October 2010

Video: Fed’s ‘Pit Bull’ Takes on BofA in Loan Buyback Battle: Video

October 26, 2010

Oct. 26 (Bloomberg) — Bloomberg’s Michael McKee reports on Houston lawyer Kathy D. Patrick, who spends her Sundays teaching children about God and her weekdays representing bond investors seeking to force Bank of America Corp. to buy back bad home loans on claims the debt failed to match contractual promises about its quality. According to one attorney who knows Patrick, she can be “as frightening as a pit bull on steroids.” (Source: Bloomberg)

Read the full article →

Ford 3Q Profit Soars As It Grabs Bigger Market Share

October 26, 2010

DEARBORN, Mich. — Ford Motor Co.’s third-quarter net income rose 68 percent as it grabbed a bigger share of the U.S. auto market and buyers paid more for its highly-rated cars and trucks. It was Ford’s sixth straight quarterly profit and the company’s best third-quarter performance since at least 1990. Ford CEO Alan Mulally said popular new cars, such as the Ford Fiesta subcompact and Ford Edge wagon, and aggressive cost-cutting helped the company make money despite lower global sales. The automaker said it expects to end the year with as much cash as it has debt, a year earlier than it had previously forecast. Ford, which four years ago mortgaged its factories, blue oval logo and other assets to fund a huge restructuring, said it paid off $2 billion in debt in the third quarter and expects to pay off an additional $3.6 billion for retiree health care on Friday. Ford’s debt will stand at $22.8 billion after those two actions. It has $20.3 billion in cash. When Ford pays its debt to the United Auto Workers health care trust, it will no longer owe the trust any money. The UAW agreed to the trust in 2007, and it began paying health care benefits for 195,000 retirees and spouses in January. The automaker was paying a 9 percent annual interest rate on its obligation to the trust. Ford also said it is launching an offer to convert $3.5 billion in debt to common stock. The offer closes Nov. 23. Ford’s earnings of $1.7 billion, or 43 cents per share, beat Wall Street estimates. Without one-time items, which included a $102 million charge related to Ford’s sale of Volvo, Ford would have earned 48 cents per share. Analysts polled by Thomson Reuters had forecast earnings of 38 cents per share. Those estimates typically exclude one-time items. In the same quarter a year earlier, Ford earned $1 billion, or 26 cents per share. Ford’s quarterly revenues fell $1 billion, or 3 percent, to $29 billion for the quarter. But Ford said if Volvo’s 2009 revenues were excluded, revenues rose $1.7 billion. For the first three quarters of the year, Ford made $6.4 billion. The company also said it expects all of its regions to be profitable in the fourth quarter and for all of 2011. In the third quarter, Ford’s European operations posted a $196 million loss, compared with a $131 million profit a year ago, but all other regions made money. Ford Motor Credit Co., the company’s auto loan arm, made $497 million for the third quarter and contributed $1 billion to the parent company. The Dearborn, Mich., automaker offered to convert $3.5 billion in bonds that pay 4.25 percent interest to shares of common stock. The notes, held mainly by hedge funds and other institutional investors, were due in 2016 and 2036. The company said it doesn’t know how many debtholders will take the offer, but it if all of them do, it will pay them off with 372 million in previously authorized shares that had not been sold. Treasurer Neil Schloss said there should be no dilution of the current shares since the shares being used to pay the debt are already on the books. Ford shares, though, were down 30 cents, or 2.1 percent, to $13.85 in premarket trading. Schloss said once Ford repays the UAW trust, it will have reduced debt this year by $10.8 billion, saving roughly $800 million in annual interest costs. The figure does not include the $3.5 billion in notes. Despite the repayments, the company still must continue to work on its balance sheet, paying down debt as it generates operating cash, Chief Financial Officer Lewis Booth said. He said the company is getting better prices for its vehicles around the world, especially as it rolls out new models. Ford is either getting customers to pay higher sticker prices or it has reduced the amount of incentives it has to offer to get people to buy, Booth said. “The strength of the product is propelling our business results,” he said.

Read the full article →

Riverbed Names Randy Schirman to Vice President of Worldwide Channel Sales

October 26, 2010

Industry Sales and Channel Veteran Tapped to Lead Channel Program

Read the full article →

Potential AIG Bailout Loss Was Concealed By Treasury, Federal Auditor Says

October 26, 2010

The U.S. Treasury concealed $40 billion in likely taxpayer losses on the bailout of American International Group (AIG.N), the New York Times said, citing a report by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program. “In our view, this is a significant failure in their transparency,” Barofsky said in an interview with the New York Times. Early this month, the Treasury changed its usual valuation methods and issued a report saying that U.S. taxpayers would ultimately lose just $5 billion on the AIG investment, the paper said. The Treasury had previously maintained a conservative estimate that it would lose $45 billion on the bailout of AIG. However, on Monday, a Treasury official disputed Barofsky’s conclusions, saying the department appropriately used different methods for different purposes, the Times said. The official told the newspaper that the smaller loss was a projection of future events and the larger one was the result of an audit, which includes only realized gains and losses. The Treasury will include more information about the AIG investment when it issues its own audited financial statement in November, which may likely report taxpayer losses of more than $5 billion, according to the paper. The Treasury department and the office of the Special Inspector General for TARP could not immediately be reached for comment by Reuters outside regular U.S. business hours. (Reporting by Sakthi Prasad in Bangalore) Copyright 2010 Thomson Reuters. Click for Restrictions .

