September 2010

Aron Cramer: Streamlining the Millennium Development Goals for More Impact

September 29, 2010

In New York City last week, government, civil society, and business leaders converged to assess progress on the Millennium Development Goals (MDGs) and raise additional funds at the Clinton Global Initiative (CGI) to meet them. Despite a still sluggish economy, CGI managed to generate an impressive $2.5 billion in pledges from its participants. Secretary General Ban Ki-moon added to this with a pledge of $40 billion over the next 5 years to catapult progress toward the 2015 finish line, particularly targeting aid for women and girls. Great work, Bill! At the halfway mark towards the deadline for meeting the MDGs in 2015, progress is being made, but it is likely that most of the goals will go unmet. Progress on MDG-5, for example, focused on improving maternal health, has been strong,, yet achievement of the goal, a two-thirds reduction in maternal mortality by 2015, is unlikely at this point. With five years to go, it is clear that the MDGs have played a powerful catalytic role in reducing poverty, by providing a powerful (and previously absent) way to measure progress on many of the most important development challenges. It is equally clear that there is no overarching roadmap to get to the finish line. In our view, three things need to be done in the final five years to optimize the impact of the Goals: (1) Develop a more holistic approach to achieving the goals, (2) Create better measurement of progress, and (3) Get business more involved. First, a more holistic approach to progress on the MDGs is needed. At present, donor coordination around the MDGs is scattered, with donors honing in on specific topics (HIV/AIDS, girls’ education, or agricultural markets) rather than the full MDGs ecosystem. Sustainable progress on the goals requires recognition of the linkages between them, i.e. steps forward on environmental protection are integrally linked to economic development. One solution might be for bilateral donors and recipients to join forces to develop coordinated action plans that address all the goals in the specific context of a single nation’s needs and circumstances. Second, better measurement is also essential. As we know from our work at BSR on return-on-investment metrics, collecting data to assess MDG progress in developing countries can be incredibly challenging given resource and capacity constraints. We need country-specific measurements, in addition to global assessments, to ensure that we stay attentive to poor results in smaller countries, even as progress in large countries creates good results. To put a fine point on it, the significant progress in China to improve maternal health risks masking a lack of progress in a country like Uganda. We need to vigilantly measure both. Finally, the private sector can and should play an expanded role in reaching the MDGs. Even during the depths of the recession, governments and communities have looked to the private sector to generate the investment and innovation that’s needed to help marginalized communities grasp new economic opportunities. And while a great deal of attention lately has been on social entrepreneurship, neither the capacity nor the conditions are present to make this the answer to massive development needs. Filling the interim gap between the present and a future ripe for entrepreneurship would be both a noble and profitable endeavor for companies–and an important development strategy. Hopefully the first ten years of the MDGs were the hardest. Now that the world has finally taken note of the Goals as a measure of development progress, the time is now to accelerate progress toward the 2015 deadline and ensure momentum and progress behind the goals that are met–and those that are not–continues.

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Surya Yalamanchili: Currency Just Tip of China Iceberg

September 28, 2010

In the past few weeks the media has been abuzz with stories about China’s currency manipulation. Given the stratospheric unemployment rate and bulging trade deficit, focusing on China’s questionable trade practices is long overdue. Mercantilism. That’s the term for the policy path that China has been following. Mercantilism is the practice by which a nation “protects” its economy by doing everything it can to encourage exports and discourage imports. Essentially, it’s the inverse of American economic policy. Our policy is all about borrowing from the rest of the world to pay for imports from the rest of the world. While most of us are familiar with our policy of importing nearly everything thanks to any time spent at a Wal*Mart, we’re still unfamiliar with how China does business, so let’s take a closer look. First, China encourages exports. They essentially subsidize the costs of production in a variety of forms. Their behavior ranges from a lump-sum cash payment to spur growth in an industry, giving big discounts on utilities or other raw material costs, discounted (or free) land/factories, large low-interest loans, etc. Second, China actively discourages imports. They do everything they can to make it difficult or expensive for foreign companies to sell in China. Tariffs are the simplest way to do this: add a fee on top of any good being imported making it more expensive . Regulatory barriers are more common– complicated rules and laws are created to make it nearly impossible for foreign firms to comply with, with the intention of keeping them from market. Another common practice is forcing foreign companies to partner with a local firm or requiring technology transfers to develop a strong eventual Chinese competitor. Currency manipulation lives above all of these policies. When a country’s currency is undervalued it makes their exported goods cheaper in the rest of the world while simultaneously making it more expensive for their citizens to buy foreign goods. It has the dual effect of boosting exports while shrinking imports. The net effect of these policies has been a massive Chinese revolution. In just a few short decades, China has essentially become the factory to the world. Consequently scores of jobs have fled the US, consumers mounted a back-breaking debt load to cope with the broken employment market, and China’s ownership of our debt has allowed them to, at times, effectively dictate American policy. China’s policies went from a brewing problem to that of a global crisis with their admittance to the WTO in 2001. Despite China’s fierce mercantilist policies, our leaders gave little concern for what the impact would be for American production and workers. As we focused on the “war on terror,” China found that they would get little, if any, pushback to their anti-US policies. Slowly the relationship found it’s equilibrium, starkly in the favor of China acting with impunity. While China built their production capabilities and raised the standard of living for millions, they simultaneously began financing the ever-growing massive amounts of money that Americans wanted to borrow. In a nutshell, as they laid the groundwork for the industries that would provide employment and wealth for the future, they also began to finance the American lifestyle. Today China is both our largest supplier and creditor. We buy goods that we used to make from them, with money borrowed from them. But we shouldn’t pretend that the undervalued Chinese currency alone caused our current sad state of affairs — nor that it alone will fix it. China chooses to invest their excess savings in American debt because each passing day only increases their leverage over us. Our position only grows weaker with each passing dollar and so our best chance is to work with the European Union, Japan and the rest of the world to confront these unfair practices. Currency is just the tip of the China iceberg. We must recognize the current global war for capital and jobs that is being waged. A war that doesn’t deal in rockets or tanks but in factories and financial leverage. Recognizing this new reality will lead us to designing a system of tax, regulatory, educational, and trade policies that set us up for a real recovery and a long-term sound economy. If we don’t, our economy will remain on a course of full speed ahead for the Chinese iceberg. This is the third in the series “A Business Plan for America” that will outline critical public policy proposals that are free of partisan politics, ideology and dead ideas. http://votechili.com/businessplan

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Gregory Unruh: Green Jobs: Promise, Progress and Potential

September 28, 2010

I led a session at the Clinton Global Initiative (CGI) last week entitled “Green Jobs: Preparing for the Green Economy” and can summarize the outcome in three areas: promise, progress and potential. Promise Most agree that a green economy – and sustainable development more broadly – are society’s best hope for reconciling the world’s need for poverty-alleviating economic growth with the planet’s need for life-giving ecological vitality. And there is great promise in a green economy. Traditional industrial development has been incredibly wasteful of materials and energy. The typical coal-fired power plant, for example, loses over half the input energy as waste heat before the first electron zips out of the facility. To produce one ton of pharmaceutical pills requires over 100 tons of input materials, making a 99 percent waste rate on average. The good news is that we already have the know-how and technology to tackle most of this waste. What’s missing is a supportive economic, social and political context, along with trained and knowledgeable workforce to get the job done. Given the 9 percent unemployment rate in the U.S., the fact that dollar-for-dollar the green economy produces more jobs than traditional development makes it a no-brainer. Progress We have seen progress. The Commerce Department reports that there is already a $1 trillion green economy up and running in diverse business sectors like construction, recycling and forestry. Countries as different as China, Germany and India have shifted their policies and incentives to support and stimulate more green growth. Here in the U.S., there has also been bi-partisan support for environmentally friendly economic development. In 2007, for example, the Bush Administration included $125 million for green jobs in the Energy Bill. And last year, the Obama Administration made green jobs an important part of the American Recovery and Reinvestment Act. Some pundits, like The New York Times’ Tom Freidman, see the green economy as the next field of economic competition and are gaining the publics’ and politicians’ attention. Potential Despite the progress, it is clear that there is still vast untapped potential in the green economy. Official statistics show green business accounts for only about 1-2 percent of all economic activity. That’s a tiny sliver of the overall economic pie. But we know that this can grow rapidly. Germany, for example, was able to grow its green industries four fold in just a decade. Even business-as-usual projections show the green economy tripling to $3 trillion by 2020. Our CGI discussion highlighted innovation and experimentation in building the green economy going on in such disparate places as the inner city New York, rural India and Native American reservations. Despite the apparent differences, the challenges are surprisingly similar: supportive policies; capable workforces; attractive business infrastructures; community support. The commonalities give optimism that shared learning might be able to accelerate green economic development and allow us to capture the potential that the green economy promises. Cross-posted from Forbes

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Video: Hoh Says MeeGenius Seeks to Promote `Love for Reading’: Video

September 28, 2010

Sept. 28 (Bloomberg) — Wandy Hoh, co-founder of MeeGenius!, talks about her company which provides electronic books for children that feature audio playback, word highlighting and personalization tools. Hoh speaks with Carol Massar and Matt Miller on Bloomberg Television’s Street Smart.” (Source: Bloomberg)

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Video: Marshall Expects HP Board to Pick Internal CEO Candidate: Video

September 28, 2010

Sept. 28 (Bloomberg) — Brian Marshall, analyst at Gleacher & Co., talks about the outlook for Hewlett-Packard Co. and the search for replacing former chief executive officer Mark Hurd. Marshall speaks with Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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40 States Bank On Rising Tax Revenue In 2011

September 28, 2010

WASHINGTON — The vast majority of state governments are anticipating a rise in tax revenues this year after two years of sharp drops. Analysts caution that most states will face large budget gaps in the next few years. Forty states forecast having an increase in tax receipts in the current fiscal year, according to a forthcoming report by the National Conference of State Legislatures. Slow economic growth is boosting proceeds from income and sales taxes. That could reduce the impact of states’ budget struggles on the economy. State budget shortfalls have led to widespread layoffs, tax increases, spending cuts and other measures that have restrained economic growth. “We do think 2010 is the bottom and we are at a turning point,” said Corina L. Eckl, director of the fiscal affairs program at the NCSL and author of the report. Still, state officials aren’t without enormous challenges. States will lose federal stimulus money in coming years and will struggle to close large budget gaps. Tax revenues are well below pre-recession level. High unemployment puts heavy demand on state-run social service programs. “Stability and growth in tax collections is very good news,” the report said. “But in the near term it will not be enough to propel states out of their fiscal difficulties.” Overall, states raised taxes and cut spending to eliminate budget gaps that totaled $84 billion for fiscal year 2011, which in most states began July 1. The NCSL forecasts a total gap of $72 billion in fiscal year 2012 and $64 billion in 2013. That means more job cuts and tax increases could still be needed. Meanwhile, the Nelson A. Rockefeller Institute of Government said in a report last month that state tax collections rose in the April-June period. But they are still about 17 percent below the same period two years earlier. Many states project it will take years for tax revenue to return to where it was before the recession began. Sixteen states say it will take at least two more years – until fiscal year 2013 or 2014 – while four states don’t expect to return to pre-recession levels until fiscal 2015. California doesn’t expect revenues to return to their peak levels for five more years, or fiscal 2016. That’s the longest of any state. State budget struggles have held back the economy, even after the recession ended in June 2009. State governments have cut 43,000 jobs since August 2008. Cuts in services and funding for local education have led to thousands of additional cuts at local schools and among private contractors doing business with the states. In previous downturns, state government employment has been a relatively safe haven. States have also raised tax rates and cut spending to make up for lost revenue. Both moves can further slow economic activity. Half the states raised taxes in 2009 by a total of $28.6 billion, the NCSL report estimates. Cuts in state and local spending reduced economic activity for three straight quarters, from the middle of last year through the first quarter of 2010, the Commerce Department estimates.

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Daniel Isenberg: The Myth of the Knowledge Economy

September 28, 2010

Cross-posted from The Economist I want to be the first to advocate the ignorance-based economy. Exhortations by public officials everywhere to build knowledge-based economies have skyrocketed in popularity since the OECD first published its manifesto in 1996, accruing a whopping 40,000 articles on Google scholar alone. Unfortunately, like many sound bites, this one has more flavor than nutrition. As I help societies around the world increase their levels of entrepreneurship, I’ve found the “knowledge-based economy” mantra, ubiquitous as it is among public leaders everywhere, has become empty for three reasons. All economic activity is knowledge-based. Today, in 2010, what isn’t? The term’s original intention was to describe an alternative to economic activity based on resource extraction, commodity sales and rent-seeking. However, these activities also require and generate tremendous amounts of knowledge. Today, diamond sales require complex regulations and tracking processes, oil production must rapidly invent unique solutions to unforeseen problems, and cement pricing and distribution must be optimized with complex algorithms. Knowledge infuses all economic activity everywhere, and when something is everything, it is nothing. Internet is a utility; information is a commodity. The phenomenal accessibility to information through the worldwide web and wireless communication was and is one of the implicit underpinnings of the knowledge-based economy concept. A Google of “web” yields 2.5 billion hits in .27 seconds, and when combined with “Internet”, 1.5 billion in .25 seconds. There are about 5 billion mobile phone users engaged in borderless texting and other interactions. Facebook is a large country and Google is a common verb. But the ubiquity of access to information means that if you need to tell someone that they should use the web for their business, one of you is over 60, and the other is Rip Van Winkle. Entrepreneurship is the scarce and valuable resource, not knowledge. Recently I reviewed a list of a university’s patents up for licensing, and saw that such an effort is near-useless. The connection between molecules and money is incredibly loose and divorced from entrepreneurial drive. In other words, advanced knowledge has little economic value. I grew up in Woods Hole Mass., with its 925 residents and 54 affiliated Nobel Laureates. Entrepreneurship? None. Spin-off ventures? None. Most regions would die for a tiny fraction of the IP that gets generated in Woods Hole, but Woods Hole has remained an economic anti-cluster since its founding in 1888. Venture capitalists invest in 1 out of 100 brilliant ideas they review. Technology is not what gets you to the top; business acumen, leadership ability, salesmanship, and the ability to put resources together is what realizes opportunity. Compared to technology, entrepreneurship is the scarce and valuable resource. The Bliss of Ignorance The interesting, value-adding aspects of economic activity are the ones that are based on ignorance, not knowledge. It is the ability and willingness to take action in the face of fundamental ignorance, in which uncertainty, ambiguity, and the unknown play dominant roles that will determine which economies, and ventures, succeed and fail. Good managers, leaders, and policy makers have evolved effective ways of dealing with such ignorance. Successful entrepreneurs have led the way in turning ignorance into opportunity; we can learn much from their behaviors. Entrepreneurs enter into the unknown, sometimes plunging headlong, more often than not creeping into it, toe after toe. Tom Szaky, for example, built an international “green” business, Terracycle, ignorant of the required technology for converting worm excrement into fertilizer. He was completely naïve to the ways to package and sell the product, not to mention finance his early investments. He learned by doing: by jumping in, by making small mistakes and a few big ones, and by using his native intelligence and scrappiness to invent solutions as unexpected opportunities and problems arose. Slowly, the landscape became clear. Szaky not only discovered the nature of this particular economic environment, but he also invented the environment. This is the way that in reality most entrepreneurs, those quintessential economic actors, work. In the past I have called this methodology, of handling ignorance by acting in the face of it, “strategic opportunism.” At Babson College, we term it “entrepreneurial thought and action.” And at the heart of this ignorance-based economy are those economic actors who learn by doing. They embrace the learning embedded in surprise, make mistakes, improve optionality as they go along, and reframe and restructure risky situations to be less risky, in part by partnering with others who will take on some of the risk. The economic well-being of today’s societies rests in encouraging entrepreneurs and fomenting their ability to deal with ignorance. If information is a commodity, is it really necessary to convince people that thinking in novel, innovative ways can lead to economic opportunity and growth? Is it necessary to persuade policy makers that investing in education and thinking is worthwhile? In 1996 a call to build the knowledge-based economy may have made sense. Not in 2010.

