March 2011

Parsons Appoints Hayes as Senior Vice President and Regional Development Executive for California

March 23, 2011

PASADENA, CA–(Marketwire – March 23, 2011) – Parsons is pleased to announce that Maureen C. “Mo” Hayes has been appointed Senior Vice President and Regional Development Executive for California. In her new role, Ms. Hayes will facilitate expansion in this key region. With more than 37 million people, California continues to be a prime market for infrastructure projects for Parsons.

Read the full article →

How Pepsi Fell Behind Coke

March 23, 2011

Pepsi lost the cola war last week. It’s debatable whether the brand was defeated or unwittingly surrendered by abandoning tried-and-true advertising for generation-next marketing tactics, and it’s also unclear whether it will stay down for long. But this much seems certain: Pepsi blinked. Its flagship, the perennial No. 2 to brand Coke, dropped to the No. 3 slot as it was surpassed by Diet Coke. As a result, for the first time in two decades, PepsiCo ceded the soft-drink category’s two leading share positions to its legendary rival.

Read the full article →

Dr. Tana Goering Joins Pulse as Chief Medical Officer

March 23, 2011

WICHITA, KS–(Marketwire – March 23, 2011) – Dr. Tana Goering has joined Pulse Systems, Inc. as Chief Medical Officer and will be based out of their corporate headquarters in Wichita, Kansas. Dr. Goering will help lead the implementation of EHR products with Pulse customers, particularly in the area of point of care where she was once on the other side of the table as a Pulse client. In addition she will be assisting product development in improving the tools and workflows used in the Pulse system to maximize productivity and patient care outcomes.

Read the full article →

Banks Still Adding Jobs In London, Despite Taxes

March 23, 2011

Investment banks in Europe’s financial capital are adding jobs, helping to bolster headcounts at law and accounting firms across London, as the rest of Britain struggles to recover from the worst economic contraction since the 1930s. Chancellor of the Exchequer George Osborne, who delivers his budget today, has little alternative except to do all he can to keep companies such as Barclays Plc (BARC) and HSBC Holdings Plc (HSBA) from leaving London.

Read the full article →

Dean Baker: The Imaginary World in Which Washington Lives

March 23, 2011

It is a beautiful spring day in Washington. This is a nice respite from the horrors taking place in Japan and the ever-growing nuttiness of D.C. politics. Enjoying the weather provides a nice alternative to listening to the news or reading the newspaper. The flood of nonsense in the traditional news outlets just continues to grow. At the top of the list is the steady stream of senators or members of Congress whose response to higher gas prices is to insist on drilling in every square inch of environmentally sensitive territory in the country. This is supposed to reduce our dependence on imported oil and lower the price of gas. Both sides of this assertion are absurd. According to the Energy Information Agency, the United States has proven reserves of 22.3 billion barrels of oil . Given our current rate of consumption of 6.9 billion barrels a year , U.S. reserves could meet our demand for oil for less than 3.5 years. That means if we could somehow drill here, now, and everywhere, we could be energy independent until the middle of 2014 and then we would be 100 percent dependent on imported oil. Of course, we cannot suddenly suck all the oil out of the ground at once, it takes time to explore and drill wells and then the oil must be drilled out over time. If we decided that we want to destroy every last national park and coastal region, we may be able to increase production by 1.0-1.5 million barrels a day in 5-10 years. At the high end, this would be a bit less than 2 percent of world supply. Given normal assumptions about how demand responds to price, we would be very lucky to see a 6 percent decline in the price of oil. This means that in the most optimistic “drill everywhere” scenario we would save less than 20 cents from our $4 a gallon gas. More likely the savings would be less than half this size. In other words, when a politician says that they want to end environmental restrictions on drilling in order to end U.S. dependence on foreign oil or bring the price of gas down, they are speaking utter nonsense. The correct response of a reporter to such assertions would be to say something like: “Senator, you know that the United States does not have nearly enough oil to be energy independent or to substantially reduce the price of gas.” However, you won’t hear this response from outlets like National Public Radio or the Washington Post . Instead, they will just allow politicians to make absurd statements about energy independence and lower prices and treat them as though they are reasonable positions in the public debate. They will often add their own framing comments explaining to their audience that the issue is one between concerns over energy independence and concerns over the environment. When major news outlets make wrong and damaging statements about a company like General Electric or Microsoft, they can count on angry and threatening phone calls from company lawyers. Unfortunately, there is no one in Washington with a comparable interest in protecting the environment, so these absurd statements get passed along in major news outlets unchallenged. Politicians routinely make similarly absurd statements about Social Security, implying that the program and the country are about to go broke. Of course both claims are obviously untrue. According to the Social Security trustees, the program can pay all scheduled benefits for the next 26 years with no changes whatsoever and even after that date can always pay close to 80 percent of scheduled benefits . Instead of our children being broke, average wages are projected to be more than 40 percent higher in 2040 than they are today. This means that when a politician whines about Social Security or the country going broke, the correct response from a reporter should be “Congressman, you know that the program is fine for more than a quarter century into the future,” or “Congressman, you know that our children and grandchildren will on average be far richer than we are today.” Unfortunately, you won’t hear reporters making these corrections either. Fortunately, there are groups like the Social Security Works , the Campaign for America’s Future , and the Institute for Women’s Policy Research that do correct bad reporting on Social Security, so there is at least some limit to how bad it can get. However, the country is unlikely to see competent reporting on these and other topics that are central to national political debates until new media outlets, like Truthout, The Huffington Post and ProPublica, mature further and displace the traditional outlets. The latter still play far too large a role in setting the bounds for acceptable political discourse. The sooner we see the transformation of the media the better. Until then, maybe we can at least enjoy the weather.