Read the full article →

Video: Mikelic Says Ford’s Mulally Is Doing a `Tremendous Job’

October 26, 2010

Oct. 26 (Bloomberg) — Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management, talks about Ford Motor Co.’s third-quarter profit reported today and the performance of Chief Executive Officer Alan Mulally. Ford, propelled by new models that are boosting its U.S. share, posted net income of $1.69 billion, the highest in the automaker’s 107-year history. Excluding some items, profit was 48 cents a share. Mikelic speaks with Erik Schatzker on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

Read the full article →

Industry Icon Returns as General Manager to Buggy World

October 26, 2010

Expects to Bring Store Sales to ‘Pre-Recession’ 1.6 Million Dollar Mark

Read the full article →

In The Pipeline: CoStar Development and Construction News for Oct. 24 – 30

October 26, 2010

In this edition of In The Pipeline, a leading indicator of future development activity turns positive last month for the first time in 21 months; CBL and Horizon Group join together to co-develop Oklahoma’s first outlet center; Inland American Real…

Read the full article →

Ford records $1.7b profit in Q3

October 26, 2010

Ford records $1.7b profit in Q3

Read the full article →

Marubeni buys BP assets for $650m

October 26, 2010

Marubeni buys BP assets for $650m

Read the full article →

U.S. Steel loss narrows in Q3

October 26, 2010

U.S. Steel loss narrows in Q3

Read the full article →

Merck achieves $296m revenues in Q3

October 26, 2010

Merck achieves $296m revenues in Q3

Read the full article →

China fuel prices rise 3%

October 26, 2010

China fuel prices rise 3%

Read the full article →

Pakistan awards $55m contract to ILF

October 26, 2010

Pakistan awards $55m contract to ILF

Read the full article →

PUMA takes over full control of business in China

October 26, 2010

PUMA takes over full control of business in China

Read the full article →

Garmin, ASUS announce new mobile handset strategies

October 26, 2010

Garmin, ASUS announce new mobile handset strategies

Read the full article →

Sweden hikes key interest rate to 1%

October 26, 2010

Sweden hikes key interest rate to 1%

Read the full article →

Eurozone industrial orders up 5.3% in August

October 26, 2010

Eurozone industrial orders up 5.3% in August

Read the full article →

IDB chief-Mitchell talks focus on alleviating poverty

October 26, 2010

IDB chief-Mitchell talks focus on alleviating poverty

Read the full article →

India’s trade deficit narrows to six-month low

October 26, 2010

India’s trade deficit narrows to six-month low

Read the full article →

Tokyo, Washington reach open skies deal

October 26, 2010

Tokyo, Washington reach open skies deal

Read the full article →

Japan, India sign deal to boost trade, investment

October 26, 2010

Japan, India sign deal to boost trade, investment

Read the full article →

US denies downplaying Iraq civilian deaths

October 26, 2010

US denies downplaying Iraq civilian deaths

Read the full article →

Japanese cabinet approves $62b extra budget

October 26, 2010

Japanese cabinet approves $62b extra budget

Read the full article →

Liquidity management body to facilitate investment flows

October 26, 2010

Liquidity management body to facilitate investment flows

Read the full article →

US ban on Chinese poultry illegal: WTO

October 26, 2010

US ban on Chinese poultry illegal: WTO

Read the full article →

India plans $22b investment in urban railways

October 26, 2010

India plans $22b investment in urban railways

Read the full article →

Video: Lamont Says ‘Don’t Be Impatient’ on U.K. Economic Growth

October 26, 2010

Oct. 26 (Bloomberg) — Former U.K. Chancellor of the Exchequer Norman Lamont talks about the outlook for economic growth in Britain. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

Read the full article →

INC Research Adds Elite Talent to Optimize Global Services Business Unit

October 26, 2010

John Barker Joins Leadership Team to Support and Enhance Clinical Trials Services Growth

Read the full article →

Michael Conboy, Representative of Luxor Capital, Joins Searchlight Minerals Corp. Board of Directors

October 26, 2010

HENDERSON, NV–(Marketwire – October 26, 2010) – Searchlight Minerals Corp. ( OTCBB : SRCH ) (“Searchlight,” “SMC” or the “Company”), an exploration stage minerals company focused on precious metals projects in the southwestern United States, today announced that Michael Conboy has joined the Company’s Board as an Independent Director.

Read the full article →

Video: Qatar’s Ruler Considers Bid for Christie’s Auction House

October 26, 2010

Oct. 26 (Bloomberg) — Bloomberg’s Poppy Trowbridge reports on Qatar’s investment in the U.K. retail industry and businesses including Christie’s International Plc. Qatar has already bought Harrods Ltd. store and real estate in central London.

Read the full article →

Video: Ellinghorst Sees `Massive’ Recovery in Earnings at Ford

October 26, 2010

Oct. 26 (Bloomberg) — Arndt Ellinghorst, head of automotive research at Credit Suisse Group AG, talks about the outlook for Ford Motor Co.¶ Ford may report the biggest third-quarter profit in its 107-year history today as Chief Executive Officer Alan Mulally’s overhaul of the model lineup boosts the company’s share of the U.S. auto market. Net income was $1.37 billion, based on the average projection of five analysts, up from $997 million. Ellinghorst speaks with Mark Barton on Bloomberg Television’s “Countdown.”