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Supreme Court Takes On Corporate Privacy Case With AT&T

September 28, 2010

WASHINGTON — The Supreme Court is getting involved in an unusual freedom of information dispute over whether corporations may assert personal privacy interests to prevent the government from releasing documents about them. The court on Tuesday agreed to a request from the Obama administration to take up a case involving claims made by telecommunications giant AT&T to keep secret the information gathered by the Federal Communications Commission during an investigation. The administration wants the high court to rule that corporations may not claim a personal privacy exception contained in the federal Freedom of Information Act. The exception may be used only by individuals, the administration said in a brief signed by Elena Kagan, the newest justice who served in the Justice Department until last month. Kagan will not take part in the case, which will be argued early next year. AT&T wants the FCC to keep secret all the information it gathered from the company during an investigation into its participation in the federal E-Rate program, which helps schools and libraries get Internet access. The FCC had released some of the information under an open records request, but withheld some, citing FOIA exemptions that cover trade secrets and humans’ right to privacy. A federal appeals court sided with AT&T. COMPTEL, a trade group representing some AT&T competitors, filed the FOIA request that led to the court ruling. The trade association and several groups that support transparency in government backed the administration’s plea to the court to hear the case. The case is FCC v. AT&T, 09-1279.

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Video: Lazear Says U.S. Must Return Spending to Historic Levels: Video

September 28, 2010

Sept. 28 (Bloomberg) — Ed Lazear, a professor at Stanford University and former economic adviser to President George W. Bush, talks about his prescription for U.S. fiscal policy. Lazear speaks with Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Antonia Juhasz: Chevron throws book at shareholder activist (me).

September 28, 2010

On May 26, I was arrested at Chevron’s annual shareholder meeting. Chevron, a California-based company, held the meeting at its Houston office — the old Enron building. On Thursday, my lawyer, and the lawyers of the four others arrested at the meeting, go to court in a preliminary hearing. Chevron has asked the Houston prosecutors for jail time. Today, John Letzing of MarketWatch wrote what I believe to be a very important article: “Chevron throws book at shareholder activist. Are criminal charges the best way to deal with a meeting disruption?” challenging the decision by Chevron to “throw the book” at one of its shareholders for the “crime” of voicing criticism at its annual shareholder meeting. Letzing writes of the unusual choice by Chevron: “Juhasz’s prosecution may result in an odd instance of a company having one of its stockholders incarcerated, and raises questions about the best way for firms to deal with activists who buy in, just to make a statement. “‘This is very, very unusual,’ says Sanjai Bhagat, a professor at the University of Colorado at Boulder’s Leeds School of Business. ‘I’m a little puzzled as to why management would take such unusually strong steps.’” “Boston University Prof. James Post said he can’t recall a similar case where a company pursued a shareholder activist with criminal charges, and for good reason: ‘A company almost never wins in a case like that.’” The article has already received over 100 comments. While far too many focus on questioning my gender (I guess my short San Francisco hairdo doesn’t translate well across the nation!), most stay to the point, which, in most of the instances thus far, seems to be agreeing with Chevron. There are important exceptions, including this one from “Larry Lynn,” who writes: “I have decided to have my family trust divest any Chevron/Standard stocks. Chevron/Standard is willing to compromise everything in order to enhance their bottom line. Halliburton had the courtesy to relocate to Dubai. If Chevron/Standard will not act in the intrest of the citizens of the United States, kick them out and shut them down.” Your Comments Are Welcome! Due to the constraints imposed upon me by the case, I cannot write about the case here. But you can learn much more on my websites: http://www.TyrannyofOil.org and http://www.GlobalExchange.org/chevron .

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Preeti Vissa: Fight Brewing Over the Best Law You’ve Never Heard of

September 28, 2010

What if there was a law that told big corporations that they have responsibilities to the communities they serve? A law that told companies that if they take profits out of a community, they need to put some investment back into it, and treat that community’s residents fairly? There is. It’s called the Community Reinvestment Act, first passed in 1977. And a fight over CRA’s future is brewing in Congress. CRA is directed at the banking industry, which once was notorious for failing to invest in low-income and minority communities. CRA has successfully encouraged banks to invest over $4.5 trillion — yes, that’s trillion with a ‘T’ — in these communities. By any rational standard, it’s among the most successful government programs ever. Because of CRA, new, affordable housing has been constructed and businesses have gotten a start. Vital community services such as medical centers have been built. A good way to learn more about CRA is from this video that The Greenlining Institute produced a while back. Some on the far right hate CRA, as they hate anything the government does to push businesses to help people or communities in need. And opponents have spread some out-and-out lies, like the false notion that CRA forced banks to make bad loans that helped bring about the housing crash and recession. That’s nonsense, as regulatory authorities have consistently stated. FDIC Chair Sheila Bair, for example, said earlier this year that such claims have ” absolutely no basis in fact. ” In fact, CRA has operated as a restraint, discouraging risky behavior by the banks it regulates. In contrast to the casino mentality on Wall Street, CRA requires banks’ actions to be “consistent with… safe and sound operation.” It’s not an accident that seventy-five percent of subprime loans were issued by institutions not covered by CRA: independent mortgage brokers and lightly-regulated bank subsidiaries. These institutions not covered by CRA were far more likely than banks to make high-cost, subprime loans, and far more likely to have those loans end up in foreclosure. If these independent mortgage companies had been covered by CRA, the subprime meltdown might have been averted. According to recent reports, some Democrats in Congress want to strengthen CRA, and legislation may be introduced soon. That’s a good idea. It’s time to give the law’s enforcement mechanisms more teeth, and improve the quality and detail of CRA ratings that banks receive. And CRA should recognize how much the financial industry has changed since 1977: Vast amounts of activity are now handled by mortgage brokers, investment banks and other institutions not covered by CRA, and that should change. On the other hand, some Republicans are itching to weaken the law or even repeal it altogether. They don’t have a chance right now, but if the GOP makes big gains in the upcoming congressional elections, they could be emboldened. CRA is that rare animal, a law that helps the most vulnerable among us and holds big corporations accountable. And it strengthens our whole economy by encouraging productive investment where it’s most needed. It’s worth protecting and expanding. Expect the fight to begin soon.

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Zach Carter: Crony Capitalism: Wall Street’s Favorite Politicians

September 28, 2010

A full 90 members of Congress who voted to bailout Wall Street in 2008 failed to support financial reform reining in the banks who drove our economy off a cliff. But when you examine campaign contribution data, it’s really no surprise that these particular lawmakers voted to mortgage our economic future to Big Finance: This election cycle, they’ve raked in over $48.8 million from the financial establishment. Over the course of their Congressional careers, the figure swells to a massive $176.9 million. The full list of these Crony Capitalists is below, along with the money they pulled in from Big Finance, according to data compiled by the Center for Responsive Politics (opensecrets.org). The career data goes back to 1989. Of the 69 House members who voted with Wall Street on both the bailout and financial reform, 60 are Republicans, while nine are Democrats. All 21 Senators who voted with Wall Street on both issues are Republicans, and Republicans raked in over 90 percent of the total campaign contributions. Here’s a chart showing Wall Street’s total contributions to this crowd for the 2010 cycle, by political party: And here’s one showing total Wall Street contributions over the course of their careers: These aren’t the only politicians carrying water for Wall Street–only the most flagrant. Some of the bank lobby’s savviest servants on Capitol Hill do their dirty work early in the legislative process. They push through technical amendments and deploy complex procedural tricks to defang a bill, but when the final vote comes, they can still create the appearance of taking a stand against Wall Street’s interests. Rep. Melissa Bean, D-Ill., is a master of this technique, and Tea Party favorite Sen. Scott Brown, R-Mass., was able to claim credit for voting in favor of reform after demanding–and receiving–a host of big bank giveaways in return for his vote . Nor are Republicans the only recipients of Wall Street largesse. Bean, for instance, has pulled in over $773,000 from Wall Street in the 2010 cycle alone, while working overtime to carve loopholes into new consumer protections (she’s scored $2.4 million over the course of her Congressional career). And the Democratic leadership has received millions as well. When it comes to dealing out economic damage, no special interest group has been able to wreak more havoc that Big Finance. After inflating an $8 trillion housing bubble and sparking a recession that has cost the economy over 8 million jobs, public pressure to crack down on Wall Street was intense. And the public is still clamoring for Wall Street accountability–after two years in office, the Wall Street reform bill remains the most popular legislative effort championed by President Barack Obama, and getting tough on Big Finance has been a reliable re-election strategy for embattled incumbents . But harnessing the Wall Street beast proved a tortuously long and difficult process, taking nearly two years despite its economic urgency. And while the bill that Congress approved this year has plenty of virtues, many of the most critical reforms were simply not addressed by the legislation. The too-big-to-fail financial behemoths that taxpayers bailed out in 2008 are even bigger today, banks can still gamble with taxpayer money, and the foreclosure crisis continues to ravage neighborhoods across the country. Until these issues are addressed, the U.S. economy will remain beholden to Wall Street’s bonus-crazed whims. But if you follow the money, it’s obvious why so much work remains to be done on financial reform. This year alone, Wall Street spent a staggering $251 million fighting financial reform. According to a separate analysis of campaign contributions performed by Public Citizen , lawmakers who voted with Wall Street on both the bailout and reform received nearly triple the campaign cash of those who opposed Wall Street (figures in the Public Citizen study don’t correspond to those I’ve compiled, as Public Citizen examined contributions from 2007 through July of 2010). Despite the popularity of Wall Street reform, 90 members of Congress didn’t even want to publicly pretend to support reining in almost universally reviled banks. When you’re trying to decide which bums to throw out in November, here’s one place to start. These members of Congress are okay with setting up economic calamities, and they don’t mind paying for them with your tax dollars. Here’s how Wall Street’s contributions break down among Wall Street’s 21 Senate Cronies. For 2010: For their careers: And here are all of the Cronies, along with their Wall Street hauls: Senator 2010 Wall Street Cash Career Wall Street Cash Sen. Lamar Alexander (R-TN) $1,600,000 $4,900,000 Sen. Robert Bennett (R-UT) $1,500,000 $2,600,000 Sen. Kit Bond (R-MO) $333,600 $3,300,000 Sen. Richard Burr (R-NC) $1,500,000 $3,300,000 Sen. Saxby Chambliss (R-GA) $2,500,000 $3,500,000 Sen. Tom Coburn (R-OK) $451,700 $1,200,000 Sen. Bob Corker (R-TN) $3,100,000 $3,300,000 Sen. John Cornyn (R-TX) $3,200,000 $4,700,000 Sen. John Ensign (R-NV) $1,300,000 $2,600,000 Sen. Lindsey Graham (R-SC) $1,100,000 $2,000,000 Sen. Judd Gregg (R-NH) $233,200 $1,100,000 Sen. Orrin Hatch (R-UT) $1,400,000 $2,600,000 Sen. Kay Bailey Hutchison (R-TX) $1,400,000 $4,700,000 Sen. Johnny Isakson (R-GA) $1,500,000 $4,200,000 Sen. John Kyl (R-AZ) $2,800,000 $3,800,000 Sen. Dick Lugar (R-IN) $412,200 $2,500,000 Sen. John McCain (R-AZ) $947,600 $34,000,000 Sen. Mitch McConnell (R-KY) $4,300,000 $5,300,000 Sen. Lisa Murkowski (R-AK) $268,200 $909,700 Sen. John Thune (R-SD) $1,600,000 $3,900,000 Sen. George Voinovich (R-OH) $435,200 $2,800,000 21 Republicans 0 Democrats Senate Total $31,881,700 97,209,700 House Member 2010 Wall Street Cash Career Wall Street Cash Rep. Rodney Alexander, R-La. $106,500 $422,300 Rep. Spencer Bachus, R-Ala. $611,600 $4,400,000 Rep. Gresham Barrett, R-S.C. $20,400 $806,700 Rep. Marion Berry, D-Ark. $24,900 $663,700 Rep. Judy Biggert, R-Ill. $395,000 $1,900,000 Rep. Roy Blunt, R-Mo. $1,200,000 $3,800,000 Rep. John Boehner, R-Ohio $1,300,000 $3,700,000 Rep. Jo Bonner, R-Ala. $90,400 $702,200 Rep. Mary Bono Mack, R-Calif. $190,000 $733,400 Rep. John Boozman, R-Ark. $257,700 $491,000 Rep. Dan Boren, D-Okla. $123,100 $722,200 Rep. Rick Boucher, D-Va. $92,700 $1,400,000 Rep. Charles Boustany Jr, R-La. $226,300 $934,600 Rep. Kevin Brady, R-Texas $157,000 $840,500 Rep. Henry Brown, R-S.C. $35,700 $494,000 Rep. Vernon Buchanan, R-Fla. $336,800 $1,400,000 Rep. Ken Calvert, R-Calif. $180,300 $940,300 Rep. Dave Camp, R-Mich. $588,000 $1,700,000 Rep. John Campbell, R-Calif. $413,400 $1,200,000 Rep. Eric Cantor, R-Va. $2,100,000 $4,400,000 Rep. Mike Castle, R-Del. $749,100 $3,200,000 Rep. Howard Coble, R-N.C. $23,400 $502,500 Rep. Tom Cole, R-Okla. $110,000 $686,000 Rep. Mike Conaway, R-Texas $161,500 $711,800 Rep. Ander Crenshaw, R-Fla. $86,100 $717,000 Rep. Henry Cuellar, D-Texas $90,600 $606,900 Rep. Charlie Dent, R-Pa. $177,900 $881,000 Rep. Chet Edwards, D-Texas $324,200 $1,900,000 Rep.Vernon Ehlers, R-Mich. $8,500 $292,200 Rep. Jo Ann Emerson, R-Mo. $143,900 $904,400 Rep. Mary Fallin, R-Okla ($1,000) $340,700 Rep. Rodney Frelinghuysen, R-N.J. $86,200 $840,300 Rep. Jim Gerlach, R-Pa. $251,600 $1,800,000 Rep. Kay Granger, R-Texas $140,000 $1,100,000 Rep. Wally Herger, R-Calif. $171,500 $1,100,000 Rep. Peter Hoekstra, R-Mich. ($1,000) $300,600 Rep. Bob Inglis, R-S.C. 0 $572,800 Rep. Peter King, R-N.Y. $173,900 $1,600,000 Rep. Mark Kirk, R-Ill. $1,900,000 $4,200,000 Rep. John Kline, R-Minn $170,900 $989,100 Rep. Jerry Lewis, R-Calif. $31,800 $748,000 Rep. Daniel E. Lungren, R-Calif. $147,700 $622,500 Rep. Howard McKeon, R-Calif. $132,100 $1,100,000 Rep. Gary Miller, R-Calif. $144,500 $902,000 Rep. Harry Mitchell, D-Ariz. $130,900 $558,000 Rep. Sue Myrick, R-S.C. $93,600 $1,200,000 Rep. Soloman Ortiz, D-Texas $40,200 $381,700 Rep. George Radanovich, R-Calif. $24,900 $462,000 Rep. Mike Rogers, R-Ala. $128,200 $1,000,000 Rep. Hal Rogers, R-Ky. $50,200 $468,000 Rep. Ileana Ros-Lehtinen, R-Fla. $127,000 $986,000 Rep. Paul Ryan, R-Wis. $531,500 $1,900,000 Rep. Jean Schmidt, R-Ohio $121,900 $519,700 Rep. John Shadegg, R-Ariz. $39,700 $1,200,000 Rep. Bill Shuster, R-Pa. $30,700 $403,600 Rep. Mike Simpson, R-Ind. $20,500 $266,900 Rep. Ike Skelton, D-Mo. $112,500 $524,200 Rep. Lamar Smith, R-Texas $258,900 $1,300,000 Rep. Mark Souder, R-Ind. $40,500 $405,800 Rep. Zack Space, D-Ohio $169,300 $476,300 Rep. John Sullivan, R-Okla. $79,200 $494,800 Rep. Lee Terry, R-Neb. $202,600 $1,400,000 Rep. Mac Thornberry, R-Texas $42,500 $603,400 Rep. Patrick Tiberi, R-Ohio $555,500 $2,800,000 Rep. Fred Upton, R-Mich. $81,700 $929,400 Rep. Greg Walden, R-Ore. $180,700 $732,400 Rep. Zach Wamp, R-Tenn. 0 $715,700 Rep. Joe Wilson, R-S.C. $155,500 $580,200 Rep. Frank Wolf, R-Va. $90,400 $1,100,000 60 Republicans $15,873,400 $72,443,800 9 Democrats $1,108,400 $7,233,000 House Total $31,881,700 $97,209,700