Read the full article →

New Home Sales Plunge To Record Low In February

March 23, 2011

WASHINGTON — Sales of new homes plunged in February to the slowest pace on records dating back nearly half a century, a dismal sign for an already-weak housing market. New-home sales fell 16.9 percent last month to a seasonally adjusted annual rate of 250,000 homes, the Commerce Department said Wednesday. It’s the third straight monthly decline and far below the 700,000-a-year pace that economists view as healthy. New-home sales now account for just 5 percent of total home sales so far this year. They typically represent closer to 15 percent in healthier housing markets. There were just 186,000 new homes available for sale in February, the lowest inventory in more than four decades. The median price of a new home dropped nearly 14 percent to $202,100, the lowest since December 2003. The median is now 30 percent higher than the median price of resold homes – twice the typical markup. In response, homebuilders are cutting their selling prices and building more inexpensive homes, pushing down sales prices. They are struggling to compete with a wave of foreclosures, which has lowered the price of previously occupied homes. High unemployment, tight credit and uncertainty over prices have also kept many potential buyers from making purchases. “Falling housing prices of existing homes are robbing demand for new houses and until that changes, the housing market will be in trouble,” said Yelena Shulyatyeva, an analyst at BNP Paribas. Last year was the fifth straight year of declines for new-home sales after they reached record highs during the housing boom. Economists say it could take years before sales return to a healthy pace. Poor sales of new homes mean fewer jobs in the construction industry, which normally powers economic recoveries. Each new home creates an average of three jobs for a year and $90,000 in taxes, according to the National Association of Home Builders. Many builders are waiting for new-home sales to pick up and for the glut of foreclosures to be reduced. But with 3 million foreclosures forecast this year nationwide, a turnaround isn’t expected for at least three years. “We fully expect further price declines in order to help clear inventory from the market although this problem is more acute in the existing home market than the new home market,” said Dan Greenhaus, chief economic strategist for Miller Tabak + Co. Homebuilders have taken notice. Residential construction has all but halted. Builders broke ground last month on the fewest homes in nearly two years. And building permits, a gauge of future construction, sank to their lowest in more than 50 years. By contrast, sales of previously occupied homes have fallen by a more modest 3 percent in the past year. Prices have dropped more than 5 percent. In February, the median price for a resale was $156,100, according to the National Association of Realtors. New-home sales fell to record lows last month in almost every region of the country. Sales dropped 57.1 percent in the Northeast, 27.5 percent in the Midwest, 14.7 percent in the West and 6.3 percent in the South. Those are record lows in each region except the West, which recorded its lowest sales pace in October. Harsh winter weather that dumped record amounts of snowfall over much of the Northeast and Midwest, along with rare snowstorms in Texas, had an impact on February sales. Given the pace of new-home sales, it would take nearly 9 months to clear them off the market. Economists say a six-month supply of homes is healthy.

Read the full article →

PremierWest Bank Announces Appointment of Executive Vice President & Chief Marketing Officer

March 23, 2011

MEDFORD, OR–(Marketwire – March 23, 2011) – PremierWest Bank is pleased to announce the appointment of Ken Wells to the postion of Executive Vice President and Chief Marketing Officer. In this role, Wells leads marketing planning and analysis, brand management, advertising, community relations, media relations, direct marketing, and digital media for the 44 branches of PremierWest Bank, Premier Finance Company and Premier Investment Services, Inc. He serves as a member of the Bank’s Managing Committee.

Read the full article →

Federal Reserve Rejects Bank of America’s Proposed Dividend Hike

March 23, 2011

NEW YORK — Bank of America said Wednesday the Federal Reserve has objected to its plan for raising its dividend in the second half of this year, a setback that suggests regulators need to see more evidence that the nation’s largest bank is strong enough to weather another recession. But the bank said in a regulatory filing that it’s been given another opportunity to submit a comprehensive plan to the Fed so that the central bank may reconsider its decision. The Charlotte, N.C., bank expects to resubmit a request to dole out a higher second-half dividend. The bank has paid a penny-per-share quarterly dividend for the last two years. Its last one-cent dividend was declared in January and payable on Friday. The dividend peaked at 64 cents in mid-2008 before being halved to 32 cents later that year. Bank of America shares fell 14 cents, or 1 percent, to $13.74 in pre-market trading. Last week, the Fed cleared the way for major lenders to increase their dividends if they passed “stress tests” to see if they are strong enough to stand up to another economic downturn. Banks had been forced to cut dividends to preserve cash following the financial crisis that peaked in late 2008. It was a condition of the government’s bank bailout package. The Fed said at the time it expects that “some” banks will increase or resume dividend payments, buy back shares or repay government capital, but it didn’t reveal the names or number of banks that are expected to do so. All of the 19 largest banks overseen by the Fed were subject to the tests. By increasing dividend payments, banks may be able to attract new investors, which should lead to more lending. The Fed has said it is taking a “measured and conservative approach” on banks’ dividend requests. The Fed also cleared investment bank Goldman Sachs to buy back all the preferred shares it issued to Berkshire Hathaway Inc., the conglomerate run by billionaire Warren Buffett. Other banks, including JPMorgan Chase & Co., Wells Fargo & Co. and U.S. Bancorp also announced large share repurchases. Citigroup Inc. on Monday said it planned to reinstate a penny-per-share quarterly dividend and announced a reverse stock split, which will lift the company’s stock price and allow more institutional investors to own it. BofA’s stock has lagged its competitors in the last year and has remained relatively flat so far in 2011. Investors have been worried that regulations enacted after the financial crisis will make it difficult for Bank of America to increase profits and grow many of its businesses, especially its credit and debit card business. The bank has warned that it would lose at least $2 billion in annual revenue for a few years in its card business. Last year, in Bank of America CEO Brian Moynihan’s first year at the helm, its credit card unit took a $10.4 billion write-down due to new regulations, and its home loan business struggled with fallout from the implosion of the housing bubble. The bank reported a 2010 loss of $3.6 billion. Most of the bank’s problems stem from its 2008 purchase of Countrywide Financial, which at the time was the country’s largest mortgage company. While the deep slump in the real estate market has hurt all its competitors, Bank of America has been at the center of almost every controversy involving bad home loans. It paid $2.8 billion late last year to the government-owned mortgage companies Fannie Mae and Freddie Mac to settle claims the bank sold them defective mortgages. In the fourth quarter, it kept aside $4.1 billion for more bad home loans that it could be forced to buy back from the two government agencies and other investors. It also set aside another $1.5 billion for litigation expenses related to bad mortgages.

Read the full article →

Tim Corkery to Lead Global Sales & Services at Ipswitch File Transfer

March 23, 2011

Experienced Technology Industry Veteran Joins Ipswitch Team to Drive Global Expansion; Company’s 2010 Growth and Momentum Position It Well for Evolving MFT and Integration Market

