March 2011

Simon Horne Appointed Chief Financial Officer, General Manager & Senior Vice President of Hearst Magazines International

March 28, 2011

NEW YORK, NY–(Marketwire – March 28, 2011) – Simon Horne has been appointed chief financial officer, general manager and senior vice president of Hearst Magazines International (HMI) it was announced today by Duncan Edwards, HMI’s president and CEO. For the last 10 years, Horne has filled the role of CFO and GM at The National Magazine Company (NatMag), a Hearst subsidiary in Great Britain. In this new position, he will take responsibility for all financial and administrative aspects of Hearst’s international magazine business and will work with Edwards on strategy and business development. Horne will be based in London.

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SF Tech Jobs Climb Near Level Of Dot-Com Peak

March 28, 2011

As technology companies’ soaring valuations draw comparisons to the dot-com days, a new analysis highlights another similarity: The number of tech workers in San Francisco today is nearing its peak in 2000.

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TOPICA Announces Appointment of David E. Cohen, M.D., to Board of Directors

March 28, 2011

PALO ALTO, CA–(Marketwire – March 28, 2011) – TOPICA Pharmaceuticals, Inc., a privately-held biotechnology company, today announced the election of David E. Cohen, M.D., M.P.H., to the company’s Board of Directors. Dr. Cohen is a renowned expert in dermatology with more than 20 years of clinical experience. 

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Dr. Dennis Schmatz Joins SCYNEXIS as Strategic Advisor

March 28, 2011

RESEARCH TRIANGLE PARK, NC–(Marketwire – March 28, 2011) – SCYNEXIS, Inc. announced today that Dr. Dennis Schmatz has joined the company as a strategic advisor. Dr. Schmatz, an industry leader in the field of anti-infectives, will provide counsel to SCYNEXIS’ management team as the Company advances its drug development programs.

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Visual IQ Appoints Analytics Expert to Enhance Scientific Modeling for Cross Channel Marketing Attribution Solutions

March 28, 2011

Dr. Payman Sadegh Joins Company as Director of Research & Development, Marketing Analytics

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W. P. Carey & Co. Appoints Jeffrey Lefleur Managing Director, European Investments

March 28, 2011

LONDON and NEW YORK, NY–(Marketwire – March 28, 2011) – W. P. Carey & Co. LLC ( NYSE : WPC ), the global investment management company specialising in long term sale leaseback and build to suit financing, today announces the appointment of Jeffrey Lefleur to Managing Director.

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Future US Appoints Simon Cox as Editorial Director for Future Plus

March 28, 2011

SOUTH SAN FRANCISCO, CA–(Marketwire – March 28, 2011) – Future US, the special-interest media company, today announced the appointment of Simon Cox as Editorial Director for Future Plus, the company’s custom publishing division.

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Grid Cloud Solutions Appoints New CEO and Files for Cancellation of an Additional 66,000,000 Shares

March 28, 2011

SAULT ST. MARIE, ON–(Marketwire – March 28, 2011) – Grid Cloud Solutions Inc. ( PINKSHEETS : GRDC ) welcomes Mr. Danny Wong to its board of directors, and appoints Mr. Wong as its new Chief Executive Officer (CEO).

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AVI BioPharma Names Peter S. Linsley, Ph.D., Chief Scientific Officer

March 28, 2011

Scientific Thought-Leader’s Move to AVI Reflects Belief That Company’s PMO Chemistry Is at Forefront of Delivering the Transformative Potential of RNA-Based Therapeutics

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Raymond J. Learsy: Nuclear Nay-Sayers and the National Interest