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Phil Bronstein: ‘Billboard Family’ Puts Itself — Kids and All — On Sale

September 28, 2010

It’s no surprise that we’ve come to this: there’s a family for sale on the Internet . No, these aren’t hostages held by Somali pirates or advertised on a Craigslist adult S&M posting. I’m talking about a middle American family that may have willingly, enthusiastically crossed the line between personal brand management and indentured servitude. Anyone with a digital footprint is selling themselves these days. But in the spooky wasteland where product placement meets slavery, you will find the Martins. Not to diss entrepreneurial spirit in a down economy. Patriarch Carl Martin told me today that “overall, this has been the best decision we have ever made.” The Martins call themselves “The Billboard Family,” with what ad industry site Adrants says is “an offering that allows advertisers to own the Martin’s lives.” Yikes. Dad Carl, mom Amy and kids Layne and Kaitlyn have turned themselves into human signage. With a social media upsell. I know they’re serious but it’s a pretty funny pitch on their website. “We are a REAL family of 4 (with one on the way) who wears YOUR COMPANY SHIRTS all day long, taking loads of photos and videos. We then promote your company online on Facebook, Twitter, Flickr, YouTube, and our Website, as well as to all of the many people who ask us why we are all wearing the same shirts.” Uh, because you’re from St. Louis? Carl says “most of the companies we have already reached out to are ones whose products we use.” Their “main demographic is family oriented companies, being that we are a real family.” Still, “we are happy to advertise for any companies that do not violate our terms and conditions.” They may be an actual family, but potential sponsors usually like organic reality, as in real doctors who prescribe Nexium in their practice, not people just selling their endorsement. But on their video, the likable Martins even show a sonogram snap of their unborn child. Getting a t-shirt on a fetus might be tough. I was just about to ask the marketing department here about inking a deal for the Martins to wear Chronicle t-shirts — you have to send them the shirts; like Google, they don’t make products. Then I wondered just how many people might actually notice what the family is wearing. No worries there. The Martins “travel and take vacations frequently” from their Missouri home to places like Chicago, Seattle, and Walt Disney World (where at might be hard to stand out among people wearing black socks and bermudas). “We have plans to travel much more in the near future.” Don’t we all? They also have 2,700 followers on Twitter and 200 Facebook fans. (Over 2,500,” Carl says, if you include friends on personal pages.) Not exactly the makings of a viral stampede. “Many of our followers help spread the word,” according to Carl. “The potential to reach a large audience is there.” The “Billboard Family” also has two competitors: I Wear Your Shirt (Carl: “They are not family-centric”) and Girl In Your Shirt (doesn’t sound very family-centric). In their “About Us” section they have more personal stats for each of them than the average big league ball player: eye color, favorite color, height, weight and shoe size. How else would you ever know that four-year-old Layne wants a Power Wheels Cadillac Escalade? Carl’s dream job is to be a “professional t-shirt wearer”, which makes sense given this particular value-added business proposition. Carl, who has a computer sciences degree, was “inspired” in this new enterprise “by his desire to make a respectable living.” Well, who these days can really afford to make fun of that? Also, he said to me he “really wanted to teach our kids about self-reliance and business..They’re very young but they have been very involved..They also love the attention.” The Martin site is thick with optimism, including nifty separate sections for them to publish all their “National Press, “Local Press”, and “Other Media Outlets.” They’re all empty. I wonder where my blog post will go. They also have Yelp-like social media page for clients who write “a review of our services.” Empty. Also a place for Flickr photos and YouTube videos. Zip. Except a short about the Martins. To be fair, they only launched a few days ago. But in the “Only 84 Days left for sale!” calendar, 30 of them are filled with “SOLD” signs, all for around $550 per, calculated by their graduated pricing formula throughout the year (Would you rather have four people wearing your brand on their tees or buy an iPad?). So far one advertiser — “Studio-R” — has bought the Martins for a day, according to the calendar. And they boast that their October through November “Non-Profit slots [are] filled” by a children’s literacy program, “Everybody WINS!” Maybe they do. Here I am writing about them. Besides, it’s a buyer’s market out there and who’s to say the Martins aren’t the next big thing in digital marketing services?

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Video: U.S. Stocks Gain on Walgreen Earnings, Fed Speculation: Video

September 28, 2010

Sept. 28 (Bloomberg) — Bloomberg’s Courtney Donohoe reports on the performance of the U.S. equity market today. U.S. stocks advanced, erasing most of yesterday’s drop, as Walgreen Co. led a rally in consumer-staples and health companies and investors speculated the Federal Reserve will buy more debt to safeguard the economy. Bloomberg’s Pimm Fox also speaks. (Source: Bloomberg)

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Robert Zevin: Addiction

September 28, 2010

Addiction Corrupt regulatory oversight, cutting corners to save costs, plus citizens and politicians chanting “Drill, baby, drill” — is the BP Deepwater Horizon catastrophe really any surprise? The spill in the Gulf of Mexico, the worst man-made environmental disaster in the U.S., is a consequence of our addiction to oil. Like an addict resorting to riskier and riskier behavior to get a “fix”, we have adopted riskier and more desperate measures to feed our addiction to oil such as drilling in deeper water and extracting oil from sand. Some of us have the luxury of saying we weren’t completely aware of the effect of our lifestyles on the environment; certainly prior to the BP spill we could hop into our cars and drive to the store and buy cheap goods and eat strawberries during a snowstorm without seeing the images of the impact of our collective actions. In fact, it is only fairly recently that we have irrefutable data that shows the environmental and health impacts from smog, carbon dioxide and other byproducts of our oil consumption. While BP project managers who cut corners and regulators who didn’t do their job are directly to blame for this spill, our collective hands are not clean. It is our addiction to oil that led to an environment in which this spill could happen. Talk is cheap In a June speech President Obama paid lip service to reducing our dependence on oil. Starting with Richard Nixon, U.S. presidents have talked about the need to reduce our reliance on oil. The most effective way to curb our appetite for oil would be to cut the subsidies to oil companies and implement a carbon tax which would more accurately reflect the cost to society of the “collateral damage” associated with oil production. In addition, politicians should materially increase subsidies to alternative energy, and make these subsidies reliable and consistent without short-term expiration and renewal concerns. Taking these steps has always been difficult because of massive vested interests in the economic status quo. Critics of alternative energy subsidies complain that alternative energy will never be as cheap as coal, oil and natural gas, however, in the United States, no source of energy was developed without subsidies; between 1973 and 2003, the federal government spent $74 billion subsidizing nuclear power and fossil fuels, during this same time frame renewable energy and spending on energy efficiency research received $26 billion from the federal government. It is easy to point the finger at politicians, to say they have not done enough to help us conquer our addiction to oil, and certainly they haven’t. Politicians have acted as enablers, allowing us to continue our addiction, and making it cheaper and easier to do so. Watching Al Gore’s movie, An Inconvenient Truth , reading about ground water contamination from natural gas drilling, or looking at pictures of oil spills; it’s easy to get angry and point fingers at the deepwater oil drillers, the natural gas drillers, or the executives at car companies that pushed SUVs. However, if Americans are asked to drive less, buy smaller cars, or turn down their thermostats, few are willing to do so. The roots of our addiction are deep Over 150 million years ago, marine plants blanketed the sea floor and sedimentation created sufficient pressure to convert the unoxidized carbon into oil. Over the past 150 years oil products have fueled the fastest growth in material wellbeing in human history. Especially with the invention of the gasoline-fueled car in 1901 and the incredible mobility it provided, oil became our drug of choice. The cost of our addiction has escalated, driving us literally to the ends of the earth to uncover more. Estimating the economic cost of our addiction is difficult; direct subsidies to oil and oil using systems are often complex and artfully concealed but estimates calculate the subsidy at around $20 per barrel of oil; but what “cost” should we add for a child who develops asthma from breathing in smog? What percent of the hundreds of billions of dollars we spend on defense is indirectly or directly a result of our oil addiction? What is the cost of the environmental damage from the BP spill and from the thousands of spills prior? We do not need to come up with an absolute number to know that the true cost of the gas we fill our tanks with is much, much higher than the $3 per gallon we pay at the pump. How do we finally break this addiction? The first step for addicts going through a recovery program is to admit that they are powerless over the substance they are addicted to and their lives have become unmanageable as a result of their addiction. We can talk objectively about the problems we face as a result of our oil addiction but without the realization that our lives have become unmanageable we cannot begin the process of recovery. We are engaged in a counter-productive war in Iraq whose real purpose is apparently to control more oil, we are facing increasing global warming, and we are assaulted by an immense environmental disaster with far reaching ecological implications. Our lives have become unmanageable. After this first step we need to begin to take concrete action to break our addiction. There is no shortage of energy in the world beyond oil, gas and coal. From the sun and the wind to biomass, geothermal and ocean currents, energy and the means to capture it exist; what we lack is the infrastructure and scale to support the economics of alternatives. We need to demand change. Automakers made SUVs because consumers wanted them. Ask for (and buy) hybrid cars, electric cars and fuel-efficient vehicles and the auto industry will make them. Conserve energy. Realize the implications of driving a few blocks and change ingrained habits. Speak up — tell lawmakers you do not want cheap gas, you want money spent on viable alternatives and efficiency improvements. The BP spill is no longer front page news and now we are left with a choice: move this disaster to the back of our minds and continue on as before, albeit slightly wiser about the negative consequences of our addiction, or choose to let the BP spill be the proverbial “hitting bottom” that propels us to finally break our addiction to oil.