Read the full article →

U.S.’s Growing Nuclear Waste Problem

March 23, 2011

— The nuclear crisis in Japan has laid bare an ever-growing problem for the United States – the enormous amounts of still-hot radioactive waste accumulating at commercial nuclear reactors in more than 30 states. The U.S. has 71,862 tons of the waste, according to state-by-state numbers obtained by The Associated Press. But the nation has no place to permanently store the material, which stays dangerous for tens of thousands of years. Plans to store nuclear waste at Nevada’s Yucca Mountain have been abandoned, but even if a facility had been built there, America already has more waste than it could have handled. Three-quarters of the waste sits in water-filled cooling pools like those at the Fukushima Dai-ichi nuclear complex in Japan, outside the thick concrete-and-steel barriers meant to guard against a radioactive release from a nuclear reactor. Spent fuel at Dai-ichi overheated, possibly melting fuel-rod casings and spewing radiation into the air, after Japan’s tsunami knocked out power to cooling systems at the plant. The rest of the spent fuel from commercial U.S. reactors has been put into dry cask storage, but regulators only envision those as a solution for about a century and the waste would eventually have to be deposited into a Yucca-like facility. The U.S. nuclear industry says the waste is being stored safely at power-plant sites, though it has long pushed for a long-term storage facility. Meanwhile, the industry’s collective pile of waste is growing by about 2,200 tons a year; experts say some of the pools in the United States contain four times the amount of spent fuel that they were designed to handle. The AP analyzed a state-by-state summary of spent fuel data based on information that nuclear power plants voluntarily report every year to the Nuclear Energy Institute, an industry and lobbying group. The NEI would not make available the amount of spent fuel at individual power plants. While the U.S. Department of Energy previously reported figures on overall spent fuel storage, it no longer has updated information available. A spokesman for the U.S. Nuclear Regulatory Commission, which oversees nuclear power plant safety, said the capacities of fuel pools are public record, but exact inventories of spent fuel are tracked in a government database kept confidential for security reasons. The U.S. has 104 operating nuclear reactors, situated on 65 sites in 31 states. There are another 15 permanently shut reactors that also house spent fuel. Four states have spent fuel even though they don’t have operating commercial plants. Reactors in Colorado, Oregon and Maine are permanently shut; spent fuel from all three is stored in dry casks. Idaho never had a commercial reactor, but waste from the 1979 Three Mile Island accident in Pennsylvania is being stored at a federal facility there. Illinois has 9,301 tons of spent nuclear fuel at its power plants, the most of any state in the country, according to industry figures. It is followed by Pennsylvania with 6,446 tons; 4,290 in South Carolina and roughly 3,780 tons each for New York and North Carolina. Spent nuclear fuel is about 95 percent uranium. About 1 percent are other heavy elements such as curium, americium and plutonium-239, best known as fuel for nuclear weapons. Each has an extremely long half-life – some take hundreds of thousands of years to lose all of their radioactive potency. The rest, about 4 percent, is a cocktail of byproducts of fission that break down over much shorter time periods, such as cesium-137 and strontium-90, which break down completely in about 300 years. How dangerous these elements are depends on how easily can find their way into the body. Plutonium and uranium are heavy, and don’t spread through the air well, but there is a concern that plutonium could leach into water supplies over thousands of years. Cesium-137 is easily transported by air. It is cesium-137 that can still be detected in a New Jersey-sized patch of land around the Chernobyl reactor that exploded in the Ukraine in 1986. Typically, waste must sit in pools at least five years before being moved to a cask or permanent storage, but much of the material in the pools of U.S. plants has been stored there far longer than that. Safety advocates have long urged the NRC to force utility operators to reduce the amount of spent fuel in their pools. The more tightly packed they are, the more quickly they can overheat and spew radiation into the environment in case of an accident, a natural disaster or a terrorist attack. Industry leaders say new technology has made fuel pools safer, and regulators have taken some steps since the 9/11 terror attacks to reduce fuel pool risks. Kevin Crowley, who directs the nuclear and radiation studies board at the National Academy of Sciences, says lessons will be learned from the crisis in Japan. And NRC Chairman Gregory Jaczko says his agency will review how spent fuel is stored in the U.S. A 2004 report by the academy suggested that fresh spent fuel, which is radioactively hotter, be spread among older, cooler assemblies in the spent fuel pool. “You’re buying yourself time, basically,” says Crowley. “The cooler ones can act as a thermal buffer.” First Energy, which runs two nuclear power stations in Ohio and one in Pennsylvania, was able to reconfigure the spent fuel rods in its pools to make more room. Still, the company is now running out of space, says spokesman Todd Schneider. Ohio has 1,136 tons of spent fuel in pools and 37 tons in dry casks. The casks in the U.S. are kept outdoors, generally on concrete pads, but industry officials insist they are safe. Unlike the pools, the casks don’t need electricity; they are cooled by air circulation. One cask model, selling for $1.5 million, places spent fuel inside a stainless steel canister, which is placed inside an “overpack” – an outside shell composed of a layer of carbon steel, 27 inches of concrete and another layer of carbon steel. When in place, the system stands 20 feet tall and weighs 150,000 pounds, said Joy Russell, a spokeswoman for manufacturer Holtec International of Florida. Russell said engineers have designed the system to withstand a crash from an F-16 fighter jet and survive the resulting jet fuel fire. Plant operators in some states have moved aggressively to dry cask storage. Virginia has 1,533 tons of nuclear waste in dry storage and 1,105 tons in spent fuel pools. Maryland has 844 tons in dry storage and 588 tons in spent fuel pools. Utilities in Texas, though, have not. There are 2,178 tons kept in spent fuel pools at reactor sites there, and zero in dry casks. In New York, 3,345 tons are in spent fuel pools while only 454 tons are in dry storage. No cask is totally invulnerable, but the academy report found that radioactive releases from casks would be relatively low. “If you attacked a fuel cask and managed to put a hole in it, anything that came out, the consequences would be very local,” Crowley said. Casks can be licensed for 20 years, with renewals, said Carrie Phillips, a spokeswoman for the Atlanta-based Southern Co., which has a dozen such casks at its two-reactor Joseph M. Farley plant near Columbia, Ala. She said officials have “every expectation” the casks could last “in excess of 100 years by design.” But not the needed tens of thousands of years. For long-term storage, the government had looked to Yucca Mountain. It was designed to hold 77,160 tons – 69,444 tons designated for commercial waste and 7,716 for military waste. That means the current inventory already exceeds Yucca’s original planned capacity. A 1982 law gave the federal government responsibility for the long-term storage of nuclear waste and promised to start accepting waste in 1998. After 20 years of study, Congress passed a law in 2002 to build a nuclear waste repository deep in Yucca Mountain. The federal government spent $9 billion developing the project, but the Obama administration has cut funding and recalled the license application to build it. Nevadans have fiercely opposed Yucca Mountain, though a collection of state governments and others are taking legal action to reverse the decision. Despite his Yucca Mountain decision, President Barack Obama wants to expand nuclear power. He created a commission last year to come up with a long-term nuclear waste plan. Initial findings are expected this summer, with a final plan expected in January. “They are 13 years late,” says Terry Pickens, Director of Nuclear Policy at Xcel Energy, the Minneapolis-based utility that operates three reactors in Minnesota. Xcel is building steel-and-concrete cask containers to hold old waste on site, and suing the government periodically to pay for them. “We would like them to get done with what they said they would get done.” Some countries – such as France, Japan, Russia and the United Kingdom – reprocess their spent fuel into new nuclear fuel to help reduce the amount of waste. The remaining waste is solidified into a glass. It needs to be stored in a long-term waste repository, but reprocessing reduces the volume of waste by three-quarters. Because reprocessing isolates plutonium, which can be used to make a nuclear weapon, Presidents Gerald Ford and Jimmy Carter put a stop to it in the U.S. The ban was later overturned, but the country still does not reprocess. France produces 1,300 tons of nuclear waste per year, and reprocesses 940 tons. Still, fuel is only reprocessed once and then it, too, needs to be stored. France is expecting that engineers will eventually succeed in building a new type of nuclear reactor called a fast reactor that will use the waste it can’t reprocess as fuel. “They’ve kicked the can down the road,” says Frank von Hippel, a director of the Program on Science and Global Security at Princeton University. Other countries, such as Germany, store spent fuel in casks. Finland is building a repository it says will store waste safely for 100,000 years. Even though there is no long-term storage in the U.S., utility customers and taxpayers have been paying for it – twice. Customers have paid $24 billion into a fund Congress established in 1982 to pay for such storage. The charge – a penny for every 10 kilowatt-hours – would typically add up to about $11 a year for a household that received all its electricity from nuclear plants. Users pay as taxpayers, too – for dry storage. Utilities that have run out of storage space in pools successfully sued the federal government for breach of contract, because it failed to keep to the 1998 deadline to establish long-term storage. By law, the money for dry casks cannot come from the nuclear waste fund, and must come from the federal budget.

