you cannot have an up without a down, a right without a left, a black without a white. All things must be accompanied by the opposite. In this case, you cannot have a desire without the ability for you to create it NOW. No, I’m not talking about wiggling your nose, Jeannie! It means that the ability to create that desire exists in your vicinity now. Right now, the way to make it happen is around you. Whoa! Okay, so let’s come full circle. To leverage the brilliance that you already have you need to: Be vigilant about what you focus on. Focus only on what you want not what you don’t want. Watch for that ‘million dollar idea’ now; Kick the Trinity of Trouble – Doubt, Fear and Worry – to the curbside, respectfully, everytime they tap you on the shoulder trying to get your attention; Start to identify what your story is about the ‘why’ of why you do the business you do; Start to understand and KNOW that your brilliance and your desires are yours to have and create – go back to #1 and repeat… Remember, you can do this on your own but you don’t have to go it alone, I’m here to help – connect with me about my coaching programs – I truly am great helping people identify and live their brilliance! Karen Luniw is the author of Attraction in Action: Your How to Guide to Relationships, Money, Work and Health and is a coach who helps people break through blocks in their personal and business lives. For inspiration, check out her Top 10 Law of Attraction Tips for 2010 movie. There are huge clues in the movie to help you move further towards your goals.

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Video: Collector Pays More Than $30 Million for 1936 Bugatti: Video

August 25, 2010

Aug. 25 (Bloomberg) — Bloomberg’s Julie Hyman reports on an anonymous classic car collector’s purchase of a 1936 Bugatti Type 57SC Atlantic for $30 million. Collectors are pumping money into the classic-car market like never before, driving up prices for the world’s most famous models of Bugattis, Ferraris, Mercedes-Benzes and Rolls-Royces. (Source: Bloomberg)

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Video: Reiss Expects M&A Among Energy, Technology Companies: Video

August 25, 2010

Aug. 25 (Bloomberg) — John Reiss, a partner at White & Case LLP, talks with Bloomberg’s Julie Hyman about the outlook for mergers and acquisitions. (Source: Bloomberg)

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Karma’s Real and So Is Caitriona Taylor: Kulae Introduces New President

August 25, 2010

NORWELL, MA–(Marketwire – August 25, 2010) –  Kulae is pleased to announce Caítríona Taylor’s promotion to President. Caítríona Taylor recently served as Chief Operating Office for Kulae’s US operations. As President, Caítríona will oversee all global operations. She will continue to increase the number of studios that carry the Kulae line, while also introducing products in regional and national sporting goods stores. In addition, Caítríona will expand Kulae’s wholesale business into the Canadian and European market. 

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Karma’s Real and So Is Caitriona Taylor: Kulae Introduces New President

August 25, 2010

NORWELL, MA–(Marketwire – August 25, 2010) –  Kulae is pleased to announce Caítríona Taylor’s promotion to President. Caítríona Taylor recently served as Chief Operating Office for Kulae’s US operations. As President, Caítríona will oversee all global operations. She will continue to increase the number of studios that carry the Kulae line, while also introducing products in regional and national sporting goods stores. In addition, Caítríona will expand Kulae’s wholesale business into the Canadian and European market. 

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Video: Harvey Pitt Says SEC Proxy Ruling Has `Hurdles to Pass’: Video

August 25, 2010

Aug. 25 (Bloomberg) — Harvey Pitt, former U.S. Securities and Exchange Commission chairman and now chief executive officer of Kalorama Partners LLC, talks with Bloomberg’s Mark Crumpton about a U.S. Securities and Exchange decision to allow investors owning 3 percent of a company to nominate directors on corporate ballots. The SEC voted 3-2 today to allow investor board candidates on the proxy statements sent to stockholders before director elections. Investors or groups that meet the ownership threshold for three years will be eligible to offer nominees. (Source: Bloomberg)

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Video: Jump$tart’s Levine Discusses Student Financial Literacy: Video

August 25, 2010

Aug. 25 (Bloomberg) — Laura Levine, executive director of Jump$tart Coalition, talks about student financial literacy. She speaks with Margaret Brennan on Bloomberg Television’s “InBusiness”. (Source: Bloomberg)

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Dave Johnson: Boehner Trade Plan: Go Back To Disaster

