October 2010

Obama: GOP Will Undo Financial Reform

October 25, 2010

In his weekly Saturday address, President Obama warned that if Republicans take control of Congress this November, they would repeal consumer protections in the Frank-Dodd financial regulatory reform legislation, which he called “one of the most important victories” he has achieved in office.

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Federal Auditor Says Obama’s Anti-Foreclosure Effort Risks ‘Generating Public Anger And Mistrust’

October 25, 2010

The Obama administration’s signature anti-foreclosure effort, unveiled in 2009 with the promise of helping three to four million homeowners modify their mortgages, is such a failure that it now risks “generating public anger and mistrust,” according to a federal audit released Monday. Far from helping at-risk homeowners, the Home Affordable Modification Program has actually made some homeowners worse off, according to the Special Inspector General for the Troubled Asset Relief Program — also known as the Wall Street bailout. The Treasury Department set aside $50 billion from TARP, plus another $25 billion from taxpayer-owned Fannie Mae and Freddie Mac, to give mortgage servicers thousand-dollar incentives to reduce monthly mortgage payments by modifying eligible homeowners’ loans. But more people have been bounced from the program than have been helped by it. People who apply for modifications via HAMP sometimes “end up unnecessarily depleting their dwindling savings in an ultimately futile effort to obtain the sustainable relief promised by the program guidelines,” the report notes, putting the imprimatur of the federal government on a claim long made by housing experts and homeowner advocates. “Others, who may have somehow found ways to continue to make their mortgage payments, have been drawn into failed trial modifications that have left them with more principal outstanding on their loans, less home equity (or a position further ‘underwater’), and worse credit scores. “Perhaps worst of all,” it continues, “even in circumstances where they never missed a payment, they may face back payments, penalties, and even late fees that suddenly become due on their ‘modified’ mortgages and that they are unable to pay, thus resulting in the very loss of their homes that HAMP is meant to prevent.” That’s what Bea Garwood of Pinckney, Mich. and Troy Taliancich of New Orleans, La. say is happening to them after extended HAMP runarounds at the hands of Bank of America and JPMorgan Chase, the nation’s largest and second-largest bank by assets, respectively. “They told us we were a great candidate, so we went for it,” Garwood told HuffPost in August. “And as a result we’re losing our home.” New data released Monday by SIGTARP and the Treasury Department only add to the portrait of a failed program. Over the last five months, an average of just 23,000 new homeowners have signed up for the program, data show, far below where the program started out. In September, just 25,000 new homeowners decided to take President Obama up on his promise. Also last month, less than 28,000 homeowners transitioned from a temporary trial modification plan into a five-year plan of promised lower monthly payments. That’s the lowest figure since November 2009, Treasury data show. During the first three months of the year, about 55,000 homeowners on average received these so-called permanent modifications. During the next three months, April to June, that average increased, to about 56,000 per month. Over the last three months, which ended in September, that average plummeted to about 33,000 per month, a 41 percent decrease from the year’s second quarter, according to data from Treasury. Thus far, 728,686 struggling homeowners have been kicked out of the program; just 640,300 remain. Through the first nine months of this year, “when HAMP has been at its apex,” according to SIGTARP, nearly 2.7 million homes have been subject to foreclosure notices, the report notes, citing data from research firm RealtyTrac. “At that pace, foreclosure notices will have been sent to more than 3.5 million homes by the end of the year, an increase of 26 percent over the 2.8 million homes in 2009 and nearly five times the comparable 2006 number,” SIGTARP said. “It is downright immoral and cruel for this administration to continue this charade of offering false hope and false promises in the form of a program that is nothing more than false-advertising that is prolonging the inevitable,” Rep. Darrell Issa (R-Calif.), the ranking member of the House Committee on Oversight and Government Reform, said in a statement. Democrats are largely avoiding campaigning this election season on their help for homeowners. During campaign stops in Los Angeles and Las Vegas, two areas ravaged by the growing foreclosure crisis, Obama didn’t mention his plan to help homeowners. Administration officials defend the program, arguing that the crisis was much larger than even they expected when they took office last year; that homeowners who are tossed from the program don’t necessarily enter foreclosure; and that the nation’s largest mortgage companies have been dragging their feet, and there’s not much the administration can do. More than half of Bank of America’s trial modifications, for example, have dragged on for longer than six months. Trial plans are supposed to last just three months. The administration has yet to fine a single servicer for noncompliance, or claw back any of the taxpayer dollars they’ve received thus far for successfully modifying delinquent borrowers’ mortgages. Through August, the eight largest mortgage servicers, which service the bulk of mortgages both inside and outside HAMP, have kicked 525,000 homeowners out of HAMP. Of those, about a quarter either lost their homes or are in process of losing their homes, and another 21 percent have yet to be dealt with, so they’re in limbo. That means that just about half of homeowners who have been tossed from Obama’s program were actually put in a position to keep their home. In recent months, the Treasury Department has dramatically downplayed the original goal of HAMP to modify mortgages for three to four million people. “You have to think about HAMP in the context of who it was supposed to help and why,” said Phyllis Caldwell, chief of Treasury’s homeownership preservation unit. “It set a framework for evaluating mortgage modifications that moved the industry to a standard modification able to reduce payments and gave more than a million homeowners immediate relief through trial modifications that had the potential to become permanent. So what it set out to do worked.” Treasury officials are adamant that not only is the program helping those homeowners who remain in it, but it also has helped those homeowners who have been bounced. In fact, those homeowners who ultimately fell out of the program benefited from the equivalent of a “free tax cut” while they were in the program because over that period, they were paying less on their mortgage than was otherwise required. And, officials say, this came without cost to the taxpayer. Nonsense, the TARP overseer said Monday. “While it may be true that many homeowners may benefit from temporarily reduced payments even though the modification ultimately fails, Treasury’s claim that ‘every single person’ who participated in HAMP gets a ‘significant benefit’ is either hopelessly out of touch with the real harm that has been inflicted on many families or a cynical attempt to define success as failure,” the report says. “Worse,” it continues, “Treasury’s apparent belief that all failed trial modifications are successes may preclude it from seeking to make the meaningful changes necessary to provide the ‘sustainable’ mortgage relief for struggling families it first promised. What Treasury deems a universal benefit, many homeowners, members of Congress, and a growing number of commentators describe as ‘cruel’ and offering little more than ‘false hope.’” ************************* Arthur Delaney is a staff reporter for The Huffington Post. He can be reached at arthur@huffingtonpost.com Shahien Nasiripour is the business reporter for The Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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Video: RBC’s Gero Likes Precious Metals, Copper, Palladium: Video

October 25, 2010

Oct. 25 (Bloomberg) — George Gero, senior vice president at RBC Capital Markets, talks about commodity prices, investment opportunities and the dollar’s performance. Gero speaks with Carol Massar and Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Dean Baker: The U.K. Swallows Austerity So We Don’t Have To

