February 2011

Video: Groenewegen Says High Rates May Dull Gold, Silver Demand

February 18, 2011

Feb. 18 (Bloomberg) — Gijsbert Groenewegen, founder of Silver Arrow Capital Management, talks about the impact of political unrest in the middle East on equities and the outlook for stocks, gold and silver. He speaks with Matt Miller and Dawn Kopecki on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Dan Dorfman: Too Many Bulls Could Gore Stocks

February 18, 2011

Rampant bullish fever is scaring a growing number of market watchers. No wonder. It’s generally a prelude to a sizable market decline. Raymond Stahler, a UK money manager who was recently in the U.S., tells me he’s deeply concerned by: the “overwhelming bullish sentiment” here — both on the part of the pros and the public — in the face of huge market gains in recent years (88 percent since March of 2009 and a tad above 20 percent since late August) and lots of question marks. He’s by no means alone in worrying about such lingering concerns as our huge national debt and budget deficit loads ($14.1 trillion and $1.3 trillion, respectively), growing weakness in housing, high unemployment and accelerating turmoil in the Middle East. “There’s too much bull fever, which invariably signals a falling market is on the way,” Stahler says. Charles Biderman, the CEO of liquidity tracker TrimTabs Research, partially owned by Goldman Sachs, also hoists some warning flags and recently toned down his bullish stance to one of caution, citing a resumption of exuberant and frothy investor sentiment and an outburst of new calendar offerings ($10 billion last week alone in initial public offerings and secondary offerings). Further, in the last four weeks alone, he points out, retail investors poured $12.3 billion into U.S. stock mutual funds, which, from a contrarian perspective, he regards as an ominous development, given it’s such a big inflow in such a short period by stock players with an awful track record. There’s way too much complacency, Biderman says. Adding to this exuberance, the American Association of Individual Investors reports that bullish sentiment the past week jumped 9.5 percent, to 51.5 percent, while the bearish sentiment fell 7.4 percent to 26.9 percent. On top of this, more sunny sentiment, with Investors Intelligence reporting that 52.7% of investment advisers are bullish, way more than double the 22 percent who are bearish. Yet another sign of bullish fever is the stepped-up inflows from sophisticated investors into hedge funds, which now boast $1.7 trillion in assets, the highest level since October of 2008. The latest inflow numbers, show an estimated $6.6 billion was invested in December, the sixth straight month of asset accumulation by hedge funds. In contrast, which has to be a worrisome note, those corporate insiders (officers and directors of companies) have been dumping stocks like crazy. For example, insider sales exploded to $11.6 billion in November and to $14.8 billion in December, the highest level since 2007. Insiders unloaded another $4.9 billion in all of January and have already sold another $4.1 billion so far in February. Interestingly, the ratio of insider selling to insider buying rose to 17.4, the highest level since November of 2009. This ratio has risen steadily since QE2 was announced last august. “That’s an ominous portent of what we think would happen to stock prices if QE2 stops (it ends in June),” Biderman says. What does it all mean? “The investment course is obvious,” asserts Biderman. “It’s time to take some profits off the table.” It all reminds me of a comment by American author Bill Vaughan, who wrote: “A February thaw is merely nature’s way of warning us against over-optimism.” What do you think? E-mail me at Dandordan@aol.com.

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Video: Wahl Says FIFA Presidency Bid Is for World’s Soccer Fans

February 18, 2011

Feb. 18 (Bloomberg) — Grant Wahl, a writer for Sports Illustrated, talks about his bid to become the next president of FIFA. He speaks with Michele Steele on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

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American River Bankshares Announces the Resignation of Amador S. Bustos and Dorene C. Dominguez From Its Board of Directors

February 18, 2011

SACRAMENTO, CA–(Marketwire – February 18, 2011) – American River Bankshares ( NASDAQ : AMRB ) today announced that Amador S. Bustos and Dorene C. Dominguez will not seek re-election as Board Members of American River Bankshares and American River Bank effective April 20, 2011 and May 18, 2011, respectively. Their terms expire on May 19, 2011. Mr. Bustos has served on the Board of Directors since 2004 and Ms. Dominguez since 2007. 

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Video: Altimeter’s Charlene Li Says Technology Creates Jobs

February 18, 2011

Feb. 18 (Bloomberg) — Charlene Li, founding partner at Altimeter Group and author of “Open Leadership: How Social Technology Can Transform the Way You Lead,” talks about President Barack Obama’s meeting with technology executives in California and the role of technology in job creation. Li speaks with Mark Crumpton on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

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Video: Simonson Says U.S. Job Growth to Propel Apartment Market

February 18, 2011

Feb. 18 (Bloomberg) — Ken Simonson, chief economist of the Associated General Contractors of America, talks about the outlook for U.S. apartment construction. Starts on multifamily homes, including townhouses and apartments, jumped 78 percent in January from the previous month to an annual pace of 183,000, the highest since February 2009, the Commerce Department said Feb. 16. Simonson speaks with Mark Crumpton on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

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Russ Feingold Rallies Protesters In Wisconsin

February 18, 2011

MADISON, WIS. — Russ Feingold may no longer be in elected office, but he can still excite crowds of labor protesters who have rallied at the state’s capitol for days with virtually no appearances by prominent politicians. And he wants other public figures who say they support workers to come out and join him. With momentum and attention building, labor organizers anticipated that Friday’s turnout would be the highest yet. By the time Feingold arrived around 11:00 a.m., thousands of people already swarmed the capitol, with many back from protesting earlier in the week or having even spent the night in the building’s rotunda. The balconies looking down into the rotunda were nearly impassible, and crowds marched around outside readying for the noon rally. Feingold went to the local fire station and brought its firefighters with him to the capitol. When he arrived, protesters cheered and some even broke into chants of “Feingold for Governor.” “I just feel enormous pride in the people of Wisconsin who are coming together — whether union or anti-union — for the rights of workers,” Feingold said in an interview with The Huffington Post. “This state is one of the originators of many of the workers’ rights and protections on child labor, unemployment compensation, and almost all kinds of workers’ rights. The fact that our governor is trying to destroy those rights is something worth fighting against. And I, of course, as a citizen of Wisconsin, somebody who knows the state very well, was proud to just show up and keep my support.” While President Obama has criticized Walker’s proposal, which would strip away the collective bargaining rights of public employees, he has yet to make an appearance. Wisconsin Sen. Herb Kohl, the state’s one remaining Democratic U.S. senator, has put out a cursory statement on the protests but has not taken a visible role. Dawn Schueller, a spokesperson for Kohl, said the senator has received more than 450 phone calls and 1,900 emails regarding the protests and Walker’s proposal. Kohl is traveling to Wisconsin from Washington, D.C. on Friday, although she didn’t yet have details on his schedule for next week. Feingold said he believed any politician who purports to be pro-labor should be out in Madison. “I can’t imagine somebody who has supported labor and has the support of working people in the state wouldn’t want to at least appear at some point,” said Feingold. “It’s a very meaningful and very difficult effort against one of the most mean-spirited things I’ve seen in a long time. I know people are busy, but to me it was gratifying to see everyone working this hard against something that’s really terribly wrong. It’s very inspiring.” This week, Feingold launched Progressives United , a political action committee focused on combating corporate influence in politics . He pointed to the protests as the type of solution Progressives United is all about. “This is the kind of grassroots will overcome the power grab corporate America is now seeking to get,” he said.

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Irene Aldridge: Who Benefits From Rising Inflation?

February 18, 2011

On Thursday, February 17, 2011, the U.S. Bureau of Labor released the latest inflation figures. Inflation, measured as a change in the Consumer Price Index (CPI), registered a slight decline at 0.4% this past month (as compared to 0.5% realized in the previous month), and just 0.2% when food and energy are excluded from the calculation. However small these numbers may seem, the figures sounded plenty of alarms in the last couple of weeks. Some commentators declared this inflation to be unhedgeable (due to traditional inflation hedges such as gold being overpriced), and, therefore, unmanageable. Numbers, however, tell a different story, and as this article shows, inflation has some lucrative and natural hedges in today’s markets. Results of a basic event study on the impact of CPI changes on equities produce clear and stunning evidence that inflation is indeed healthy for many stocks and their investors. Among all equities susceptible to rising CPI, those most affected are shown in Table 1 along with their quantitative price responses to every 1% in monthly inflation figures. With probabilities of the response hitting 99.9%, the numbers speak loud and clear that inflation is great for at least two large sectors of the U.S. economy: financial services companies and commodity companies. Table 1. Quant response of prices of selected firms to a +1 change in CPI. (Probabilities of the response are reported in parentheses). Symbol Expected Response on Day 0: the day of the CPI announcement Expected Response on Day 1: the day after the CPI announcement Expected Response on Day 5: one week after the CPI announcement Expected Response on Day 10: two weeks after the CPI announcement Expected Response on Day 21: one month after the CPI announcement APC +4.7% (99.9%) +7.5% (100.0%) +6.1% (99.6%) +6.1% (92.0%) +17.1% (95.6%) ANR +1.2% (87.8%) +10.5% (99.9%) +10.6% (96.9%) +4.1% (74.1%) +18.2% (82.8%) ACI +2.2% (98.1%) +7.9% (99.8%) +5.4% (95.4%) +6.8% (90.6%) +22.2% (99.3%) CCJ +1.7% (99.6%) +3.9% (99.4%) +7.1% (99.7%) +7.0% (88.4%) +13.9% (87.6%) BK +4.8% (99.3%) +8.3% (100.0%) +1.9% (84.3%) -5.1% (71.1%) +10.6% (95.8%) AXP +5.2% (99.6%) +6.5% (99.6%) +8.7% (99.9%) -0.8% (50.6%) +33.5% (99.5%) First, about commodity companies. True, prices of many commodities like gold and cotton are at their near-record levels and can be hardly helpful for inflation hedging. Other commodities, however, are still fair game, as the numbers show. In particular, petroleum companies (i.e. Anadarko Petroleum: APC), coal producers (i.e. Alpha Natural Resources: ANR, Arch Coal: ACI), aluminum handlers (i.e. Alcoa: AA), and even uranium suppliers (i.e. Cameco: CCJ) persistently rise following increases in inflation. Increasing the concentration of these and similar stocks in one’s portfolio is likely to provide a hedge against inflation. Then, there are the financial services companies like the Bank of New York Mellon Corp. (BK) and American Express (AXP) that statistically benefit from rising inflation. How so? The simplest explanation can be found in the lending rates of these firms: with higher inflation, the banks tend to charge higher nominal rates from their customers, capturing a larger spread between the rates at which they lend and the rates at which they borrow. Popular banking products with variable interest rates such as credit cards, are subject to a rate hike, generating a fair premium for banks. Whether one likes it or not, banks are in a lucrative position as far as inflation is concerned. How good of a hedge can financial services or commodity companies provide? As Table 1 shows, both sets of firms take well to inflation. For example, in response to a 1% monthly increase in the CPI, the price of the Bank of New York Mellon (BK) on average rises by nearly 5% on the day of the CPI announcement and by over 10% in one month following the announcement, with over 95% statistical confidence. Allocating just a fraction of your portfolio to the inflation-driven stocks may be sufficient to immunize your entire portfolio. While fretting about the onset of inflation and speculating about its ramifications in the fundamental space, why not hedge it based on quant analysis?