Read the full article →

Video: Kitson Sees U.K. Growth `Significantly’ Lower in 2011

October 26, 2010

Oct. 26 (Bloomberg) — Michael Kitson, an economist at Cambridge University’s Judge Business School, talks about the outlook for U.K. gross domestic product. Britain’s economy grew in the third quarter by twice as much as economists forecast as services and construction helped sustain the recovery’s momentum, easing pressure on officials to add stimulus. Kitson speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

Read the full article →

Video: Mentel Expects `Tougher Times Ahead’ for Big Swiss Banks

October 26, 2010

Oct. 26 (Bloomberg) — Lothar Mentel, chief investment officer at Octopus Investments Ltd., talks about the impact of changes to Swiss tax laws on bank earnings. He speaks with Rishaad Salamat on Bloomberg Television’s “On The Move.”

Read the full article →

Video: Blaabjerg Sees ‘Strong’ 2011 Trading Revenue for Banks

October 26, 2010

Oct. 26 (Bloomberg) — Christian Blaabjerg, chief equity strategist at Saxo Bank A/S, talks about UBS AG’s third-quarter earnings and the outlook for investment banks in 2011. He speaks from Copenhagen with Mark Barton on Bloomberg Television’s “Countdown.”

Read the full article →

Bennie Peleman Joins ValidSoft as Vice President, Sales, EMEA

October 26, 2010

LONDON–(Marketwire – October 26, 2010) –  ValidSoft ( www.validsoft.com ), a global supplier of fraud prevention, authentication and transaction verification solutions and a subsidiary of Elephant Talk Communications, Inc. ( OTCBB : ETAK ) ( www.elephanttalk.com ), announced today that Bennie Peleman is joining the company as Vice President, Sales, Europe, the Middle East and Africa (EMEA).

Read the full article →

Video: BoA’s Wraith Sees BOE Delaying Bond Purchases Until 2011

October 26, 2010

Oct. 26 (Bloomberg) — John Wraith, a fixed-income strategist at Bank of America Merrill Lynch, talks about the outlook for third-quarter U.K. gross domestic product and for further bond purchases by the Bank of England. He speaks with Mark Barton on Bloomberg Television’s “Countdown.”