October 25, 2010

Little brothers exist to be abused by their older siblings. The United Kingdom has willingly played the role of abused sibling for the United States for decades. When our president wanted to launch a harebrained invasion of Iraq, no one was more outspoken in his support than Prime Minister Tony Blair. Who is our closest ally in our Vietnam-style occupation of Afghanistan? Yep, it’s the Brits again. And now the new Conservative-Liberal government is taking the lead in trying to use government austerity to restore prosperity. Those of us who oppose austerity in the United States are delighted. The U.K. is jumping out front to lay off public sector workers, raise taxes, and cut government programs and supports across the board. It is doing this at a time when the economy has nearly 8 percent unemployment and considerably excess capacity in almost every sector of its economy. This drive to austerity comes at a time when the short-term rate set by the Bank of England is 0.5 percent and the rate on 10-year bonds is just 3.0 percent. The timing is also perfectly wrong in that most of the U.K.’s major trading partners are also suffering from weak economies and therefore unlikely to provide strong export markets. Nor are they likely to tolerate a substantial devaluation of the pound against their currency. It is really difficult to come up with an economic theory as to how the U.K. austerity drive even could work in principle. The U.K., like the U.S., had enormous overbuilding of residential housing as a result of its housing bubble. Does anyone think that the drive to austerity will lead to a new round of building? (The bubble in the U.K. does not appear to have fully deflated, but this is another story.) Households in the U.K. are hugely over-extended as they borrowed based on their housing-bubble-generated wealth. Will government austerity cause heavily indebted households to go on a consumption binge? That one does not seem terribly likely, and probably not desirable even if it were to take place. Households will need to accumulate some savings to support themselves in retirement. Another boom based on consumer debt is certainly not a good long-run story for most of the population. Turning to the business side of the story, demand growth is generally the most important determinant of investment. Demand growth is almost certain to slow precipitously in the context of the sharp cuts being put forward by the government. If firms are not investing now, it is hard to believe that they will invest more when the economy weakens, no matter how excited they might be over the prospect of lower budget deficits. Finally, it is not clear the government is expecting much of a boost on the trade side, but if they are it would come about through a marked depreciation in the pound, which would raise the price of imports, thereby encouraging the consumption of domestically produced goods. This would also have the effect of raising the inflation rate in the U.K., the comparatively high level of which has been a cause of concern to the Bank of England. If the Bank of England (foolishly) responds to higher inflation by raising rates, it is very hard to see what possible route to growth the deficit hawks would have left to turn to. There are not many instances of countries adopting the sort of polices that the British government is now embracing, but the examples we have are not encouraging. For example, we have Herbert Hoover’s efforts to balance the budget in 1932 and Franklin Roosevelt’s drive in 1937. Both resulted in a considerable worsening of the economy. Of course, the U.K. had its own experiments with austerity in the middle of the Great Depression, which also did not turn out well for fans of economic growth and full employment. But, these episodes took place in the distant past and memories in politics are short. However many of us in the United States may feel sorry for the ordinary workers in the U.K. who will be the victims of their bankers and hare-brained elites, it is hard to avoid the feeling that it is better them than us. Hopefully our little brother will be able to remind every one in the United States of the foolishness of pursuing austerity in the middle of sharp downturn. The Brits will have our gratitude and our sympathy. This piece originally appeared in the Guardian.

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Anoop Singh: Investing in a Rebalancing of Growth in Asia

October 25, 2010

Continuing my travels through Asia for the launch of our October 2010 Regional Economic Outlook: Asia and Pacific , I am writing to you today from Singapore. In my last post , I focused on the near-term outlook and challenges for Asia. Today, I turn to the key medium-term challenge–the need to rebalance economies in the region away from heavy reliance on exports by strengthening domestic sources of growth. This is against a backdrop of the need to rebalance global growth that was emphasized over the weekend by the ministers of the Group of Twenty industrialized and emerging market countries. Heavy reliance, arguably over-reliance, on exports is a common challenge across Asia. Yet, the policies to address it will differ among the countries in the region. Much of the public discussion focuses on ways to increase consumption, and this is something the IMF has written about extensively in the past. But the role of investment in rebalancing growth is equally important and something that should not be overlooked. Current gaps in investment Across the region, investment could play a bigger role in driving growth in three respects. Overall investment appears low in some parts, but not all, of Asia. This tends to be more of an issue for the leading economies of the Association of Southeast Asian Nations (ASEAN). Elsewhere in the region, such as the newly industrialized economies (Hong Kong SAR, Korea, Singapore, and Taiwan Province of China) and Japan, aggregate investment is in line with comparable countries outside the region. But, the composition of investment is skewed toward exporters and capital-intensive firms, which crowds out domestically-oriented and labor-intensive enterprises. In addition, rapid growth across the region has stretched existing infrastructure close to the point where it severely constrains activity. Boosting investment What are the main reasons for this situation, and what can be done about it? Two important factors seem to be at play. First, investment in many regional economies has been subdued over the past decade or so. This reflects lower returns, greater uncertainty and mixed perceptions about the ease of doing business particularly since the Asian financial crisis in the late 1990s. However, financial constraints also played a role. In particular, small and medium enterprises, as well as firms operating in the services sector, appear to have limited access to financing, including in Japan and Korea. In these cases, modernizing the ways banks extend credit (including more risk-based financing) or make it easier to restructure the finances of small and medium enterprises, can help reduce the impediments to investing in the services sector. The second important factor concerns shortfalls in infrastructure, which also suppress private investment spending. This is most pronounced in the ASEAN region and low-income economies. With most infrastructure in the region provided by governments, greater private participation through public-private partnerships may help address critical bottlenecks while also reducing pressures on public coffers. Policy actions under way The good news is that several countries are already taking steps in the right direction. Japan and Korea are improving the financial infrastructure for smaller and more service-oriented firms through reforms in collateral laws and creating a market for distressed corporate assets. Indonesia and Malaysia have taken steps to improve the business environment by easing restrictions on foreign investment in the services sector and creating ‘one-stop shops’ for investors to reduce administrative delays. And many countries, including low-income ones, are making greater use of public-private partnerships to promote critical investment in infrastructure. Clearly, it will take time and steadfast implementation of reforms to boost investment and, in turn, rebalance Asia’s growth. But the strength with which shock waves from the financial crisis hit markets across Asia–from India to Japan–also remind us that Asia’s economies will be the primary beneficiaries of strengthening their domestic engines of growth. The time has come to invest in a rebalancing of growth in Asia. From iMFdirect blog

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Marshall Auerback: G20 Currency Accord Collapses Under the Weight of its Own Contradictions