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Miles Mogulescu: Wisconsin Is Ground Zero in America’s New Uprising Against the Corporate Oligarchy

February 18, 2011

About 30 years ago, shortly after finishing college, I produced and co-directed an Academy Award-nominated documentary called Union Maids about three courageous women who helped organize labor unions in 1930′s-’40s Chicago. It showed how unions were the product of struggle, organization, mass protests, and sometimes jail and beatings. I believed then, and I still believe now, that organized labor is the middle class’s best defense against an organized corporate oligarchy that has waged a one-sided 30-year long class war against the American middle class. That’s why I’m not surprised that the first stirrings of American resistance to the corporate oligarchy since Wall Street greed and malfeasance brought the American and world economy to its knees in 2008 are coming from the organized labor, centered today in the capital of Wisconsin, a state with one of the longest progressive traditions in America. And it’s why I’m not surprised that some of the first acts of newly minted right-wing Republican Governors are to try to destroy organized labor. When foreign dictators take power some of their first actions usually include either breaking unions or turning them into puppets of the state. And unions, like Solidarity in Poland, are often the first line of resistance that help bring down dictatorships. In Egypt, it was internet-savvy young professionals who helped initiate and organize the mass street protests against the Mubarak dictatorship. But the Egyptian army finally forced Mubarak out when labor unions also began to strike — particularly unions in the Suez Canal that control access to Egypt’s most valuable asset — thus threatening the economic interests of top army officers who own key sectors of the Egyptian economy. Remember that one of Ronald Reagan’s first acts as President was to break the air traffic controllers union. It was one of the first shots across the bow in a 30-year long war by America’s corporate oligarchy to transfer wealth from the working and middle classes to the rich and to deregulate the economy in order to increase the wealth and power power of the corporate and financial elite. As Jacob Hacker and Paul Pierson point out in their brilliant and essential new book, “Winner Take All Politics” , the share of income earned by the top 1% increased from 9% to 23.5% between 1974-2007 (the last year of available data). The share of the top 0.1% (the richest one in a thousand households) who collectively rake in more than $1 trillion a year, grew from 2.7% to 12.3%, a fourfold increase. From 1979-2007, the top 1%–the richest 1 in 100 households, received 36% of gains in household income and from 2001-2006, the heart of the Bush years, it was a startling 53%. “Even more striking, the top 0.1% — one out of every thousand households — received over 20 percent of all after-tax income gains between 1979 and 2005, compared with 13.5 percent enjoyed by the bottom 60 percent of households. If the total income growth of those years were a pie, in other words, the slice enjoyed by the roughly 300,000 people in the top tenth of 1 percent would be half again as large as the slice enjoyed by the roughly 180 million in the bottom 60 percent. Little wonder that the share of Americans who see the United States as divided between the ‘haves” and the ‘have nots’ has risen sharply over the past two decades — although…the economic winners are more accurately portrayed as the ‘have it alls,’ so concentrated have the gains been at the very, very top.” Equally important, Hacker and Pierson show how this staggering growth in the income of a tiny elite accompanied by a stagnation in the income of the majority of the middle class is not the inevitable result of economic markets. It’s result of a series of political decisions by corporate funded politicians to deregulate the economy while bankrupting government through tax cuts and ever less progressive taxation. This one-sided class war by the corporate oligarchy against the middle and working class has, until now, been met by remarkably little resistance from the latter. The progressive movement, such as there is one, has been primarily directed at electing Democrats who too often disappoint it by deregulating financial markets and passing “free” trade bills that reduce American jobs (Clinton) or appointing the same Wall Street friendly economic advisors who helped create the Great Recession and cutting deals with corporate special interests to pass inadequate health care and financial reforms (Obama). There’s been little of the mass progressive movements of the past which FDR said were necessary to “make him” (and other politicians) pass reforms like those of the New Deal. But perhaps enough is finally enough. By their extremism, right-wing Republicans may have woken a sleeping giant in organized labor that is just beginning to show its power in the streets of Wisconsin. It may be the beginning of a new mass movement of the middle and working class — both unionized and non-unionized — to take power back from organized corporate oligarchs and to restore a measure of social and economic equality to the nation. Just as what started Tunisia and Egypt is now spreading to Bahrain, Yemen and Libya, what started in Wisconsin may spread to Ohio, Illinois, New Jersey, California, and across the country. That’s why everyone who still believes in the American dream that your children can have a better life than you do should do everything they can to support the workers in Wisconsin. And that’s why it’s so vital that the union members in Wisconsin win their fight to keep their democratic rights to collectively bargain with their employers. Last week we were all Egyptians. This week we are all Wisconsin Badgers. On Wisconsin! On America!

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Don McNay: A Beginner’s Guide to Stopping Payday Lenders

February 18, 2011

Just like last year and the year before, my home state of Kentucky failed to pass a cap on the interest payday lenders can charge their prey. A bill was proposed to put a 36% cap on the amount of interest that payday lenders could charge. It’s identical to the cap that the federal government put on payday lenders who deal with military personnel and their families. I think payday lending is a scummy business. I suspect many people agree with me. A referendum on capping payday lenders at 28% in Ohio got 63% of the vote. Most states don’t offer ballot initiatives and referendums. They elect legislators and ask them to represent us. Dealing with legislators does not seem to work for people fighting payday lenders. I’ve been rooting for the “good guys” for several years. And I’ve been watching them get clobbered for several years. It’s like watching the Harlem Globetrotters play the Washington Generals in basketball. The victories are few and far between for the Generals. Here is my advice for making something happen. Not just in Kentucky, but in any state: 1. Read Gary Rivlin’s book, Broke USA. Then wait a week and read it again. I reviewed Broke USA for Huffington Post and thought it was one of the most influential books to come out in some time. Rivlin is an incredible storyteller, and the rise of the “poverty industry,” where companies make money off the poorest of the poor, is an incredible story. Rivlin tells us how states like Ohio and North Carolina were able to successfully fight the payday industry. It would be easy for other states to model what they have done. I’ve personally given out over 30 copies of Broke USA, but more need to be purchased. I’m always stunned when someone committed to fighting payday lending tells me that he has never read Broke USA. It’s like a Christian minister preaching even though he or she has never read the Bible. Broke USA is a mandatory read for anyone who wants to fight payday lenders. 2. Embrace the “Great Person Theory.” Larry Diamond, who is now at Stanford, started his teaching career at Vanderbilt. He taught his social movement students, including me, a concept called the “Great Man Theory.” The thrust of that theory espouses is that causes are only successful when they have a central leader, like a Martin Luther King or a Gandhi, to be the focal point. In the days of Twitter and Facebook, it is easier to operate without a “Great Person.” But in fighting payday lending, it would help. Many of the groups fighting payday lending are part of larger coalitions with a litany of other legislative interests. Fighting payday lending is merely one of many issues on their plates. The payday lenders are all-in. It’s life or death for them. They hire the best lobbyists. In Kentucky, they hired former Secretary of State Bob Babbage, the state’s highest paid lobbyist. (Disclosure: Babbage is a former business associate and remains a close friend, despite our extreme differences on payday lending.) Payday lenders have a well-organized, well-financed front and that are going to fight to the death with everything they’ve got. They make lots of contributions to all the right people. Unless a “Great Person” steps up to the lead the other side, it’s going to be hard to defeat them. 3. Find a poster child for the payday industry’s ills. In 1998, I was part of a group that made Kentucky the first state to have model legislation reigning in the companies that purchased structured settlement payments. The bill had Harry Moberly, one of the state’s most effective legislators, as it sponsor. It had the backing of the state’s trial lawyers and bar association. But what really “sealed the deal” was a brave young woman, who had been horribly mistreated by a settlement purchasing company, came forward to tell her story. The day I saw her picture on the front of the Louisville Courier-Journal, I knew the battle was over. She put a human face on a back-burner issue and turned it into a front page issue. The bill passed the legislature unanimously. One of the reasons it was easy for Congress to put a 36% cap on payday lending for military people is that it was easy to imagine a soldier, serving in Iraq or Afghanistan, being taken advantage of. The human victim was present. 4. Show the legislatures you have clout. I’ve yet to see an election lost on the payday lending issue. That needs to happen before elected officials will take the opponents seriously. I can see a scenario where the issue could make or break an election, especially if a legislator got big campaign contributions from payday companies. When people wanting to get rid of payday lending get organized and vote out a couple of payday lending supporters, the rest of the legislatures will take them seriously. And, just maybe, pass this long-needed legislation. Don McNay, CLU, ChFC, MSFS, CSSC of Richmond, Kentucky, is an award-winning columnist, structured settlement consultant and Huffington Post Contributor. He is the author of the book, Son of a Son of a Gambler: Winners, Losers and What to Do When You Win the Lottery. He has appeared on the CBS Evening News With Katie Couric along with numerous other television and radio programs. You can read more about Don at www.donmcnay.com McNay has Master’s Degrees from Vanderbilt and the American College and is in the Hall of Distinguished Alumni of Eastern Kentucky University.

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Diana LaCome: High-Speed Rail Projects: A Fast Track to Nowhere for Minority-Owned Businesses?

February 18, 2011

The Obama Administration is pouring billions of dollars into high-speed rail projects across the country, touting them as a way to stimulate local economies in recessionary times. Just this week, President Obama submitted a budget plan to Congress, seeking approval of an additional $8 billion for such ventures. Yet as these projects get underway, this massive infusion of federal money appears to be bypassing the very businesses that help bolster our local economies — small and minority-owned businesses. Data is making it increasingly apparent that minority-owned businesses — among those hardest hit in the current economic climate — are being largely shut out of bullet train contracting opportunities. California is a prime example of how little minority communities are benefiting from these projects. High-speed rail in the Golden State is designed to link San Francisco to Los Angeles and San Diego, with multiple stops throughout the Central Valley. The project is estimated to cost approximately $43 billion, making it the single largest public works venture in the nation. Yet a civil rights complaint filed recently by the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area details how minority-owned businesses are being largely excluded from contracting opportunities on this massive project. Through a restrictive procurement system and a laissez-faire attitude, the state agency established to oversee the project appears to be funneling nearly all contracting dollars to large non-minority — and in some cases foreign-owned — corporations. For example, on 10 multimillion dollar design contracts already awarded, barely a dozen of the 134 prime and subconsultants are minority-owned firms. This includes those with exceedingly small contracts in comparison with overall contracting dollars, such as a minority-owned business with a $100,000 subconsulting contract on a $75 million prime contract. Statistics on participation by small businesses — which many minority-owned businesses are — paint an equally grim picture. Over the past six fiscal years, less than four percent of contracting dollars for California’s bullet train have gone to small businesses. California is not alone in seeing this trend. In Florida, the Obama Administration had committed over $2 billion to a bullet train line that would link Tampa to Orlando, with a possible extension to Miami at a later date. A statewide coalition of minority-owned businesses in Florida recently called upon the bullet train project there to take proactive steps to open up procurement opportunities, fearing that otherwise all of the contracting would remain only within an insular “old boys” network of firms. With the recent rejection of this high-speed rail project by Florida Governor Rick Scott, California stands to gain significantly from the redistribution of those funds, highlighting the need to ensure that equitable contracting ensues. There is certainly no shortage of minority-owned businesses that are ready, willing, and able to do the necessary work if given the opportunity. A recent study by the California Department of Transportation found that hundreds of minority-owned civil engineers, structural engineers, land surveyors, and other professionals that are ready and able to participate in large-scale public works projects such as the high-speed rail. When minority-owned businesses are allowed to compete on an equal footing in a fair and open system, they win contract awards. And when that happens, the ripple effect is astounding. Growing businesses hire workers, often from minority communities. They spend money locally and contribute to community re-vitalization. But when procurement systems are closed and insular, as bullet train projects are shaping up to be, none of these benefits are realized. Fortunately, it is not too late for the Obama Administration to reverse this trend. Though billions of dollars have already been spent on these high-speed rail projects, many more billions are still at stake. The federal government holds the purse strings. It can — and should — insist that contracting opportunities funded by federal taxpayer dollars be open to all on an equal basis. The civil rights complaint filed by minority-owned businesses in California demands that federal agencies suspend all funding to that state’s high-speed rail project until its contracting practices are made fair and non-discriminatory. We support that effort, and call upon the Obama Administration to go even further. The Administration should re-examine federally-funded high-speed rail projects across the country, insist that minority-owned businesses be afforded equal opportunity to work on these ventures, and withhold funding until closed procurement systems are opened up. Without immediate federal intervention, this multi-billion opportunity to jumpstart the economy will be squandered, and high-speed rail will end up as a fast-track to nowhere for minority businesses and the communities they help. Diana LaCome is President of National Concilio of America, a non-profit organization promoting Hispanic business interests nationally. Harry Alford is the President and CEO of the National Black Chamber of Commerce, a non-profit organization dedicated to economically empowering and sustaining African American communities through entrepreneurship and capitalistic activity. The civil rights complaint filed by the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area regarding California’s High-Speed Rail Project can be found here .