March 28, 2011

The events in Japan as they relate to issues of nuclear energy have been an urgent and important clarion call to all regarding the safety of our nuclear facilities and the role nuclear energy will play in our energy future. It is an issue of vital importance to the nation given its impact on global warming, national security and the economy. It is an issue that needs be examined openly and not simply left to those who are pre-programmed to present us with the familiar saws railing against nuclear energy with the tailwind of current events at their back. Almost the first out-of-the-box of nuclear energy dismissal was Rep. Ed Markey (D-Mass.) who on March 13, but two days after the tsunami hit Japan, set forth a list of nuclear policy objectives ranging from a call to imposing a moratorium on siting new reactors to requiring a review of the U.S. Department of Energy’s loan guarantee program, without which the construction of new facilities would be brought to a screeching halt. All points certainly to be put on the table, but Markey’s haste to be out front bespeaks where he is coming from. His views were more succinctly enunciated but a week later on March 20th speaking to ‘ Face the Nation ‘, he was quoted: “the nuclear industry as an electrical-generating part of our mix for the future” would likely “meet its maker” in light of the recent tragedy in Japan. Coming from the ranking member of the house Energy and Commerce Committee one can well imagine what lies ahead. Then we have Mr. Gregory Jaczko, head of the Nuclear Regulatory Commission testifying before the Energy and Commerce Committee about the nuclear situation in Japan. His testimony was broadcast around the world and fueled growing criticism of Japan’s government handling of events while frightening all who were paying attention. The New York Times would banner headline its first page on March 17, ” U.S. Sees ‘Extremely High’ Radiation Level at Plant, Focusing on Spent Fuels Impact ” and went on to write “More Dire Appraisal of Crisis Creates Split With Japan.” In these situations perhaps it is best to err on the side of caution. Yet in the retrospect of now twelve days since Jaczko’s testimony, it would appear the Japanese assessment was closer to the mark. Interestingly Gregory Jaczko worked as a Congressional Science Fellow on Representative Markey’s staff. Jaczko also seved as Senator Harry Reid’s science policy advisor. And therein lies the rub. Senator Harry Reid (D-Nev), probably more than anyone in public office has slowed down to a virtual halt the expansion of nuclear power in the United States (not a single nuclear power plant has been built here since the late 1970′s) by forcing the shutdown of the multi-billion Yucca Mountain, Nevada repository project for nuclear waste. In doing so he enormously complicated the siting of new plants and the safe handling of spent fuels, an issue now again in laser-like focus in response to the Japanese disaster. Without a program to effectively deal with nuclear waste, pools holding spent fuels at nuclear plants in the United States are even more heavily loaded than those at the Japanese reactors. Yet no plan has emerged to replace the Yucca Mountain repository, ( NYTimes : ” Japan Nuclear Crisis Reviving Long U.S. Fight On Spent Fuel ” 03.24.11). Certainly at Harry Reid’s insistence, President Obama told his Department of Energy to withdraw their application for the construction license for Yucca Mountain facility that was submitted to the Nuclear Regulatory Commission (NRC). When the Energy Department sought withdrawal of their license application last June, a panel of three administrative law judges maintained there was no provision in law to do so and rejected the NRC’s request to withdraw. The issue was automatically appealed to the full five member NRC . With one commissioner having recused himself the NRC voted 2-to-2 leaving the commission deadlocked thereby failing to override the panel of judges ruling. Thus the administrative judges’ ruling was left to stand. However Commission Chairman Jaczko has refused to bring the matter to a final vote, continuing to leave the issue unsettled, much to the consternation of many in Congress, not to speak of the utility industry and raising the question altogether, to whose benefit? Solution to the waste disposal problem has been under endless examination. Some years ago this writer proposed, at risk of being pilloried, siting such a facility in northern Alaska much in keeping with the effectively resolved Russian depots on the Novaya Zemlya archipelago in the Northern Arkhangelsk region (please see ” Nuclear Waste: ‘Not in My Backyard!’ Then Whose? ” 07.07.06) Another crucial initiative that could play a major role and has in many national nuclear programs such as that of France as but one example, is the reprocessing of spent fuel to recover plutonium produced in uranium powered reactors for reuse as reactor fuel. It is an issue that has been off the table in the U.S. since the 70′s when Jimmy Carter banned the process because of proliferation concerns (please see ” Climate Change and Nuclear Energy: America’s Missed Opportunity “, 12.13.09). Certainly the benefits and risks inherent in a nuclear energy program are enormous. It is important for the nation’s future when all is said and done, in spite of the current reaction to events in Japan, that the benefits attributable to nuclear energy are given temperate and fair consideration in all policy assessments.

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Cubic Defence New Zealand Names New General Manager

March 28, 2011

SAN DIEGO, CA–(Marketwire – March 28, 2011) – Cubic Defence New Zealand, Ltd., part of the defense systems segment of Cubic Corporation ( NYSE : CUB ), has appointed Mike Toxopeus as its new General Manager. Toxopeus will be in charge of operations in Auckland, where about 135 employees are stationed.