October 25, 2010

Cross-posted from New Deal 2.0 . Treasury Secretary Tim Geithner appeared fixated on US trade at last weekend’s G20 Summit in South Korea . While it is misguided to focus solely on current account imbalances, there is a certain kind of perverse logic behind his thinking. Given that the US government is likely to cut back on spending in the near future, which won’t do anything good for our consumption here at home, one can understand the Treasury Secretary’s preoccupation with trade imbalances. In an economy that is far below full employment, higher exports could generate sufficient demand so that, as much as you might be exporting an increasing amount of your domestic output to increase the per capita consumption of foreigners, there is also an accompanying increase in US consumption because of the multiplier effects of more employment. Remember that per capita outputs, and per capita consumption, do not only rise because of imports, but also because we have more people employed. After all, while the Chinese are exporting ever more, they are also slowly increasing their own per capita consumption, especially as more and more of the disguised unemployed in the Chinese countryside become employed in the export sector. But is the optimal policy truly to target current account imbalances? No. The right policy response is to work toward a full employment policy by vastly expanding fiscal policy. The US government is fully capable of doing this on its own without any global cooperation. It is true that many of us have been saying for years that exports are a cost and imports a benefit, so therefore the US should maximize net imports. We have got absolutely no traction with this argument because it is a contingent statement, true only at full employment. So while we have suggested fiscal policies designed to get us to full employment, until the rate of unemployment is reduced substantially it is much harder to make the case that maximizing net imports is a good strategy in an economy that is far below its production possibility curve (i.e., far below full employment). A sensibly constructed fiscal policy that incorporates a Job Guarantee program would be a great start. But let’s be honest: It ain’t gonna happen anytime soon, especially given the likely configuration of the future Congress after the midterm elections. Failing a big fiscal response, then, there clearly is a big problem ahead for the US. The latest data from the US western ports indicate that the American economy has gone from a very rapid pace of expansion in exports on a sequential and year on year basis to small declines in exports on a year on year basis and more severe declines on a sequential basis. And a veritable tsunami of Chinese imports is now hitting our shores, the product of China’s own substantial build-up of its export capacity last year (which is where their government deployed the majority of its fiscal resources). Sign up for weekly ND20 highlights, mind-blowing stats, event alerts, and reading/film/music recs. Why is US trade deteriorating? In part because the rest of the global economy might be slowing. But the more significant cause is China’s over-investment in industrial tradables and the consequent pressures for greater Chinese exports and a greater degree of Chinese import substitution. More restrictive fiscal policy, added to deteriorating trade accounts, likely equals higher unemployment. It seems almost inevitable that this will engender more than mere threats from the American government next year. Tariff increases appear to be in the cards. The upshot is that Beijing is going to be hit with the collateral damage via a trade war. Their economy’s dependence on export growth represents a clear and present danger. So the Chinese are doing themselves no favors by maintaining the pegged rate regime, which they should abandon as soon as possible — largely for their sakes, not ours. Consider the following: According to the Hurun report on China’s wealthiest individuals, 95% of those on the rich list earned their money by focusing on domestic consumption; just 5% are export moguls. Clearly this domestic consumption sector wants to grow from the bottom up, but Chinese government policy currently prevents it from doing so. That said, you can see why Beijing doesn’t take kindly to the “helpful suggestions” from the US, which are riddled with contradictions. On the one hand, Congress and the Treasury are accusing China of currency manipulation designed to increase its net exports. Meanwhile, the Federal Reserve, via ” QE2 “, is trying to force a run out of the dollar to appreciate the currencies of our trading partners so that the US can export its way out of its Great Recession. Similarly, Beijing has been raising its rates on concerns that the Chinese economy is overheating. But our Treasury Secretary is urging them to increase their already booming domestic demand so that they can buy more US output. At the same time, Geithner wants countries with trade deficits like the US to boost saving and cut spending. Fine, except that it seems odd to add to an already booming economy in China while the US is slumping and Geithner talks about the desirability for us to rein in long term deficits and therefore reduce demand. At a basic level, the incoherence in the American proposals is symptomatic of a broader policy making problem when one operates from a flawed paradigm. Policy makers like Tim Geithner have long been clueless on domestic federal budgets. This time around, however, his focus on current account imbalances might be logical, but only as the stupid outgrowth of a misguided understanding of public reserve accounting. In many respects it is nothing but a sideshow, one which conceals the fact that most of the policies of the Obama Administration are only making matters worse (such as turning a blind eye to fraud as part of financial “reform”). The irony, of course, is that when China does begin to enact policies that allow its population to fully consume the fruits of its own economic output, then we’ll be paying a lot more for basic stuff. Remember how great it felt to be paying $5.00 per gallon for gas during the oil price spike in the summer of 2008? That’s going to be child’s play compared to what’s ahead. But we aren’t taking advantage of the gift that China is giving us. And things will only get worse, because we remain prisoners of a 19th century gold standard mentality.

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Top Fed Official On Government’s Foreclosure Prevention Efforts: ‘Three Years Of Failed Policies’

October 25, 2010

One of the Federal Reserve’s top economists denounced the Obama administration’s approach to stemming the growing foreclosure crisis, saying it’s part of “three years of failed policies” intended to help homeowners avoid losing their homes. “We can’t prevent millions of foreclosures using the tools people are currently using,” Paul S. Willen, a senior economist and policy adviser in the research department of the Federal Reserve Bank of Boston, said Monday during a mortgage and housing finance conference held at the Federal Deposit Insurance Corporation in Arlington, Va. Those tools — government programs that did little to change the fundamental incentives driving mortgage companies, lenders and investors — have been “the roadmap for three years of failed policies,” said Willen, an expert in household finances and home mortgages. “The lenders foreclosed on borrowers because it’s in their financial interest to do it. Modification is an expensive and ineffective medicine,” he added. To the experts in the audience, Willen’s statements did not come as a surprise. The Obama administration designed a $75 billion program to ease the pain of the housing crisis by promising to pay mortgage companies, mortgage owners and the homeowners themselves if they successfully modified the terms of a delinquent borrower’s mortgage. The Home Affordable Mortgage Program (HAMP) is the biggest part of that plan. Obama promised in February 2009 that the program would help three to four million homeowners. Rather than allowing millions of homeowners to lose their homes, the administration tried to stem the rising tide of foreclosures by getting mortgage companies to lower borrowers’ monthly payments. If borrowers have a more manageable payment obligation, the logic goes, they’re more likely to stay current, or become current, because the mortgage is no longer seen as unattainable. But it hasn’t worked. Many have called it a “failure.” Obama’s foreclosure plan has been widely panned by industry experts. If anything, it’s likely to prolong the pain by stretching out the housing crisis, they say. And for most homeowners, it’s made things worse. More homeowners have been kicked out of HAMP than have benefited from lower monthly payments. The vast majority of these homeowners now owe more on their home than when they signed up for Obama’s plan, because of the fees and surcharges that have been rolled into the mortgage. For those who successfully navigated HAMP and ended up with five years of promised lower monthly payments, they, too, now typically owe more on their mortgage than they did before. In fact, the typical homeowner in HAMP is “underwater,” meaning they owe more than their home is worth, and were pushed further underwater by HAMP. Homeowners who are underwater are far more likely to default on their mortgage than other homeowners, academic and government research shows. By stretching out the crisis, hoping all the while it will self correct, many have termed Obama’s plan a giant ” extend and pretend ” scheme, in which the administration extends the time line to achieve success. Willen said that calling on mortgage companies to voluntarily modify mortgages would not even make a “modest dent” in the foreclosure crisis. He did, though, offer a different solution: “To prevent foreclosures we must pay lenders or borrowers a lot of money or force lenders to modify loans even when they don’t want to,” the Fed researcher said. “The idea we can go forward and all we need to do is tweak things a little or change a rule here or there or even change a lot of rules and give some incentive payments — that is not enough. “If we want to prevent foreclosures, and that is a…political consideration, not really an economic consideration, then we know how to do it. In essence what I’m trained to say is we know how to prevent foreclosures. We just need to be prepared to spend the money and to decide who we think needs that money and who we think deserves help rather than trying to come up with some way we can do something for free [that] helps all of the right people and punishes all the wrong people.” If the administration chooses instead to pursue what many believe to be the only viable solution — widespread mortgage principal writedowns — then policymakers had better be ready to restructure the nation’s largest financial institutions, said Adam J. Levitin, a professor at Georgetown University Law Center who’s served as special counsel to the Congressional Oversight Panel, a watchdog created to keep tabs on the bailout. Making the nation’s biggest banks forgive mortgage principal would force them to recognize losses. The losses would be so enormous that the government would likely have to step in and take over the lenders. “Whether we have the courage as a country to bite that bullet, I don’t know,” Levitin added. ************************* Shahien Nasiripour is the business reporter for the Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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Michael Pento: Bernanke Has Buried the Buck