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Video: Intel to Build $5 Billion Plant, Hire 4,000 Workers

February 18, 2011

Feb. 18 (Bloomberg) — Intel Corp., the world’s largest chipmaker, said it will build a new $5 billion plant in Arizona and hire 4,000 workers in the U.S. this year. Chief Executive Officer Paul Otellini made the announcement during a visit by President Barack Obama to a company facility in Hillsboro, Oregon. Dominic Chu and Hans Nichols report on Bloomberg Television’s “Street Smart.” Bloomberg’s Matt Miller also speaks. (Source: Bloomberg)

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Video: CEOs More Optimistic About Business Conditions, Economy

February 18, 2011

Feb. 18 (Bloomberg) — Chief executive officers of leading U.S. companies are more optimistic about business conditions and the outlook for the U.S. economy. Julie Hyman reports from the Business Council meeting in Fort Lauderdale, Florida, on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

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Video: Kwak Says Tighter Rules on Derivatives a `Tricky Issue’

February 18, 2011

Feb. 18 (Bloomberg) — James Kwak, author of “13 Bankers: The Wall Street Takeover and the Next Financial Meltdown,” talks about the impact of tighter rules for trading derivatives on U.S. companies and financial firms. He speaks with Lisa Murphy on Bloomberg Television’s “Fast Forward.” (Source: Bloomberg)

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Greenspan On Financial Crisis: ‘Not Bad’

February 18, 2011

Former Federal Reserve chairman Alan Greenspan oversaw policies that contributed to the worst economic catastrophe since the Depression. But the morning after the stock market crashed, he reportedly didn’t feel too bad. Speaking publicly at New York University, Greenspan recounted what was going through his mind one morning in September 2008, after the Dow Jones Industrial Average dropped nearly 7 percent. According to Washington Square News : “The morning after we learned of the news,” he said, “I was able to look myself in the mirror and say, ‘Hey, not bad.’” Greenspan kept interest rates low in the decades leading up to the crisis, helping promote first a bubble in technology stocks and then a bubble in real estate assets. With money flowing cheaply, investors scrambled to buy products that later proved dangerously risky. Even when other Federal Reserve officials expressed concern over the fast-moving economy, Greenspan held firm. The former Fed chairman has also been a strong supporter of derivatives , the financial instruments that worsened the financial meltdown. In testimony before the Financial Crisis Inquiry Commission last year, Greenspan said he was “right 70 percent of the time, but I was wrong 30 percent of the time and there are an awful lot of mistakes in 21 years.” On that morning in September, the full extent of the crisis hadn’t yet unfolded. Few people predicted just how severe the economic fallout would be.

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Video: Clifton Says U.S. Budget Process Is `Game of Chicken’

February 18, 2011

Feb. 18 (Bloomberg) — Dan Clifton, head of policy research at Strategas Research Partners, talks about the outlook for this year’s U.S. budget. The House is nearing passage of a spending plan for the remaining seven months of this fiscal year that includes at least $61 billion in cuts. Democrats reject the proposal as too extreme and harmful to the economic recovery. Clifton talks with Tom Keene on Bloomberg Television’s “Surveillance Midday.” (Source: Bloomberg)

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Andrew Sum: Ignore the Teen Employment Problem at Your Peril

February 18, 2011

In reviewing the findings of the recently released national report on employment and unemployment developments in the U.S. for January 2011, one might have encountered a sense of double vision in examining the findings for the nation’s teenagers (16-19 years old). In January 2011, only 25.7 percent of the nation’s teens (16-19 years old) were employed, continuing the steep decline in teen job opportunities over the past few years and decade. During that same month, the unemployment rate for the nation’s teens (seasonally adjusted) also was 25.7%. Thus, perfect equality existed between the teen employment rate (E/P) and the unemployment rate of teens in that same month. An identical result prevailed in the previous calendar year (2010) when the teen annual average E/P ratio and their unemployment rate were again exactly equal at 25.9%. This was the first time since the end of World War Two when these two key teen labor market variables came into equality. The 25.9% teen employment rate in 2010 marked the fourth consecutive annual drop in their employment rate. The modest growth in overall payroll employment levels during the past year did nothing for improving teen employment. Aggregate teen employment continued to fall for the fourth consecutive year and helped drive up their official unemployment rate to just under 26%, the highest it has been in the past 62 years for which CPS unemployment rates are available, another record high. Limited employment prospects for teens have pushed more than a million of them out of the labor force over the past few years (a 1.4 million decline since 2007) helping keep their unemployment rate artificially low. The magnitude of the decline in teen employment over the past decade (2000-2010) is mind boggling. In 2000, slightly over 45% of the nation’s teens were employed. The teen employment rate declined very sharply during the recession of 2001 and the largely jobless recovery of 2002-03, falling by between 8 and 9 percentage points. Teens benefitted very little from the national job growth that took place from 2003-2006, with their E/P ratio staying largely unchanged over this period. Over the next four years, their employment rate would fall steadily and steeply from 36.9% to 25.9%, a decline of 11 percentage points, far exceeding that of any other age group (See Chart 1). Every major demographic and socioeconomic group of teens has experienced declining employment rates over the past decade. Yet, in 2010 and all preceding years, both the employment rates and unemployment rates of teens differed often widely across gender, race-ethnic, educational attainment, and family income groups. Teenage males have performed worse than females in the labor market, and both Blacks and Hispanics trail considerably behind White, non-Hispanics. Low income minorities fare the worst by far in obtaining any type of employment. The deep deterioration in teen employment over the past decade will have severe adverse consequences for them and the rest of the nation in the future. Teen employment is highly path dependent. The more teens work this year, the more likely they are to work next year. Cumulative work experience in the teen years influences the employability, wages, and training experiences of these youth in their early to mid-20s. National research also has shown that higher teen employment for women and men has been associated with lower teen pregnancy rates, a lower tendency for men to drop out of high school, and reduced delinquency behavior. Higher employment also raises the annual incomes of teens and young adults, thereby increasing federal and state tax revenue and reducing a number of cash and in-kind transfers. Improved teen employment is thus a win, win, win, win proposition for the youth themselves, for their communities, the nation as a whole, and for national and state governments. We ignore this problem at our peril.

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Video: Agco’s Richenhagen Says Farm Equipment Prices May Rise: Video

February 18, 2011

Feb. 18 (Bloomberg) — Martin Richenhagen, chief executive officer of Agco Corp., discusses the company’s business and equipment price outlook. Agco is the second-biggest U.S. maker of farm equipment. Richenhagen talks with Julie Hyman at the Business Council meeting in Fort Lauderdale, Florida, on Bloomberg Television’s “Fast Forward.” (Source: Bloomberg)

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‘Flash Crash’ Panel Calls For U.S. Market Overhaul

February 18, 2011

WASHINGTON/NEW YORK (By Roberta Rampton and Jonathan Spicer) – U.S. regulators should stem the growing tide of anonymous stock-trading and consider charging high-frequency traders for their disproportionate amount of buy and sell orders, said a panel of experts advising how to avoid another “flash crash.” The panel’s 14 recommendations for U.S. securities and futures regulators contained some bold ideas that, taken together, would overhaul the high-speed electronic trading market. The advisers on Friday told regulators that today’s markets can easily breed uncertainty among investors, and asked them to move urgently on the suggestions. Yet many of the ideas called only for “consideration” or “further study” — potentially raising more questions as the first anniversary of the May 6 flash crash nears. “The recommendations are a good first step … but from a practical standpoint of avoiding another (crash) in the future, it doesn’t go far enough. I don’t think it’s possible to prevent another one from happening,” said Adam Sarhan, chief executive of Sarhan Capital in New York. U.S. regulators were cautious about some of the boldest recommendations, including new fee structures to encourage liquidity and discourage high numbers of order cancellations. “I do not know where we as a commission would come down on fees,” Securities and Exchange Commission Chairman Mary Schapiro told reporters after the panel meeting on its recommendations. The unprecedented May 6, 2010, market crash sent the Dow Jones industrial average down some 700 points before rebounding, all in a matter of minutes. It rattled investors, exposed flaws in the structure of markets, and set regulators on a mission to fix the system and restore confidence. The eight-member panel suggested the SEC consider forcing the banks, hedge funds and others that facilitate stock-trading away from the public exchanges to give investors a better price by a minimum amount. It also wants regulators to consider a way to better allocate the “costs imposed by high levels of order cancellations, including perhaps requiring a uniform fee across all exchange markets.” That suggestion comes after regulators and others began raising questions this past summer about the massive amount of message traffic, or “noise” in the markets, and whether it allowed some high-speed, short-term traders to manipulate prices for profit gains. “What market regulation now has to do is limit uncertainty,” said Maureen O’Hara, professor of finance at Cornell University and member of the flash crash panel. “You limit uncertainty by limiting the amount of movement a price can have before it falls off the map.” The changes would require the SEC and fellow regulator, the Commodity Futures Trading Commission, to take on a massive amount of research and rulewriting at a time when the agencies are straining to carry out the Dodd-Frank financial reform law. REGULATORS VS TECHNOLOGY While some have argued the crash was a freak event that called for obvious adjustments, such as the new “circuit breaker” trading halts, others said it was a wake-up call to finally get a firm handle on what could destabilize capital markets. It wants regulators to consider a so-called “trade at” order routing rule — something that would hurt the growing ranks of “dark pools” where trading is done anonymously. Some 33 percent of U.S. stock-trading takes place away from exchanges, up from 20 percent four years ago. Some of the biggest internalizers are market maker Knight Capital Group Inc, bank Goldman Sachs Group Inc, and hedge fund Citadel. A “trade at” rule, which Schapiro on Friday expressed support for, would generally prohibit any of the dozens of U.S. venues and wholesale market makers from executing an incoming order unless they were already publicly displaying the best bid or offer in that particular stock. After the crash, one of the regulators’ first steps was to form the committee to come up with some answers. Many of its ideas fall squarely in the “esoteric” category, though even small adjustments could revamp the flow of tens of trillions of dollars annually in the markets. The panel wants regulators to consider adjusting trading fees so that firms that provide liquidity get additional rebates that would help stabilize markets during stressful times; “depth of book protection” that would cut down on investors getting poor prices; and a closer look at “disruptive trading activities” in the futures markets. Other recommendations unveiled on Friday, such as expanding and modifying the “circuit breaker” trading pauses, had been telegraphed by regulators and mostly endorsed by market participants and exchanges such as NYSE Euronext and Nasdaq OMX Group. The exchanges at the center of the breakdown, however, added a new wrinkle to the debate when in the last week they set off a new wave of planned global mergers, including the takeover of Big Board parent by Germany’s Deutsche Boerse. The mergers highlight the increasingly interconnected global marketplace, where drops in one region can rapidly trigger plunges elsewhere, and show how aggressively traditional exchanges are investing in newer, faster systems. “The whiz-bang technology in markets today means that when things go wrong, they go wrong very fast,” CFTC Commissioner Bart Chilton said. (Reporting by Sarah N. Lynch, Jonathan Spicer and Roberta Rampton, with additional reporting by Ryan Vlastelica; Editing by Steve Orlofsky, Dave Zimmerman and Tim Dobbyn) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Video: BNP’s Semonella Says Bahrain Credit Concerns `Justified’

February 18, 2011

Feb. 18 (Bloomberg) — Raffaele Semonella, an emerging markets credit analyst at BNP Paribas, talks about the impact of protests in Bahrain on oil and credit markets. He talks with Lisa Murphy on Bloomberg Television’s “Fast Forward.” (Source: Bloomberg)

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Robert Teitelman: Don’t Overuse the Word "Revolution"