Read the full article →

Japan’s Energy Crisis Curbs Rising Oil Prices

March 23, 2011

HOUSTON — The recent economic jolt to Japan’s economy, by lowering energy demand, has at least temporarily offset some of the Libyan uprising’s impact on oil prices. But experts say there are limits to how long that buffering effect might last.

Read the full article →

Buying A New Home Makes Less Sense After Foreclosure Crisis

March 23, 2011

WASHINGTON — A new home, the dream of many would-be buyers, makes less and less financial sense in many places. A wave of foreclosures has driven down the cost of previously occupied homes and made them even more of a comparative bargain. By contrast, new homes have become more expensive. The median price of a new home in the United States is now 48 percent higher than that of a home being resold, more than three times the gap in a healthy housing market. Such a disparity can be a drag on the economy. New homes represent a small fraction of sales, but they cause economic ripples, bringing business to construction and other industries. Sluggish new-home sales deprive the economy of strength. “A lot of people are saying, ‘If I can get a great deal on a home already on the market, why go through the headaches of getting a new home?’” says Mark Vitner, a senior economist with Wells Fargo. “There’s a relatively small group of people who have the credit, have the down payment and are secure in their jobs that can go out and buy new.” The gap is widening because prices of previously occupied homes are falling fast, pulled down by waves of foreclosures and short sales. A short sale occurs when a lender lets a homeowner sell for less than is owed on the mortgage. New homes aren’t directly affected by such sales. The median price of a new home – the price at which half the homes sell for more and half sell for less – has risen almost 6 percent in the past year to $230,600, even though last year was the worst for sales in nearly a half-century. Slowed by those higher prices, new-home sales have plummeted over the past year to the lowest level since records began being kept in 1963. The government provides fresh data on new-home sales Wednesday. By contrast, sales of previously occupied homes have fallen almost 3 percent in the past year. Prices have dropped more than 5 percent. In February, the median price for a resale was $156,100, according to the National Association of Realtors. That adds up to a price difference of $74,500, or 48 percent, the highest markup in at least a decade. In healthier markets, a new home typically runs about 15 percent more, according to government data. Home prices and sales still vary sharply among metro areas. Cities with more foreclosures tend to have more resale homes that have languished on the market and are priced at a bargain. That makes new homes in those areas comparatively expensive. In Atlanta, for instance, where foreclosures accounted for one in every 23 homes sold last year, the median price of a previously occupied single-family home was $109,900, about 12 percent lower than a year ago, according to the Georgia data firm Smart Numbers. The median price of a new home was more than twice that. “That’s as much of a difference as we’ve ever seen,” said Steve Palm, president of Smart Numbers. “New homes can’t compete, and that means jobs.” An average of three jobs and $90,000 in taxes are created for each home built, according to the National Association of Home Builders. In some areas, older homes were more expensive before the housing market bust. That was especially true in urban neighborhoods with little or no room left to build on. But now, buyers get their pick even in some of the trendiest places. That’s what Robert Rost is finding in central Phoenix. Rost doesn’t want to commute far to his job. He’s been looking for a home for about five months but can’t find new properties in the neighborhoods where he wants to live. “I don’t want to commute 45 minutes to an hour a day one-way,” the 38-year-old computer engineer says. Homebuilders have taken notice. Residential construction has all but come to a halt. Builders broke ground last month on the fewest homes in nearly two years. And building permits, a gauge of future construction, sank to their lowest in more than 50 years. Many builders are waiting for new-home sales to pick up and for the glut of foreclosures and other distressed properties to be reduced. But with 3 million foreclosures forecast this year nationwide, a turnaround isn’t expected for at least three years. Don Eyler, who has owned E and R Construction in Terre Haute, Ind., for three decades, blames the banks. He says people are still interested in having a custom-built home but can’t finance the purchase. Tighter credit has made it harder to get larger loans. Eyler typically built eight homes a year before the housing boom and bust. Now, he’s averaging just about five. And he’s making less profit on each. “We hope we can stay in business until it gets better, but the turning point is this year,” Eyler says. “If it doesn’t change, we’ll have to do something different.” Contributing to higher new-home prices is the rising cost of building materials. Fewer new homes sold means fewer jobs added to an economy struggling with 8.9 percent unemployment. About 2.2 million overall construction jobs have disappeared since the housing boom went bust. That’s nearly a third of the people the industry employed in January 2007. Workers in residential construction have fared even worse than other construction employees. Homebuilders cut nearly 1.3 million jobs in that time, or 39 percent of total payrolls. Besides generating jobs in construction and other fields, new-home purchases tend to help the economy because buyers are more likely to buy new furniture, appliances and other amenities. There’s also the psychological factor. In good times, most homes rise in value. But new homes historically have risen faster – by an additional 1.5 percent a year, according to Realtors and census data. When homes appreciate in value, people feel they have more money. So they spend more. “When you have more net worth, especially in your home, you feel richer,” says Chris G. Christopher Jr., senior principal economist at IHS Global Insight. ___ AP Business Writers Christopher S. Rugaber in Washington and Alex Veiga in Los Angeles contributed to this report.

Read the full article →

Apple Shares Drop On Fears Of Japan Quake’s Effects

March 23, 2011

SAN FRANCISCO — Last week, shares of Apple did something they rarely do: they fell nearly 7 percent, in two days. The unusually sharp drop, which was twice as large as the decline in technology shares over all, was driven in part by worries over the impact that the crisis in Japan would have on Apple’s ability to make its blockbuster products.

Read the full article →

In AT&T Deal, Bankers Guaranteed To Benefit As Consumers And Shareholders Hope For Best