October 25, 2010

It wasn’t too long ago that the parity pontificators were out in full force claiming that the European currency would trade one-to-one with the U.S. dollar. On June 7th 2010 the Euro hit a low of $1.1917. Since then, the Euro has risen over 17% against the US dollar, hitting $1.3961 as of today. That recent move, engendered courtesy of the Fed, has at least temporarily silenced the critics who questioned the viability of the European Union and its currency, while also serving to impugn the notion of the U.S. dollar’s permanent position as the world’s reserve currency. To be clear, there has never been any question in my mind that the euro is just another flawed fiat currency. However, it has since its inception deserved to maintain its status as an excellent diversification-currency for those who hold excess dollars. Now we find the question being correctly asked today more than ever before if the USD can act as a safe haven from the troubles found in international currencies. The answer to that question can be found in the data and from the lips of our Federal Reserve Chairman. The 27 countries comprising the European Union’s economy is the largest in the world. It’s GDP on a purchasing power parity basis was $16.5 trillion in 2009, which is greater than the $14.2 trillion US economy. The economies of the 16 countries in the Euro zone that use the Euro currency produced GDP of about $10.5 trillion on a PPP basis according to the CIA 2009 world fact book. That is equivalent to 74% of US total output. Therefore, the economies of the EU (27) or Euro Zone (16) are similar in size and scope to those of the US and should be viewed with the same gravitas. The size of the European economy had never been an issue. But according to the IMF, the US dollar accounts for 62% of global central bank reserves even though it represents less than 25% of global GDP. In comparison, the Euro currency represents just 26% of FX reserves. Why is it that the U.S. economy deserves to represent such a tremendous over-weighting of central bank reserves? Since their currency holdings are so vastly concentrated, it places global central banks in a tenuous and vulnerable position. Should they ever need to reduce their dollar holdings–especially in concert–it would place tremendous downward pressure on the US currency. But unlike the greenback no such over-owned condition along with its concomitant pent-up selling pressure exists for any other currency. Currently the gross national debt of the U.S. stands at 93% of GDP. The European Commission projects that their gross national debt will reach 84% of output this year and 88.2% in 2011. And In contrast, the Congressional Budget Office projects our national debt to reach over 100% of GDP in 2012, whereas the national debt of the EU will not reach 100% of output until 2014, according to the European Commission. Finally, U.S. interest rates are much lower as compared to those of the European Union. Therefore, the Euro should never have been viewed as a currency that is inferior to the USD. But What Happens the Next Time Down Investors the world over have traditionally flocked to the USD for safety. This past credit crisis caused the greenback to surge 27% on the DXY and crushed most commodity prices including gold. How do we know the next international crisis won’t cause the same global flight into the “safety” of U.S. debt and dollars and out of other currencies like the Euro? The answer can be found in our central bank’s reaction to that same crisis. Ben Bernanke’s initial response to the credit crisis was fairly muted. It may surprise investors to be reminded that the Fed left interest rates unchanged throughout the entire period from April 30th thru October 8th 2008, despite the fact that the S&P500 dropped from 1,413 to 899. And Bernanke only slightly increased the monetary base by $160 billion to just over $1 trillion during that drubbing in equities. During that time of relative inaction, global investors flocked to the dollar as they have done in Pavlovian fashion since the Bretton Woods agreement was signed. But after that, Ben sent out a fleet of helicopters to demonstrate to the world that he would not tolerate the appreciation of the USD or allow the rate of inflation to contract. Our central bank has now clearly inculcated to global investors that they will severely be punished if seeking shelter in our currency and bond market. The monetary base has now reached $2.0 trillion and the announcement of another dramatic increase is expected once again at the conclusion of the next FOMC meeting on November 3rd. The Fed has engineered robust growth rates in all the monetary aggregates and is also now on record for the first time in its history saying that the rate of inflation is too low. All this has resulted in the U.S. dollar losing nearly 13% of its value since June. I’m went on record last summer saying that selling Euros (or most any other currency) to buy dollars is sort of like exchanging your ticket on the Titanic for a ride on the Hindenburg. A viable solution cannot be to sell one sinking currency and jump on another one that is drowning as well. The only safe forms of money are those that can act as a store of wealth, that cannot be diluted by fiat and whose purchasing power cannot be corrupted by a government. The Fed has put the world on notice that the USD can no longer be viewed as a safe haven currency. During the next crisis, investors should seek the safer harbor that is derived from owning commodities and precious metals, rather than to believe the USD will once again offer them any real protection. Precisely because the position of the U.S. buck as the world’s reserve currency has been burned and buried by Ben Bernanke. Michael Pento is the Senior Economist for Euro Pacific Capital

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Alice O’Connor: The Myth of the Mancession? Women & the Jobs Crisis — Fact, Fiction, and Female Unemployment

October 25, 2010

After the crash, the downturn was dubbed a “mancession.” As the meme continues to circulate, the Roosevelt Institute’s New Deal 2.0 blog asked leading thinkers to help sort fact from fiction. Are men suffering more than women in a weak economy? Is Washington doing enough to address female unemployment? How do we ensure a jobs agenda that’s fair and equitable? In the first part of an ongoing series, ” The Myth of the Mancession? Women & the Jobs Crisis “, historian Alice O’Connor takes on divisive arguments that skew the facts. As an analysis, the myth of the ” mancession ” may have started out as an overly-stylized reading of labor market statistics. Men lost a larger share of jobs than women at the outset of the Great Recession in 2007, according to widely-reported Bureau of Labor Statistics measures tracking trends through spring 2009. This led University of Michigan economist and American Enterprise Institute scholar Mark J. Perry to conclude that there was a “historic” and “unprecedented” gender gap in unemployment favoring women by as much as two percentage points — a gap that actually has been closing more recently as cutbacks shift from the male-dominated construction and manufacturing sectors to education, human services, and other areas where women predominate. But as an idea, the myth of the mancession has assumed a staying power beyond what those initial numbers appeared to support: it taps into larger cultural and economic anxieties that predate the Great Recession and that have to do with changing relations between men and women. This is revealed nowhere more powerfully than in the late, great passing of the “traditional” two-parent family, in which men could expect to be the chief — if not the solo — breadwinners. Of course, there is rarely just one way to read statistical measures, and on these grounds alone the “mancession” has been subject to much dispute. More fine-grained analyses of the data, for example, show considerable differences in the impact of male job loss across lines of class, race, age, and region; not all men have been affected equally by the downturn, nor women for that matter, suggesting at the very least that there is more to the so-called gender gap than meets the eye. Nor has the Great Recession shown any “favor” to women when it comes to wage losses and poverty rates, both of which are on the rise. And historical experience reminds us that men have also lost the large majority of jobs in past recessions, as they did in the Great Depression, due to the fact that they are disproportionately represented in traditionally hard-hit and better-paying sectors of the economy. Indeed, one could use this observation to conclude that the gender gap in job loss reveals just how stratified the labor market remains, with nearly 90 percent of construction jobs held by men, and nearly 70 percent in manufacturing. The “mancession,” however, comes to a simpler, if misleading conclusion: men suffered far more from the Great Recession than women, and by the time we actually recover, they may find themselves even further behind. As characterized by Perry when he first started writing about the unemployment “gender gap,” what women were experiencing as a “downturn” was a “catastrophe” for men. It is in taking this line that the myth of the “mancession” most clearly links up to a larger narrative that, in its starkest expressions, presents a story of female ascendancy and male decline. Indeed, news reports of the mancession almost invariably come wrapped up in a bundle of statistics suggesting that women are outdoing men in all sorts of other “historic” and “unprecedented” ways, from higher numbers of college and post-graduate degrees to larger shares of consumer spending and growing importance, if not yet outright leadership, as breadwinners in the household economy. Men, in the zero-sum logic that underlies the larger narrative, are losing out, not just in terms of relative economic position, but in the sense of authority and, well, manliness that once anchored their sense of identity. The fearful, not to mention highly exaggerated, narrative of women’s looming economic and cultural dominance is hardly new. By invoking it, the myth of the mancession carries on a long tradition of more deeply rooted historical fictions that for decades were used to diminish or otherwise distort the significance of women’s participation in the paid labor force — and to defend the sanctity of the male breadwinner ideal. Until well into the twentieth century, these fictions mostly served as a form of willful ignorance, if not downright denial, treating women as at best temporary, non-essential workers without legitimate aspiration for better-paying, high-skilled jobs, let alone long-term careers. In formulations that still haunt us today, they treated African American and other minority female breadwinning as an expression of cultural pathology, a “matriarchy” that prevented men from taking their rightful roles as household heads. Such fictions persisted despite a similarly long tradition of social investigation documenting the realities — and the necessity — of female employment and household work. And they had real and lasting consequences: in well-documented government policies, union and private sector practices that denied women access to better job opportunities at equal pay; in decades of organized resistance to adequate child care provisions for parents in the paid labor force; in job training, employment, and social welfare programs that consistently favored male over female earnings capacity; and in a whole host of economic practices and cultural cues that sent women “back” to more traditionally subordinate positions in the wake of the unprecedented job opportunities that had been opened up by World War II. The myth of the mancession may not take us back to the dark days of cultural denial, but its exaggerated claims echo the old stereotype-laden, zero-sum ways of thinking that pit the fortunes of female earners against those of men. In recent months, it has stirred a minor skirmish in the ongoing culture wars between feminists and the right. Echoing the idea that men were the chief victims of the Great Recession, AEI resident scholar and author of ” The War Against Boys ” Christina Hoff Sommers accused feminists of “skewing” President Obama’s initial stimulus plan by insisting on equal treatment for women, who in “mancession” logic did not need the jobs as much as men. Writing more recently on the AEI blog, Mark Perry similarly criticized the Obama National Economic Council for issuing its report on “Jobs and Economic Security for America’s Women ” in the midst of what he now refers to as the “Great Mancession”, calling it “one-sided and misguided” to focus on women, when they are doing “so much better than men.” If history is any guide, perpetuating the myth of the mancession could very well exact a price: not only in thwarting long overdue discussions of a jobs agenda that is fair and equitable across the board, but in preventing a more frank coming to terms with the cultural anxieties — and politics — that prevent us from articulating, and embracing, a more realistic, equitable, and genuinely shared breadwinner ideal. Given the challenges ahead, that’s a reckoning we can’t afford to put off. Cross-posted from New Deal 2.0 .