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One Legacy Circle in Plano Trades for $53.6M

March 28, 2011

Franklin Street Properties Corp. (NYSE: FSP) acquired One Legacy Circle, an eight-story, 214,110-square-foot office property in Plano, TX, from Nodenble Associates LLC for $53.6 million or $250 per square foot. A joint venture between Trammell Crow Co. and Principal Real Estate Investors developed the commercial property at 7500 Dallas Parkway three years ago. One Legacy is part of Legacy Town Center, a master-planned office, retail and residential…

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In The Pipeline: Construction and Development News for March 24 – 30

March 28, 2011

In The Pipeline is a column on significant land sales, transactions and trends affecting office, industrial, flex, multifamily, mixed-use, hotel and public works developers. Send us news leads about your new project — and sign up to be added to our distribution list to receive future In the Pipeline columns by e-mail. Read previous columns and articles. Watson Breaks Ground on Spec Industrial Building

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Video: BoA’s Hume-Kendall Says IPOs `Complicated’ By Risks

March 28, 2011

March 28 (Bloomberg) — Rupert Hume-Kendall, chairman of global capital markets at Bank of America-Merrill Lynch, discusses the outlook for initial public offerings. He talks with Linzie Janis from Bangkok on Bloomberg Television’s “Global Connection.”

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Video: Egypt’s Radwan Expects Stocks to Stabilize This Week

March 28, 2011

March 28 (Bloomberg) — Egyptian Finance Minister Samir Radwan spoke with Bloomberg’s Francine Lacqua on March 26 about the seven-week halt in trading on the country’s stock exchange. Linzie Janis introduces this report on Bloomberg Television’s “Countdown.”

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Fidelity Canada Expands Managers Roles

March 28, 2011

Two Fidelity Investments Canada portfolio managers Mark Schmehl and Daniel Dupont will be taking on additional responsibilities

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Robert Kuttner: An American Industrial Renaissance?

March 27, 2011

In the sorting out of the wreckage after Japan’s earthquake and tsunami, many Americans have begun paying more attention to a phrase they had barely known — “supply chains.” American manufacturing companies no longer make most of the parts that they use in production. Rather, both U.S. companies and foreign ones that produce for the U.S. market have long and complex chains of suppliers the world over, many of them in Japan. Now, a lot of that production is temporarily idle, while Japan digs out. The outsourcing of so much production through extensive foreign supply chains, combined with lean and supposedly more efficient “just in time” inventories, leaves companies ranging from Apple to GM vulnerable to supply disruptions half a world away. A few writers such as Barry Lynn and Eamonn Fingleton have been warning about risks of supply-chain fragility for more than a decade, but were paid little attention. Now, however, we not only have the wake-up call in the form of Japan’s earthquake. Economists such as David Levy of the Jerome Levy Forecasting Center, and some dissenting corporate executives such as John Surna of US Steel, point out that it makes less and less economic sense to keep outsourcing production because labor represents a dwindling share of manufacturing costs. As industry becomes more automated, it takes fewer human workers to manufacture a product. So even if a Chinese worker is paid just one-twentieth the wage of his or her US counterpart, there is only so much that can be saved by moving production abroad. Almost four decades ago, the Nobel laureate in economics Vassily Leontieff famously imagined a time when machines would be so productive that there would be only one production worker, and her job would be to flip the switch. We are not there yet, but labor cost savings no longer justify the epidemic of outsourcing, given all of the vulnerabilities that it entails. Meanwhile, as labor costs become less important in manufacturing, energy costs keep increasing. In short, does it really make sense for China to import coal and iron ore from Australia, so that it can fabricate giant wind turbines and send them by ship to the United States? Wouldn’t it make more sense for the US to build more of what we consume? Even in the case of miniature electronics which are less costly to ship, Apple, which designs mostly in the US but out-sources most component production to Asia, could be encouraging more production at home. As energy and the cost of shipping become expensive, and production becomes more automated, the logic of production shifts back in favor of more domestic manufacturing. However, absent some kind of industrial policy, that will not be sufficient to bring back manufacturing jobs. Why? Because labor and transportation costs are not the only factors weighing in the decisions of executives of multinational corporations to move production offshore. Higher environmental and labor standards in the US also make it attractive for multinational companies to outsource production to nations where workers not only have lower wages but no rights, and companies are freer to pollute. US companies also locate production offshore to take advantage of foreign government subsidies. These subsidies are illegal, in principle, under the World Trade Organization. But China’s entire industrial system depends on subsidies intended to attract western companies to shift production to China. In addition, producing worldwide makes it easier to book profits in such a way that avoids national tax liability. It was recently reported that GE, with worldwide profits of $14.2 billion in 2010, paid no US taxes . In fact, the US ended up owing GE $3.2 billion. In January, President Obama named GE Chief Executive Jeff Immelt to chair a new presidential council on jobs and competitiveness. But based on GE’s record of outsourcing and creative tax avoidance, Immelt should be the poster child for how corporate America ought not to behave. There is a whole other approach to bringing back manufacturing to the US. Events in Japan and shifting relative prices of labor and energy costs give that approach new compelling logic. Manufacturing is increasingly hollowed out in the US, but still accounts for upwards of 14 million jobs. It’s hard to keep innovating in the US if we lose what’s left of our manufacturing industry. Manufacturing and energy together account for most of our trade deficit, now upwards of $46 billion a month. As events in Japan remind us, doing more production at home is only prudent. It also makes increasing economic sense. What’s missing is more political leadership to put the pieces together. Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril .