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Video: Lockyer Hopes for California Budget Compromise This Week: Video

September 28, 2010

Sept. 28 (Bloomberg) — California Treasurer Bill Lockyer talks about the outlook for a political compromise that would close a $19.1 billion deficit and give the state a budget, the impact of this year’s budget delay on the state’s ability to borrow and the state of California’s housing market and economy. Lockyer talks with Carol Massar and Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Michael A. Lucki, CPA Joins CH2M HILL as Chief Financial Officer

September 28, 2010

DENVER, CO–(Marketwire – September 28, 2010) – CH2M HILL, a global full-service consulting, design, construction, and operations firm, announces that Michael A. Lucki, CPA, has joined the firm as Senior Vice President and Chief Financial Officer. Mr. Lucki will assume his new responsibilities effective November 1, 2010.

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Phil Trupp: Did SEC Hide Botched Stanford Probe? I.G. Says Timing Is "Suspicious"

September 28, 2010

In the style of “Mad” magazine, it’s the season of con vs. con at the Securities and Exchange Commission — only no one’s laughing. Word on the inside is that the Commission covered up — or at least ignored — an investigation of billionaire R. Allen Stanford, who is awaiting trial in a Texas jail on 21 criminal charges that his Antiguan bank allegedly sold questionable certificates of deposit with “improbably high” interest rates and was running a Ponzi scheme at the same time. “They didn’t call him ‘Agile Allen’ for nothing,” according to a source familiar with the case. The SEC apparently wasn’t nearly so agile. A report by SEC Inspector General H. David Kotz claims the SEC was aware Stanford was running a $7 billion Ponzi scheme as far back as 1997, but waited until late 2005 to step in. The Commission filed civil charges in the case in February 2009. Kotz noted that the Commission filed civil fraud charges against Goldman Sachs last April, on the same day it released his report critical of the Stanford investigation. The timing of the Goldman filing is “suspicious,” said Kotz, who went on to suggest that the Goldman charges diverted attention from the report of the botched Stanford probe. The inspector general said the timing of the two actions in April “strains credulity.” Kotz made his suspicions public at a September 22 congressional hearing on the Stanford investigation before Senate Banking Committee. Republican sources in Washington claimed the SEC made Goldman the poster boy for greed as a cover for the Stanford investigative foul up. These sources also suspect Goldman was sued to help boost support for the new regulatory reforms governing Wall Street’s occasionally bad behavior. Though SEC denies the Goldman announcement was a cover-up of the Stanford probe, Kotz wondered out loud if in fact the timing might have been politically motivated. Republican speculation aside, Mr. Kotz told the committee that top officials at the SEC’s Fort Worth office were “being judged on the numbers of cases they brought, so-called ‘stats’,” the obvious and easy cases. “Complex cases were disfavored,” Mr. Kotz explained, because they were not “slam dunks.” Mr. Allen’s case is a rat’s nest of allegations including, but hardly limited to, the purchase of a Caribbean island. In other words, it didn’t add up as a “stat” or “quick hit” case. Robert Khuzami, director of SEC’s Enforcement Division, and Carlo di Florio, director of the Office of Compliance Inspections and Examinations, said they are moving to implement the reforms demanded by Mr. Kotz. Mr. Khuzami said he was alerting what he called “rank and file” SEC inspectors that quick hits do not drive enforcement. He said the divisions are now coordinating their efforts and stepping up the pace. So what does it take to make the SEC do the right thing? Among the suggestions by Mr. Khuzami and Mr. di Florio is to expand training programs and modernize the management structure. In addition, they added, it’s time to place “seasoned investigative attorneys back on the front lines and improve examiners’ risk management techniques.” No one on the Senate panel bothered to ask where these “seasoned attorneys” have been hiding. The Kotz report landed on SEC Commissioner Mary Schapiro’s desk in March. The Senate hearing gave the lawmakers a chance to vent their dissatisfaction with the Commission, but it’s anyone’s guess if substance will come out of the Senate probe. Last year, for example, the House Financial Services Committee held hearings on the $336 billion auction rate securities scandal, but no legislation or regulations followed. When Rep. Barney Frank (D-MA) was asked about this failure, he replied, “The (’08) meltdown got in the way.” It now remains to be seen if the Senate Committee can find a clear path to financial reform of the SEC’s enforcement process. The hearing produced notable contradictions. Sen. Richard Shelby (R-Ala), the committee’s ranking republican, said the Bernard Madoff $65 billion Ponzi scheme had caught the SEC flatfooted though at least one part of the Commission had been aware of the Stanford case for years. Sen. Shelby was obviously unaware that there had been warnings about Madoff as far back as the late 1990s. “I believe this should mark the beginning of our review of this troublesome episode,” Sen. Shelby said, referring to Mr. Stanford. “We need to know exactly why evidence of this fraud was not more thoroughly pursued.” He added that Mr. Khuzami had brought to light “a colossal failure of the SEC.” Observers wondered why Sen. Shelby was so outraged. “Is he living on another planet?” asked one source. “Is this the first time it crossed his mind that the SEC is maybe a little slow off the mark?” Another open question: Why was no one fired because of the incompetent handling of the Stanford affair? It seemed a rhetorical question, given that no one was fired in the wake of the Madoff scandal, which was a much larger fraud. Lawmakers also expressed concern that the head of the Fort Worth division later offered to defend Mr. Stanford before the Senate committee. “It takes time for a culture to change,” Mr. Kotz said. “It takes time to trickle down the line.” In the meantime, the investing public will just have to wait on trickle-down ethics to kick in before trust is restored. ###

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Sempra Energy Names Luis Tellez to Corporate Board of Directors

September 28, 2010

SAN DIEGO, CA–(Marketwire – September 28, 2010) – Sempra Energy ( NYSE : SRE ) today announced that Luis Téllez has been re-elected to join the company’s board of directors.

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Video: Fuss Says California `Will Get Through’ Budget Crisis: Video

September 28, 2010

Sept. 28 (Bloomberg) — Daniel Fuss, vice chairman at Loomis Sayles & Co., talks about the outlook for California’s budget crisis. Fuss also discusses the state’s debt and economy, and his investment strategy. He talks with Carol Massar and Matt Miller on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

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Video: `Freakanomics’ Filmmakers Investigate Sumo-Finance Link: Video

September 28, 2010

Sept. 28 (Bloomberg) — Producer Chad Troutwine and co-director Heidi Ewing talk with Bloomberg’s Melissa Long about their “Freakanomics” film. (Source: Bloomberg)

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Larry Summers Optimistic About Middle Class

September 28, 2010

Top presidential economic adviser Larry Summers declared on Tuesday that the future of the American economy depends on a robust middle class. Speaking to a well-heeled crowd in a ballroom of the Ritz Carlton Hotel, Summers also blamed the nation’s increased income inequality in part of what he called a “breaking down in social norms by people in a position to take.” There were certainly a few sops to the audience, which included senior business leaders gathered by the global management consulting company McKinsey & Company and the Harvard Business Review. “Let no one who dedicates their life to helping a company succeed… doubt that they are engaged in public service, are engaged in a task that addresses our most fundamental national challenge,” Summers said. But his comments about the middle class were unequivocal. “We are very likely to succeed as a nation if we produce steadily rising incomes from a growing middle class over the next generation — almost regardless of whatever else happens,” he said. “We are unlikely to succeed as a nation if we do not provide steadily rising incomes from the middle class — almost regardless whatever else happens.” Summers, who announced last week that he would step down as director of the White House’s National Economic Council by the end of the year, said what Americans want from the economy is pretty simple. “The vast majority of us are parents, and the vast majority of us want nothing more or less than for our children to have the ability to live better than we do.” Polls show that many Americans now harbor doubts that the American Dream is still attainable. As Summers put it: “We are not at a moment where confidence in either the short run or the long run is at an apex.” But, he said: “I am much more optimistic than the American public. Much more optimistic than many of my friends.” Summers spoke of reigniting a healthy economic cycle, and put in a pitch for a series of economic measures proposed by the White House “that should be anything but controversial.” They include major tax incentives for investment and a commitment to research and development. “If we can make the right choices, our best days as competitors and prosperous citizens lie in the future,” he said. Asked about new Census data showing that the income gap between the richest and poorest Americans grew last year to its widest amount on record, Summers said one factor is that “we have a more ruthless economy. There’s breaking down in social norms by people in a position to take.” He noted that income inequality has been getting worse for a while. “All was not well before we had a recession,” he said. “Incomes did not grow from 2000 to 2007, even as the economy was said to be booming.” The fraction of income going to [the] lowest 95 percent of the population was steadily falling, he said. “We can do better as a country.” It was Summers’s second speech of the day. Earlier, he said that the economy will eventually improve and that “people aren’t going to live with their parents forever.”

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Daniel Firger: Lifting the Resource Curse: Will Dodd-Frank Do the Trick?

September 28, 2010

Don’t think Wall Street reform has much to do with Afghan corruption? Think again, says Congress, President Obama, and a broad coalition of human rights and sustainable development NGOs. As we all know by now, the landmark Dodd-Frank Wall Street Reform Act passed in July 2010 contains a slew of new rules to rein in abuses in the financial sector. One of its most interesting features, however, is aimed not at wrongdoing by American commodities traders, but at corruption and conflict in the countries where commodities themselves are extracted from the ground. Packed into the bill’s 2,300-odd pages is a somewhat overlooked but nonetheless far-reaching provision that requires publicly traded oil, gas and mining companies to disclose the payments they make to foreign governments in exchange for the rights to drill and dig. From Congolese gold mines and Nigerian oilfields to the rainforests of Borneo and soon — if the Pentagon is to be believed — the mountains of southern Afghanistan, natural resource abundance is too often linked to corruption, conflict, and human rights abuses. One promising strategy to help lift this so-called “resource curse” involves natural resource revenue transparency. The idea is simple: force international companies to disclose what they pay — and to whom — and then let local stakeholders and international NGOs make use of this information to hold corrupt leaders accountable. Until it was signed into as Section 1504 of the Dodd-Frank bill, this novel disclosure requirement was the cornerstone of a relatively obscure bill sponsored by Senators Richard Lugar (R-IN) and Ben Cardin (D-MD), first introduced in September 2009 after years of persistent lobbying by human rights, anti-corruption, and sustainable development activists. In fact, the bill was so low profile that big corporations from ExxonMobil on down were caught by surprise when the provision was inserted into Dodd-Frank at the 11th hour. Groups like the Publish What You Pay Coalition, Revenue Watch, Transparency International, and Global Witness deserve heaps of praise for pushing the issue of transparency and extractive industries to the fore, and Senators like Lugar and bill co-sponsor Ben Cardin (D-MD) ensuring that the United States continues to be a leader in the fight against foreign corruption. Karin Lissakers, Director of the Revenue Watch Institute, has already authored a great piece here on The Huffington Post describing the bill in detail, and many others — including, most recently, President Obama in his September 22 speech to the UN General Assembly — have chimed in to praise the legislation as a responsible, forward thinking measure that will make a real difference in the lives of millions. Unfortunately, less attention has been given to some of the bill’s shortcomings. Big Oil, of course, is already gearing up to fight the new transparency rules, arguing that disclosure of financial data will be expensive and will hinder U.S. competitiveness at a time when we need all the economic growth we can get. This line of reasoning is an obvious red herring; since most big foreign oil and mining companies list shares on American stock exchanges, they, too, will be obligated to report payments to the SEC, just like domestic firms. And anyone who argues that transparency, per se, is bad for business should take a good long look at the history of the Foreign Corrupt Practices Act, which generated a virtuous “race to the top” and allowed U.S. businesses to seize the high ground on international bribery early on, forcing other countries to play an expensive game of catch-up over subsequent decades. More troubling than these competitiveness or cost concerns is a serious — and entirely overlooked — mismatch between the bill’s means and ends. As I explain in great detail in a forthcoming article in the Georgetown Journal of International Law — available for download here — the legislation’s new transparency requirements rely for their effectiveness on SEC enforcement and shareholder activism, but seek to end foreign government corruption, not the domestic corporate malfeasance for which investor protection laws were written. Unlike the fight against insider trading, say, countering overseas corruption requires real, sustained engagement with faraway local actors and institutions. While disclosure of information by oil and mining firms may help, the bill’s focus on shareholders’ interests masks a dangerous disconnect between the protection of investors and support for foreign anti-corruption activists. The SEC, as it works to draft implementing regulations, is no doubt aware of this issue. And NGOs are working hard to find creative ways to get disclosed revenue data back into the hands of local citizens, who can make the best use of it. Still, the bill is no panacea; lifting the “resource curse” will ultimately require much stronger medicine than Dodd-Frank can provide. For more information on Section 1504 of the Dodd-Frank Act, see my article or visit Global Witness , the Revenue Watch Institute , the Publish What You Pay Coalition , or Transparency International . To comment publicly on the SEC’s implementing regulations, visit the agency’s online comment site .

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Niska Gas Storage Partners LLC Announces Resignation of Senior Vice President

September 28, 2010

HOUSTON, TX–(Marketwire – September 28, 2010) –  Niska Gas Storage Partners LLC ( NYSE : NKA ) announced the resignation of Paul Amirault, Senior Vice President, effective November 15, 2010. Mr. Amirault is resigning to pursue other interests and the board of directors would like to thank him for his efforts over the course of his engagement with the Company. The Company is not seeking a replacement for Mr. Amirault at this time.

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Prolifics Promotes Robyn Dixon to Strategic Alliance Manager

September 28, 2010

NEW YORK, NY–(Marketwire – September 28, 2010) –  Prolifics, the largest end-to-end systems integrator specializing in IBM technologies, today announced that it has promoted Robyn Dixon to the new role of Strategic Alliance Manager. The new position expands on Ms. Dixon’s current channel relationship responsibilities to include overall management of Prolifics’ alliances and participating programs. Additionally, the role includes managing Prolifics’ relationships with distributor Avnet; overseeing IBM’s Software Value Plus (SVP) reseller program; extending IBM alliance support in UK and Germany; extending IBM alliance support for all of SemanticSpace group including both Arsin and SST; and growing relationships with new business partners.