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Delucchi+ and Blue Bug Digital Welcome New Director of Public Relations

October 25, 2010

Stephanie Orton Lynch Joins Washington, D.C. Marketing Firm

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Video: Whalen Says Foreclosure Woes Not Hurting Mortgage Bonds: Video

October 25, 2010

Oct. 25 (Bloomberg) — Bryan Whalen, managing director at TCW Group Inc., talks about the impact of the U.S. foreclosure crisis on mortgage-backed securities. Whalen speaks with Lisa Murphy on Bloomberg Television’s “Fast Forward.” (Source: Bloomberg)

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Video: Carlyle’s BankUnited Said to Target New York Banks: Video

October 25, 2010

Oct. 25 (Bloomberg) — Bloomberg’s Cristina Alesci talks with Lisa Murphy about plans by BankUnited, the Florida lender owned by investors including Blackstone Group LP, Carlyle Group and WL Ross & Co., to use proceeds from an initial public offering to take over New York-based banks. According to a person with direct knowledge of the bank’s plans, BankUnited is aiming to raise more than $500 million in its planned IPO. In addition to raising funds for acquisitions, the bank’s private-equity backers will sell some of their stakes, the person said. (Source: Bloomberg)

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Video: Mark Burg Says `Saw 3D’ Is Final Film in Franchise: Video

October 25, 2010

Oct. 25 (Bloomberg) — Mark Burg, executive producer and founder of Twisted Entertainment, discusses “Saw 3D: The Final Chapter,” the latest film in the horror film franchise. Burg, speaking with Betty Liu on Bloomberg Television’s “In the Loop,” also discusses the implications of 3-D technology for the industry (Source: Bloomberg)

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Video: Nordvig Says Japan Will Likely Intervene at 80 Yen: Video

October 25, 2010

Oct. 25 (Bloomberg) — Jens Nordvig, a managing director at Nomura Holdings Inc., and Adam Sieminski, chief energy economist at Deutsche Bank AG, talk about the possibility that Japan will sell the yen to stem its rally and the outlook for oil prices. Nordvig and Sieminski speak with Tom Keene on Bloomberg Television’s “Surveillance Midday.” (Source: Bloomberg)

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Video: Thailand’s Korn Seeks Orderly Rebalancing of Currencies

October 25, 2010

Oct. 25 (Bloomberg) — Thailand Finance Minister Korn Chatikavanij talks about the Group of 20 finance ministers’ meeting in Seoul and global currency policies. Korn speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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5 Things You Didn’t Know About Supermarkets

October 25, 2010

From Beijing to Brighton, billions of people now can’t imagine life without supermarkets. But what forces push us, as we push our carts?

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Parsons Appoints Loose as Senior Vice President and Installations & Environment Division Manager

October 25, 2010

PASADENA, CA–(Marketwire – October 25, 2010) –  Parsons announces the appointment of Vice Admiral (VADM) Michael K. “Mike” Loose, United States Navy (ret.), as Senior Vice President and Manager of the Installations & Environment (I&E) Division for its Infrastructure & Technology group. In this role, Mr. Loose will be responsible for overseeing Parsons’ work with federal government clients, including the Department of Defense and all military services, the General Services Administration, and other agencies at cabinet level and below. I&E’s markets and services encompass the full life cycle of natural and built environments.

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Short Sales Resisted Foreclosures Are Revived

October 25, 2010

Bank of America and GMAC are firing up their formidable foreclosure machines again today, after a brief pause. But hard-pressed homeowners like Lydia Sweetland are asking why lenders often balk at a less disruptive solution: short sales, which allow owners to sell deeply devalued homes for less than what remains on their mortgage.

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Video: Treasury Shields Citigroup as FOIA Made Meaningless: Video

October 25, 2010

Oct. 25 (Bloomberg) — The late Bloomberg News reporter Mark Pittman asked the U.S. Treasury in January 2009 to identify $301 billion of securities owned by Citigroup Inc. that the government had agreed to guarantee. He made the request under the federal Freedom of Information Act on the grounds that taxpayers ought to know how their money was being used. More than 20 months later, after saying at least five times that a response was imminent, Treasury officials responded with 560 pages of printed-out e-mails, none of which Pittman requested. Bloomberg’s Suzanne O’Halloran reports. (Source: Bloomberg)

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Bluesocket Announces Appointment of Industry Veteran Chris Koeneman as Vice President of Worldwide Sales and Marketing

October 25, 2010

BOSTON, MA–(Marketwire – October 25, 2010) –  Bluesocket announces the appointment of industry veteran Chris Koeneman as Vice President of Worldwide Sales and Marketing. Chris Koeneman further strengthens the leadership team of the company, as Bluesocket continues to lead the market as the number one supplier of virtual wireless LAN networking.