Read the full article →

David Isenberg: Sergio Leone on PMC

October 26, 2010

Earlier this month I mentioned past congressional testimony by Colonel T. X. Hammes (USMC – Ret.), Senior Research Fellow, Institute for National Strategic Studies (INSS) , National Defense University. He also gave a presentation on private security contractors at the Middle East Institute. Now the INSS has published a paper he wrote in which he explores the question “Does using contractors in a conflict zone make strategic sense?” I’ll simply say that if you are going anything to read anything on private military contractors read this. It will easily be the best 15 pages written on the subject this year. Be warned; because it is so cogent and incisive I am going to quote from it a lot. The paper is titled Private Contractors in Conflict Zones: The Good, the Bad, and the Strategic Impact . I’m guessing the colonel is a fan of Sergio Leone films. Note to Clint Eastwood: there is a PSC film waiting to be made that has your name in a starring role written all over it. Give Col. Hammes credit dealing with a topic that is relatively unexplored. Most writing on private military and security contractors deals with operational and normative issues but putting PMC in the context of national military strategy or grand strategy generally gets short thrift. Also give him credit for getting right to the point. His key points are: the United States has hired record numbers of contractors to serve in the conflict zones of Iraq and Afghanistan but has not seriously examined their strategic impact. there are clearly advantages to using contractors in conflict zones, but they have three inherent characteristics that have serious negative effects during counterinsurgency operations. We cannot effectively control the quality of the contractors or control their actions, but the population holds us responsible for everything the contractors do, or fail to do. contractors compete with the host government for a limited pool of qualified personnel and dramatically change local power structures. contractors reduce the political capital necessary to commit U.S. forces to war, impact the legitimacy of a counterinsurgency effort, and reduce its the perceived morality. These factors attack our nation’s critical vulnerability in an irregular war–the political will of the American people. Hammes notes, as PMC supporters often assert, that use of contractors does have its advantages, such as speed of deployment, continuity, reduction of troop requirements, reduction of military casualties, economic inputs to local economies, and, in some cases, executing tasks the military and civilian workforce simply cannot. Col. Hammes also has some interesting estimates on the level of combat firepower private contractors represented. While the vast majority of contractor personnel were involved in noncombatant logistics tasks, DOD estimated there were over 20,000 armed contractors in Iraq during 2007. Other organizations have much higher estimates. Even using the Pentagon’s lower estimate, contractors provided three times more armed troops than the British. It should also be noted that in Iraq and Afghanistan, many unarmed, logistic support personnel functioned in what the military would define as a combat role. Te drivers were subjected to both improvised explosive devices and direct fire attacks. This combination of drivers willing to run the gauntlet of ambushes and armed contractors replaced at least two full combat divisions. Given the very low support-to-operator ratio that contractors maintain, it is not unreasonable to estimate they actually replaced three divisions. And, in regard to contractor casualties, a vastly underreported and underappreciated subject, he notes: The contractors not only provided relief in terms of personnel tempo but also reduced military casualties. Contractors absorbed over 25 percent of the killed in action in Iraq, which reduced the political resources required to maintain support for the conflict. By the end of 2009, contractors reported almost 1,800 dead and 40,000 wounded in Iraq and Afghanistan. As the fighting in Afghanistan gets worse, contractors are now suffering more deaths than U.S. forces: “In the first two quarters of 2010 alone, contractor deaths represented more than half–53 percent–of all fatalities. This point bears emphasis: since January 2010, more contractors have died in Iraq and Afghanistan than U.S. military soldiers.” For practical purposes, these casualties were “of the books” in that they had no real impact on the political discussions about the war. What this means in terms of enabling continued war is obvious. Replacing these contractors, both armed and unarmed, would have required additional major mobilizations of Reserves or a dramatic increase in Army and Marine Corps end-strength. In effect, the mobilization of civilian contractors allowed the United States to engage in a protracted conflict in Iraq without convincing the U.S. public of the need for additional major mobilizations or major increases in the Active Armed Forces. An in regard to the never ending argument of contractor cost-effectiveness Hammes writes: Determining actual costs is extremely difficult due to the large number of variables involved–some of them currently impossible to document. For instance, with over 40,000 U.S. contractors wounded to date, we are unable to estimate potential long-term care costs to the U.S. Government. While contractors may claim their insurance covers those costs, the government, in fact, paid for that insurance through the contract, and if the coverage proves insufficient, the government may well end up paying for the continued care through various governmental medical programs. In short, long-term costs associated with employing contractors in a conflict environment are essentially unknowable. Now, believe it or no, all the above came from the section on contractor’s good points. Now let’s see some of his points regarding their bad side. To start, three inherent characteristics of contractors create problems for the government. First, the government does not control the quality of the personnel that the contractor hires. Second, unless it provides a government officer or noncommissioned officer for each construction project, convoy, personal security detail, or facilities-protection unit, the government does not control, or even know about, their daily interactions with the local population. Finally, the population holds the government responsible for everything that the contractors do or fail to do. Since insurgency is essentially a competition for legitimacy between the government and insurgents, this factor elevates the issue of quality and tactical control to the strategic level. On the issue of quality control Hammes tells this story: When suicide bombers began striking Iraqi armed forces recruiting stations, the contractor responsible for recruiting the Iraqi forces subcontracted for a security force. The contractor was promised former Gurkhas. What showed up in Iraq a couple of weeks later were untrained, underequipped Nepalese villagers. Not only did these contractors provide inadequate security, the United States armed them and authorized them to use deadly force in its name. This is more than a shake your head anecdote however, as it goes to the heart of one of the arguments contractors supporters frequently make, i.e., that most private contractors in war zones are former military and bring the same qualities of discipline and professionalism they presumably had while on active duty. Hammes’s response to that is: Since the government neither recruits nor trains individual armed contractors, it essentially has to trust the contractor to provide quality personnel. In this case, the subcontractor took shortcuts despite the obvious risk to the personnel manning the recruiting stations. Even if the government hires enough contracting officers, how can it determine the combat qualifications of individuals and teams of armed personnel? The U.S. military dedicates large facilities, major exercises, expensive simulations, and combat-experienced staffs to determine if U.S. units are properly trained. Contractors do not. We need to acknowledge that contracting officers have no truly effective control over the quality of the personnel the contractors hire. Te quality control problems are greatly exacerbated when the contractor uses subcontractors to provide services. These personnel are at least one layer removed from the contracting officer and thus subject to even less scrutiny. In Hammes’s view the use of PMC also represents a military vulnerability. In the uprising in Iraq during the spring of 2004, both Sunni and Shia factions conducted major operations against coalition forces. The insurgents effectively cut Allied supply lines from Kuwait. U.S. forces faced significant logistics risks as a result. Despite the crisis, U.S. officials could not morally order unarmed logistics contractors to fight the opposition. The contractors lacked the training, equipment, and legal status to do so. Had the supply line been run by military forces, it would have been both moral and possible to order them to fight through. Despite this demonstrated operational vulnerability, the fact that unarmed contractors are specifically not obligated to fight has not been discussed as a significant risk in employing contractors rather than military logistics organizations. Furthermore, while military logistics units can provide their own security in low threat environments, unarmed contractors cannot. Te government must either assign military forces or hire additional armed contractors to provide that security. The substitution of unarmed contractors for Soldiers and Marines creates yet another vulnerability: lack of an emergency reserve. In the past, support troops have been repeatedly employed in critical situations to provide reinforcements for overwhelmed combat troops. Contractors are simply unable to fulfill this emergency role. This limitation, as well as the unarmed contractor’s inability to fight, is even more significant in conventional conflicts than in irregular war. Here is the strategic question Hammes puts that we should all ponder. What is the impact of contractors on the initial decision to go to war as well as the will to sustain the conflict? Contractors provide the ability to initiate and sustain long-term conflicts without the political effort necessary to convince the American people a war is worth fighting. Thus, the United States can enter a war with less effort to build popular consensus. Most wars will not require full-scale national mobilization, but rather selective mobilization of both military and civilian assets. Both proponents and opponents admit that without contractors, the United States would have required much greater mobilization efforts to generate and support a force of 320,000 in Iraq (the combined troop and contractor count) or a force of over 210,000 in Afghanistan. The use of contractors allowed us to conduct both wars with much less domestic political debate. But is this good? Should we seek methods that make it easier to take the Nation to war? That appears to be a bad idea when entering a protracted conflict. Insurgents understand that political will is the critical vulnerability of the United States in irregular warfare. They have discussed this factor openly in their online strategic forums for almost a decade. Ensuring that the American public understands the difficulty of the impending conflict and is firmly behind the effort should be an essential element in committing forces to the 10 or more years that modern counterinsurgencies require for success. Thus, while the use of contractors lessens the extent of political mobilization needed, it may well hurt the effort in the long term.