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Naazish YarKhan: See You at the Second Annual American Muslim Consumer Conference!

September 28, 2010

The American Muslim Consumer Conference broke ground last year with a conference that was titled “American Muslim Consumer: Who? What? Where?” and drew a crowd of over 250 participants. This year they are back, and I hope to be one of the attendees. The conference is a platform for industry professionals to examine the American Muslim market sector and explore its rich potential. This year’s conference is titled “Charting the Landscape.” According to Zogby International, there are approximately 7 million American Muslims living in the United States (or 9 Million, according to IFANCA), with an estimated buying power of $170 billion. The American Muslim Consumer Conference focuses on promoting dialog and raising awareness of this multicultural niche where many mainstream companies are now seeing a growing opportunity. In a recent interview on CNBC’s Street Signs titled “Muslims & Their Money,” Mostapha Saout, CEO of Allied Media Corp., highlighted why big business should focus their attention on the American Muslim market. The Muslim demographic is relatively younger, with 89.3 percent below the age of 50, compared with 45.2 percent for the general population. They are also well educated, with 77.9 percent having a Bachelor’s degree or higher as opposed to 43.7 for everyone else. This translates to a very affluent niche market, with 44 percent of American Muslims earning $75,000 or higher each year. There are several companies globally that are starting to take notice of this untapped market with abundant opportunities across all industries, including the financial sector, food, fashion and even Hollywood. Ogilvy & Mather, a leading international advertising, marketing and public relations agency, has launched Ogilvy Noor , the world’s first marketing consultancy service focused on Islamic branding practices. John Goodman, Ogilvy & Mather’s regional director for South and Southeast Asia, puts it into perspective: “It’s like being in 1990 and telling people that China doesn’t matter. Twenty years ago you might have said that, but now you’re being foolish.” Miles Young, CEO of Ogilvy & Mather Worldwide, will be the keynote speaker at the second annual American Muslim Consumer Conference. He stresses the strategic value of the Muslim consumer: “A market of 1.8 billion people that has scarcely been tapped, Muslim consumers offer enormous potential to businesses around the world — but only if their values are fully understood.” To be held at the Hyatt Regency in New Brunswick, New Jersey on Saturday, October 30th 2010, the show promises to be as important to multinational companies as it is to large- and small-scale entrepreneurs.

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Video: Thad Allen Says Spill Response Needs to Be Revisited: Video

September 28, 2010

Sept. 28 (Bloomberg) — National Incident Commander Thad Allen talks with Bloomberg’s Lizzie O’Leary about the U.S. government’s response to the BP Plc oil spill in the Gulf of Mexico. (Source: Bloomberg)

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Jerry Chautin: Franchising Is an Alternative to Unemployment if You Can Get Start-Up Financing

September 28, 2010

Self-employment is an alternative to unemployment. Yet, determining what kind of business to start, knowing how much money you will need, and what steps to take can be daunting. Franchising tries to alleviate the uncertainties by having ready answers and with a proven system in place to follow. The franchisers tell you how much money you will need and even help you find sources to borrow a portion of it. But start-up financing for small-business owners has gotten more difficult to obtain since the financial meltdown and funding for franchises are no exception. For example, even franchisers of well-established franchises such as Kentucky Fried Chicken are applying to be on the U.S. Small Business Administration’s Franchise Registry. It is a way of improving the probability that that its franchisees will find start-up, renovation or expansion funds. “KFC had not previously been listed in the SBA franchise registry because our franchisees were securing financing with little difficulty,” says Scott Haner, its director of franchisee recruiting. “We decided that we wanted to do whatever we could to expedite the financing process, which included pursuing a listing on the SBA Franchise Registry.” Expediting the process is the exactly what being listed the on the registry is intended to do. That’s because SBA and its attorneys pore over the franchisor’s modus operandi. More specifically, they want to be sure that the provisions of the Franchise Agreement do not impose excessive controls upon the franchisee. If they do, SBA will ask the franchiser to make modifications. Otherwise its unit purchasers will not be eligible for SBA financing. For example, “The franchise agreement may not include a right of first refusal on a partial transfer of ownership within the franchisee entity,” says Katie O’Brien, a lawyer with Starfield & Smith, P.C. in Fort Washington, Penn. “This is deemed (by SBA) to create excessive control or affiliation.” KFC ran into a similar problem and had to modify its Franchise Agreement to be listed on the Franchise Registry. “During the review, the SBA raised some issues regarding our standard option agreement,” says Haner. “We worked with them to clarify our option process and ultimately addressed all their concerns.” Meanwhile, Atlanta, Ga.-based AmeriCare, a home health care organization, found that tight credit was impacting its ability to sell franchises. “With the current recession and regulatory environment, we found that our potential franchise owners were facing more challenges with securing a loan,” says Debbie Reis, its president. “We entered the process for SBA Franchise Registry because we knew it would simplify the loan process and make it easier for potential AmeriCare franchisees to obtain the funding they needed.” If a franchise is not listed on the Franchise Registry, the lender is required to obtain SBA’s approval each time a franchise buyer applies for a loan. It is time consuming. Consequently, some lenders will not accept loan application unless the franchise has been previously vetted and is already on the registry. So if you are thinking about buying a franchise, check to see if it is listed on the registry. If not, it can impede your progress in accessing the SBA financing programs. Jerry Chautin is a volunteer SCORE business counselor, business columnist and SBA’s 2006 national ” Journalist of the Year ” award winner. He is a former entrepreneur, commercial mortgage banker, commercial real estate dealmaker and business lender. You can follow him at www.Twitter.com/JerryChautin

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Chip Conley: Apple & The Oakland A’s: They’re Both Playing Moneyball

September 28, 2010

As we round the bases for the last two weeks of Major League Baseball, it’s worth noting that big league managers may know more about 21st century leadership than Fortune 500 CEO’s, with the possible exception of Steve Jobs. Remember Michael Lewis’ bestseller Moneyball about how Oakland A’s General Manager Billy Beane remade the game of baseball by looking at new metrics as a means of determining which players had the greatest impact on his team’s success? Like Steve Jobs’ Apple in the battle against Microsoft, The A’s had high odds against them with a team payroll that was just one-third of what a bigger market team like the New York Yankees could pay their players. So, Billy Beane reevaluated the conventional wisdom that stolen bases, runs batted in, and batting average were the most important statistics to consider when selecting players for a team. Doing rigorous statistical analysis — and using a certain amount of gut wisdom — Beane was able to show that little-considered stats like on-base percentage or slugging percentage were bigger indicators of offensive success than some of the historical numbers that most teams used. The Oakland A’s soon leveraged their intellectual competitive advantage by selecting bargain players who helped them in a series of improbable playoff runs. Sadly for the A’s, the rest of the league caught up and teams like the Boston Red Sox parlayed these “Sabermetrics” — what Beane called these unique numbers — into the World Series. The A’s were back where they started, a perennial also-ran. Most business leaders are using 20th century metrics to create 21st century success. We were taught to “manage what we can measure” and, generally, what’s most easily measurable are the more tangible aspects of life. In business, this translates to metrics like profitability and cash flow — clearly important, but outputs in actuality, not the inputs that create success in the modern company. Today’s most valuable business assets often don’t appear on a balance sheet, an accounting relic that is 500 years old. In our knowledge economy, it’s not the tangible factories or equipment that creates sustainable success, it’s the intangibles like innovation, employee engagement, brand reputation, and customer evangelism that drive market performance. Stock analysts suggest that 80% of Apple’s value doesn’t appear on its balance sheet. The balance sheet is the output, just like the baseball standings are the results of how you’ve invested in your inputs. We’re living in a new era. And yet, we’re using the old metrics. Nearly two-thirds of the world’s GDP now comes from the intangible service industry — as opposed to tangible industries like manufacturing or agriculture — where competitive advantage isn’t about who’s the biggest, but who’s the smartest. Savvy business leaders are learning how to measure those intangible assets like loyalty and reputation — there are even social media benchmarks for your company now — so that they can modernize what they’re managing. What are the inputs or “Sabermetrics” in your business that you’ve been ignoring? Fortunately, Hollywood is a step ahead of most business leaders, as they realize that Moneyball defines our 21st century world of underdogs looking for a leg up. You’ll see Brad Pitt playing Billy Beane next year when Sony Pictures brings this epic story of “what counts” to theaters around the world. Let’s hope a few business execs sneak off on their lunch hour to learn this leadership lesson on the big screen.

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GOP, U.S. Chamber Of Commerce Beat Back Bill To Combat Outsourcing

September 28, 2010

Senate Republicans beat back an effort by Democrats Tuesday to end tax breaks for companies who send jobs offshore only to import products back into the United States. The House has passed a series of similar legislation over the past several weeks, as Democrats work to portray Republicans as in the pocket of Big Business at the expense of workers, the economy, the trade deficit and the budget deficit. That message was muddied, however, by the defection of four Democrats and Independent Democrat Joe Lieberman, who voted against the motion to end a filibuster. “I wish this election would be a simple referendum on this issue,” Dick Durbin, the Senate’s number two Democrat, said on the Senate floor Monday night. “Who in the world believes that we should be rewarding corporations in our country for shipping jobs overseas?” The U.S. Chamber of Commerce is one powerful answer to Durbin’s query. The Chamber, which represents businesses in the United States, has aggressively battled the effort to reduce outsourcing. During the debate over the stimulus, the U.S. Chamber fought efforts to include a provision that would encourage taxpayer money to be spent on products made by domestic companies. It opposed the outsourcing bill, arguing in a letter to the Senate that “the concept of economic growth is not a zero-sum game. Replacing a job that is based in another country with a domestic job does not stimulate economic growth or enhance the competitiveness of American worldwide companies.” In 2004, Chamber head Tom Donohue made the case that outsourcing shouldn’t be a concern because only “two, maybe three million jobs, maybe four” would be lost. “American companies employ 140 million Americans,” Donohue said in a CNN interview that Chamber opponents are happy to remind him of. “They provide health care for 160 million Americans. They provide training in terms of 40 billion a year. The outsourcing deal over three or four or five years and the two or three sets of numbers are only going to be, you know, maybe two, maybe three million jobs, maybe four.” The bill included a payroll tax holiday for companies that bring jobs back from overseas, ended tax breaks for plants that shut down to go elsewhere, and blocked companies from deferring their tax bill year to year by keeping money out of the U.S. The U.S. Chamber, in a letter to the Senate, outlined its opposition to the measure and said that it may use the vote to rate how friendly to business a senator is in the lobby’s annual scorecard. The bill, argued the Chamber, would “significantly curtail [tax] deferral [of earnings], reversing longstanding tax policy and subjecting American worldwide companies to immediate double taxation on the earnings of their foreign subsidiaries. Limiting deferral would hinder the global competitiveness of these American companies, impede U.S. economic growth, and ultimately result in the loss of jobs – both at the companies directly impacted and companies in their supply chains.” Sens. Ben Nelson (D-Neb.), Jon Tester (D-Mont.) and Mark Warner (D-Va.) broke with their party to vote to continue the filibuster, as did the chairman of the Senate Finance Committee, Max Baucus (D-Mont.). Republicans argued that revoking the tax breaks would punish American companies and make them less competitive with foreign firms. But more broadly, they pressed the case that the vote was a political stunt since Democrats knew they didn’t have 60 votes to cut off the filibuster. The best thing to do, said GOP senators, is to get out of town. “I think that right now all concerns, the leader included, are to get this over with, get back home and campaign,” said Sen. Jim Inhofe (R-Okla.). “To be honest with you, because of the election, we’re not going to get anything done. We’re just wasting–they’re wasting time. My hope is that after the election we can come back here and get serious about some issues that need to be dealt with,” said Sen. George Voinovich (R-Ohio). “They may be forcing it, but what we should be taking up right now are the tax cuts,” argued Sen. George LeMieux (R-Fla.). Sen. Bernie Sanders (I-Vt.) pushed back on the GOP argument that the vote was political theater. “Republicans call this a stunt. You go and you speak to the millions of American workers who have lost their jobs, because their plants have shut down and their companies have moved to China, and you ask them if they think focusing on outsourcing and demanding that American companies reinvest in American companies is a stunt. I don’t think they believe it’s a stunt,” he said. “We’re hearing a lot of things thrown out to create a diversion,” added Sen. Debbie Stabenow (D-Mich.). “The question is this: Do Republicans think that middle class families should pay through their tax subsidies for plants to close up and the cost of shipping jobs overseas to be on their back?” House Democrats are making a similar attempt to draw a bright line on jobs between Republicans and Democrats. At Tuesday’s “Conference on the Renaissance of American Manufacturing,” House Majority Leader Steny Hoyer (D-Md.) laid out the agenda for the remaining floor time before the election. “[T]his week the House will vote on three additional bills,” he said, according to his prepared remarks. “One will make sure that the government buys American-made American flags. Another helps ensure that American workers are given every opportunity to earn certifications, degrees, and qualifications for the jobs American industry needs to fill. And the third addresses China’s unfair currency policy and its harms to American workers. By deliberately keeping the value of its currency low, China is able to sell its goods in the United States at an artificially low price–which helps put American manufacturers out of business. The bill we vote on this week will help level the playing field for American businesses and workers.”

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Video: Pershing, Winthrop Unable to Stop Stuy-Town Foreclosure: Video

September 28, 2010

Sept. 28 (Bloomberg) — Pershing Square Capital Management LP and Winthrop Realty Trust lost their bid to halt an upcoming foreclosure sale of the Stuyvesant Town-Peter Cooper Village apartment complex in Manhattan, according to a New York state appeals court clerk. Bloomberg’s Monica Bertran reports. (Source: Bloomberg)

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Dan Dorfman: Will the Real Economy Please Stand Up?