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Home Sales Up In September, But More Troubles Ahead

October 25, 2010

WASHINGTON — Sales of previously occupied homes rose last month after the worst summer for the housing market in more than a decade. And fears over flawed foreclosure documents could keep buyers on the sidelines in the final months of the year. Sales grew 10 percent in September to a seasonally adjusted annual rate of 4.53 million, the National Association of Realtors said Monday. Home sales have declined 37.5 percent from their peak annual rate of 7.25 million in September 2005. They have risen from July’s rate of 3.84 million, which was the lowest in 15 years. Most experts expect roughly 5 million homes to be sold through the entire year. That would be in line with last year’s totals and just above sales for 2008, the worst since 1997. Still, sales could fall further if potential lawsuits from former homeowners claiming that banks made errors when seizing their homes make consumers fearful of buying foreclosed properties. The Federal Reserve on Monday become the latest government regulator to announce it would be looking into whether mortgage companies cut corners on their own procedures when seizing homes. Chairman Ben Bernanke said the Fed would look intensively to see if policies, procedures or internal controls led lenders to improperly foreclosure on homeowners. Preliminary results of an in-depth report are expected to be released next month. “We take violation of proper procedures very seriously,” Bernanke said. In a survey taken by the Realtors group this month, about 23 percent of the 2,000 agents surveyed said they have a client who is no longer interested in purchasing a foreclosed property due to the foreclosure-document mess. “You’re going to see uncertainty on the part of homebuyers,” said Quinn Eddins, director of research at Radar Logic Inc., which tracks the housing market. Mortgage applications to purchase homes last week were 29 percent below the same week a year ago, according to the Mortgage Bankers Association. At that time, buyers were rushing to purchase homes to qualify for federal tax credits. Last month the inventory of unsold homes on the market fell about 2 percent to 4 million. That’s a 10.8 month supply at the current sales pace. It compares with a healthy level of about six months. Dubious mortgage practices and lax lending standards were blamed for contributing to a housing bubble that eventually burst and thrust the economy from 2007-2009 into the worst recession since the 1930s. Many Americans took out home loans that they didn’t understand and bought homes that they couldn’t afford. As a result, foreclosures have soared to record highs. It’s one of the negative forces restraining the economy’s ability to get back on sounder footing. Now more than 20 percent of borrowers owe more than their home is worth, and an additional 33 percent have equity cushions of 10 percent or less, putting them at risk should house prices decline much further, Bernanke said. “With housing markets still weak, high levels of mortgage distress may well persist for some time to come,” Bernanke warned.

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Halloween 2010: Best Cities For Trick Or Treating (PHOTOS)

October 25, 2010

Not all Halloweens are created equal. For the candy and costume fanatics wondering what it’s like to collect Halloween candy in another city, Zillow, the real estate search site , has developed a semi-scientific index for the 10 best cities in which to Trick or Treat. What makes a great Trick or Treat city? Well, it helps if you can easily walk through town.

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PIMCO Hires Devin Chen as Executive Vice President and Commercial Real Estate Portfolio Manager

October 25, 2010

NEWPORT BEACH, CA–(Marketwire – October 25, 2010) –  PIMCO, a leading global investment management firm, announced today that it has hired Devin Chen as an Executive Vice President and commercial real estate portfolio manager. He begins with the firm on November 8th and will be based in the Newport Beach office.

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Nation’s Largest Financial Technology Management Provider Hires Well Known Industry Thought Leader to Take Company to Next Level

October 25, 2010

SANTA ANA, CA–(Marketwire – October 25, 2010) –  Mr. Kevin Prince joins Compushare, Inc. as the Chief Technology Officer to oversee all product research and development efforts as well as the execution of new offerings and solution enhancements. Compushare is the leading national Financial Technology Management solutions provider for the financial services industry.

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Video: Pimco’s Toloui Says Consider Emerging Market Bonds

October 25, 2010

Oct. 25 (Bloomberg) — Ramin Toloui, an emerging-markets portfolio manager at Pacific Investment Management Co., talks about emerging market bonds. He speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (This report is an excerpt. Source: Bloomberg)

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Video: CommScope in Talks With Carlyle for $3 Billion Buyout

October 25, 2010

Oct. 25 (Bloomberg) — CommScope Inc. said Carlyle Group, the Washington-based leveraged buyout firm, is in talks to buy the company in a deal that would value the telecommunications equipment maker at about $3 billion. Bloomberg’s Jeffrey McCracken talks with Margaret Brennan on Bloomberg Television’s “InBusiness” about the outlook for a potential buyout. (Source: Bloomberg)

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Inder Sidhu: Clicks and Mortar Integration: Where Retail Excellence and Relevance Come Together

October 25, 2010

No time to shop for tonight’s dinner? It’s not a problem if you live in the Mid-Atlantic or Southeastern part of the United States. Now you can order groceries online at harrristeeter.com and pick them up curbside at dozens of Harris Teeter stores. With the time you save there, you could swing by Nordstrom and indulge yourself in the shoe department. Can’t find your size? No worries. Just go online to Nordstrom.com and search more than 100 company store warehouses with a single click. Isn’t this what shopping convenience is supposed to be? Harris Teeter and Nordstrom think so. And so do a growing number of other companies that are working to make your life easier by integrating their online and on-site shopping experiences. They are investing in new software systems and changing internal policies to reduce any barriers between their “clicks” operations and “mortar” stores. This is something many have tried before but few have mastered until recently. Even at some of the nation’s most successful retailers, a truly integrated experience is still a work in progress. At Best Buy, for example, items purchased online can be returned for store credit. Exchanges, however, are not yet possible. Why the hitch? Blame it on the current gap between business excellence and customer relevance in retail. Like many companies, retailers understand that in order to succeed, they have to produce both year-in and year-out. But they are challenged by ongoing technology changes, economic pressures and evolving customer demands. In recent years, retailers have made great strides improving their business excellence by optimizing their supply chains and rationalizing their store counts, among other things. While these efforts have steadied retailers during the recession, they haven’t yielded much in the way of improved customer relevance. But integrating online and on-site stores is. Unlike other initiatives, this work directly benefits customers, whose demands are constantly evolving. Today, consumers want to shop both online and in person when it suits their needs. Regardless of where they buy things, they want to return them wherever it is most convenient. The only way retailers can provide this type of convenience is by integrating their online and on-site operations. This often requires a software overhaul and an organizational realignment. Any retailer that fails to get this is apt to fall behind. But those who make the effort can benefit handsomely. Take Nordstrom again. In August, Nordstrom Direct President Jamie Nordstrom told The New York Times that integrating the company’s online and on-site warehouses translated into “some pretty meaningful results.” In the 11 months after the integration was complete, same-stores sales jumped 8 percent. Other factors contributed to the increase, but Nordstrom singles out the inventory change as having a significant impact. “We can sell more without having to buy more inventory,” he said. “That plays through to margins and, ultimately, earnings.” Other retailers are making changes with the hopes of achieving similar gains. At Kohl’s stores, for example, shoppers who can’t find items in their size or preferred color can now browse an in-store kiosk and take a peek at what’s inside the warehouse. Instead of leaving disappointed, more and more are walking out satisfied. In a bid to increase customer relevancy, many companies are now taking clicks and mortar integration a step further. Gap, J. Crew and other retailers now rely on Facebook, Twitter and other forms of social media to communicate news about store sales and to distribute retail discounts. Then there’s cosmetics retailer Sephora, the division of luxury products giant LVMH. In September, the company released an iPhone app that shoppers can download and use to read product information and consumer reviews while shopping inside its stores. As of late October, nearly half the people who reviewed the app on the Apple iTunes store gave it a five-star rating. “I love how you can scan any product or QR code to see reviews and videos,” said one customer. “Today’s obsession is fresh and fun. Way to go Sephora!” Becoming your customer’s obsession? It’s hard to get more relevant than that. Or more excellent. By increasing both among its customers, Sephora has out-performed its rivals throughout 2010. And so have other retailers who have committed to doing both. Inder Sidhu is the Senior Vice President of Strategy & Planning for Worldwide Operations at Cisco , and the author of Doing Both: How Cisco Captures Today’s Profits and Drives Tomorrow’s Growth . Follow Inder on Twitter at @indersidhu .