Read the full article →

Jeff Pollack: Losing Steam: Why Digital Track Sales Are Flat

October 26, 2010

A recent analysis of music sales by Ed Christman of Billboard had a comment that really caught my eye: “2010 could become the first year that digital track sales post a year on year decline.” Although digital album sales for 2010 are up overall, according to SoundScan, the first nine months of digital track sales this year are lagging behind the same time period in ’09. This was a much discussed topic at Digital Music Forum West a few weeks back and a source of real concern to the music business… what would it mean if the physical business continued to decline without the growth in digital track and album sales? I asked a few of my colleagues about their views on this disturbing trend and if the increased price point, now $1.29 for current hits, is one of the main culprits. According to Jay Frank, SVP Music Strategy at CMT, “The change in pricing certainly had an effect on units sold. 99 cents is an impulse buy to the consumer. $1.29 is enough to make some people pause.” BigChampagne’s CEO, Eric Garland, had an interesting observation: “In the short term, albums are gaining back some ground against singles. One could argue that digital is “up” in terms of the (higher priced) bundle gaining. And yes, this is probably in part a function of pricing: as individual songs get more expensive, the album is a relatively better perceived value.” Or could it be that on-demand access is so readily available and was so quickly embraced that it is no longer exciting — it is expected, and consumers are quickly moving-on from technologies that don’t provide it? Photo: Esparta Palma Garland underscored this view, saying “But the bigger issue is that ownership is losing ground to access. Impressions from on-demand audio and video streaming services (YouTube, MySpace) and programmed streams (Pandora, Last.FM) are all up and to the right.” Jay Frank also added “Digital music sales are flattening thru a multitude of factors. Streaming sites are becoming more prevalent, whether it be radio, subscription, or on-demand video. So more people than ever can just click a link to hear the song instead of buying it. If the song fails to be sticky, then there’s no need for ownership. Then there’s the additional growth of digital movies, TV and apps. All of a sudden, music has to compete with more “floor space” on iTunes. This means fewer promotions. Fewer promotions between fewer sales. Since retailers and labels have failed to adequately support enough alternative stores, the growth trajectory becomes more difficult.” So in this environment, we should not be surprised to learn that there is a rapid decline in the dedicated MP3 player. Apple’s recent 3rd quarter financial review revealed the fact that iPod sales were down 11% year to year. That’s not an unexpected development given the meteoric rise of the iPhone and iPad, which both include iPod capabilities, but it does point out that the dedicated music player is an endangered species. Photo: BizMac And perhaps not far behind it would seem is the dedicated listener. Consider how many of these devices now come with added features, including Wi-Fi web access, that take them away from their original music-only focus (e.g. the iPod Touch supplanting the iPod Classic). And with web access and a plethora of music apps comes distractions such as Pandora and other streaming services. Not only does the Web bring competitive music services, it also brings video, whether it’s MTV, YouTube, Vevo, Hulu or Instant Netflix. These sites and their content bring a completely different type of media into competition with music, downloaded or streamed. In fact, the beginning of recorded music’s slide, which began in the late 90s, is usually attributed to illegal downloading. However, one overlooked factor is that the slide in CD sales coincided with the rising popularity of DVDs. Consumers only had so much disposable income and some of that was redirected from music to films and TV shows. The same thing is happening now in the digital space. As Jay pointed out, digital media has to compete with downloadable movies and TV shows. Look at iTunes, where much of the real estate, originally all about music, is now dedicated to promoting film and TV show downloads. One of the major problems for downloaded music vs. the Internet is very basic: why have some when you can have it all? Why would I switch devices, or even merely applications, when I can watch/listen to whatever I want on Youtube? Photo: John Blyberg Ten years ago, the concept of physical stock controlling my access started to seem odd. When I stream a TV show or download a song, they are never out-of-stock, hence the demise of Blockbuster. Now, the concept of any sort of limited access/storage seems odd. I may have 16 gigs of memory on my iPhone, but the music I can listen to on it becomes infinite when I launch my Pandora app. And how much of this is due to anticipation of soon-to-be-launched cloud-based music services such as the long-rumored iTunes cloud-based initiative, Google Music, Spotify, etc.? Ultimately, there are so many ways to instantly access everything that you want to hear and see that it’s not surprising that paying for individual tracks is leveling off. Although consumers in general have been slow to embrace subscription, the affordability and immediate access of these services could set the stage for new models to finally gain some real traction.