September 28, 2010

Unlike some of the people you see in my HuffPost writings, I am not an economic expert. Like you, I read the financial pages, watch the financial shows, scan some internet sites and try to use my noodle to make sense out of the wildly conflicting and, at times, seemingly insane economic opinions. That conjures up a great dilemma, though. With more and more economic experts coming out of the woodwork — both on Wall Street and in Washington — who are we supposed to believe? How about President Obama, who tells us “we are moving in the right direction and the economy is getting stronger by the day?” Or New York Times columnist Paul Krugman who insists “we’re in early stages of a third depression?” Or maybe the National Bureau of Economic Research, which recently told the nation the 18-month recession ended in June? Or should we heed the roar of Wall Street, which is signaling loud and clear that the economy is clearly, but slowly mending by driving up the Dow more than 750 points in the past couple of months? Then again, maybe Standard & Poor’s thoughtful and perceptive senior economist, David Wyss, has the right idea. “We’re having a half-speed recovery, nothing to get excited about, but it’s better than none,” he tells me. Or perhaps, Madeline Schnapp, a forward-thinking economist out of West Coast liquidity tracker TrimTabs Research, who says: “We’re still stuck in first gear and haven’t exited the recession yet.” The answer, judging from these decidedly contrary views, is we seem to be caught in an environment of ‘up in the air economics’. In other words, there’s a thick fog of uncertainty out there, and nobody has the faintest idea when it will evaporate. It all brings me back to a memorable event that took place on October 26, 1881. That was the infamous day of one of the Old West’s most famous gunfights — a shootout between the Earps — aided by “Doc” Holliday — and the Clantons, at a vacant lot behind the OK Corral in the Tombstone Arizona territory. Now, nearly 129 years later, a slew of additional gunfights are taking place between the economic bulls and bears at what might appropriately be called the Economics Corral. One of the more intriguing economic gunmen is a skeptical grizzly of a 34-year-old man named Michael Larson, editor of a monthly newsletter out of Jupiter, Florida, The Safe Money Report Based on a fair number of highly negative and unpopular, but on-the-money forecasts, Larson has demonstrated he’s lightening fast on the economic trigger, not the kind of guy with whom an economic bull would want to tangle. Larson’s ability to repeatedly score both financial and economic bulls-eyes is well documented in past interviews I’ve done with him. For example, he was well ahead of the Wall Street herd in forecasting such dreaded events as the credit and housing crises, a major downturn in commercial real estate and a wicked decline in stock prices. His latest thinking, indicative of much more bloodletting, is spelled out in a brief commentary he just fired off to his newsletter subscribers. His summation: “The economy is on the ropes, a double-dip recession is all but inevitable, and the rally presents a fantastic selling opportunity.” Larson contends the latest batch of economic data couldn’t be more clear, pointing in particular to a deceleration in industrial production growth from 0.6% in July to 0.2% in August; likewise, a slump in the New York Fed’s economic index to a 14-month low in September, while the Philadelphia Fed’s index fell below the zero line for the second consecutive month. Larson also observes that banks repossessed more homes in August than in any month in U.S. history, while companies across the spectrum are either reporting anemic sales and earnings or cutting future targets. To Larson, it means the handwriting is on the wall, namely a hefty drop in stock prices. For starters, he sees the Dow — currently trading at around 10,812 — wrapping up the year at about 10,000 or possibly in the 9/000s. It’s worth recalling that in the gunfight at the OK Corral, several people were killed. Financially speaking, Larson is convinced the dragging economy will produce even more fatalities at a similar hot and heavy gunfight now under way at the Economics Corral. What do you think? E-mail me at Dandordan@aol.com

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Video: Peabody Sees Rally for Banks, No Double Dip for Economy: Video

September 28, 2010

Sept. 28 (Bloomberg) — Charles Peabody, partner in charge of research at Portales Partners LLC, talks with Bloomberg’s Julie Hyman and Mark Crumpton about the outlook for U.S. bank stocks and the economy. (Source: Bloomberg)

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Keith O’Neale: How Dirty Politics Are Threatening An American Economic Success Story

September 28, 2010

“It’s the economy, stupid!” Nearly two decades after James Carville introduced the axiom, it is more relevant than ever for Democrats and for America. Every company that wants to stay in America and contribute to our economy is important. And every Democratic leader fighting to keep these companies here – and fulfilling the electoral mandate to stabilize and grow the economy – needs support, not attacks from fellow Americans. In the U.S. Virgin Islands, we face the same recession-driven hurdles as the rest of the country. The USVI’s difficulties are compounded by our inherently limited economy, a challenge for more than 50 years. We must be smart, work hard and think creatively, building on our strengths and core industries. One of those is rum making, which dates to the 1760s in the USVI. Rum is serious business for us. It creates direct economic growth in America’s Caribbean islands. It supports indirect jobs, from our transportation companies to our local stores and restaurants. And under the rum excise tax cover-over program, it generates an essential revenue stream for the USVI government. To successfully expand our economy, rum is a vital tool. So you can understand our consternation and bemusement when the USVI is attacked for making economic decisions that are good for our territory and America. Because remember, “it’s the economy, stupid.” The latest barrage – with its hyperbole and misinformation – has come from a strange alliance of Puerto Rican statehood backers and a few conservative bloggers. They simply are not interested in the truth. The USVI has few tools in its arsenal to promote economic development, while both the USVI and Puerto Rico receive fewer federal benefits than the 50 states. The rum excise tax cover-over is among the most important. It rebates the excise tax paid by rum producers when they import rum to the U.S. mainland back to the government where the rum is produced. The Congressional Research Service reported that the cover-over program was created nearly a century ago to generate business activity and spur economic growth. CRS also declared that cover-over revenue is under full local control. The USVI is using it to keep companies in the United States, create new local government revenue, modernize the rum industry and clean up the environment. The USVI’s Governor John deJongh – a Democrat with a business and economic development background – struck two innovative public-private partnerships with Diageo and Fortune Brands to produce Captain Morgan and Cruzan Rum brands in the USVI. The key to these agreements is that we will work together to grow rum production so our investments bring in significantly more cover-over revenue to the USVI. This is found money. By more than doubling this revenue stream, our government can fund economic development and public needs, from upgrading infrastructure, to building schools, to fixing our pension system’s unfunded liability. The partnerships have already prevented layoffs of thousands of government workers. Equally important, the partnerships lock in the companies to stay in the USVI for 30 years. You won’t be reading newspaper headlines about these companies moving to a foreign location for cheaper production, weaker environmental protections or lower labor standards. So what’s the problem? Puerto Rico and its allies don’t like our agreements. After decades controlling America’s rum industry, providing billions of dollars in funding to their rum producers, they say our investments and incentives are too high. They toss around scary statistics and made-up production figures with no basis in reality. And they are pushing federal legislation that would retroactively overturn our partnerships, divert revenue from the USVI to Puerto Rico’s coffers and maintain Puerto Rico’s 80-plus percent market share. Yes, 80-plus percent market share. The reality is another story. Our investments have protected American jobs. They are already benefiting small businesses. They improve the environment with best-in-the-world sustainable facilities. They guarantee our children have a better future. And they make sure companies that want to stay in America do so. Most leaders in Washington have rejected Puerto Rico’s smear campaign against the USVI. So the attacks have become more offensive. Now Puerto Rico is targeting Democratic lawmakers and possibly harming the Democratic party this fall as it fights for every Congressional seat and statehouse. Miguel Lausell, the chairman of one attack group, the National Puerto Rican Coalition (NPRC), claims to be a Democrat but endorsed Senator McCain over then-Senator Obama. He recently wrote of Democratic “failures,” called Democrats “unethical” and claimed we do not deserve to lead. A board member of this group (NPRC) was just appointed by the Obama administration to a senior role at USAID. How does he explain Puerto Rican assaults on the President’s own party that seem to have come from the GOP’s playbook and are undermining the Democratic majority and senior Democrats on Capitol Hill? Instead of attacks, Puerto Rico should look for solutions. Creating economic growth requires commitments from businesses and governments that are fair and guarantee a real return-on-investment for local residents. In the USVI, where Diageo will start producing rum later this year, this ROI is tangible. The contractors and employees at work, the “under construction” signs and the ringing cash registers are proof of which all Virgin Islanders are proud. In a year of “it’s the economy, stupid,” letting politics stop economic progress is a recipe for disaster.

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Video: Aquila Says Push for Higher Returns Supporting M&A: Video

September 28, 2010

Sept. 28 (Bloomberg) — Frank Aquila, partner at Sullivan & Cromwell LLP, talks with Bloomberg’s Julie Hyman and Mark Crumpton about the outlook for mergers and acquisitions and initial public offerings. (Source: Bloomberg)

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Kevin O’Connor: 3 Reasons Why This Small Business Owner Thinks the $30B Small Business Program Will Be a Bust

September 28, 2010

A cynic may say this $30 billion fund to encourage small community banks to lend to small businesses is mid-term election politics. The Small Business and Credit Act of 2010 (H.R. 5297) passed both Congressional houses and is expected to soon be signed by President Obama. This bill, however, is a waste of tax-payer money and will have zero effect on stimulating our economy for the following three reasons: 1. Businesses Need Confidence Washington is playing the dangerous game of vilifying large businesses and banks on one-hand, but saying small businesses and community banks are good. But business is business. Most small businesses start out thinking that they will one day be big businesses. When I start a small business, like I recently have with FindTheBest.com , my goal is to eventually become a big business. This belief that government can micro-manage the economy with complicated programs is misguided. 2. Good Businesses Borrow for Growth If you have viable business, banks will offer their assistance — that is the nature of the banking industry. If your business is stacked with risks, a loan will most likely be the wrong solution. Simple business 101 — a growing company often needs loans for cash flow and these loans can be secured with receivables. Other reasons for borrowing money include funding inventory and assets, all of which can be used to collateralize the loan (i.e., something the bank can seize and re-sell if you don’t pay back the loan). Banks make these types of loans because that is their business. If your company is growing, it will be a win-win situation; you don’t need government assistance to encourage good investments. 3. Bad Businesses Borrow for Losses When businesses live beyond their means (i.e., expenses exceed revenue), they can’t print money or borrow from other countries like our government does. Banks will not fund loses because these are high risk loans — the company is likely to fail — and there’s nothing to secure. A risky business should not be rewarded with a loan. With this pending bill, Congress is encouraging banks to move up the “risk curve.” In other words, helping banks make loans which, without the so-called stimulus program, they would never make because the loans don’t make economic sense. A cynic might draw an analogy to the mortgage industry where Fannie and Freddie encouraged lending to unqualified borrowers to buy over-priced houses they couldn’t afford. What are your thoughts on the pending bill? Do you think it has the potential of jumpstarting the economy or do you think it will just encourage risky lending?

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Video: Moorman Sees Greater Enterprise Use of Tablet Computers: Video

September 28, 2010

Sept. 28 (Bloomberg) — James Moorman, an analyst at Standard & Poor’s, talks about prospects for Research In Motion Ltd.’s PlayBook tablet computer. Research In Motion is targeting business customers with the PlayBook to compete with Apple Inc.’s iPad and add a fresh source of revenue. Moorman talks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (This is an excerpt of the full interview. Source: Bloomberg)

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Video: Damico Sees `Great Growth Opportunity’ for IntraLinks: Video

September 28, 2010

Sept. 28 (Bloomberg) — Andrew Damico, chief executive officer of IntraLinks Holdings Inc., talks about the company’s services, business model and growth outlook. IntraLinks is a software provider that allows companies to exchange confidential documents online. Damico talks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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Bill To Tax Firms That Export Jobs Fails In Senate

September 28, 2010

WASHINGTON — The Senate on Tuesday blocked tax legislation that would have punished U.S. firms that export jobs. But the political symbolism of trying to save American jobs, not passing a bill, was the Democrats’ closing argument on the economy in the waning weeks of the congressional elections. Republicans complained that the vote used a serious subject – economic recovery – to score points with voters five weeks before the balloting in which all 435 House seats, 37 Senate seats and the Democratic majority are on the line. The bill in question, Republicans said, would make U.S. companies less competitive. “The liberal Senate leadership has brought forward a politically motivated bill that will never become law,” said Sen. Orrin Hatch, R-Utah. But majority Democrats, now without their original plan to close the campaign with a middle class tax cut, sought to convince voters that the bill showed off their commitment to supporting the nation’s economic recovery. “This is part of the continuing focus on jobs,” Sen. Debbie Stabenow, D-Mich., told reporters. The bill failed, 53-45, to attract the 60 votes required to advance. Four Democrats and one Independent joined Republicans to block its progress. But debating it and forcing senators on the record was the Democrats’ point. “We’re just a few weeks away from an election,” said Sen. Dick Durbin, D-Ill. “I wish this election would be a simple referendum on the debate we’re having on the floor of the Senate right now.” The bill at issue in the Senate would exempt companies that import jobs from paying the 6.2 percent Social Security payroll tax for new U.S. employees who replace overseas workers who had been doing similar work. The two-year exemption would be available for workers hired over the next three years. The tax cut – estimated to cost about $1 billion – would be partially offset by tax increases on companies that move jobs overseas. The bill would prohibit firms from taking deductions for business expenses associated with expanding operations in other countries. It would increase taxes on U.S. companies that close domestic operations and expand foreign ones to import products to the U.S. Republicans argued the tax cuts would be difficult to administer and the tax increases would hurt international corporations that employ U.S. workers. “Let’s have votes on real job creation incentives and let’s get out of this gamesmanship,” said Sen. Chuck Grassley of Iowa, the top Republican on the tax-writing Senate Finance Committee. The tax increases total $369 million over the next decade, according to a preliminary estimate by the nonpartisan Joint Committee on Taxation. Combined with the tax cut, the bill would add an estimated $721 million to the budget deficit over the next decade. The Democrats voting to block the bill were Sens. Max Baucus of Montana, Ben Nelson of Nebraska, Jon Tester of Montana and Mark Warner of Virginia. Also voting no was Sen. Joe Lieberman, I-Conn.