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New Figures Detail Depth Of Unemployment Misery, Lower Earnings For All But Super Wealthy (VIDEO)

October 25, 2010

One out of every 34 Americans who earned wages in 2008 earned absolutely nothing — not one cent — in 2009. The stunning figure was released earlier this month by the Social Security Administration, but apparently went unreported until it appeared today on Tax.com in a column by Pulitzer Prize-winning tax reporter David Cay Johnston. It’s not just every 34th earner whose financial situation has been upended by the financial crisis. Average wages, median wages, and total wages have all declined — except at the very top, where they leaped dramatically, increasing five-fold. Johnston writes that while the number of Americans earning more than $50 million fell from 131 in 2008 to 74 in 2009, those that remained at the top increased their income from an average of $91.2 million in 2008 to almost $519 million. The wealth is astounding, says Johnston. “That’s nearly $10 million in weekly pay!… These 74 people made as much as the 19 million lowest-paid people in America, who constitute one in every eight workers.” Johston sees the depressing figures as a result of government tax policies maintained by politicians with an eye on re-election, not good government: It is the latest, and in this case quite dramatic, evidence that our economic policies in Washington are undermining the nation as a whole.We have created a tax system that changes continually as politicians manipulate it to extract campaign donations. We have enabled ”free trade” that is nothing of the sort, but rather tax-subsidized mechanisms that encourage American manufacturers to close their domestic factories, fire workers, and then use cheap labor in China for products they send right back to the United States. This has created enormous downward pressure on wages, and not just for factory workers. Combined with government policies that have reduced the share of private-sector workers in unions by more than two-thirds — while our competitors in Canada, Europe, and Japan continue to have highly unionized workforces — the net effect has been disastrous for the vast majority of American workers. And of course, less money earned from labor translates into less money to finance the United States of America. Johnston’s assertions appear to be supported by a recent Senate vote. In September, Senate Republicans along with a handful of Democrats , partnered to defeat the Creating American Jobs and Ending Offshoring Act , a bill that would have raised taxes on companies that send jobs abroad and benefited companies that bring jobs back to American soil. The notion that it’s good business for American corporations to send jobs overseas has been championed by U.S. Chamber of Commerce, the nation’s biggest and most powerful business lobby. The tabulations, staggering as they may be, are only half of half of picture. Behind the official 9.6 percent unemployment ( which is probably somewhere closer to 22 percent ), are the stories of millions of individuals who are struggling to get by or are coming to terms with a future of lower wages and a life with less. “60 Minutes” profiled the underemployed and unemployed on Sunday in a piece titled “The 99ers.” Among the most troubling stories: a financial analyst unemployed for two years and living in a stranger’s attic and a former office manager who collects bottles and cans to get by. WATCH

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Video: MERS Comes Under Fire in Foreclosure Crisis: Video (Correct)

October 25, 2010

(Corrects MERS CEO R.K. Arnold’s title in graphic.) Oct. 22 (Bloomberg) — Bloomberg’s Megan Hughes reports on Mortgage Electronic Registration Systems Inc. (MERS), a database that tracks the servicing rights and ownership interests in mortgage loans. MERS, whose parent company is Merscorp Inc., was created by industry leaders in 1995 to improve servicing after county offices couldn’t deal with the flood of mortgage assignments, a company spokeswoman said. (Source: Bloomberg)

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Video: U.S. Existing Home Sales Rise 10% to 4.53 Million Rate: Video

October 25, 2010

Oct. 25 (Bloomberg) — Sales of U.S. existing homes rose more than forecast in September, a sign cheaper borrowing costs are helping stabilize an industry that’s battling the headwinds of foreclosures and joblessness. Purchases increased 10 percent to a 4.53 million annual rate from 4.12 million in August, the National Association of Realtors said today in Washington. Bloomberg’s Michael McKee reports. (Source: Bloomberg)

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Video: IHS’s Behravesh Says Fed Needs to Address Foreclosures: Video

October 25, 2010

Oct. 25 (Bloomberg) — Nariman Behravesh, chief economist at IHS Inc., talks about the need for the Federal Reserve to address the foreclosure crisis and the outlook for the Japanese economy. Behravesh speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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12 Famous Companies’ Surprising Beginnings

October 25, 2010

Quick, when you think of Nokia, what immediately comes to mind? Cell phones, right? Most of us would be surprised to know that Nokia didn’t start out in the mobile phone business. In fact, its roots go back to 1865 when it was involved in the “original”

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Video: Cote Says Obama Gets No Credit for Avoiding Depression: Video

October 25, 2010

Oct. 25 (Bloomberg) — David Cote, chief executive officer of Honeywell International Inc., discusses the implications of the U.S. budget deficit for the economy and President Barack Obama’s job performance. Cote, speaking with Betty Liu on Bloomberg Television’s “In the Loop, ” also talks about Honeywell’s third-quarter earnings. (Source: Bloomberg)

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Ben Bernanke: Regulators Looking Into Foreclosure Mess

October 25, 2010

WASHINGTON — Federal banking regulators are examining whether mortgage companies cut corners on their own procedures when they moved to foreclose on people’s homes, Federal Reserve Chairman Ben Bernanke said Monday. Preliminary results of the in-depth review into the practices of the nation’s largest mortgage companies are expected to be released next month, Bernanke said in remarks to a housing-finance conference in Arlington, Va. “We are looking intensively at the firms’ policies, procedures and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures,” Bernanke said. “We take violation of proper procedures very seriously,” he added. The central bank’s decision adds weight to federal and state investigations into whether banks used flawed documents to foreclosure on homeowners. Attorneys general in all 50 states plus the District of Columbia are jointly investigating whether paperwork and legal procedures were handled properly. At the federal level, the Treasury Department’s Office of the Comptroller of the Currency last month asked seven big banks to examine their foreclosure practices. The OCC and the Federal Deposit Insurance Corp. are also working with the Fed on its examination. In addition to probing the banks handling of foreclosure documents, Fed staffers and other federal agencies are evaluating the potential effects of the foreclosure debacle on the real-estate market and on financial institutions, Bernanke said. The Federal Reserve oversees bank holding companies – typically Wall Street’s biggest banks – including Citigroup, Bank of America, JPMorgan Chase & Co., and Wells Fargo. The inquiries come as Bank of America and Ally Financial Inc.’s GMAC Mortgage have resumed processing foreclosures, after halting them temporarily to review documents. Both lender face allegations that employees signed but didn’t read foreclosure documents that may have contained errors. Other companies, including PNC Financial Services Inc. and JPMorgan, have halted tens of thousands of foreclosures after similar practices became public. The federal agencies have a range of options at their disposal. They include issuing a “cease and desist” order requiring a company to stop engaging in a specific practice. They can impose fines on the companies. Agencies also can take less drastic actions, such as crafting a plan with the company to fix any problems. Bernanke didn’t provide details in his speech. According to people familiar with the examination, the banking agencies are looking into whether companies had controls in place when foreclosure documents were signed, what procedures were in place to proper handle documents, and whether employees involved in the foreclosure process were adequately trained. Dubious mortgage practices and lax lending standards were blamed for contributing to a housing bubble that eventually burst and thrust the economy from 2007-2009 into the worst recession since the 1930s. Many Americans took out home loans that they didn’t understand and bought homes that they couldn’t afford. As a result, foreclosures have soared to record highs. It’s one of the negative forces restraining the economy’s ability to get back on sounder footing. Now more than 20 percent of borrowers owe more than their home is worth, and an additional 33 percent have equity cushions of 10 percent or less, putting them at risk should house prices decline much further, Bernanke said. “With housing markets still weak, high levels of mortgage distress may well persist for some time to come,” Bernanke warned.