March 23, 2011

Eleven years ago, at the height of the telecom bubble, Deutsche Telekom paid about $51 billion for one of America’s smallest national cell phone companies, hoping to gain entry into the burgeoning U.S. market. On Monday, the German giant announced it’s selling the offspring of that deal — T-Mobile USA — to AT&T for $39 billion. That 2000 investment — now worth about 40 percent less after adjusting for inflation — has cost Deutsche Telekom and its shareholders dearly. The benefits for the American public, which were widely touted at the time as the German company fought for regulatory approval, are debatable. But the bankers on those deals sure made a killing. And while it remains to be seen whether the same purported “synergies” and “cost savings” that were peddled in 2000 will ultimately benefit AT&T’s shareholders who are being promised the same thing, bankers once again are poised to strike it rich. Bankers’ fees will roll in regardless of whether their advice will ultimately benefit their clients. “When you look at investment bankers, their job is to put buyer and seller together,” said Matt McCormick, a portfolio manager at Bahl & Gaynor, which oversees about $3.2 billion. “Much like a real estate broker, if you’re trying to buy a house, does the broker really care if you’re in a ranch, or a two-story home, or with a pool or not? They are only paid if a deal gets done.” AT&T’s shareholders are cool to the idea. McCormick, who oversees about 500,000 shares of AT&T for clients, said the benefits of the deal are “yet to be seen.” Shares in AT&T are up 0.6 percent since Friday. Bankers will probably pocket about $120-140 million off the AT&T and T-Mobile deal, according to Teck-Tjuan Yap, managing director at Freeman Consulting Services. For JPMorgan Chase, which advised AT&T and provided a $20 billion loan, it’ll likely be much, much more after a few years, one prominent bank analyst said. Richard Bove, an analyst at Rochdale Securities, told clients that the purchase could be worth upwards of half a billion dollars for JPMorgan after fees and other sorts of income over the coming years are considered. Bankers, unlike shareholders, are always among the biggest beneficiaries when companies merge. Back in 2000, when Goldman Sachs was advising VoiceStream Wireless, the firm that eventually became T-Mobile, it made at least $80 million off its sale to Deutsche, securities filings show. That $80 million is worth $103 million in today’s dollars. Investors fared worse. Shares of Deutsche Telekom closed at 10.8 Euros on Tuesday, down about 60 percent from when the firm announced it was buying VoiceStream. In July 2000, Deutsche’s shares were trading in the 25-Euros range. Even investors who bought houses in Miami at the height of the housing bubble in 2006 have fared better. Their investment is down only about 49 percent, according to the S&P/Case-Shiller Home Price Index. The initial investment in T-Mobile was apparently so bad for Deutsche’s investors that they celebrated the sale to AT&T. Deutsche’s shares are up 12.6 percent since Friday’s close. But the wisdom of Deutsche’s bankers’ advice at the time isn’t what generated their fees. Donaldson, Lufkin & Jenrette, a firm that was eventually bought by Credit Suisse, got paid to get the deal done. That’s generally how it works, according to Alex Edmans, a finance professor at the University of Pennsylvania’s Wharton School and a former investment banker at Morgan Stanley. “Bankers’ fees are not contingent on the success of the deal,” Edmans said. “How much a banker gets paid for advising on a deal doesn’t depend on whether it creates shareholder value or whether they could sell it for more later. They get a fee for the announcement and the completion of the deal.” Edmans reckons that this may skew incentives towards completing a deal “at any cost, even if it’s not in the client’s interest.” There are three benefits from getting a deal done — regardless of its merits, he said. First, the bank immediately receives fees. Last year, mergers and acquisitions generated $17.9 billion in fees for investment banks, a 23 percent increase from 2009, according to data compiled by Bloomberg. Second, the banks on the deal improve their rankings among peers. Wall Street compiles lists ranking firms based on the income banks generate off M&A and the value of their deals. These lists are incredibly important — both for bragging rights and for landing future clients. Edmans said the potential of moving up these lists creates a “huge incentive” to get deals done as potential clients largely decide which bank they’ll pick for future deals based off their rankings. Third, deal activity improves a bank’s market share, particularly if the deal is huge. Predictably, there’s an emphasis on doing lots of deals, rather than being selective about which truly are the best for clients. The AT&T deal is the largest telecom acquisition since AT&T purchased BellSouth in 2006 for about $102 billion, according to Dealogic, a data provider. Thanks to the proposed purchase, JPMorgan moved one spot up in the rankings, according to data compiled by Thomson Reuters. “Even if you do a lot of value-destructive deals, this doesn’t seem to reduce your market share going forward,” Edmans said. “That sort of discouragement doesn’t really seem to exist.” “This isn’t optimal for the industry,” he added. There’s a way to ease the distortion caused by such incentives, Edmans argues. He said clients should judge banks based on the quality of their advice, rather than on the number of times they’re asked to provide that advice. In a paper with Jack Bao of Ohio State, Edmans and his colleague ranked banks based on whether investors cheered a proposed deal. By looking at the stock price of the affected companies over a three-day period immediately preceding and following a deal’s announcement, they found that the biggest banks were among the worst when it came to advising successful mergers. Goldman Sachs was about 10 times worse than the average firm, Edmans and Bao found. Morgan Stanley was just a tad better than Goldman. JPMorgan was also significantly worse than average. Their paper will be published in the Review of Financial Studies. Edmans and Bao found that middle-tier investment banks advised the best deals, likely providing the best advice, according to their metric. The big banks like Goldman and Morgan, Edmans said, probably advised bad deals because they had other interests in getting the deal done, like future opportunities underwriting the firm’s bonds or new stock issuance, as opposed to simply getting paid for providing good advice. “Given how the industry works, the banks are doing the rational thing,” Edmans said. That particularly makes sense in cases in which banks aren’t even brought in for their advice. “Being a consultant I hate to say this, but sometimes consultants are called onto a job just to validate what the CEO and CFO want,” said Yap of Freeman. “The question is: are the bankers basically called in to validate or justify,” or are they brought in to provide good counsel? Yap asked. He said that for AT&T, the question may not be about the benefit of purchasing T-Mobile, but rather the detriment that could arise from a competitor buying the nation’s fourth-largest wireless provider. If AT&T didn’t attempt to merge with T-Mobile, for example, the firm could face the prospect of declining market share if a competitor joined forces with Deutsche’s American subsidiary. AT&T and T-Mobile said the value of the “synergies” from their merger — corporate lingo for the savings derived from eliminating duplicative employees and activities — are “expected to exceed the purchase price of $39 billion,” according to a joint statement. That’s nothing new to McCormick, the money manager. “The usual things I look for in every press release are always statements like, ‘This will mean more synergies’ or ‘This will lead to more cost savings,’” he said. Firms are “always touting those key points again and again and again.” “But the truth is, they rarely work out.” ************************* Shahien Nasiripour is a business reporter for The Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