Read the full article →

Video: Bayston Sees Opportunity in Corporate, Non-U.S. Bonds: Video

October 26, 2010

Oct. 25 (Bloomberg) — Roger Bayston, portfolio manager and senior vice president at Franklin Templeton Fixed Income Group, talks about his investment strategy. Bayston speaks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

Read the full article →

Video: Semmens Say New Fed QE Should Be `Open-Ended Intention’: Video

October 26, 2010

Oct. 25 (Bloomberg) — David Semmens, an economist at Standard Chartered Bank, talks about the outlook for quantitative easing by the Federal Reserve. Semmens also discusses the increase in the sales of U.S. existing homes in September. He speaks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

Read the full article →

Video: Cowboys’ Jones Says Focus Is on Avoiding NFL Lockout: Video

October 25, 2010

Oct. 25 (Bloomberg) — Dallas Cowboys Owner Jerry Jones talks about the team’s new stadium, the impact of the economy on attendance and the determination of National Football League owners to avoid a labor dispute with players. He speaks with Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

Read the full article →

Robert Benmosche, AIG CEO, Diagnosed With Cancer

October 25, 2010

NEW YORK (Reuters) – Bailed-out insurer American International Group on Monday said Chief Executive Robert Benmosche has cancer and has an unclear prognosis, casting another shadow on the company as it undergoes a comprehensive restructuring. AIG did not disclose what kind of cancer Benmosche, 66, has, but said he is undergoing “aggressive chemotherapy.” Benmosche, in a statement, said he felt fine but said his long-term prognosis would not be clear until he had a couple more months of treatment. Benmosche has been an authoritative presence at AIG since becoming CEO in August 2009, getting much of the credit for a turnaround that included selling foreign life unit ALICO at an attractive price to MetLife and sorting out the mess surrounding the failed sale of Asian unit AIA. In July Benmosche won a boardroom battle with former chairman Harvey Golub over the failed AIA sale. Reports indicated Benmosche had threatened to resign if Golub was not replaced. (Reporting by Ben Berkowitz; Editing by Gary Hill) Copyright 2010 Thomson Reuters. Click for Restrictions .

Read the full article →

Video: Horizon’s Adgate Expects More Content-Cable TV Disputes: Video

October 25, 2010

Oct. 25 (Bloomberg) — Brad Adgate, director of research at Horizon Media Inc., discusses Cablevision Systems Corp.’s fee dispute with News Corp. over how much the cable company should pay for programming. Broadcasters have recently pressed demands for fees from pay-TV distributors for content that has long been available for free over the air waves and the Web. While Cablevision and other pay-TV companies have resisted paying, the networks have succeeded in several markets. (Source: Bloomberg)

Read the full article →

Fannie Freddie Bailout Cost To Exceed 150B

October 25, 2010

The final cost to American taxpayers from the bailout of mortgage giants Fannie Mae and Freddie Mac is expected to exceed 150 billion but adverse scenarios could see the total grow higher according to The Wall Street Journal

Read the full article →

Video: John Brynjolfsson Not a `Big Buyer of Fixed-Rate Debt’: Video

October 25, 2010

Oct. 25 (Bloomberg) — John Brynjolfsson, chief investment officer at Armored Wolf LLC, talks about the implications of the Treasury’s sale of $10 billion of five-year Treasury Inflation Protected Securities at a negative yield for the first time. Brynjolfsson also discusses the outlook for inflation, quantitative easing by the Federal Reserve and the bond market. He talks with Carol Massar, Matt Miller and Dominic Chu on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

Read the full article →

G20 Split Over Trade Balancing Proposal

October 25, 2010

Members nations of the Group of 20 have been split by a proposal aimed at preventing a global currency war and correct international trade imbalances according to The Wall Street Journal

Read the full article →

Video: U.S. Stocks Climb as G-20 Fuels Fed Easing Speculation: Video

October 25, 2010

Oct. 25 (Bloomberg) — Bloomberg’s Courtney Donohoe reports on the performance of the U.S. equity market today. U.S. stocks rose, sending the Standard & Poor’s 500 Index to a fourth straight gain, after the Group of 20 nations pledged to avoid “competitive devaluation” of currencies and investors bet the Federal Reserve will announce further bond purchases next week. Bloomberg’s Pimm Fox also speaks. (Source: Bloomberg)