February 18, 2011

When was the last time you strolled into your local tavern and someone yelled, “Yo, bub, doesn’t that turmoil in the Middle East remind you of 1848?” Mostly, we recall the usual televised revolutions: the Soviet bloc, 1989 (the Wall); Tiananmen Square, 1989 (the tank); Iran, 1979 (hostages); the ’60s (hair). If you’re Glenn Beck, you’re fixated on the Russky Revolution, 1917 (George Soros as Vladimir Lenin). Then come the standbys: The American and French revolutions (wigs, Chryslers, guillotines). Textbook stuff. That about empties the revolution database. But in its day, revolutionary fever swept through Europe like a forest fire, an infection, a financial crisis, metaphors we have recently learned to toss about like beach balls. The conflagration of 1848, in retrospect, was foreshadowed by minor disturbances, pressures, forebodings; but when it came, it exploded spontaneously, like Tunisia, fed by a thousand grievances. A few nations resisted it — Britain, the Netherlands, Switzerland, Russia (too far, too autocratic) — as it hopscotched through pre-unified Italy, from Milan to Sicily, leapt to France, where the first blood ran, then through the German states, including Prussia, then the Hapsburg Empire, then back to France, Europe’s Egypt. The middle classes and nobility poured into the streets; the poor joined in. Absolutism quaked. Protests led to riots, barricades, tossed paving stones, deaths. And then, as the calendar flipped to 1849, the reactionaries took back the streets. The revolutions “failed,” raising the technical question of whether you can have a “revolution” that fails. The Springtime of Peoples ended. The crowds often lacked leadership and pursued divergent goals. Mostly, they were just tired of the same old lantern-jawed despots in charge. Expectations had been rising. Technology was on the march, and a popular press had emerged. Globalization stirred. But there had been famine across Europe — the potato blight wasn’t just Irish — and a trade slump. New ideas percolated: socialism, nationalism, liberalism, romanticism; 1848 was a boost to Karl Marx’s career. And yet, in the longer view, 1848 proved to be a beginning, not an end. The old men in charge, the Hosni Mubaraks, were shaken. The folks in the street had both demography and age on their side. After 1848, Germany and Italy unified; liberal institutions took root and pursued reforms, and Europe mostly drifted on a tide of bourgeois prosperity until World War I blew everything up. “Revolution” may be one of the most overused words in the vocabulary of modernity. There is a torrid romance about the concept, particularly when it’s occurring in far-off lands, or a past when soldiers rode horses and wore feathers. What is it we’re seeing in Egypt and beyond? Alas, the greater the distance, the stranger the milieu, the looser grasp we have on events. Revolutionary moments worship a glowing, if hypothetical, future. But even from the inside, they are chaos. Revolutions are profoundly unpredictable, not only in their direction but in their result: democracy, autocracy, kleptocracy, theocracy. They are a moral arbitrage between means and ends. Like a bubble, it’s hard to discern a true revolution as it’s unfolding; the test comes after, usually when the revolutionaries are old men themselves. True revolutions release energy, unmoor populations. The notion that any group or individual can control these forces — Mubarak, Obama, the Saudis, Google — is farcical, despite the “success” of the Chinese in Tiananmen, the Bolshevikis in St. Petersburg. “Winning” is subjective, a dice roll, not a Beckian dream of infiltration and mind control. A coup requires a cabal and a plot; a revolution dispatches bodies into heated Brownian motion. The term “revolution,” of course, has long been absorbed into our world of hype, self-promotion and status seeking. Jefferson nudged this along when he suggested a revolution every generation or so, just to clear the sinuses. Revolution is a key element of what used to be called radical chic and it attaches itself to technology like a leech. NPR recently asked people to write in about their experiences in revolutions. This is a weird form of political tourism, like saying, “Tell us your experiences in your last nuclear attack. Was it fun? Informative? Exciting?” This inflationary tendency is well known and not worth pursuing, except to note another similarity of revolutions to the notion of financial bubbles. Bubbles represent the separation of value from price; there’s no anchor tethering the price of tulips, mortgages or stocks to earth. They are unhinged, floating freely, creatures of their own gassy momentum. When we attach the word “revolutionary” to every new development, from the Tea Party to the iPad to political victories (Reagan, Gingrich, Obama), we debase its meaning and lose any sense of its seriousness — the blood, toil, destruction. We become a little stupid, a little blind and more than a little superficial — not to say a little more prone to the true revolution we never saw coming.

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Video: HCA Said to Seek $27-$30 a Share in Initial Offering

February 18, 2011

Feb. 18 (Bloomberg) — HCA Inc., the hospital chain taken private five years ago in a $33 billion leveraged buyout, plans to start marketing shares next week in an initial public offering, said a person familiar with the company’s plans. HCA will seek $27 to $30 a share when it starts its road show on Feb. 22, said the person, asking not to be named because the information is private. Bloomberg’s Cristina Alesci reports. (Source: Bloomberg)

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Video: Barrett Says U.S. Must Focus on Education to Compete

February 18, 2011

Feb. 18 (Bloomberg) — Craig Barrett, former chairman and chief executive officer at Intel Corp., talks about the need to increase U.S. investent in education. Barrett, speaking with Margaret Brennan on Bloomberg Television’s “InBusiness,” also discusses proposals for improving U.S. business competitiveness and creating jobs. (Source: Bloomberg)

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Richard Barrington: Covering Your Assets: 7 Signs Your Bank May Be Failing

February 18, 2011

Even though the banking sector is getting healthier, there were still 157 bank failures in 2010. When a bank fails, FDIC insurance should protect your checking and savings accounts (as long as you don’t exceed the $250,000 deposit limit), but accessing money from a failed institution can be inconvenient. If you’d rather avoid that kind of trouble, you should be alert for signs that your bank is struggling. After all, those 157 bank failures in 2010 exceeded 2009′s figure of 140. The reason 2010 was deemed to be a better year for banks is that there were fewer large bank failures, so fewer customers were affected. Still, bank failures remain a regular part of the banking landscape. Here are seven signs to watch out for if you think your bank is in trouble: Deteriorating financial ratios. You can get detailed financial ratios from the Federal Financial Institutions Examination Council. This information can be extremely complex, but if you call up a Uniform Bank Performance Report, you can see whether the capital ratios of your bank are deteriorating and/or are trailing the bank’s peer group. Deposit migrations. You can look at a year-to-year comparison of total deposits for a bank on the FDIC’s web site. A sharp drop means other people are heading for the exits, and you should be curious about why. Delayed financial reporting. Even if you can’t make heads or tails of the detailed financial reports, if you hear that a bank has delayed releasing earnings or other financial details, it may be a sign they are struggling with extreme changes in valuations. Layoffs. Drastic cuts in employees are a bad sign. Even if the bank isn’t failing, these cuts probably mean you can expect less service than in the past. Branch closures. Look at this as a more extreme version of layoffs. Don’t overreact if your bank steadily reduces the number of branches over time–the trend in banking is towards more electronic banking, with less of a bricks-and-mortar presence. However, a sudden announcement of a drastic reduction of branches is not a sign of an orderly, long-term strategy. Cuts in services. Whether it’s free checking accounts , rewards points, or special savings account rates for large customers, healthy banks make an effort to provide incentives for loyal customers. In a struggling bank, cost-cutting outweighs relationship-building. Sharp hikes in fees. As a general rule, healthy banks are in a mode of actively trying to attract new business–they are advertising regularly, offering competitive savings account rates, and have reasonable fees. Banks that are in trouble tend to go into a defensive posture where they don’t seem interested in new business, and they hike fees to get more out of existing customers. Several banks are adjusting fees because the banking environment overall has changed, but the more extreme the fee hike, the more wary you should be. None of these signs is the definitive kiss of death for a bank, but the more evidence of this kind you see, the more likely it is that your bank is struggling. At the very least, this can mean lousy service and uncompetitive products, and in the worst case, it could mean your bank is heading towards failure. So, if you start to see some of these signs, it may be time to shop for another bank. This post was originally featured on Money-Rates.com

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Video: Sfakianakis Sees Bahrain Delaying Bond Sale on Unrest

February 18, 2011

Feb. 18 (Bloomberg) — John Sfakianakis, the Riyadh, Saudi Arabia-based chief economist at Banque Saudi Fransi, talks about the political unrest in Bahrain and its impact on financial markets in the region. Credit-default swaps on Saudi Arabia surged on concern unrest in neighboring Bahrain will spread to the world’s biggest oil exporter. The cost of insuring Bahrain’s government debt rose for a fifth day. Sfakianakis speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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Michael Pento: Geithner’s Failed Makeover

February 18, 2011

To counter the increasing demands that government reduce its micromanagement of the economy, last week the Obama Administration offered a fig leaf in the form of a white paper entitled “Reforming America’s Housing Finance Market.” In addition to marking the official end of the Bush era “ownership society,” where increasing the level of home ownership was a national priority, the document contains a recommended regulatory overhaul of the Federal Housing Authority (FHA) as well as Fannie Mae and Freddie Mac (together known as Government Sponsored Enterprises “GSE’s”), that intends to bring the share of government owned home loans from the current 95% to 40% over the next 5-7 years. In the report, the Obama Administration makes the important admission that government interference in housing had dangerously distorted the market. And, while the goal of reducing the government’s footprint in the housing market is certainly laudable, the reform plan is not only too little too late, but fails miserably to address the nucleus of the problem. Even if all the recommendations are adopted, the government would actually extend its explicit guarantees to bail out failing lenders. Most importantly, the proposal completely overlooks the most significant government distortion of the housing market: the Federal Reserve’s manipulation of interest rates. Thus, this plan will insure that government’s role in the mortgage market will likely expand in the years ahead. Banks are in the business of borrowing on the short end of the yield curve and lending on the long end. Since interest rates are generally lower for shorter time durations, banks make profits by capturing the spread. But if the gap between long term and short term rates narrow, or sometimes vanish completely, banks have a much harder time operating. Rapid and dramatic changes in interest rates also expose banks to money losing risks. In a free market, whenever the supply of savings contracts the cost of money tends to increase. Those rising interest rates curb the demand for borrowing and increase the propensity to save. Conversely, increased savings rates lower the price of money, thereby encouraging more borrowing. Consequently, in a free economy market forces tend to stabilize interest rate volatility. However in the United States interest rates are anything but free. When interest rates are set by a few people behind closed doors, as they are by the Federal Reserve, massive distortions can occur in the supply demand metric. For example, the S&L crisis of the late 80′s and early 90′s was brought about by the loose monetary policy of the 70′s. Rising interest rates, which were a direct response to rising inflation, soon found S&L’s paying out more on their short-term borrowed funds than they were collecting on their long term assets. The consequences for those imbalances caused by our central bank rendered nearly one thousand banks insolvent. To mitigate this problem, early in the last decade banks began turning more and more to securitization as a way to unload the mortgages on their books by packaging and selling loans to outside investors. Not only does securitization bring in fees and reduce banks’ risk exposure but it also sucks in more capital to the real estate market, while increasing financial sector profits. It’s no wonder that the securitization market grew to over $10 trillion in the U.S. before the credit crisis of 2008. On paper this was a good solution to the problem, but additional government involvement in the securitization market threw in a monkey wrench. Given the size and diversity of the investment market in the U.S. and around the world, there was adequate private demand for securitized mortgages. With relatively low risk and more generous yields than government debt, pension funds and other institutional investors bought heavily. However, as the Federal Reserve continued to lower rates and as the government engineered housing boom finally went bust, this private label demand dried up almost completely. The GSEs now provide financing for 9 out of 10 mortgages. Therefore, the real estate market today is virtually 100% distorted and manipulated by government forces. Treasury Secretary Geithner–the President’s main pitch man for the program–touted the proposed solution of a hybrid federal reinsurance plan that would include a standing federal catastrophic reinsurer for private guarantors of mortgage-backed securities. The government has already clearly shown that its erstwhile implicit guarantee is now in fact explicit for GSE debt. That condition would remain intact. However, now government involvement would also morph into an explicit guarantee to reinsure private label mortgages. Therefore, in typical government fashion, the proposed reforms are merely a repackaging of the previous sham. Even if the plan were to be successfully carried out, the GSEs would still account for nearly half of all mortgage financing. Only now the government would also back private insurance for private label MBS with yet another explicit guarantee in case of emergency. Who can doubt that such conditions will inevitably arise? As to how this can ever satisfy the need to remove moral hazard or getting the government out of the housing market is beyond me. In other words, there is no meaningful governmental withdrawal from the market. Most importantly, the plan does nothing to address the Fed’s role in making interest rates much lower and more volatile than they would otherwise be. Unfortunately the housing market will remain in government control for years to come and another real estate crisis will inevitably occur. Michael Pento is the Senior Economist for Euro Pacific Capital

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Matt Spangler: Find New Profits From Old Products: YouTube, Brand Channels, and Easy Money