Read the full article →

Oil Rises Again On Yemen Unrest

March 23, 2011

SINGAPORE — Oil prices hung near $105 a barrel Wednesday in Asia as violent uprisings in the Middle East kept traders nervous about possible crude supply disruptions. Benchmark crude for May delivery was up 4 cents to $105.01 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.88 to settle at $104.97 on Tuesday. The April contract, which expired Tuesday, climbed $1.67 to end at $104. In London, Brent crude was up 18 cents at $115.88 a barrel on the ICE futures exchange. Oil has jumped 24 percent since Feb. 14 as violent protests rock the Middle East and North Africa. In Yemen, an important transfer point for global oil supplies, embattled President Ali Abdullah Saleh warned Tuesday that the country could slide into a civil war as the opposition rejected his offer to step down by the end of the year. Also on Tuesday, violent protests spread in southern Syria. In Libya, fighting between rebels and government forces has halted most of the country’s 1.6 million barrels a day of crude production. Investors expect that allied coalition military intervention on the side of rebels will likely prolong the shutdown of oil output from the OPEC nation. U.S. Navy Adm. Samuel J. Locklear said Tuesday that intelligence confirmed Libyan leader Moammar Gadhafi’s forces were attacking civilians in Misrata, Libya’s third-largest city, and said the international coalition was “considering all options” there. The market is factoring in a “virtual loss of the Libya’s exports for an extended time period of at least six months,” Ritterbusch and Associates said in a report. The widespread unrest in the region will keep oil prices elevated throughout the spring and into the summer, it said. Oil demand in China, the world’s second biggest crude consumer behind the U.S., rose 10.1 percent in February from a year earlier, to the second strongest level on record, Platts reported Tuesday. “Demand growth has shown little signs of slowing down,” Barclays Capital said. “Indeed, led by a renewed surge in Chinese demand in particular, demand has continued to surprise to the upside.” The American Petroleum Institute said late Tuesday that U.S. crude inventories rose 970,000 barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 2.0 million barrels. Inventories of gasoline plunged 7.9 million barrels and distillates fell 612,000 million barrels, the API said. The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday. In other Nymex trading for April contracts, heating oil was steady at $3.08 a gallon and gasoline gained 1.5 cents to $3.02 a gallon. Natural gas added 3.2 cents to $4.29 per 1,000 cubic feet.

Read the full article →

Paulo Sarti Named Managing Director for Penske Logistics South America

March 23, 2011

READING, PA–(Marketwire – March 23, 2011) –  Penske Logistics has named Paulo Sarti as Managing Director for South American operations. Based in São Paulo, Brazil, he is responsible for the operations and growth of business in South America.

Read the full article →

Smith Breeden Chairman Michael Giarla Named Chief Executive Officer

March 23, 2011

Current CEO Gene Flood Departing to Join TIAA-CREF

Read the full article →

PacificHealth Laboratories Announces Private Sale of Stock and Election of New Board Member

March 23, 2011

MATAWAN, NJ–(Marketwire – March 23, 2011) – PacificHealth Laboratories, Inc. ( OTCQB : PHLI ), a nutrition technology company, announced today that the Company completed a private placement of its common stock resulting in net proceeds to the Company of $450,000. The private placement was sold as 180,000 units with each unit representing ten shares of the Company’s common stock at a purchase price of $0.25 per share, warrants to purchase five additional shares of common stock at $0.31 per share, and warrants to purchase one additional share of common stock at $0.38 per share. The President and CEO, Fred Duffner, and director, Dr. Robert Portman, participated in the private placement. There were no fees or expenses associated with this placement. Yesterday’s closing trading price of the Company’s stock was $0.225 per share. 

Read the full article →

Portugal Government May Collapse Ahead Of Austerity Vote

March 23, 2011

LISBON, Portugal — Portugal’s government could collapse Wednesday after opposition parties withdrew their support for another round of austerity policies aimed at averting a financial bailout. The expected defeat of the minority government’s latest spending plans in a parliamentary vote will likely force its resignation and could stall national and European efforts to deal with the continent’s protracted debt crisis. The vote comes on the eve of a two-day European Union summit where policymakers are hoping to take new steps to restore investor faith in the fiscal soundness of the 17-nation eurozone, including Portugal. Last year, both Greece and Ireland had to accept massive rescue packages after markets lost faith in their governments’ efforts to deal with their debt burdens. The political tension fueled a rise in Portugal’s borrowing rates, just as it is trying to cut spending. The yield on the country’s 10-year bond, for example, was up to 7.57 percent Tuesday – just shy of its euro-era record level. The interest rate has been above 7 percent for several weeks despite the government’s earlier austerity measures which, its political rivals say, failed to quell investor fears. As in Greece, the austerity policies – including tax hikes and pay cuts – have prompted an outcry from trade unions and numerous demonstrations and strikes. Train engineers walked off the job during the morning commute Wednesday, causing widespread travel disruption. By most measures, Portugal is one of the eurozone’s smallest and feeblest economies but its financial collapse would likely trigger a fresh bout of nerves over other debt-heavy – and bigger – euro countries such as Spain, Belgium and Italy. “Portugal seems very likely to become the third … eurozone country to need a bailout,” Emilie Gay, European economist at Capital Economics said. The governing Socialist Party’s parliamentary leader Francisco Assis made an 11th-hour appeal for opposition rivals to negotiate changes to the latest austerity package and ensure the government’s survival. Prime Minister Jose Socrates, who heads the government, has said he will no longer be able to run the country if the package is rejected. “This is a decisive moment,” Assis said Tuesday. Finance Minister Fernando Teixeira dos Santos has said failure to enact the package – the fourth set of measures in 11 months – would push Portugal closer to needing financial assistance. But opposition parties say the center-left government’s latest austerity plan goes too far because it hurts the weaker sections of society, especially pensioners who will pay more tax. The package also introduces further hikes in personal income and corporate tax, broadens previous welfare cuts and raises public transport fares. The leader of the main opposition center-right Social Democratic Party, Pedro Passos Coelho, said the political deadlock made an early election “inevitable.” Markets have heaped pressure on Portugal over the past year as investors demanded ever higher returns for lending it money, driving the country’s borrowing costs to intolerable levels. Even so, the government has insisted it can weather the current difficulties and doesn’t need a bailout. The government’s austerity measures have won praise from other European countries, but they are only half the story: Portugal urgently needs to generate fresh growth. The economy is in deep trouble, with a double-dip recession expected this year and unemployment standing at a record 11.2 percent. Moody’s recently downgraded the country’s credit rating, and Standard & Poor’s has warned it may follow suit. Portugal’s plight stems from a decade of miserly growth. While growing at the tepid rate of 1 percent a year, it ran up debt to finance its western European lifestyle. Its economy is hobbled by old-fashioned practices, especially outdated labor laws which protect jobs, and has failed to keep pace with more flexible competitors. Tullia Bucco, an analyst at Unicredit in Milan, says investors who have risked their money on Portugal can take some heart from the fact that the Social Democratic Party also espouses debt reduction and increased economic competitiveness. The Social Democrats have been ahead in recent opinion polls. Even so, the winner of any election is unlikely to get an extended honeymoon period. “They could be very tough times ahead,” Bucco said.

Read the full article →

Cymtec Partners With COMPUTERLINKS Benelux to Deliver Leading Network Visibility and Optimization Solutions Across Western Europe

March 23, 2011

To Support Continued European Expansion, Rob Krol Joins Cymtec as Sales Director in Newly Established EMEA Sales Office

Read the full article →

Paulo Sarti Fue Nombrado Director Gerenal Para Logistics Penske Sudamérica

March 23, 2011

SAO PAULO, BRAZIL–(Marketwire – March 23, 2011) – Penske Logistics ha nombrado a Pablo Sarti como Director General para las operaciones Sudamericanas. Ubicado en São Pablo, Brasil, él es responsable de las operaciones y del crecimiento del negocio en Sudamérica.