Read the full article →

Lanny Davis: Let’s Stick to the Facts on For-Profit Colleges Regulations

October 25, 2010

As I wrote on September 23 in this space, the Department of Education’s (DOE) attempt to put more stringent regulations on for-profit colleges is an example of good intentions gone awry. Rather than expanding college opportunities and fighting fraud, the proposed new “gainful employment” (“GE”) rules would instead limit college access especially for minority students, raise taxpayer costs, and create new obstacles for employers eager to hire qualified workers. The new rules target only for-profit institutions, a relatively small section of higher education. And for reasons not explained by the DOE, it has made no effort at all to hold public and private non-profit colleges to any similar standard for student debt and repayment limitations and job placement outcomes — particularly puzzling since these schools are subsidized by tens of billions of dollars of direct federal and state grants and are the beneficiaries of the largest share of federally-backed student loans. Even so, there remains a problem in the debate on this important issue that is fundamental — and that is respect for the difference between ideology and facts. To put it bluntly and to paraphrase a well-known pundit, those who criticize for-profit schools are “entitled to their own opinions, but not their own facts.” In this spirit, I challenge three important “assertions of fact” by proponents of these regulations, including leaders at the DOE as well as some Democrats in the U.S. Senate, that are false or misleading, or both. First: Repayment Rates — Asserted fact: that the regulations are needed because the “profit” in the for-profit colleges yields lower repayment rates than at non-profit and public colleges. Actual fact: Repayment rates are a result of the demographic and socio-economic status of the students who take out the loans, not the tax status of the colleges they attend. See, e.g., independent study by Mark Kantrowitz, an independent financial aid professional (found here) and Professor Jonathan Guryan, Ph.D, a professor in economics at Northwestern University, whose comments to this effect regarding the proposed gainful employment regulations were submitted to the DOE (found here). Mr. Kantrowitz’s data leads to especially troubling conclusions for those who are concerned about low-income and minority students: that the more minority students are in a college, the more they are likely to fail one or both of the two tests in the GE regulations — debt-to earnings and repayment rates. No wonder so many members of the Democratic Congressional Black Caucus have written letters of concern to DOE Secretary Arne Duncan, as well as many other leaders of minority communities who have expressed the same concerns, such as Rev. Jesse Jackson, and Rev. Al Sharpton, regarding these regulations as currently drafted and support serious changes before final issuance. Isn’t it troubling (at least to fellow liberal Democrats, such as myself) that a progressive Democratic administration seems indifferent or determined to go full steam ahead and ignore a disparate racial and economic effect of these regulations on a core Democratic Party base — minorities and lower income people who comprise most of the for-profit colleges students adversely affected by these proposed regulations? And just before an election day when the president and Democratic Party leaders are seeking a large turnout from that base? Second: Cost to Taxpayers — Asserted facts: Critics assert that regulations are needed because for-profits cost federal tax payers too much money each year. DOE uses the number26.5 billion as the latest total annual “federal aid.” Senator Harkin repeatedly uses the number24 billion. Both are false and misleading. Actual fact: The data proves that public colleges and private not-for-profit colleges cost taxpayers substantially more money per student at four-year colleges than for-profit colleges. (See recent analysis by noted economists Dr. Robert Shapiro and Dr. Nam Pham, available here.) A recent analysis by Charles River Associates concluded that career colleges cost the taxpayers25,000 less per graduate than community colleges or other public two-year institutions. With $20 billion in annual student loans to students attending for-profit colleges, the DOE’s own data calculates that the projected cost of student loan defaults at these for-profit colleges — net of recoveries after defaults – is about one percent to be written off as entirely non-collectible, or less than $200 million – not the $26.5 billion or $24 billion misleadingly cited by the DOE and Senator Harkin, respectively. Third: Inferior Job Placement – Critics assert that for-profit schools have dismal graduation and job placement rates, leaving students with large debts and bleak earnings potential, as compared to private not-for-profits and public colleges. Actual fact – For-profit college graduation rates at two year institutions exceed 55 percent, significantly higher than those at community colleges. Yet no mention was made of that fact during the much-touted White House meeting focusing just on community colleges, which totally omitted any reference to for-profit colleges and the predominantly low-income and minority students they serve. For-profit schools have produced millions of success stories, helping students prepare for and find new jobs, advance their careers and earn higher pay. Graduates find jobs in a wide range of high-demand professions as nurses and health care aides, computer professionals and programmers, chefs and retail managers, solar and wind energy technicians. If Senator Harkin wanted to hold 10 hearings, he could fill the HELP Committee panels with real people telling those real success stories. Instead, not one single career college student was allowed to appear to tell a single success story at a single HELP Committee hearing on this issue. As I wrote in this space several weeks ago, there is a vague and uneasy aroma of elitist double standards going on here. The Harvard or Stanford students majoring in ancient history or anthropology, with difficulty finding jobs in those fields, would be unaffected by these proposed regulations. Yet a minority or low-income student training to be a health care assistant or computer technician or chef would face two new debt and repayment rate tests that could have adverse effect on the institutions under the Department’s rules. Why is there such a distinction? Am I wrong in seeing a double standard here? Why can’t Secretary Duncan fix the rule to eliminate its unintended but clearly discriminatory impacts? And why not apply any final rule to all schools — even, if necessary, by seeking additional congressional authority to do so to ensure evenhandedness? Why not treat the low-income, full-time working parent studying at night at a for-profit college in a two-year program to be a medical assistant the same as a full-time Yale student majoring in philosophy? By relying on problematic facts, the Department of Education has created a problematic policy. Before finalizing any new rules, it should first finalize its facts. The proposed rules need to be fixed to mitigate their effect on low income and minority students and to apply them across the board — to for-profit colleges as well as non-profit and public colleges. Certainly there should be no last minute rush to put into effect by November 1 even a portion of the gainful employment regulations, such as those applicable to new programs, without full review. To do so would be contrary to the spirit if not the letter of the commitment the Secretary made to take into account the more than 90,000 comments made about the gainful employment regulations. It would smack of a rush-to-regulate not becoming and not justified. One thing we should all agree on — it’s time for Secretary Duncan to put the amber light on and be sure, no matter what, to base such far-reaching regulations on the facts, and only the facts. Mr. Davis, a former special counsel to President Clinton in 1996-98, is a Washington D.C. principal at the firm of Lanny J. Davis & Associates and is a public spokesperson and registered paid lobbyist on behalf of the “Coalition for Educational Success,” a group of 72 for-profit colleges in 37 states with more than 200,000 students. He is the author of “Scandal: How ‘Gotcha’ Politics Is Destroying America” (Palgrave MacMillan, 2006).