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Video: Mason Says Fed Not Helping Quell Foreclosure Maelstrom: Video

October 25, 2010

Oct. 25 (Bloomberg) — Joseph Mason, professor of finance at Louisiana State University, talks about the problem the Federal Reserve is facing in balancing the need to recover taxpayer money used in bailouts, while ensuring the stability of the financial system. Last week a group of investors, including the New York Fed, sent a letter to Bank of America Corp., demanding the bank buy back bad mortgages that were bundled into mortgage securities issued by Countrywide Financial Corp. Mason speaks with Deirdre Bolton on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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Video: Diller Says Daily Beast, Newsweek Talks Ended `Amicably’: Video

October 25, 2010

Oct. 25 (Bloomberg) — Barry Diller, chairman and chief executive officer at IAC/InterActiveCorp, talks about the end of merger talks between the Daily Beast website and Newsweek magazine, and his decision to resign as chairman of Live Nation Entertainment Inc. Diller, speaking with Carol Massar on Bloomberg Television’s “Street Smart” on Oct. 22, also discusses the outlook for the Ask.com search site. (Source: Bloomberg)

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BP Sells 4 Gulf Of Mexico Fields To Marubeni To Pay For Oil Spill

October 25, 2010

LONDON — BP Chief Executive Bob Dudley accused some politicians and the media on Monday of being too hasty to pin all the blame on his company for the devastating Gulf of Mexico spill – and emphasized the need for deep-water drilling. In his first major public speech since taking the top job, Dudley also said BP would not pull out of the United States – and that the U.S. needs a company with BP’s resources to meet its vast energy needs. Dudley delivered a speech whose mood hovered between firm and penitent, seeking to make clear that BP was learning every lesson possible from the disaster. He stressed that he also has met with experts from other hazardous industries, including the nuclear and chemical industries, as part of the company’s focus on improving safety. “We were certainly not perfect in our response, but we have tried to do the right thing,” Dudley added. Before becoming the first American to lead the British oil company on Oct. 1, Dudley was in charge of BP’s spill response efforts in the Gulf. U.S. lawmakers have widely blamed BP for the disaster. On Monday, Dudley said many parties, including the media and rival oil companies, were guilty of “a great rush to judgment” before all the facts were known. “I watched graphic projections of oil swirling around the Gulf, around Florida, across and around Bermuda to England – these appeared authoritative and inevitable. The public fear was everywhere,” he said. The company’s own investigation shared the blame with rig owner Transocean Ltd. and contractor Halliburton Co. The U.S. government could fine BP up to $21 billion for the spill, on top of a $20 billion disaster fund that the company has committed itself to. A bill that passed in the U.S. House of Representatives would prevent companies like BP that have a poor safety record from getting new offshore permits. A Senate bill that was eventually tabled didn’t contain a similar provision. Speaking at an annual conference of Britain’s leading business lobby group, Dudley stressed BP’s commitment to the United States despite the ongoing political and public fallout and talked up the company’s ability to withstand the expected financial hit from the spill. Earlier Monday, BP announced it has sold its stake in four mature oil and gas fields in the Gulf of Mexico to Marubeni Oil and Gas for $650 million (euro466 million). The fields were part of a recent acquisition of Gulf assets from Devon Energy and were considered nonessential. BP is hoping to raise $30 billion from selling assets and already has raked in almost $9 billion from the sale of properties in Egypt, Canada, the U.S. and Colombia. Dudley argued that deepwater drilling is necessary despite the dangers. He cited predictions that the world could be consuming 40 percent more energy than today by 2030. Deepwater drilling is projected to grow to account for 9 percent of total oil supplies in 2020, from 7 percent currently. He said BP is “one of only a handful of companies with the financial and technological strengths to undertake development projects in these difficult geographies and it can be done safely.” BP continues to make plans for further drilling projects in the Gulf of Mexico. Rig owner Pride International Inc. said BP has leased two of its deepwater rigs. One of those rigs is already in the Gulf and another is on its way. Pride spokeswoman Kate Perez said it’s unclear what projects are in store for those rigs – they still could be moved out of the Gulf. BP relies on the Gulf for about 10 percent of its total oil and gas production. President Barack Obama recently lifted a moratorium on new deepwater drilling in the Gulf, imposed after the April 20 explosion that kicked off the worst oil spill in U.S. history. Obama is due to announce further recommendations under a presidential commission in the coming months. Dudley, who took over from gaffe-prone former CEO Tony Hayward early this month, also sought again to reassure business leaders that the company has the financial strength to shoulder the anticipated heavy costs of the Gulf spill. Dudley said he has spent much of his time since becoming CEO traveling the world to visit BP’s partners. “Our underlying operational and financial performance is sound,” he said, stressing the company’s wide geographical reach. Analysts responded with optimism. “That’s what the company needs, it needs a determined champion not an apologist,” said Nick McGregor, an analyst at Redmayne-Bentley Stockbrokers. “He’s going to want to go forward and leave the apologies … His job is to acknowledge the past, not continuously apologize for it.” Dudley dismissed suggestions that the United States might turn its back on the company, or that BP could voluntarily leave the United States. “I am confident that neither of these propositions is true,” he said. “Contrary to what is sometimes said, BP is not widely seen over there as ‘British Petroleum’: we’re part of the American community.”

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Sunshine State Names Cratem Chief Underwriting Officer

October 25, 2010

ST. AUGUSTINE, FL–(Marketwire – October 25, 2010) –  Michael R. Cratem, an insurance executive with 18 years in the business, has been named Vice President-Chief Underwriting Officer at Sunshine State Insurance Company (SSIC), a leading writer of homeowners’ insurance in Florida, Stephen Korducki, President/CEO, announced.

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Torvec Seeks Increased Profile, Accepts Director Retirements

October 25, 2010

ROCHESTER, NY–(Marketwire – October 25, 2010) –  Richard A. Kaplan, Chief Executive Officer of Torvec, Inc. ( OTCBB : TOVC ), announced today that Torvec has accepted the retirements of Daniel R. Bickel, Herbert H. Dobbs and Joseph B. Rizzo as members of the company’s board of directors effective immediately. The directors’ decision was based upon their desire to help position the company to attract director leadership of a national and international caliber and reputation while maintaining the character of limited size. The board of directors has the authority to fill the vacancies resulting from the retirements.

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Mogul Energy International, Inc. Announces the Appointment of Donald J. Timko and James G. Sorrells as Advisory Board Members

October 25, 2010

SEATTLE, WA–(Marketwire – October 25, 2010) –  Mogul Energy International, Inc. (“Mogul”) ( OTCBB : MGUY ) ( FRANKFURT : BKX ) is pleased to announce Mr. Donald J. Timko and Mr. James G. Sorrells have joined Mogul as Advisory Board members, effective October 21, 2010.

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Video: Moran Says Pension Obligations Rising on Low Rates: Video

October 25, 2010

Oct. 25 (Bloomberg) — Michael Moran, a vice president at Goldman Sachs Group Inc., talks about the impact low interest rates may have on corporate pension plan funding. Moran speaks with Erik Schatzker on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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St. Bernard Appoints David Smith Senior Vice President of Worldwide Commercial Sales

October 25, 2010

Smith Brings Over 20 Years of Executive Sales Management Experience With a Proven Track Record of Driving Hyper-Growth

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Eight Senior Healthcare Professionals Join Stifel Nicolaus Weisel

October 25, 2010

New Officers Enhance a Strong Healthcare Franchise

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Xceedium Adds Security Heavyweight to Executive Team

October 25, 2010

Ken Ammon, Founder of NetSec and IT Security Evangelist, Joins Zero Trust Access Control Leader as Chief Strategy Officer

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The EU gives Pakistan a break. But is it for real?

October 25, 2010

The EU gives Pakistan a break. But is it for real?

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India: Coal it down

October 25, 2010

India: Coal it down

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India- MoUs worth $53b signed at Khajuraho summit in Bhopal

October 25, 2010

India- MoUs worth $53b signed at Khajuraho summit in Bhopal

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In Asian Trading, U.S. Dollar Weakness Returns Following G20

October 25, 2010

In Asian Trading, U.S. Dollar Weakness Returns Following G20

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Singapore Exchange bids $8.3b for ASX

October 25, 2010

Singapore Exchange bids $8.3b for ASX

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