Read the full article →

Paulo Sarti é nomeado diretor- presidente da Penske Logistics América do Sul

March 23, 2011

SAO PAULO, BRAZIL–(Marketwire – March 23, 2011) – A Penske Logistics nomeou Paulo Sarti como diretor-presidente para as operações da América do Sul. Sediado em São Paulo, Brasil, ele será responsável pelas operações e crescimento de negócios na região.

Read the full article →

Great Lakes Data Systems Appoints Garrick Russell as President and COO

March 23, 2011

CARLSBAD, CA–(Marketwire – March 23, 2011) – Great Lakes Data Systems, Inc. ( www.glds.com ) (GLDS), the leading provider of PC-based subscriber management and billing systems for the broadband industry, today announced the appointment of long-time employee Garrick Russell as President and Chief Operations Officer. 

Read the full article →

Benefits Executive Michael Rosenberg Joins Alliant Insurance Services as First Vice President

March 23, 2011

Rosenberg Brings 20 Years of Benefits Brokerage Experience and Knowledge of South Florida Market to Fort Lauderdale, FL Office

Read the full article →

Video: Sawiris Anticipates `Buying Spree’ for Egyptian Stocks

March 23, 2011

March 23 (Bloomberg) — Naguib Sawiris, chairman of Orascom Telecom Holding SAE, discusses trading on the Egyptian Stock Exchange which resumed following a two-month suspension. He talks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

Read the full article →

Video: Portes Says U.K. Inflation May Decline `Quite Sharply’

March 23, 2011

March 23 (Bloomberg) — Jonathan Portes, head of the National Institute of Economic and Social Research in London, talks about the outlook for inflation this year and the U.K. government’s budget. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

Read the full article →

Video: U.S. Bans Some Japanese Products; Toyota Extends Halts: Video

March 23, 2011

March 23 (Bloomberg) — Jane King summarizes the top stories this morning on the Bloomberg Business Report. (Source: Bloomberg)

Read the full article →

Video: Egypt Stock Exchange’s Abdul Salem Discusses Trade Halt

March 23, 2011

March 23 (Bloomberg) — Mohamed Abdul Salem, chairman of Egypt’s stock exchange, talks about the halt in trading after shares tumbled following a closure of almost two months. He speaks with Francine Lacqua on Bloomberg Television’s “On The Move.”

Read the full article →

Video: Moedas Says Portugal Needs `Huge Structural Reforms’

March 23, 2011

March 23 (Bloomberg) — Carlos Moedas, special economic advisor to the leader of the Portuguese opposition Social Democratic party, discusses the outlook for today’s vote by lawmakers on the government’s deficit-cutting plan. He talks from Lisbon with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

Read the full article →

Video: Bowman Says Smiths Is Looking For `Bolt-On’ Acquisitions

March 23, 2011

March 23 (Bloomberg) — Philip Bowman, chief executive officer of Smiths Group Plc, the world’s biggest maker of airport-security scanners, talks about acquisition plans and the outlook for the U.K. government’s budget. He speaks with Francine Lacqua on Bloomberg Television’s “On The Move.”

Read the full article →

Video: Barclays’s Norrish Says Oil, Grain Are Drawing Investors

March 23, 2011

March 23 (Bloomberg) — Kevin Norrish, managing director of commodities research at Barclays Capital, talks about the outlook for grain, oil and gold. He speaks with Francine Lacqua on Bloomberg Television’s “On The Move.”

Read the full article →

Video: Darling Says U.K. Rate Rise Would Be `Blow’ to Economy

March 23, 2011

March 23 (Bloomberg) — Former U.K. Chancellor of the Exchequer Alistair Darling discusses the outlook for U.K. interest rates and today’s budget announcement. He talks with Francine Lacqua on Bloomberg Television’s “On The Move.”

Read the full article →

Video: FSB’s Cave Says U.K. Budget Must Incentivize Job Growth

March 23, 2011

March 23 (Bloomberg) — Andrew Cave, head of policy at the Federation of Small Businesses, talks about the outlook for the U.K. government’s budget. He speaks with Francine Lacqua on Bloomberg Television’s “On The Move.”

Read the full article →

Video: Portuguese Austerity Plan Vote May Force Snap Election

March 23, 2011

March 23 (Bloomberg) — Bloomberg’s Francine Lacqua and Nicole Itano report on the outlook for today’s vote by Portuguese lawmakers on the government’s deficit-cutting plan.

Read the full article →

Video: Sainsbury’s King Says Sales Slow on `Careful’ Spending

March 23, 2011

March 23 (Bloomberg) — Justin King, chief executive officer at J Sainsbury Plc, talks about the supermarket owner’s fiscal fourth-quarter sales and consumer spending. He speaks with Francine Lacqua on Bloomberg Television’s “On The Move.”

Read the full article →

Salix Leases 153,000 SF in Raleigh

March 23, 2011

Salix Pharmaceuticals signed a 153,000-square-foot lease at The Colonnade office complex in Raleigh, NC. It took 26,074 square feet at Colonnade I and 126,926 square feet at Colonnade II. Colonnade I delivered in 2001 at 8540 Colonnade Center Drive and Colonnade II delivered in 2008 at 8510 Colonnade Center Drive. The five-story, Class A, office property is in the 6 Forks Falls of Neuse submarket. Austin Koon of Jones Lang LaSalle represented…

Read the full article →

Video: U.K. Motorists Seek Budget Relief From Rising Fuel Costs

March 23, 2011

March 23 (Bloomberg) — Bloomberg’s Elliott Gotkine reports on the impact of rising fuel costs on the U.K economy.

Read the full article →

Commerzbank Inks 173,000-SF Lease

March 23, 2011

Commerzbank signed a 15-year, 173,000-square-foot direct lease at Two World Financial Center. The financial company will continue to occupy the 31-34th floors. The lease will commence in 2013. The 44-story, 2.5 million-square-foot, class A office building was built in 1987. It is located within the World Financial Center in Lower Manhattan. Other tenants in the building include OppenheimerFunds and Nomura Securities. John Cefaly and Robert…

Read the full article →

Groupon To Occupy 196,189 SF at Chicago Office Tower

March 23, 2011

Groupon inked an office lease that more than quadruples its space at 303 E. Wacker Drive in Chicago’s East Loop. The locally based company currently occupies 46,115 square feet at the 30-story office tower and recently signed for a total of 196,189 square feet on seven floors at the 859,187-square-foot building. Groupon will pay Franklin Street Properties Corp., the owner, $441,425 per month until its lease expires on May 31, 2012, according to…

Read the full article →

Inc. 500 Firm Poaches Industry Veteran to Lead Sales & Marketing

March 23, 2011

Archway Technology Partners Adds Sales & Marketing Leadership

Read the full article →

Ian Fletcher: Holy Cow! A Real Debate About Free Trade in the NY Times!