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Halsey Minor: FDIC: The Government’s Job-Killer

September 28, 2010

What agency is systematically destroying American jobs? The mantra this election season is jobs, jobs, jobs, as both parties claim that putting people back to work is their top priority. But what if I told you that in the midst of the worst downturn since the Great Depression, one federal agency is throwing people out of work — and that neither the Democrats nor the Republicans are lifting a finger to prevent it? Forget “shovel-ready projects,” the Federal Deposit Insurance Corporation under Chairwoman Sheila Bair is literally taking the working shovels out of the hands of hard-working Americans as it hijacks — and then mothballs — construction projects across the country. This is what “recovery” looks like in too many American towns: half-built projects rotting behind chain-link fences as desperate workers sit idle and politicians search for new shovels to fill with pork. One of those projects is mine. For more than a year, a boutique hotel in my hometown of Charlottesville, VA has sat rusting within sight of Thomas Jefferson’s Monticello. Other projects in places such as Los Angeles, Albuquerque and Milwaukee have met similar fates as Bair’s FDIC refuses even to answer the phone calls of entrepreneurs who had the grave misfortune of being financed by banks that failed and were subsequently taken over by the FDIC. Turns out, those bank failures were just the beginning of the cataclysm, as I and others learned. Many lost their life savings because of the FDIC’s ineptitude and proclivity for cutting sweetheart deals with vultures like Barry Sternlicht’s Starwood Capital — a guy who notoriously told The York Times that his company is positioned to be “like the Saudis” in some real estate markets. Others, like me, have spent millions of dollars just to force the FDIC to the table in an effort to get our projects finished. Meantime, Chandrakant Patel, 67, has been ruined. In the 1970s, he fled the anti-business repressive regime of Idi Amin in Uganda and built a thriving business in the United States. He has spent the past several months working as a security guard on the site of the Albuquerque hotel project he started and invested his life savings to build. The project was so close to completion that shipping containers had already arrived with the fixtures and furnishings. But then his bank failed. The federal government then failed Mr. Patel. Earlier this month, the FDIC foreclosed after months of foot-dragging, misinformation and running Mr. Patel out of money. Instead of putting ordinary Americans back to work, the FDIC is presiding over one of the greatest wealth transfers in American history. Many of the same unaccountable banks and financiers who wrecked the global economy out of sheer personal greed are now scooping up projects for pennies on the dollar — with the help and blessing of the FDIC. One in seven American now live in poverty, but the super-rich are fast becoming the mega-rich and the mythical American path to prosperity is being blocked, compliments of an agency whose original mission of safeguarding the deposits of ordinary citizens has mutated into protecting the banks at all costs. The FDIC claims it’s all for the greater good, but as Bloomberg’s Jonathan Weil recently noted : “The banks were saved by the American people. Now who will save the people from the banks?” To understand how fiercely the FDIC protects the interests of banks over ordinary citizens, consider that it took me over a year and around $500K dollars in lawyer bills to just get the names of the eight syndicate banks that held the loan on my project after my original lender, Specialty Finance Group, collapsed in the largest bank failure in Georgia history. That’s right: the FDIC didn’t believe I had a right to know the names of the banks that stopped funding my project. It’s all part of an accounting scam. While the banks later claimed I defaulted, they never foreclosed on the project, which should have been the natural and expected course of action. As a result of fancy accounting, eight banks show my loan as good on their books. But as the people of Charlottesville know all too well, the hotel is just a half-finished skeleton of concrete and steel looming over downtown. If you think Enron was bad, get this: these banks also show interest payments from me as revenue and profits! I assure you, I have not paid these banks one single red cent of interest since they stopped funding. But they continue booking this imaginary interest income and phantom profits and report it to shareholders and customers alike. Mission accomplished: hundreds of jobs destroyed and accounting fictions created, all in one tight package. If I was a customer of or investor in these banks, I’d want to know what I just told you, particularly since the “value” my loan makes up a significant portion of some of these bank’s so-called “assets.” According to iBanknet.com, the eight syndicate banks have an average of $33 million in equity; my original loan was supposed to be for more than $23 million. (Remember, bank customers, you are own on deposits over $250,000 when it comes to deposit insurance.) The banks, complete with the person in charge, are: River Community Bank in Martinsville, VA; Ronald Haley, President Pioneer Bank in Stanley, VA; Thomas Rosazza, President & CEO Old Dominion National Bank in North Garden, VA; Charles Darnell, President & CEO HomeTown Bank in Roanoke, VA; Susan K. Still, President & CEO Harrison County Bank in Lost Creek, WV; David Griffith, President Guaranty Bank & Trust Co. in Huntington, WV; Marc Sprouse, President First United Bank & Trust in Oakland, MD; William B. Grant, Chairman of the Board, President & CEO SuffolkFirst Bank in Suffolk, VA; T. Gaylon Layfield III, President & CEO Most people who fall victim to the FDIC never learn the names of the banks that help do them in, in large part because the FDIC throws the full weight of the federal government behind its efforts to protect the banks. Simply by warning people I am violating a court order. That’s how oppressive the FDIC is in protecting its banks. Few people have the resources or perseverance to fight that kind of obstruction from an army of government lawyers paid with taxpayer money and backed by taxpayer-funded threats. Chandrakant Patel tried for eight months just to get through to the right person at the FDIC after it took over his lender – coincidentally also part of Silverton Bank, which was being run for the FDIC by a former Ameriquest Mortgage executive named Claire Cotter. Ameriquest, you may recall, was fined $298 million for illegal lending practices before it went belly up. (I was able to get through to Claire Cotter in less than eight months, but she repeatedly hung up on me. Then the FDIC sought an injunction to prevent me from calling Cotter and other public officials at their government offices.) Mr. Patel and his family were told by Claire Cotter that the agency would help them renegotiate the loan and then backpedaled. The FDIC told Patel one of the syndicate banks holding his note refused to renegotiate the terms so Patel could finish the final 15% of his project. When Patel asked to see the paperwork, he was denied. The only alternative the FDIC offered Mr. Patel was to find someone else to buy his loan out. Keep in mind that this was during the height of the credit crisis. At a time when government officials from President Obama on down were telling the country that taxpayers were injecting money into the banks to enable lending, the government agency overseeing a big piece of that process was basically telling the Patels they were on their own. More than 75 people lost their jobs when Mr. Patel’s project stopped — not counting the ongoing jobs the hotel would have created. Now he is facing foreclosure and bankruptcy. In Los Angeles, developer Sonny Astani was well on his way to completing the first phase of his Concerto high-rise project, planned to include 629 residential units in twin 30-story towers. Then in the fall of 2009, his lender, Corus Bank, failed and was seized by the FDIC, which subsequently sold his loan and 100 others to a consortium of hedge funds led by Starwood Capital. Buoyed by the FDIC’s sweetheart deal of 0% financing, Starwood began squeezing Astani out by turning off the spigot of construction funds needed to complete Concerto, costing hundreds of jobs and millions in tax revenue. Astani is now fighting desperately to keep Starwood from seizing his property and making it part of a portfolio of 50 other high-end properties wrested from other developers. As for me, I had to put my hotel company into Chapter 11 bankruptcy to defend against what would have been a ridiculously expensive legal fight on multiple fronts. The FDIC wants to fight me in multiple venues in multiple states over the same set of facts; I’m trying to consolidate them in one venue. It’s another absurdity in a case that has collectively cost me and taxpayers like you more than $12 million. For the record, my loan balance was only $10.3 million when the bank stopped funding and threw 100 people out work. Do the math. There are likely thousands or even tens of thousands of stories like these all across the country, but the FDIC doesn’t want people to hear them or to know what’s being done with taxpayer money in the name of economic recovery. But if no one speaks up, the FDIC will continue to take what entrepreneurs like Mr. Patel, Mr. Astani and myself built and hand it off to for pennies on the dollar to international bankers. Tomorrow, I am scheduled to begin a mediation hearing with the FDIC. My sole original goal was to end Charlottesville’s nightmare and finish my project. But as I have learned the plight of Mr. Patel and many others, I now know that something more must be done to help entrepreneurial small business people protect themselves from rapacious banks seizing wealth and then killing jobs. We have given hundreds of billions of dollars to banks that don’t lend. Banks don’t create jobs, the small businesses and entrepreneurs of America do. Yet banks won’t even loan money that they are given expressly for that purpose. They just pay bonuses to themselves for taking no risks. Hard working entrepreneurs and small business people like Mr. Patel created the engine of American commerce and power our world-renowned willingness to invest and take risks. Somehow Washington has been seduced by the banks into thinking it is they who are the key to job growth. How can politicians confuse those who got us into this mess with those who will lead us out? Don’t get me wrong: banks play a function in economic growth, but only if they lend. In that way, a bank is like gasoline. Entrepreneurs are the engines that power our economy, but they need the gasoline of credit. When banks think they can exist on their own without the engine of small business, they are — like gasoline — nothing more than a highly combustible substance. We saw that when the banking “industry” threw a match on the global economy it now controls. Entrepreneurs like me, Mr. Astani, Mr. Patel and many others are still waiting for the flames to die, but the FDIC seems intent on stoking the fire as long as it can.

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Video: Martin Promises `Clarity’ on Anglo Irish by Week’s End: Video

September 28, 2010

Sept. 28 (Bloomberg) — Irish Foreign Affairs Minister Micheal Martin discusses the outlook for the government’s bailout of Anglo Irish Bank Corp. and the nation’s sovereign debt crisis. The cost of insuring against default on Ireland’s government debt surged to a record as Standard & Poor’s said the price of bailing out nationalized lender Anglo Irish could exceed $47 billion. Martin speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (This is an excerpt of the full interview. Source: Bloomberg)

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Elizabeth Warren Was Paid To Be An Expert Witness In Cases Against Bailed-Out Banks

September 28, 2010

While acting as a government-appointed bailout watchdog, Elizabeth Warren, whom President Obama appointed this month to lead the creation of the Consumer Financial Protection Bureau , served as an expert witness in cases against some of the big banks receiving aid from the Troubled Asset Relief Program, Bloomberg News reports. Warren was paid $90,000 to be an expert witness in a class-action lawsuit at the same time she was head of the Congressional Oversight Panel , which oversees the $700 billion government bailout of the financial sector. Bank of America, Citigroup and JPMorgan Chase, all of which received TARP assistance, were among the defendants in the suit, according to Bloomberg . Warren told Bloomberg that her work as a witness constituted no ethical violations, saying she had prior approval from the ethics lawyer for the Congressional Oversight Panel. A Harvard professor and an expert on the financial sector particularly as it relates to middle-class consumers, Warren said she was allowed to continue doing side jobs even as she held this government role. Warren is famously tough as advocate for the middle class, and a former student described her teaching style at Harvard as “Socratic with a machine gun.” As head of the panel overseeing TARP, she remained more skeptical than Treasury secretary Tim Geithner about whether the program had actually succeeded in ensuring that certain banks could function without government support. In appointing Warren to set up the CFPB, which she is credited with devising, the president effectively made her head of the agency, at least for now, and sidestepped what could have been a contentious confirmation hearing.

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Is It Time To Ditch The Dow?

September 28, 2010

NEW YORK — It’s Caterpillar’s market. The Illinois maker of earth movers is just one of 30 companies in the Dow Jones industrial average, but you wouldn’t know it from its impact on the index recently. Caterpillar’s stock is responsible for 40 percent of the Dow’s climb since the beginning of the year. Translation: If not for Caterpillar Inc., the world’s most widely followed stock index would be up just 2.5 percent this year instead of 4.1 percent. Take out gains from the next three biggest contributors to the index – McDonald’s Corp., DuPont Co. and Boeing Co. – and we would be sitting on losses. “It’s all about Cat,” marvels BNY ConvergEx strategist Nicholas Colas in a recent report. “Names like Microsoft, Cisco, Bank of America and Intel might be large companies but as far as Dow impact goes, they are tiny.” Caterpillar is one of the great American success stories coming out of the recession. Sales of its loaders, excavators and harvesters jumped 37 percent in August, much of that thanks to demand abroad. So if you like to cheer on the Dow now that it’s risen for a fourth week in a row, news that Caterpillar is the pied piper of those gains should make you happy. Just don’t confuse the Dow with the stock market or the economy. Notwithstanding our attention to its every rise and dip, the Dow has a big flaw that explains its top-heavy nature. The index gives greater weight to high-priced stocks than to low-priced ones. You might think investing $30 in a mutual fund tracking the Dow means $1 is riding on each of the 30 stocks. In reality, the higher the price, the more of that $30 is allocated to that stock. Stock in Caterpillar closed Friday at $79.73 a share – more than four times the price of General Electric Co. or Intel Corp. That means if you put money into a mutual fund tracking the Dow, more than four times as much of that money will end up in this one stock than in GE or Intel. Now consider that this buying could raise the price of the stock, begetting more buying. So, as Caterpillar was leaving other Dow members in the dust with a 40 percent rise this year, more and more of each new dollar in the index went into this manufacturer. In fact, a fifth more of your money is going into Cat now than it would have at the beginning of the year. Meanwhile, the stock has gotten expensive, too. It trades now at 20 times estimated earnings this year versus 13 times for the average Dow member. Of course, you should really do the opposite: Buy more when stock is cheap. All this would be mere curiosity if so much of our mood and money didn’t seem to hang on the Dow lately. When the index is up, we’re up. When it’s down, we’re down. The question now: With the recovery in doubt, will the index confirm our hopes that better times are around the corner and continue to climb? In no small part, the answer is rather prosaic. Check back on Oct. 21 when Cat announces earnings for the third quarter. Analysts are expecting a profit of $1.07 a share, more than double what it reported a year earlier. The distortions of the Dow also matter because of the way we’re now investing. After two crashes in a decade, individual investors are pulling money out of stocks. For those sticking with equities, there’s an equally interesting shift in where we’re putting our money: mutual funds tracking equity indexes with computers rather than funds run by highly paid stock pickers. There are many indexes beside the Dow, of course. One that gets much more of our money is the Standard & Poor’s 500. It allocates dollars according to a company’s market value, or the stock price multiplied by the number of shares. The S&P also spreads its bets over 500 stocks so there’s less risk of a single soaring stock bringing down the index if it stumbles. But the S&P suffers from the same self-reinforcing ill of the Dow. As the market value of a company rises, S&P index funds buy more of the stock, lifting the price. As tech stocks rose in the late 90s, index funds pushed them higher still. Ditto for financial stocks before the last crash. Instead of protecting us from our all-too-human swings from greed to fear, the computers running the index funds exaggerate them. One index that tries to fix this problem is the PowerShares FTSE RAFI 1000. The index was designed by Research Affiliates, a money management firm run by famed S&P critic Robert Arnott. Instead of dividing money according to market values, it does so based on a company’s cash flow and other fundamentals. PowerShares is down -5.44 percent annually over three years, but that is 2.15 percentage points better than the S&P. The flaws of our most popular indexes aren’t new. They started when Charles Dow listed a handful of big stocks and their prices on a piece of paper and decided we should buy one share of each instead of multiples and fractions of those shares so our money and risk would be equally divided among the companies. His original sin should have doomed the measure but for one thing: He did this in 1896. Of course, old brands die hard. We’re drawn to them despite ourselves. “You can get some distorted results,” says Harris Private Bank strategist Jack Ablin of the Dow, though he concedes, “I still follow it.” ConvergEx’s Colas rips into its price-weighting as “arbitrary” but in the next moment is talking excitedly about how the index is older even than that most venerable symbol of American capitalism, the New York Stock Exchange Building (erected in 1903). And so warts and all, the Dow will continue to shape our views. “It influences our perception of the economy,” Colas says. “And right now perceptions matter.”