February 18, 2011

“Can you help us quickly find new opportunities and open new markets to deliver short term revenue growth?” It’s the most common question I hear through my consulting practice, when corporate executives from blue chips discuss their challenges with me. In many cases, the answer might be hiding in plain sight. Not to chase after the shiny new thing but look for innovation and new profits in existing systems and businesses. It might not be as sexy as the hot new startup, but those potential revenue streams have the chance to return new profits with less upfront investment. After all, those shiny new things can be quite expensive. Even YouTube , considered one of the most innovative companies in the world, struggles with similar challenges. Through personal experience with the company over the last year, I saw an opportunity to rethink their brand channel process, a mainstay service that already exists but is painfully difficult to setup, and leverage it in new ways to deliver value for users and profits for the video giant. Hard to believe that just five years ago YouTube was that shiny new thing, hemorrhaging money to blaze the internet TV trail. Five years later it’s annual page views are upward of 700 billion and its monthly global audience, according to a recent article by Fast Company , is 500 million people. The crowd-sourced broadcast behemoth is the definitive place to view video online with 35 hours of video footage pushed live every minute. Like many successful online ventures, translating pageviews into revenue has been YouTube’s challenge since its inception. Much of the Fast Company profile focused on YouTube’s “relentless experimentation” with new monetization models but with no public financial data, and speculation on its bandwidth costs, few know if their current models are profitable. One thing not in doubt is that YouTube continues to face rising competition from companies like Hulu , Vimeo , Netflix , Boxee and Apple and will need continual innovation around monetization (along with the constant need to keep consumers happy) to win the race and dominate home entertainment. March 2010 reports indicate that the site should generate close to 1 billion in sales , so what do they offer brands now, and are there ways they could generate new profits before they have to reinvent the wheel? There are many options for how to get involved. A chart in the Fast Company article provides a breakdown that includes traditional ad units, expensive homepage customization, in-video ad units that plays before the content (including Content ID ), promoted videos, an Adwords system and more. Some would argue there is no better place to tell your story then through video, and when it comes to nearly every brand’s involvement with YouTube, a customized “channel” is the starting point. Channel accounts allow you to customize the design of your YouTube page and create a place for brands to send customers to hear the story of a new product or service. This is especially important for emerging companies, since their advertising strategies will likely not begin with ads, but rather the creation of great content to build audience and brand awareness. But even the largest global brands embrace the brand channel model, which makes it all the more surprising that at present YouTube has few answers when it comes to monetizing it or even providing customers with an easy way to set one up. It’s broken. It needs fixing. It needs focus, both from a consumer support and profitability standpoint. And that can be done with a few simple steps. And by increasing focus on channels, you move to grow the YouTube “partner” program , which provides revenue share to encourage audience growth from super users who in turn drive the overall traffic without additional marketing (ex: Huffington Post’s free blogger network ). So how do you setup a brand channel on YouTube? Log on to YouTube and try setting one up. Sounds simple, right? I thought it would be, until I experienced it for myself. In the summer of 2010 while coordinating communication efforts for a small business client, we produced a series of twelve professional parenting videos geared towards YouTube’s active community of new parents. We planned an ongoing series and wanted a page for the videos that fit their brand aesthetic. We searched YouTube for basic information on brand channels and arrived at the Advertising page (http://www.youtube.com/advertise). A downloadable pdf for “creating a brand channel” explained the functionality along with the distinction between free and paid channels but had no information about the costs or installation instructions. There was no automated process to upgrade your page and after an extensive search of the help forum a few random comments indicated the costs to edit your channel was rumored to climb into six figures. I contacted some ad industry contacts with experience working on brand channels, and they confirmed the rumor and insinuated, that while they had heard of cheaper options, their experience opening the iFrames and adding custom code had cost over $100,000. In September 2010 my team filled out the form, to contact a YouTube representative , indicating our interest and budget. No automated email response. Two weeks passed; no response. We filled out the form again; still nothing. A month later the developer I hired to help me implement the channel design was kind enough to send a personal email to a contact at YouTube. Thanks to that lucky break, our request finally found it’s way to the proper person. After one more week. Finally an email arrived, asking what kind of channel we wanted. We waited 10 more days for the first bit of concrete information: they added us to the white list and said our brand channel upgrade would be free, but we would not receive the full capabilities of a paid channel. Perfect. Done. That was, um, easy? Two weeks later, over two months after our first email, we randomly checked our channel page, and it turned out that the account had been upgraded. There was no notification or instructions of any kind. The YouTube brand channel system is something my client was ready to pay for. We allocated a budget to produce the videos and wanted our brand presence to reflect the same quality. We expected a setup fee to help facilitate a timely launch to our channel and would have paid a monthly subscription charge for ongoing service that included analytics on visitors and tools to promote the channel to users interested in our subjects. Currently the only revenue being derived from the program is the extremely high, rumored fees that large brands pay for extensive customization. Note: Since our experience, the help section was updated in early 2011 with a dedicated area for brand channels and a new “Show and Tell” section with examples of brand channels curated by the ADC (Art Directors Club) . This does a decent job of showing examples of custom channel designs but provides no information about the options, pricing or process to join the party. In fact, you’re sent to the same signup form that returned us no results. There is great opportunity here. Small business and personal branding was one of the hottest topics of 2010 with sites like Flavors.me and About.me growing large audiences by making it easier for individuals to create well-designed personal websites. Combined with the proliferation of video tools like the Canon 5D Mar II , more individuals and small businesses are using video to tell their story to the consumer and the volume of individuals interested in controlling their brand’s image creates a bigger market for personalized channels. According to an article published on theStreet.com , in the US alone, local online advertising is expected to grow to nearly one quarter of all advertising dollars spent by 2014 . As the economy continues to recover, much of the growth will come from small to medium businesses looking to establish their name in a crowded market. No place is better positioned to grab that crowd, many still internet novices, than YouTube. It was speculated that Google’s desire to purchase Groupon was because the daily coupon site has, “more than 1,500 employees that deal with places like restaurants, nail salons and spas. Google also hoped to leverage Groupon’s sales team to encourage advertisers to list on its local business directory.” Through automation and product improvements YouTube can help build the small and local business relationships without spending money on acquiring human capital. The ecosystem exists, and the audience is thirsty for reasonably priced alternatives to market their businesses. Automation of the brand channel system would allow customers to choose from a suite of options. They would be presented clearly on the site with all their features, capabilities, and levels of customization delineated. Templates and simple tools would help novice users upload images to brand a page and promote the videos they create. For example lets use a basic three-tiered pricing model; a common pricing strategy for subscription software products ( 37Signals , Mailchimp , Shopify etc). Apply to the brand channel model: Small fees, $25/month, allow you to apply your brand style to the design of the page and greater access to color control. Medium fees, $50/month, provide greater control, improved analytics and promotional options. For $100/month you receive further design customization, additional widgets built exclusively for YouTube and access to advertising tools imbedded in your dashboard. (assuming that a $1200 a year investment on your YouTube page means you are likely interested in buying advertising to drive interest to the page-ex. Facebook ads ) Dedicated reps and in-depth customization would still be available for the six figure rates and include other premium features and promotion on highly trafficked sections of the site. Basic, sure, but if you take the yearly charge of the three example programs levels ($300 / year), and combine it with 1% of the estimated 100 million active viewers (vastly less then their 250 million registered users), you have $300 million per year in additional revenue on customized brand channels with very little additional work or infrastructure. Additionally you would explode your community of engaged brands who would work to drive interest and traffic to their own channels, increasing the growth rate of the site and advertising spend within the ecosystem. YouTube pulls in revenue from something it already offers, and small businesses get an easy and affordable platform to build their brands. It’s a win-win. A s 2011 hits full swing, and you look hard at your own business, YouTube offers a valuable lesson. There might be revenue opportunities hidden inside your existing businesses if they just take the time to look. Sometimes that innovation may be as simple as extending an existing, successful platform, and customizing it for an underserved target with spending power. It seems so simple. It’s unbelievable YouTube hasn’t leveraged their brand channels. And it’s simply a matter of time before they do. Easy money.

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Video: Ahuja Says LightSquared in Talks With National Carriers

February 18, 2011

Feb. 18 (Bloomberg) — Sanjiv Ahuja, chief executive officer of LightSquared Inc., talks about his company’s efforts to build a wireless network and sell space to network retailers. He speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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Nake M. Kamrany: China’s Rapid Recovery in the Great Recession of 2007 – 2009

February 18, 2011

During the recession of 2007-2009 China’s exports dropped 15-18 percent causing 23 million workers to be laid off, but 98% readily found jobs as the economy bounced back and the unemployment rate dropped to 4% with a $586 billion stimulus package. The strategy was to create employment directly through fiscal means as President Roosevelt did during the Great Depression of the 1930s. In the great recession of 2007-2009, President Bush and Obama’s monetary stimulus have not reduced U.S. unemployment rate below 9% as of this date.. China is indeed back on track having 11.9 percent growth of GDP for the first quarter of 2010. It is now U.S.’s second largest trading partner, largest holder of U.S. public debt, is the number one producer of solar energy, second to the U.S. in energy consumption, is the biggest producer of greenhouse gasses, and the number one market for U.S. autos. China has a trade surplus with the U.S. in the amount of $238 billion. It intentionally keeps the value of its currency renminbi (yuan) low against the dollar to promote its favorable trade surplus. China has a de-facto G-2 partnership with the U.S. power sharing deal, The U.S. and China have common and divergent interests as China is becoming a global power house. China is holding $1.295 trillion of U.S. securities, an increase of 6.4 fold since 2002. China’s per capita income is $6,546 as compared to $40,208 for the U.S. The GDP is $9 trillion as compared to $14 trillion for the U.S.. If China’s economic performance continues at the same rate as in the last 30 years, its per capita income will converge with that of the U.S. by the year 2040 assuming it remains politically stable. China’s reform started in the 1980s just about in the same time as President Richard Nixon’s visit to China which opened the way for China’s incursion into international trade and economic growth. Since then, more than 250 million Chinese have been lifted out of poverty — a remarkable achievement. China’s system cannot be emulated by other nations because of its unique institutional framework, nor is it intending to export its system. Some of its leaders fear that adopting Western democracy may cause turbulence in society. Its main objective in dealing with foreign countries is economic opportunity, trade and development in a pragmatic way. Political leadership of a one-party system is elected every five years. China has a market authoritarian form of a system in which a free market is allowed to operate with the government holding a very firm hand on political activity in the country. Last year 10,000 small protests were tolerated. Currently over half of China’s GDP is produced by privately controlled enterprises. Currently China’s unemployment is at 4% by adopting a policy of employing labor into the factories in contrast to engaging private loans through micro-financing schemes as is prevalent in India and Latin America or through short term manipulation of the supply of money as being practiced in the U.S. Further, it is most notable that China escaped three global financial meltdowns since 1990 including the Japanese severe credit implosion, the developing Asian economies who suffered foreign reserve meltdown caused by money flight due to fixed exchange rate regimes and the 2007-2011 great recession that engulfed most of the world’s economy except China. The 2007-2011 great recessions were contagious and China’s strong globalization orientation was expected to push the Chinese economy into the transmittable and turbulent global meltdown, but ironically China escaped. Thus the Chinese rapid economic performance draws attention to the Western neoclassical synthesis concerning management of macroeconomic stability, macro/monetary policy and efficacy of countercyclical measures in the short run and in the long run. What is it that distinguishes China’s approach in contrast to the rest of the world? Essentially the Chinese performance suggests a reexamination of the received doctrine of mainstream macroeconomic paradigms in the West as the costs of the economic meltdown of 2007-2009 and on previous occasions point to the limitations of the existing remedies of macroeconomic and financial framework. Nake M. Kamrany is professor of economics and director of program in law and economics at the University of Southern California. This article is a synopsis of a chapter in the forthcoming book, “China After the Global Financial Crisis,” to be published by International Research Institute in November, 2011.