March 23, 2011

Despite being one of the most pressing policy choices facing America, and despite having been one of the biggest controversies in the last, oh, 400 years of economic history, free trade rarely gets a real debate in this country. For the most part, its superiority is just assumed, and the word “protectionist” is treated like, say, “fascist”: something just obviously, axiomatically bad and requiring no serious thought. So it is gratifying to see economist Uwe Reinhardt of the New York Times and Princeton University attempt to engage in a real debate on the issue. He is a free trader. Which is what makes it so interesting that a good look at what he has to say actually reveals a lot about what’s wrong with free trade. (I apologize in advance to Prof. Reinhardt if I have misunderstood anything he said.) For example, he writes: Public discussions on foreign trade sometimes convey the impression that China and the rest of the world make everything, as the United States sits idly by, importing their stuff and going to hell in a handbasket, to use the vernacular. .. Goods and services produced here still represent the great bulk of gross domestic product in the United States. (Original here .) Technically, he is correct. Well over 80% of what America consumes is produced in America. Unfortunately… this metric is totally irrelevant to whether free trade is good for us or not. It doesn’t prove a thing either way. (Anyone who thinks it does is welcome to write me and explain why.) What does have logical traction here? This: as I’ve argued in several articles of my own, the U.S. trade deficit shows an America that is consuming more than it produces. This is a problem because it means that over time, we must either sink into debt or sell off existing assets in order to keep running this giant bar tab with the rest of the world. Therefore, because free trade–or America practicing it while our major trading partners practice mercantilism –arguably causes this trade deficit to happen, free trade is doing us harm. Over time, it leaves us poorer than we would be if we obtained reciprocity under some kind of managed-trade regime. Bottom line: even if “Everything in made in China now!” is a myth, we’ve still got a big problem. Next up, let’s try this assertion by the good professor: After all, imagine what life would be like in the United States in the absence of foreign trade, with all products we use daily made domestically–many would be far more expensive than they currently are, and many would be likely to be of inferior quality to those now available. (Original here .) Talk about a straw man! I don’t know of a single protectionist in the United States who literally proposes to abolish imports entirely. That strange philosophy is found only in places like North Korea, which does (at least pretend to) ban imports on grounds of its ideology of juché or self-reliance. Bottom line: trade and free trade are not the same thing, and one can certainly oppose the latter without opposing the former. Now let’s look at an assertion that doesn’t constitute a falsehood on the professor’s part per se , but does expose a big falsehood that free traders spout all the time. Discussing what to do about people who are harmed by free trade, he writes: A far better approach would be to have in place a solid, general economic safety net that helps all families whose economic base is disrupted through forces beyond their control, whether such disruptions originate in foreign trade or domestic developments. (Original here .) The problem here is all the libertarians and small-government types who like free trade because they think it means the absence of government interference in our lives. This is an appealing philosophy and not without merit, but they’re wrong in the case of free trade. As Prof. Reinhardt notes, even if free trade is a good thing, it’s not a small-government policy. To function, even as free traders like him assert it should, it needs big government to step in and clean up the various messes it makes. Bottom line? Free trade isn’t economic freedom, it’s laissez faire on life support from big government. (Wall Street, didn’t we see this movie before?) Prof. Reinhardt deserves a tip of the hat for being honest about this fact. He has a similar (true, but tending to debunk his own side) point here: Whether a fellow American gains from a trade or someone in Shanghai does not make any difference to most economists, nor does it matter to them where the losers from global competition live, in America or elsewhere. (Original here .) This should be a real tip-off for ordinary voters not to trust most economists. If they don’t care who wins and who loses from trade, why should we heed their advice on the subject or let them advise our government? The issue here isn’t that economists ought to be America First nationalists . That’s a matter of political opinion, and they’re entitled to whatever ideological leanings they fancy. Instead, the issue is twofold: First, granted, it is indeed arbitrary from the point of view of pure economic science whether a given policy is good for America or Timbuktu. But it’s equally “arbitrary” that I’m me and you’re you! I don’t balance my checkbook for my own financial benefit because of some ideological conviction that I’m special; I do it because I’m me, just as you do. (And just as I must assume most of these oh-so-cosmopolitan economists do.) Second: it is really easy to use the nation-agnostic objectivity of pure economics to slide into the argument that we somehow shouldn’t care about national economic well-being. But that doesn’t follow. From the point of view of pure economics, internationalism is just as much an arbitrary ideological assumption as nationalism. Just because biology can’t take sides between diseases and the people that diseases kill, doesn’t mean medicine can’t. Indeed, medicine is crazy if it doesn’t. So while we can all thank Prof. Reinhardt for opening up some needed public debate about free trade, he’s dreaming if he thinks it’s settled in favor of free trade.

Read the full article →

Video: Cloudera’s Olson Says Data Will `Transform’ Industry

March 23, 2011

March 22 (Bloomberg) — Mike Olson, chief executive officer of Cloudera Inc., talks about the outlook for corporate use of data. Olson also discusses data storage and analysis, and database vendors. He speaks with Cory Johnson and Emily Chang on Bloomberg Television’s “Bloomberg West.” Cloudera specializes in data analytics software. (Source: Bloomberg)

Read the full article →

Dan Solin: The Misguided Search for the "Winning" Mutual Fund

March 23, 2011

Those people over at Standard & Poors spoil all the fun. Their periodic research reports on the performance of mutual funds routinely show the majority of actively managed mutual funds underperform the benchmark indexes the fund managers are so handsomely paid to beat. As if that indignity was not enough, twice a year they publish the “S&P Persistence Scorecard.” It answers the question every active fund manager fears: Does past performance matter? We all know that “past performance is not an indicator of future performance”, but the financial media and the securities industry work seamlessly to convince us this is not true. Here’s what I mean: CNBC has “fund screener” on its web page. . It lets you find funds that have a history of stellar performance. Forbes touts its mutual fund screener that “…will help you find the right pick from our database of more than 2,600 funds that qualify for a Forbes Rating based on their track record in bull and bear markets.” TD Ameritrade lets you select certain criteria , including past performance, and screen for funds that meet your requirements. All of the major brokerage firms offer similar screens. John Hancock recently launched a massive advertising campaign in which it featured the fact that many of its mutual funds are rated four and five stars by Morningstar. Presumably, the message is that its past performance is an important factor for investors to consider when shopping for mutual funds. The latest S&P Persistence Scorecard presents irrefutable data indicating that this focus on past performance to predict future performance is simply nonsense. Let’s assume you used one of the fund screeners and identified each one of the 542 domestic stock funds that was in the top twenty-five percent of performers for the first year of the five year period measured by the Persistence Scorecard, commencing in September 2006. You decided to invest in all of them, confident that the majority would repeat their fine performance. After all, fund management is a skill, and these managers clearly had the secret to successful investing, right? According to the Persistence Scorecard, your fund selections were a total bust. Not a single one of these top performing funds maintained its top quarter ranking in each of the remaining four years. This is not surprising for those familiar with the data. When a fund outperforms, Wall Street tells you the fund manager has skill. In fact, it is just luck. Skill persists. Luck doesn’t. If a fund family had investment skill, all of its funds would outperform the market. It would not be advertising just the few winners. As investors, you need to screen out mutual fund screens and ignore past performance. Investing based on these factors is harmful to your financial wealth. The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

Read the full article →