Read the full article →

Video: Huntley Sees `Disappointment’ in Near Term for Stocks: Video

October 25, 2010

Oct. 25 (Bloomberg) — Jason Huntley, manager of the Mars Hill Global Relative Value Fund, talks about the outlook for the U.S. stock market. Huntley, speaking with Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart,” also discusses Federal Reserve policy and the U.S. economy. Pat Kernan, an options trader at Cardinal Capital Management, also speaks. (Source: Bloomberg)

Read the full article →

Josh Silver: Washington Post Endorses Comcast-NBC: Ironically Proves Dangers of Mega-Merger

October 25, 2010

Today, the Washington Post published a piece of unabashed corporate advocacy , arguing that the pending mega-merger of cable giant Comcast and NBC-Universal should be swiftly approved by regulators. The editorial claims that media concentration is not a problem, and that “advocacy groups (opposing consolidation) have been poor prognosticators of the effects of large media mergers.” I’m not sure what planet the WaPo editors live on. Weakened media ownership limits have led to a media system with far too many newspapers, radio and television stations in too few hands. Public interest groups have correctly predicted the host of problems brought by rampant consolidation: woefully few outlets owned by women and people of color, huge profit pressures that result in job cuts, closed news bureaus, and a system where hard hitting, investigative commercial television and radio journalism is nearly an oxymoron. Radio is homogenized, with too many ads and opinions, and scant original reporting. On television, the most important issues are synthesized into seven second sound bites and impossibly short segments that are devoid of context and crucial information. The net result of ownership consolidation (aided and abetted by the rise of the Internet) is poorly-staffed newspapers and commercial television and radio that are long on hot-headed opinions, advertisements and mindless entertainment, but short on the substance that an informed democracy requires. Defenders of the status quo are either benefiting from it, or are like frogs in warming water: it happened so slowly, they haven’t realized it’s boiling over. The great irony of the Post’s endorsement is that the editorial itself is a poignant example of why the Comcast-NBC merger is so dangerous. When media companies control too much, their own interests — and opinions — directly conflict with the public’s desperate need for sound policy and diverse, independent, critical viewpoints. The Post is not a disinterested or neutral observer in this case. The Washington Post Company owns Cable One, provider of television, internet and phone services to several states. They own six television stations, a long list of print publications, plus Slate.com, Foreign Policy and other online sites. Yes, the op-ed technically discloses this, but fails to disclose how greatly these interests influence the Post’s position on this issue. The Post suggests that “FCC officials should resist calls by some merger opponents to impose ‘net neutrality’ principles.” Yet it fails to explain that, as an Internet service provider, the company has self-interest in abolishing Net Neutrality, the rule that prevents Internet providers from creating fast lanes and slow lanes on the Internet in order to maximize profits. The Post argues that the $30 billion deal “should be allowed to proceed,” and that strong conditions need not be applied to the deal. Instead “[c]ompetitors who believed that they were harmed by unfair dealing could have their complaints adjudicated by the FCC” on a case by case basis. But to anyone familiar with the FCC, the threat of enforcement is almost always an empty one. The process is long and expensive — and complaints languish for months or even years before any FCC action, if at all. And that’s for companies that can afford high-powered connections and high priced-attorneys. If you’re an average person whose cable bill is skyrocketing, or whose internet connection is slow and expensive — well, you’re screwed. The backlog of consumer complaints at the FCC is notorious. For the vast majority of people, the agency’s complaint process is a right without a remedy. Comcast is already the nation’s largest Internet broadband and cable television provider. NBCU owns 26 television stations, Universal Pictures, the NBC Television Network, Bravo, CNBC, NBC News, MSNBC, Oxygen, Syfy (Sci Fi Channel), Telemundo, USA Network, and the Weather Channel. If the merger is approved, a single corporation would own a huge array of popular content and would control how that content — and the content produced by its competitors – is distributed over the airwaves, cable, and Internet. As all media moves to a digital platform, the harms of the “vertical integration” of content and distribution become more severe. Comcast can starve competing online video providers by withholding access to NBC programming. It can also move video content that is currently offered for free on sites like NBC.com behind a “paywall” tied to a cable subscription so that you must pay for cable TV if you want to watch TV online. President Obama boldly proclaimed — on the campaign trail and once he took office — that he would promote policies that “encourage diversity in the ownership of broadcast media, promote the development of new media outlets for expression of diverse viewpoints, and clarify the public interest obligations of broadcasters who occupy the nation’s spectrum.” Obama’s top antitrust official Christine Varney said in May 2009, that “vigorous antitrust enforcement must play a significant role in the government’s response to economic crises to ensure that markets remain competitive.” Yet today, Wall Street analysts are increasingly bullish that the merger will be approved by the FCC and the Justice Department, cheered on by Washington Post’s editorial page. Score yet another victory for the entrenched big money interests that rule Washington, and yet another defeat for the American people.

Read the full article →