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Philip O. Nolan Joins Camber Board of Directors

February 18, 2011

The Former CEO of Stanley, Inc. Brings Extensive Acquisition and Corporate Growth Management Experience

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Randall Kempner: Entrepreneurs Are Transforming The Developing World

February 18, 2011

At least once a day at work (and all too often at cocktail parties), I have the opportunity to explain to a newcomer in my field why I think small and growing businesses (SGBs) are key to long-term poverty eradication in developing countries. “If you look at the economic pyramid of a developing country, like the U.S.,” I tell them, “at least 50 percent of jobs and GDP come from small businesses.” Even as I write this, I’m eating Chinese take-out from Mei Wah, the second culinary venture of D.C. restaurateur Larry La. Outside of my office, I hear the vacuum of the nightly cleaning crew, managed by a local company that provides janitorial services to D.C. area businesses. Throughout my day I interact in a variety of ways with small businesses that are the fabric of the U.S. economy. But what does this have to do with poverty in the developing world? It turns out, quite a lot. Because while formal small businesses make up the backbone of “developed” nations, they contribute to only 16 percent of GDP and 18 percent of total employment in the “developing” world. That’s a big difference — and one that we at the Aspen Network of Development Entrepreneurs (ANDE) think can and should be overcome. Small businesses are essential because they create jobs, generate income and take a stake in the communities in which they operate. They also generate goods and services for local communities. When led by the right kind of managers, they grow — and create more jobs, more services and more wealth. And increasingly more often, they tackle social and environmental issues as well. Take, for example, Servals Automation Private Limited in Chennai, India. Servals’ flagship product is a Venus kerosene burner, which reduces kerosene consumption by 30 percent due to an innovative design that uses a single part in place of multiple tubes. Use of the stove reduces harmful emissions and saves the end consumer money. But that’s not all. Servals has also taken the next step to “de-engineer” the production process — breaking it up into a series of small pieces. They then created a manufacturing base in a village 50 miles from Chennai and worked with local self-help groups to train rural women to make the components. The women earn income, without having to leave their families and travel to the city. Servals is a prime example of the many positive impacts that SGBs have in developing countries. However, there are just as many obstacles standing in the way of their success. We believe that entrepreneurs need three key things to succeed: access to talented staff, access to markets and information, and access to capital. The members in our network support SGBs in accessing these resources, and are working together to build up the entrepreneurial ecosystems in over 140 developing countries. In the case of Servals, they received support from Villgro Innovations Foundation which included mentoring and business consulting, as well as help with its R&D, patent processing and fundraising. For the impact investing community, and even the broader investment community — SGBs provide a valuable channel and opportunity. More and more investors are realizing that they can reap financial rewards as well as social and environmental impacts by investing in these types of businesses. Our upcoming Impact Report will share research that demonstrates that in 2010 alone, 31 new funds targeting SGBs were launched. Peter Shrimpton of Heart Capital likens this new interest in SGBs to his experience surfing in his native South Africa. “For a long time it felt to us that we were standing on the beach with our wetsuits on, with our boards waxed up and looking at the ocean and the ocean was flat and people would ask us what we were doing. We would tell them that there was a tidal wave of social transformation coming, but they looked at the ocean and only saw poverty, despair and struggle at the grassroots level. In the past few years we’ve seen this global movement begin to take form, and we are beginning to recognize that we are not all standing on the beach alone with our surfboards, but in fact there is genuinely this global movement of social change and each one of us plays a very key role in terms of bringing about this change.” Which is not to say that we can all sit back and enjoy the ride. There is still much work to be done in this sector to enable us to grow the sector in emerging markets and truly measure the impact of these types of investments. We need to provide more support to entrepreneurs. We need to find more investment dollars. But as both the entrepreneurs behind Mei Wah in D.C. and Servals in India can tell you, a thriving small-business community is key to economic prosperity anywhere.

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Video: LeBron James Says Animated Cartoon His Own Inspiration

February 18, 2011

Feb. 18 (Bloomberg) — Miami Heat forward LeBron James will star in an animated Web series called, “The LeBrons.” Michele Steele reports on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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Wisconsin GOP Sends State Troopers After Democrat

February 18, 2011

MADISON, Wis. — Republicans in the Wisconsin state Senate have asked the governor to send state troopers after Democratic leader Mark Miller. Senate Democrats are boycotting a Senate vote on a bill that would strip public sector workers of their collective bargaining rights. They have been missing from the Capitol for a day and a half. Senate Majority Leader Scott Fitzgerald says he has asked Gov. Scott Walker to send two state troopers to Miller’s home in Monona. He says he believes the troopers are en route. The Wisconsin Constitution prohibits police from arresting legislators while they’re in session. Fitzgerald says he just wants to send a message to Miller – if he’s even home – that he must bring his caucus back to Madison.

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Video: Bennenbroek Says Euro Is Facing `Risk of Disappointment’

February 18, 2011

Feb. 18 (Bloomberg) — Nick Bennenbroek, head of currency strategy at Wells Fargo & Co., talks about the outlook for currency discussion at the meeting of finance ministers and central bankers from the Group of 20 countries today and tomorrow in Paris. Bennenbroek talks with Betty Liu, Sheila Dharmarajan and Jon Erlichman on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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House Debates Blocking Funds For Health Care Law

February 18, 2011

WASHINGTON — Republicans aimed their budget-cutting at President Barack Obama’s health care law on Friday as the House plowed through a final stack of amendments to a huge spending bill that would impose sweeping cuts on domestic programs. Following through on the GOP’s goal of dismantling last year’s health care overhaul, Rep. Denny Rehberg, R-Mont., proposed blocking funds to implement the measure, arguing that it was a budget-busting overreach by government. Democrats fought back, saying the law has been a boon to families and will create health care jobs and reduce the federal deficit. The overall bill is the first step in an increasingly bitter struggle between Democrats and Republicans over how much to cut federal agencies’ funding over the second half of the budget year that ends Sept. 30. Current funding runs out March 4 and a temporary spending bill will be needed to avoid a government shutdown. As Friday’s debate began, the focus was on the health care overhaul, which dominated Congress’ work in 2009 and early 2010. Bitter partisan differences over it remain unabated. The GOP has virtually no chance of killing the law because of support for the program from Obama and the Democratic-run Senate. But Republicans plan to try chipping away at it relentlessly. “It’s a law designed by those who wish to control every health care decision made by health care providers and patients, by every employer and employee, by every family and individual,” Rehberg said. Rep. Rosa DeLauro, D-Conn., said the GOP effort would “put insurance companies back in charge, further demonstrating the majority’s special-interest priorities and hypocrisy on job creation and deficit reduction.” Action expected Friday also included votes on a proposal to block federal aid to Planned Parenthood, bar the Pentagon from spending taxpayer money to sponsor NASCAR race teams; to reverse a proposed Obama administration rule that seeks to crack down of for-profit colleges and vocational schools; and to strip the Environmental Protection Agency of its authority to issue regulations on global warming. With a government shutdown possible if the spending measure isn’t extended at least temporarily, House Speaker John Boehner, R-Ohio, inflamed the situation Thursday by insisting that the GOP-controlled House would refuse to approve even a short-term measure at current spending levels. “Read my lips: We’re going to cut spending,” Boehner declared. Democrats immediately charged that Boehner was maneuvering Congress to the precipice of a government shutdown. The GOP would reduce spending to about $60 billion below last year’s levels, mixing an increase of less than 2 percent for the Pentagon with slashing cuts averaging about 12 percent from non-Pentagon accounts. Such cuts would feel almost twice as deep since they would be spread over the final seven months of the budget year. The Environmental Protection Agency and foreign aid accounts would be especially hard hit, while GOP leaders orchestrated just a modest cut to Congress’ own budget. Some of the most politically difficult cuts, to grants to local police and fire departments, special education and economic development grants, were reversed. Amtrak supporters easily withstood an attempt to slash its budget. But with the fiscal framework of the measure already saddled with a veto threat, Republicans mounted an assault on the administration’s regulatory agenda. By a 244-181 tally Thursday, Republicans voted to block the Federal Communications Commission from enforcing new rules that prohibit broadband providers from interfering with Internet traffic on their networks. The new “network neutrality” rules are opposed by large Internet providers. Republicans then moved, on a 250-177 vote, to stop the Environmental Protection Agency from imposing limits on mercury pollution from cement factories. Supporters said the new rules would send American jobs overseas, where air quality standards are more lax or non-existent. Republicans also turned back Democratic attempts to boost funding for the Securities and Exchange Commission and the Commodities Futures Trading Commission, whose budgets would be cut sharply under the measure, to pay for responsibilities added in last year’s overhaul of federal financial regulations. Social issues also came into play. Thursday night’s action was dominated by a lengthy debate on an amendment by Rep. Mike Pence, R-Ind., a strong foe of abortion, to block Planned Parenthood from receiving any federal money. The organization provides a variety of women’s health services. “It is morally wrong to take the taxpayer dollars of millions of pro-life Americans and use them to fund organizations that provide and promote abortion, like Planned Parenthood of America,” Pence said. Democrats said Planned Parenthood provides much-needed access to contraception, medical exams and counseling to women and that federal law already prohibits the use of government funds for abortions in most circumstances. Rep. Nita Lowey, D-N.Y., said the GOP proposal would “make it harder to access pap tests, breast exams, routine gynecological examinations, flu vaccinations, smoking cessation services, cholesterol screening, contraceptives, and all of the other services that Planned Parenthood provides.” Liberal Minnesota Democrat Betty McCollum hoped to team up with tea party-backed GOP freshmen to bar the Pentagon from spending taxpayer dollars to sponsor NASCAR race teams. She said such sponsorships can cost millions of dollars, simply for placing decals on race cars and for a few driver appearances. The Army, the Air Force and the National Guard each sponsor cars with the aim of boosting military recruitment, but the Navy and Marine Corps dropped their NASCAR sponsorships in recent years, saying they didn’t know whether they were effective.

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Video: Marshall Doesn’t Expect Apple IPad Antitrust `Fireworks’

February 18, 2011

Feb. 18 (Bloomberg) — Brian Marshall, an analyst at Gleacher & Co., talks about Apple Inc. and Google Inc.’s competition on services selling newspaper and magazine subscriptions for tablet computers. Marshall talks with Bloomberg’s Betty Liu, Sheila Dharmarajan and Jon Erlichman on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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Video: Swan Says Financial Imbalances Must Be Addressed by G-20

February 18, 2011

Feb. 18 (Bloomberg) — Australian Treasurer Wayne Swan talks about the country’s economy and the discussion about global financial frameworks in the G-20. He spoke in Paris before the Group of 20 meeting of finance ministers.

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K Street Holding Cards On 2012 Primary

February 18, 2011

Many K Street insiders are close to several of the likely presidential contenders and are waiting to see who will officially jump into the race before showing their cards.