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Echo360 Appoints Steve Fitzgerald to New Role of Chief Technology Officer

September 28, 2010

Leader in Campus-Wide Lecture Capture Solutions Taps IT and Software Development Veteran to Drive Next Phase of Company’s Technology Vision and Product Innovation

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Jeffrey Rubin: Will the Fed’s Zero Rate Policy Bring Another Speculative Bubble?

September 28, 2010

At the recent Federal Open Market Committee meeting, Federal Reserve Board Chairman Ben Bernanke signalled that he plans to keep interest rates effectively at zero for as long as possible, and that he’s ready to stand by with more quantitative easing (i.e. printing money) if necessary. But if the Fed’s blaming the last recession on the financial meltdown from the subprime mortgage market, why is it so committed to recreating those same credit conditions that spawned Wall Street’s worst-ever post-Depression crash? There is no shortage of people to blame for the subprime mortgage fiasco: wayward rating agencies that ranked the risk of mortgage default as comparable to the risk of a US Treasury default; unscrupulous lenders who eagerly approved mortgages and then quickly resold them to financial institutions; over-leveraged banks that used depositors’ money to play Russian roulette in the financial derivatives market; and asleep-at-the-wheel regulators (like the Securities Exchange Commission ), who were either blind or indifferent to Wall Street’s systemic risk to the subprime mortgage market. However, the real culprits behind the subprime mortgage crisis were the incredibly low interest rates that sustained the bubble. All the greed in the world could not have done what the Fed’s easy-money policy made so simple. Was it not the desperate search for yield that threw many an otherwise cautious pension fund into the arms of seemingly safe CDOs (collateralized debt obligations)? Beneath the AAA-rated vanilla wrapping paper were pools of subprime mortgages just waiting to go bust. The measly extra basis points they offered over government-funded AAA bonds may not seem like much when Treasury yields are 5 to 6 per cent, but they meant a lot more to return-starved pension plans when government bond yields fell to near-record lows. Similarly, was it not the ridiculously low cost of credit that allowed banks to become so leveraged–hence exposed–to the subprime mortgage market? And of course, it was the same low cost of capital that allowed interest-free mortgages (negative amortization types) to be given out to anyone who would take them in the first place. Neither the demand for financial products like CDOs that were funded by subprime mortgages, nor the supply of subprime mortgages themselves would have been possible in a world of normal interest rates. When the federal funds rate rose to 5 per cent, an historically average setting, the subprime mortgage market collapsed, creating an insolvency crisis for financial institutions whose vaults were filled with reeking CDOs. Of course it won’t be subprime mortgages and CDOs next time, but if the Fed keeps rates at zero for long enough, you can count on financial markets’ insatiable desire for yield to invent something just as toxic.

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Kaseman LLC Names Former Head of DynCorp International to Its Board of Directors

September 28, 2010

FAIRFAX, VA–(Marketwire – September 28, 2010) –  Kaseman LLC (“Kaseman”), a company controlled by DC Capital Partners, LLC, announced today that Herbert J. Lanese has joined its Board of Directors.

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Don Tapscott: Macrowikinomics: The Choice Between Atrophy or Renaissance

September 28, 2010

Today an important new book is being released in the United States and Canada. Macrowikinomics: Rebooting Business and the World , written by Don Tapscott and Anthony D. Williams is the sequel to their best selling work Wikinomics . The Economist says Macrowikinomics is “a Schumpeterian story of creative Destruction.” Mark Parker CEO of Nike calls it, “A masterpiece. An iconic and defining book for our time.” Google CEO Eric Schmidt says the book, “inspires, pointing the way forward for all of us.” Tapscott, author of 14 widely read books about technology in business and society teamed up with Williams a few years ago and the result — Wikinomics — was the best selling management book in the United States in 2007. Macrowikinomics offers nothing less than a game plan for all of us to fix a broken world. Drawing on an entirely new set of original research conducted with countless collaborators the authors explain how the world’s most dynamic innovators are using the Internet and new business models to transform industries ranging from manufacturing and transportation to global problem solving. Technology, Health and the Environment are three axes of transformation, each inextricably intertwined. They argue that this is a time of peril as old approaches collapse, but a time of great promise and opportunity as we stand on the threshold of a new age. Now the onus is now on each person to lead the transformation in our workplaces and communities. **** The global economic crisis should be a wakeup call to the world. We need to rethink and rebuild many of the organizations and institutions that have served us well for decades, but now have come to the end of their life cycle. This is more than a recession or the aftermath of a financial crisis. We are at a turning point in history. Let’s face it. The world is broken and the industrial economy and many of its industries and organizations have finally run out of gas, from newspapers and old models of financial services to our energy grid, transportation systems and institutions for global cooperation and problem solving. At the same time the contours of a new kind of civilization are becoming clear as millions of connected citizens begin to forge alternative institutions using the Web as a platform for innovation and value creation. From education and science and to new approaches to citizen engagement and democracy, powerful new initiatives are underway, embracing a new set of principles for the 21st century — collaboration, openness, sharing, interdependence and integrity. Indeed, with the proliferation of social media and social networks, we believe society has at its disposal the most powerful platform ever for bringing together the people, skills and knowledge we need to ensure growth, social development and a just and sustainable world. Of course, the sparkling possibilities described above contrast sharply with the stagnation and inertia that grips so many contemporary institutions. The harsh reality is that it will take years and probably decades to undo some the damage done by misguided policies and approaches. When the economy crashed in 2008, for example, it cost American taxpayers trillions of dollars. Faced with a historic market meltdown, the worst recession in three generations, plus government guarantees that exceed the cost of every war the U.S. has ever fought, American taxpayers are understandably still furious. It is pretty much the same story around the world. Many people are reviving calls for updated regulations, more government intervention and even the breakup or nationalization of the big banks. In the meantime, the lingering effects of the financial meltdown threaten to engulf not just companies but entire countries in a sovereign debt crisis. Greece, Spain, and Portugal may have rocked the financial markets, but the U.S. arguably looms largest, with Congress contemplating a budget that by 2020 would nearly double America’s national debt, to $22 trillion — twice the size of the U.S. economy. Clearly we need to rethink the old approaches to governing the global economy. But rebuilding public finances and restoring long-term confidence in the financial services industry will require more than government intervention and new rules; it’s becoming clearer that what’s needed is a new modus operandi based on new principles like transparency, integrity and collaboration. Clearly the financial system is not the only institution that’s in desperate need of a makeover. A string of recent events suggests that many of the institutions that have served us well for decades — even centuries — are frozen and unable to move forward. The failure to reach a meaningful agreement on climate change in Copenhagen has further undermined confidence in the ability of international institutions to provide effective leadership in dealing with a growing list of global challenges. The disastrous oil spill in the Gulf of Mexico provided yet another reminder that the world is grossly under-investing in green energy alternatives that could at last break our perilous addiction to fossil fuels. And despite Obama’s historic reforms, the government’s own projections suggest that the world’s richest nation will still struggle to rein-in the spiraling health care costs that threaten to cripple government budgets in the years to come. Sure, one could argue that the industrial economy and industrial-age institutions brought us centuries of unprecedented productivity, knowledge accumulation and innovation that resulted in undreamt-of wealth and prosperity. But that prosperity has come at a cost to society and the planet and it is clear that the wealth and security enjoyed in advanced economies may not be sustainable as billions of citizens in emerging markets aspire to join the global middle class. Indeed, as the world’s main economic engines continue to sputter, there is growing consensus that we are finally entering a very different kind of economy. Economist Robert Reich asks, “What will it look like? Nobody knows. All we know is the current economy can’t ‘recover’ because it can’t go back to where it was before the crash.” Is there a way forward? We think so. But don’t look to big government or big corporations to supply the answers. The most promising catalysts for reinvention today can be found in a powerful new form of economic and social innovation that is sweeping across all sectors and turning the old models on their head. After all, political leaders may have failed in Copenhagen, but ordinary people everywhere are connecting to create a mass movement that is bringing greater awareness and sense of community to the process of making household and business decisions that can reduce our carbon footprints. Carbonrally.org is a good example. Some 40,000 environmental enthusiasts propose great ideas for saving energy and reducing emissions and the community chooses the best ideas to pursue as a team. Carbonrally tracks the collective impacts and shows the power of many people getting the job done together. On PatientsLikeMe.com , one of the Web’s most vibrant health care communities, some 60,000 members believe that sharing their health care experiences and outcomes is good, and perhaps even integral, to speeding up the pace of research and fixing a broken health care system. Why? Because when patients share real-world data, collaboration on a global scale becomes possible. The health care system becomes more open and this in turn improves outcomes for patients, doctors and drug makers. New treatments can be evaluated and brought to market more quickly. Patients can learn about what’s working for other patients like them and, in consultation with their doctors, make adjustments to their own treatment plans. All considered, communities such as PatientsLikeMe are leading the way toward a health care system that is cheaper, safer and better than what we have today. Even governments are taking baby steps toward using the Web to generate more productive, transparent and equitable public services. Indeed, where most governments build mainframes and buy expensive software, U.S. federal Chief Information Officer Vivek Kundra is encouraging federal agencies to use free Google services and open-source wikis for everything from word processing to performance measurement, to service improvement. He calls it the government cloud, but think “app store for government” — a place where employees can access a vast ecosystem of secure applications and data sets for doing their jobs. Put it all together and it becomes increasingly clear that we can rethink and rebuild many industries and sectors of society around the principles of wikinomics. Indeed, we’re convinced that the world now has nothing less than an historic choice: reboot the old models, approaches and structures or risk institutional paralysis or even collapse. It’s a question of stagnation versus renewal. Atrophy versus renaissance. Peril versus promise. Fortunately, for the first time in history, people everywhere can participate fully in creating a sustainable future. This is not just a theory — it’s happening. Adapted from MACROWIKINOMICS: REBOOTING BUSINESS AND THE WORLD by Don Tapscott and Anthony D. Williams by arrangement with Portfolio, a member of Penguin Group (USA), Inc., Copyright (c) Don Tapscott and Anthony D. Williams, 2010.

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Video: Lynch Says Barnes & Noble Attracting Interest on Sale: Video

September 28, 2010

Sept. 28 (Bloomberg) — William Lynch, chief executive officer for Barnes & Noble Inc., talks with Bloomberg’s Jon Erlichman about the possibility of a sale of the company and the shareholder vote that elected to keep Chairman Leonard Riggio on the board, rejecting an ouster attempt by Ron Burkle’s Yucaipa Cos. Riggio, the biggest shareholder, was re-elected to the nine-member board with less than 50 percent of votes cast, Yucaipa said in a statement. (Source: Bloomberg)

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Tom Donohue: We Can’t Wait for "Superman"

September 28, 2010

The 2010-11 school year is well underway and with it, a season of new beginnings. We send our children into the classroom with an expectation that they will learn and succeed in core academic subjects, be given opportunities to explore their interests, and be prepared to enter college or a career upon graduation. For students who are lucky enough to attend good schools and receive instruction from good teachers, this is the case. But far too many young Americans are not so fortunate. These students are trapped in low performing schools, often with no way out. While school reform has been debated for years, there’s been too little action. A groundbreaking new film, Waiting for “Superman” , may permanently change that dynamic. This movie tells the story of five children as they try to make their way out of failing public schools and into charter schools. Along the way, viewers are exposed to the low expectations and poor results that exist in our public school system. The statistics are alarming. Among developed countries, the United States ranks 21st out of 30 in science literacy and 25th out of 30 in mathematics literacy. Perhaps our greatest shortcoming is the 1.2 million students who fail to graduate from high school each year. But the movie is at its most powerful when it goes beyond facts and figures to show the human impact of a failing education system. Take, for example, Anthony, a fifth-grader living in Washington, D.C., who wants a different life than the one that caused his father to die from drug addiction. But Anthony’s path to a brighter future — acceptance into a high performing public charter school — will be determined by a lottery. The school to which he is applying has only 24 slots for 61 applicants. This is tragic — and maddening. Because a superhero isn’t coming to save our schools, it’s up to every American to demand more from the educational establishment. A good K-12 education isn’t just for the privileged few; it’s the birthright of every American child. The U.S. Chamber of Commerce has been at the forefront of efforts to shake up K-12 education so that every child is prepared for higher education or productive careers. We continue to advocate for commonsense reforms including greater accountability in schools, merit pay for high-performing teachers, fair removal of ineffective teachers, and expanded access to charter schools. The Chamber is proud to promote Waiting for “Superman.” For more information about the film and campaign, visit www.waitingforsuperman.com/action . For more about the Chamber’s education activities, visit www.uschamber.com/icw .

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Video: Kindler Says Private Equity `Back in the Game’ for M&A: Video

September 28, 2010

Sept. 28 (Bloomberg) — Robert Kindler, vice chairman and global head of mergers and acquisitions at Morgan Stanley, talks about M&A market conditions. He speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (This report is an excerpt of the full interview. Source: Bloomberg)

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