August 25, 2010

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF. House Minority Leader John Boehner (R-OH) gave a speech yesterday describing his party’s positions on jobs & the economy going into the fall election. Summary: Our economic policies destroyed the country’s economy and millions of lives, but it made a few of my buddies really REALLY rich, so let’s do more of it. I write about the specifics of Boehner’s call to return to disastrous trade policies below, but first I just have to say a few words about his economic ideas in general and how utterly wrong they are. In the speech Boehner said we have an “economy stalled by ‘stimulus’ spending.” But according to FOX News’ Wall Street Journal , yesterday the CBO reported that “the impact of the stimulus program estimated … the plan lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points .” In addition, the Washington Post reported , “The CBO said the act also increased the nation’s gross domestic product by between 1.7 percent and 4.5 percent in the second quarter, indicating that the stimulus may have been the primary source of growth in the U.S. economy.” Boehner also said that “each dollar the government collects is taken directly out of the private sector.” This is the old “taxes take money out of the economy” argument, which is intended to trick people into thinking that the money just disappears instead of being used to pay for the schools, courts, agencies and infrastructure that enable businesses to thrive and drive the country’s prosperity. If you think that President Eisenhower’s spending on the Interstate Highway System “took money out of the economy” you really need to see someone about your problems and not take them out of the rest of us. Taking direct shots at democracy, Boehner complained about “big government” — namely We, the People making decisions instead of a few wealthy corporate owners making decisions for us — and said, “As Mitch Daniels, the governor of Indiana, recently said, “You’d really be amazed at how much government you’d never miss.” Boehner really has a problem with this whole “We, the People” thing. Boehner on Trade Boehner wants to go back to the trade policies that brought us massive job losses and trade deficits. In the speech he called for “passing free-trade agreements” with Colombia, Panama, and South Korea. He doesn’t mention what is IN these agreements, only calls for passing them. These trade agreements were negotiated by the Bush administration. Here are charts showing the Bush administration’s record: This is bad enough, but these “free trade” agreements create a worldwide race to the bottom, allowing companies to bypass the protections that democracies fought to provide for their citizens, pitting exploited, low-wage workers against citizens in democracies, forcing wages and standards ever lower. These “free trade” agreements need to be reviewed and reformed , so they protect wages, the environment., worker’s rights and small businesses around the world. We have a chance to lift each other up instead of push each other down. In February I wrote about Whirlpool closing a refrigerator plant in Evansville, moving the jobs to Mexico where workers are paid $70 a week. The problem is that Mexican Workers Paid $70/Week Can’t Buy Refrigerators ! If they were paid decent wages, we could sell things we make to them, while they sell things they make to us. But if we follow Boehner’s trade ideas everyone just gets poorer and eventually the economy stops. Oh, wait, we DID follow Boehner’s trade plans, and everyone DID get poorer, and the economy DID stop! But a few of his buddies got really REALLY rich. So he wants to do more of that. This speech by Boehner is just more calling for a return to the policies of the past: we’ve been seeing the trade deficit soaring in the last few months, as the economy tries to go back to old economy. China is 96% of our trade deficit. Boehner sayting lets go back to the path we followed when we were borrowing $2 billion a day, it took away 2.8% growth in 1st quarter , sapping the recovery. This notion that Boehner calling for continuing course shows a perverse blindness to changes country has to make. Sign up here for the CAF daily summary .

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Dave Johnson: Boehner Trade Plan: Go Back To Disaster

August 25, 2010

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF. House Minority Leader John Boehner (R-OH) gave a speech yesterday describing his party’s positions on jobs & the economy going into the fall election. Summary: Our economic policies destroyed the country’s economy and millions of lives, but it made a few of my buddies really REALLY rich, so let’s do more of it. I write about the specifics of Boehner’s call to return to disastrous trade policies below, but first I just have to say a few words about his economic ideas in general and how utterly wrong they are. In the speech Boehner said we have an “economy stalled by ‘stimulus’ spending.” But according to FOX News’ Wall Street Journal , yesterday the CBO reported that “the impact of the stimulus program estimated … the plan lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points .” In addition, the Washington Post reported , “The CBO said the act also increased the nation’s gross domestic product by between 1.7 percent and 4.5 percent in the second quarter, indicating that the stimulus may have been the primary source of growth in the U.S. economy.” Boehner also said that “each dollar the government collects is taken directly out of the private sector.” This is the old “taxes take money out of the economy” argument, which is intended to trick people into thinking that the money just disappears instead of being used to pay for the schools, courts, agencies and infrastructure that enable businesses to thrive and drive the country’s prosperity. If you think that President Eisenhower’s spending on the Interstate Highway System “took money out of the economy” you really need to see someone about your problems and not take them out of the rest of us. Taking direct shots at democracy, Boehner complained about “big government” — namely We, the People making decisions instead of a few wealthy corporate owners making decisions for us — and said, “As Mitch Daniels, the governor of Indiana, recently said, “You’d really be amazed at how much government you’d never miss.” Boehner really has a problem with this whole “We, the People” thing. Boehner on Trade Boehner wants to go back to the trade policies that brought us massive job losses and trade deficits. In the speech he called for “passing free-trade agreements” with Colombia, Panama, and South Korea. He doesn’t mention what is IN these agreements, only calls for passing them. These trade agreements were negotiated by the Bush administration. Here are charts showing the Bush administration’s record: This is bad enough, but these “free trade” agreements create a worldwide race to the bottom, allowing companies to bypass the protections that democracies fought to provide for their citizens, pitting exploited, low-wage workers against citizens in democracies, forcing wages and standards ever lower. These “free trade” agreements need to be reviewed and reformed , so they protect wages, the environment., worker’s rights and small businesses around the world. We have a chance to lift each other up instead of push each other down. In February I wrote about Whirlpool closing a refrigerator plant in Evansville, moving the jobs to Mexico where workers are paid $70 a week. The problem is that Mexican Workers Paid $70/Week Can’t Buy Refrigerators ! If they were paid decent wages, we could sell things we make to them, while they sell things they make to us. But if we follow Boehner’s trade ideas everyone just gets poorer and eventually the economy stops. Oh, wait, we DID follow Boehner’s trade plans, and everyone DID get poorer, and the economy DID stop! But a few of his buddies got really REALLY rich. So he wants to do more of that. This speech by Boehner is just more calling for a return to the policies of the past: we’ve been seeing the trade deficit soaring in the last few months, as the economy tries to go back to old economy. China is 96% of our trade deficit. Boehner sayting lets go back to the path we followed when we were borrowing $2 billion a day, it took away 2.8% growth in 1st quarter , sapping the recovery. This notion that Boehner calling for continuing course shows a perverse blindness to changes country has to make. Sign up here for the CAF daily summary .

Read the full article →

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