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Lucy P. Marcus: Future Proofing the Boardroom: Today’s Agendas

February 18, 2011

The board room agenda is going through a reformation . To ensure that we are helping organizations future proof themselves, what are some of the essential things that boards and board members need to think about, no matter the size, location, or sector of their organization? Five areas need an update in the way we as board members think about them: infrastructure, technology, internationalization, communication, and balancing continuity and change. Infrastructure Boards must embrace the political, economic, and social reality of the way the world is operating today and tomorrow. One of the areas that needs a real rethink is building organizations that can operate effectively in a low-carbon economy. The main issues here are about energy consumption, integrating clean tech and sustainability, and they apply to all facets of the business: from facilities, to building stock and rolling stock, from changing work patterns and practices to the ways in which companies engage with their stakeholders and the local communities where they are based. It touches everything an organization does, how it behaves, how it invests, and it means board members need to be asking the questions about how these decisions will impact the business five and ten years down the road. Most importantly, it isn’t about green washing or perception; it is fundamentally about how the organization does business. Technology At the heart of many of the issues on the modern board agenda is technological innovation. Technology, thus, is not a stand-alone issue, but an integral part of how effectively and successfully a company can be run. It is not an end in itself, but an instrument that can only prove its worth if it serves a concrete purpose. Coupled with that is the speed at which new technology comes into play and the level of disruption it creates in the process of integrating it into the daily running of a company. For all the importance of disruptive innovation, if ‘old industries’ and the tech sector communicate effectively, if one understands the other’s needs, and the other, in turn, comes to grips with the significant benefits that today’s technology offers, innovation more generally can be enormously helpful in future proofing companies. For this potential to be fulfilled, boards must make sure that their organization is flexible enough to recognize important technological developments and incorporate them into existing business models. Internationalization Regardless of a company’s main business or where it is located, its success will ultimately depend on grasping the completely internationalized environment in which it operates. The world today is politically, socially, and economically more inter-connected, and this offers opportunities and poses risks at the same time. Board directors need to be able to think outside the walls of their own corporate board room, they need to speak their own language as well as the language of the markets where they want to be, for while the world gets smaller and in some respects more similar, local cultural difference remains and understanding it gives companies a distinct edge. Corporate boards need to set an example and help implement an agenda that is focused on attracting the best people from anywhere and put them in a place where they work most productively for the success of the company as a whole. Communication No corporate board will be able to implement its modern agenda without effective and dynamic communication, both with all its stakeholders (customers, staff, investors, etc.) and within the board room. Within the boardroom, this is about asking the necessary questions and being open to hear the answers, however uncomfortable they might be. Outside the boardroom communication is about the image and strategy of the company, and it is about the methods used to communicate this message , and increasingly so. A board that sends out a message of a forward-looking, socially and economically responsible, and politically aware strategy and does it by old and new forms of communication also sends a message about the right balance between continuity and change, about the unity of word and deed, demonstrating in action to which it rhetorically commits. Balancing Continuity and Change Embracing new ideas and news ways of thinking does not mean completely disregarding the old. Boards will only succeed in their task of future proofing their organizations only if they see the connections between the old and the new. This requires casting a critical eye on the old, innovating where fruitful, and integrating new technologies and items on the corporate social responsibility agenda into the tried and tested business practices of corporate governance, risk assessment, and finance. Corporate directors need to understand the purpose, strengths and limitations of existing practices and be willing and able to take steps to address them. The modern board agenda does not disregard ‘old issues’, it is not driven by short-lived ‘flavors of the month’ or temptations of every disruptive technology or idea that comes into the room, but is rather guided by the needs and vision of the business. This need for balance requires board rooms to have a mix of people to ensure a comprehensive and complementary diversity of approach, background, and skills Stargazing is most effective if it is done from a strong foundation where the nuts and bolts of the company work, and where they are grounded in a solid foundation. This is nowhere more obvious then when it comes to a company’s financial stability and sustainability. Past, present, and future are a continuum when companies seek opportunities for investment and expansion; when they carefully assess risks connected with either; and as they determine the right level of (not only monetary) compensation for their directors and staff. Note: For more information on the juxtaposition of grounding and stargazing see Future Proofing the Boardroom: Grounding and Stargazing . This was originally published on the Marcus Ventures website and on CSRWire .

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Lorrie Febus: Bank of China — An Option to the Devaluing Dollar

February 18, 2011

At a time when the U.S. economy is struggling to recover, and there is concern of dollar devaluation, could the Bank of China be offering a new option? For the first time, U.S. citizens will be allowed to deposit U.S. dollars and hold them in Chinese Yuan within the United States. On Jan. 12, 2011, The Wall Street Journal reported : China has launched trading in its currency in the U.S. for the first time, an explicit endorsement by Beijing of the fast-growing market in the yuan and a significant step in the country’s plan to foster global trading in its currency. The state-controlled Bank of China Ltd. is allowing customers to trade the yuan, also known as the renminbi, in the U.S Despite personal political views, this could possibly be a hedge against dollar devaluation caused by the Federal Reserve’s monetary easing. Most believe now the yuan is being kept artificially low to keep a favorable trade balance with the US. With China currently experiencing an inflationary economy, many believe this will force the value of the yuan higher. The changes to the IRS policy, including additional reporting for overseas bank accounts makes holding currency in foreign banks more cumbersome. This development with the Bank of China is an interesting hybrid. Holding foreign currency within the US banking system, including FDIC insurance is an interesting option. It seems this may be a good option for holding cash. A few months ago, I wrote an a blog about people in Russia holding their savings in US dollars or Euros to hedge the risk of their own currency. This is the same concept with holding yuan in the US, and just the fact we are able to do so, may be an indication the ‘torch’ as the world’s great economic power, is being passed from the U.S. to China right before our eyes. Currently, the Bank of China has two offices in New York and one in Los Angeles, and anyone interested in opening an account must do so in person. The banks website BOCUSA.com states, The Bank of China limits the amount of yuan that can be converted by a U.S.-based individual customer to up to $4,000 a day, with an annual limit of $20,000. The restriction is designed to fend off speculation in the currency, bank officials say. But there is no limit, at least for now, on the amount that can be converted by businesses, so long as they are engaged in international trading. The bank has no restrictions on the ability by U.S.-based customers to convert the yuan back into dollars. In addition, accounts opened in the New York branches are FDIC insured.

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Video: Public Worker Protests Spread From Wisconsin to Ohio

February 18, 2011

Feb. 18 (Bloomberg) — Workers from Wisconsin to Ohio are protesting against legislation that would restrict their collective-bargaining rights. Bloomberg’s Mark Niquette discusses the spread of protests at statehouses with Matt Miller on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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Trish Kinney: Job Search Technology Not User Friendly to Employers

February 18, 2011

My company recently began a search for two managers and set up a nifty gmail account to house the responses. In a short period of time, hundreds of resumes came pouring in. Our vice president, who wrote and posted the ad, spent hours reviewing the submittals, setting up interviews, and meeting with perspective employees. She sent me her final two candidates, neither of which was suitable. In an emotional meeting, she stated that her workload did not allow her to repeat the frustrating and time consuming process, complained about the quality of the applicants, and seemed nearly certain that one of them was a murder suspect she had seen on the television news. I offered to take over the search for the two managers. Having personally hired hundreds of people over the past 28 years, I approached the task with confidence. By the time I accessed the swelling gmail account, there were 921 responses. It was daunting to make that first click and absolutely overwhelming to consider such a large number of applicants. After my first session, a handful of resumes were saved in a folder and approximately 215 were reviewed and discarded. Hours later, I was down to 700 applicants. I found myself looking for any excuse to avoid the process completely, willing to spend time doing anything but throwing myself into the black hole of click after click on resumes that included air conditioning techs, hospital clerks, cashiers, sushi chefs and journalists. Not one included a cover letter stating why, despite their lack of related experience, they were applying for a community manager position and what special talents they could bring to my company. It was clear that a lot of clicking was going on from their end, utilizing software that allowed their resumes to be blasted to any and every job posting on the site. The old adage about throwing spaghetti against the wall and seeing what sticks came to mind. Many of the responses were barely in the form of resumes. My favorite so far is: “Worked in a high paced,large volumes of wealthy and distinguished clientel! Professional attititude and conduct is what i am all about, I work very hard and thoroughly ,i am an efficiency expert!I am creatative ,outgoing very articulate, a team player!” Finally I went to my folder and selected one candidate and dialed his number. He was overqualified for the job but his resume was beautifully done and his vast experience was at least indirectly related to our industry. We spoke on the phone for nearly 40 minutes and he was an impressive candidate. I reiterated, as was stated in the ad, that it was an entry level management position with tremendous potential for rapid growth within the company. While I knew he was overqualified, we would have to both agree to take a chance on the other and see if we were a good match. He said he had enjoyed every minute of our discussion and we scheduled an interview at my office. I recklessly stopped looking at the resumes after that, feeling confident I had found my manager. During the interview, I offered the job at the high end of the salary range posted in the ad to which he had responded. He seemed shocked at the number and it completely changed the tone of the interview. It suddenly dawned on me that he had no idea which job he was applying for because he had forwarded his resume so many times by repeated box clicking. For a moment I drifted off in my mind to the days when resumes were received in the US mail with beautifully drafted cover letters and crisp, well organized resumes for consideration or dropped off in person by people dressed in business clothes with briefcases or leather notebooks under their arms. A good response was maybe 30 applicants with direct experience and the hard part was which qualified candidate was the best fit. He asked if he could think about it overnight and promised to get back to me this morning. I think it’s even money as to whether he can even imagine coming to work for that kind of money when he made so much more in a position that no longer exists in today’s economy. All I know is that it seems backwards to me that the employer has to do all the work in the hiring process and the job seekers have only to click, click, click to circulate their resumes anywhere and everywhere, sometimes without even reading the entire job description. It dilutes the process for both sides which is a real shame with unemployment being what it is today. I honestly feel that I would seriously considered any applicant, literally, who takes the time to write a personalized cover letter to my job posting showing at least minimal interest in my needs. But so far, not one resume has included such a letter. What seems perfectly clear to me is that resumes flying around internet space does not a legitimate job search make. A small effort to make yourself stand out to an employer would be worth it. And don’t worry, you won’t have to leave your computer to do it.

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Marty Zwilling: The ‘Big Bang’ Theory Doesn’t Work for Startups

February 18, 2011

The traditional mode of starting a company is to plan a serial process, where you complete only once all the steps, leading to the “big bang” launch of the company. I strongly recommend a dramatic departure from this model, called “planned iteration,” where you assume you won’t get it right the first time. This idea was well articulated by Paul Graham in an old essay, called ” Startups in 13 Sentences ” in which he talked about “making a few people really happy rather than making a lot of people semi-happy.” One of his key points is that “launching teaches you what you should have been building,” and I agree. All you old software development types will recognize the analogy to the traditional two year “waterfall model” of software development, which has been totally replaced with the Agile iterative methodology. Agile assumes and plans for iterative development, where requirements and solutions evolve as more is known and markets change. Don’t mistake this for a license to launch an incomplete or poor quality solution. Your strategy today should be to define and excellently prepare the absolute minimum product that will excite a selected small segment of your intended customers, and roll it out to them – as a Beta, early promotion, or even a give-away. Then you assess feedback, adjust your offering, and iterate until you get it right (have some very satisfied customers). Plan on multiple small launches, with iterations, rather than a big launch. Here are the advantages I see with this approach: Faster time to market. If you launch fast, you can be working with real customers in 4-6 months from your start, rather than 1-2 years. In today’s fast moving marketplace, needs, competitors, and costs change rapidly, so even if you were right, two years later the wave has moved on. Equally likely, your first target was wrong, and you will need to adjust. Get traction before funding. Let’s face reality, the angel or VC funding process now takes 4-6 months of almost dedicated effort and time, and usually fails because you don’t yet have a product or customer. By using a laser focused approach for the first iteration, you may actually produce something and get a customer without funding. Now investors will pay attention, since scale-up funding is less risky and has a time frame. Find customers, partners and channels early. There is nothing like a real customer pipeline to convince you that you need partners and channels, and to convince partners, channels, and investors that you are real. Get out there personally and find that first customer. It will narrow your development focus, and adjust your strategy for you. Spend your time finding renewable sources of customers and iterate. Use social networking to start the wave. Costs are low these days to set up a credible website, do some search engine optimization, start blogging, and start mining the social networks for interest. It won’t cost you your whole funding pot to start some momentum, or to realize that your original strategy needs major tuning. Think about it. Where did Google, eBay, and Facebook come from? They inched their way into public view before the first multi-million dollar funding rounds, and they have never had a big public launch. New product companies in the offline world start one store at a time, or in one geographic area. Big bang product launches are the domain of big enterprises, and you can never match their clout and budget. The biggest advantages you have as a startup are speed and agility. Use them.

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While Congress Debates EPA, CO2 Keeps Rising

February 18, 2011

Welcome to our new blog, “The Watchdog,” which will keep a close eye on regulatory agencies and how their actions impact the lives of everyday Americans. Though the rules and regulations they write — from determining how much arsenic is allowable in your drinking water to whether your favorite TV show can drop the F-bomb in primetime — affect all of us, their deliberations and the way that lobbyists influence their decisions receives very little coverage. To make sense of these debates, follow the implementation of health care reform and financial reform and decipher the minutia of the Federal Register, “The Watchdog” is on the case. If you have any tips or suggestions, send them to marcus@huffingtonpost.com .

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Crestone Boosts Investment Research Capabilities With New Hire

February 18, 2011

Wealth Manager Enhances Due Diligence Efforts With Addition of Adam Whitehead

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Elizabeth Warren Names Major CFPB Regulator

February 18, 2011

WASHINGTON — On Thursday, House Republicans cemented plans to slash the budget for the new Consumer Financial Protection Bureau, setting up a major fight with the Senate and President Barack Obama over one of the signature progressive accomplishments from last year’s financial reform bill. But for public interest groups, there was a sliver of good news buried underneath: Elizabeth Warren, the consumer watchdog charged with setting up the CFPB, named longstanding consumer advocate Raj Date the head of rule-writing and research for the nascent bureau. “Raj’s background gives him a great set of skills and experiences,” Warren told HuffPost. “He has a creative vision for organizational design, he’s got industry experience in the credit markets and he was one of the strongest voices for reform in the aftermath of the financial crisis.” Date has been a top adviser to Warren since last year, and was one of the first four people to join the new agency. His background is in banking — with a resume that includes leadership positions at Deutsche Bank, Capital One and uber-consulting firm McKinsey & Co. during the past decade. But following the financial collapse of 2008, Date struck off on his own, founding (and partially funding) the Cambridge Winter Center for Financial Institutions Policy, a reform-minded think tank. And while Date remains highly respected by bankers, he was one of the key players arguing for a major overhaul of the financial system during the congressional debate. Date’s nuts-and-bolts economic research formed the backbone for many of the arguments launched by Americans for Financial Reform — an umbrella group for consumer advocates urging stronger regulation. “Raj is one of the few bankers who understood that the financial industry couldn’t succeed by bleeding the middle and working classes dry,” says Heather McGhee, director of the Washington, D.C. office of Demos, a think tank and AFR member organization. Date was particularly effective in the debates over the Volcker Rule, which bans risky proprietary trading by banks that enjoy federal guarantees, and several consumer protection rules, especially those surrounding abusive auto lending. In his new job — one of a handful at the agency that will report directly to Warren– he’ll be responsible for overseeing market research and writing rules. His plan is straightforward– collect your own data, keep a constant eye on market trends to make sure you know what’s going on. When you see abuses, do something about it. It’s a simple plan, but one that hasn’t been implemented at U.S. bank regulators before. Most agencies rely on information reported by banks themselves, rather than finding their own data. And nobody watches market trends. “We’re going to assign someone to monitor each one of these markets,” Date told HuffPost, listing five categories of consumer credit: mortgages, credit cards, deposits, credit reporting agencies, and another category including student loans and car loans. “That’s new. If you go over to any other agency right now, there’s nobody assigned to just watch what’s happening in, say, the mortgage market.” The new agency has plenty of hurdles ahead. House Republicans are not only going after the budget for the CFPB, they’re also targeting Warren herself. A vote is expected Friday on an amendment from Rep. John Carter (R-Texas) that would effectively require President Barack Obama to fire Warren, along with 23 other top administration officials. As the budget proposal currently stands, the CFPB would have only about half of the funding it needs to get off the ground this year, an attempt by the House GOP to prevent the agency from effectively enforcing rules against Wall Street. But if the new agency can survive the budget salvo, consumer advocates see reason for hope, even in the face of Wall Street’s infamous and deep-pocketed lobbying machine. Hires like Date — who joins a handful of very effective state regulators that Warren has also scooped up, including former Ohio Attorney General Richard Cordray and Massachusetts Banking Commissioner Steve Antonakes — show a team of officials dedicated to actually regulating industry abuses, a rare phenomenon in Washington. “This business is complicated, but it’s not magic,” Date said. “If you deify finance as somehow beyond the comprehension of government, regulators will not do their jobs and the markets will never work. You have to be willing to act like law enforcement when you have to.”

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Tony Hsieh: Zappos CEO: In Your Next Speech, Just Wing It

February 18, 2011

Excerpted from #1 NY Times Bestseller Delivering Happiness by Zappos CEO Tony Hsieh In the two years leading up to the announcement of the Amazon acquisition, Zappos started getting more and more media coverage. A lot of people assumed that we must have stepped up our PR efforts, but that wasn’t the case at all. We simply continued doing what we had always done: constantly improving the customer experience while simultaneously strengthening our culture. The funny thing is that a lot of the press we got was for things we had first done several years earlier, such as paying employees to quit during their new hire training or occasionally sending flowers to customers. We didn’t intend for any of the things we were doing to end up in the news or on blogs. But every once in a while, a reporter or popular blogger would pick up on something that we were doing, and the story would spread like wildfire. We were as surprised as anyone else by the publicity because it was never planned for on our end. We learned a great lesson: If you just focus on making sure that your product or service continually wows people, eventually the press will find out about it. You don’t need to put a lot of effort into reaching out to the press if your company naturally creates interesting stories as a by-product of delivering a great product or experience. As our media coverage increased, I started receiving more and more speaking requests for different conferences and industry events. One of my first speeches was at the Footwear News CEO Summit in 2005. I remember I was a nervous wreck, because I hadn’t really done much public speaking before. At the time, I agreed to do it because it would be a good opportunity to tell the Zappos story to a lot of footwear vendors we were still trying to establish relationships with. I wrote out my entire speech beforehand, and then spent a month memorizing it and rehearsing it. I couldn’t sleep the night before my speech. It ended up going okay, and I was relieved when it was finally over so I could catch up on my sleep. Even though I didn’t really enjoy the whole experience, it had a very positive impact on our business, so I was glad I had done it. Over the next year, a few more speaking requests started trickling in. I agreed to all of the with a feeling of dread, but I knew they would help build our business and our brand. I also thought that, as uncomfortable as I was with doing them, they were opportunities for me to grow both personally and professionally. Like anything else in life, I figured that public speaking was just a skill that required practice on a regular basis. Each speech I gave was just another practice session. During my first year of public speaking, I was diligent about writing out my speeches beforehand and memorizing them. It took a lot of time to do, and I would never sleep well the night before my talks. Sometimes, while giving the speech, I would accidentally skip over or forget a sentence or an entire paragraph, which would leave me temporarily flustered on stage as I racked my brain trying to remember the lines I had practiced the night before. With each speech, I found myself slowly improving. But I still didn’t enjoy the actual speaking itself. Even though my speaking was helping build the Zappos brand, I thought that maybe I just wasn’t meant to be a public speaker because I was so uncomfortable with the process, even after having done it for a year. And then one day, I had an epiphany. I realized that nobody knew what I had written down beforehand. Nobody would ever know if I skipped a sentence, a paragraph, or even an entire section. I had also noticed that while people appreciated the content of my speeches, they generally commented about two things afterward. They told me they really enjoyed the personal stories, and they said that, even though many of them had already read about Zappos in the press, it made a huge difference to actually hear it come from me. They told me they could really feel my passion for company culture, customer service, and Zappos in general. So, for my next speech, I tried a completely different approach. I decided not to memorize or rehearse anything. I would just wing it and see what happened. I knew I had a lot of stories I could choose from on the fly to tell, and I knew that as long as I stuck to topics I was passionate and knowledgeable about — customer service and company culture — that I would have plenty of material to draw from to fill the time. When I finally got on stage, I still had some jitters for the first minute or two as I adjusted to the audience and the room. After that, the time just flew by. The audience was more engaged than they had been in my previous talks. I even managed to get some unexpected laughs from moments in my stories when I was just trying to tell a story instead of trying to recite lines from a script I’d written. I would later learn that I had achieved the state of flow . In his book by the same name, researcher Mihaly Csikszentmihalyi describes flow as a type of happiness, in which someone loses sense of time, self-consciousness, and even self. That’s exactly what happened to me. From that point forward, I used the same formula for all of my speeches and found that most of the rest of the stuff that I used to worry about usually just fell into place. I just went by three basic rules for my talks: 1. Be passionate. 2. Tell personal stories. 3. Be real. I made the mistake once of agreeing to speak at a conference about a topic that I wasn’t actually passionate about. Even though I knew all the content inside and out, I wasn’t able to speak passionately, so my performance turned out to be only okay. But it was a good learning experience. Today, whenever I’m invited to speak somewhere, I let them know that I will only speak about certain subjects, which may or may not match the overall theme of the conference. I then leave it up to the conference organizers to decide whether they are okay with that or not. Usually they are fine with it, but occasionally not. In those instances, no matter how much money the conference is offering to pay Zappos and no matter how good an opportunity it would be for Zappos to be exposed to that audience, I always do the same thing. I politely decline.

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Video: Martin Sorrell Says WPP to Raise Digital Sales Target

February 18, 2011

Feb. 18 (Bloomberg) — Martin Sorrell, chief executive officer of WPP Plc, discusses the outlook for digital advertising revenue. WPP is the world’s largest advertising company. Sorrell talks with Julie Hyman at a Business Council meeting in Fort Lauderdale, Florida, on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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Why Obama’s Walking Fine Line On GOP Slash-And-Burn Budget Proposals

February 18, 2011

Clearly, the president — as would be expected — opposes the GOP cuts. But the White House is not at this point picking a fight over the House Republican effort to slash non-discretionary funding covering scores of government services. There are several reasons why Obama would pass up the chance to bash cop-firing GOPers…

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Vivian Norris: Why Muhammad Yunus and the Poor Need Us More Than Ever

February 18, 2011

In the past weeks, Nobel Peace prize winner Muhammad Yunus has been under attack by not only his leader of government in his native Bangladesh but by those people and organizations who are upset with what narrows down to Dr. Yunus’ stand against corruption and loan sharking. Basically here is what it comes down to: greed and corrupt power versus truly helping the poor to help themselves. Anyone who has spent time with Dr Yunus, and everyone I have spoken to over the past few weeks who knows him, and the work of Grameen , is horrified at how he is being attacked personally. (See this piece .) This is a man who lives on a small income, with no air-conditioning in his home in hot humid Dhaka, who will not accept even a cup of water from the poor, and who has dedicated his life to helping the poor help themselves out of poverty. He travels many days per year just to speak out and raise awareness and try to encourage governments and organizations to take action. He truly wants to see and believes we can see poverty eliminated. When he receives a prize or fee he gives it immediately back to the bank for the poor, to create new programs and outreach. Show your support for Dr Yunus by signing one of these petitions here: http://www.petitiononline.com/mod_perl/signed.cgi?a110115z&51 http://www.ipetitions.com/petition/americansforyunus/ http://www.thepetitionsite.com/2/stop-harassing-nobel-laureate-prof-muhammad-yunus/ http://www.gopetition.com/petition/42857/signatures.html And visit the Support Yunus Facebook page now. So why is he being attacked? And why do people have such a hard time believing someone could actually act in such a selfless way? True integrity, and a kind of deep belief in the power of the bottom of the pyramid billions who live on next to nothing, combined with what has become a growing movement and awareness that things can indeed change for the better, threatens the status quo. The world has changed. The future of this planet will not be dictated by a handful of wealthy folks in the West. That “bottom billion” is extremely powerful and harnessing the energy and creativity of those billions of human beings can be used for either good, or misused by a greedy few to profit off the poor and keep a vicious cycle going. If this power is used in a positive way, the future can be amazing. If abused, we all go down with the ship. Dr. Yunus speaks out about how the poor, if given access to credit, can help themselves out of poverty. He believes that the poor should be the owners of the banks that loan to them, not wealthy or foreign interests who want to cash in on what has become a profitable paying back of interest on the loans. He does not believe that countries should accept foreign funds, and has challenged the debts created by the likes of The World Bank and IMF. He is about keeping the money circulating locally, about truly micro microloans to the poorest of the poor, and that the bankers must go out to the borrowers, hear their concerns, know them. As Dr. Yunus has repeatedly said, all humans have both a selfish side and a selfless side. There is nothing wrong with making a profit, just don’t make it off the backs of the poor. Go make your profit somewhere else! And shame on the banks and financial interests profiting off the poor through speculation and pushing up of food and commodity prices! Where has your humanity gone? They are profiting not just while the poor abroad suffer but also here at home in the US! Read this and watch this . One last note of encouragement for Dr. Yunus, Grameen and their 40 years of work in Microcredit, from another visionary: “First they ignore you, then they ridicule you, then they fight you, then you win.” — Mahatma Gandhi Those bottom billion will indeed win, and we can all win together by speaking out, taking action and fighting the good fight. We are with you Dr. Yunus! Follow me on Twitter at : vivigive and vigilantevnm and visit my site at: www.vigilante-vnm.com.

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