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GOP Senator Questions Costs Of Libya Conflict

March 27, 2011

WASHINGTON — On Sunday, Sen. Richard Lugar (R-Ind.) raised questions about the economic costs of U.S. involvement in Libya. Speaking on NBC’s “Meet The Press,” Lugar insisted that the U.S. has no vital national security interest in Libya and argued that additional military spending will exacerbate the nation’s budget deficit. “There have to be objectives and a plan and an agreement that we’re prepared to devote the military forces but also the money,” Lugar said. “It makes no sense in the front room, where in Congress we are debating seemingly every day the deficits, the debt ceiling situation coming up, the huge economic problems we have — but in the back room we are spending money on a military situation in Libya.” President Obama committed U.S. forces in Libya amid escalating violence, in which Libyan leader Muammar Gaddafi pledged to show “no mercy” to those opposing his regime. Other members of Congress have been critical of Obama’s Libya decision, presenting arguments that many congressional Democrats had used to critique President George W. Bush’s handling of the Iraq war. But in recent years, Lugar has developed a record of questioning U.S. military efforts that other top Republicans have supported. After initially supporting the Iraq invasion, Lugar broke with President Bush and his party in 2007 by calling for a reduced American role in Iraq. He has also criticized continued U.S. involvement in Afghanistan over the past year, noting the costs of the operation and unclear military objectives . Rep. Justin Amash (R-Mich.) introduced legislation last week to immediately halt military action in Libya unless the president receives authorization from Congress. Rep. Bruce Braley (D-Iowa) has also pressed the administration for a full accounting of the costs of U.S. involvement , saying he has not yet received a straightforward answer from the White House. Administration officials are not planning on asking Congress for a supplemental bill to pay for the military intervention in Libya, which National Journal estimated cost more than $100 million in Tomahawk missiles alone in its first day. “The operation in Libya is being funded with existing resources at this point. We are not planning to request a supplemental at this time,” Office of Management and Budget spokesman Kenneth Baer said Monday. In an interview with Jake Tapper on ABC’s “This Week,” Defense Secretary Robert Gates refused to estimate the length of the U.S. commitment in Libya. When asked by Tapper whether American troops would be withdrawn by the end of the year, Gates responded, “I don’t think anybody knows the answer to that.” Gates was also cautious about defining American objectives in Libya, noting that “regime change is a complicated business,” and suggesting that a full ouster of Gaddafi may not be a final goal of the U.S. mission. In a separate interview for “Meet the Press,” Gates acknowledged that Libya does not represent a clear threat to U.S. national security interests, but said that other considerations make the military mission important. “I don’t think it’s vital interest of the United States, but we clearly have interests there,” Gates said. “And it’s a part of the region which is a vital interest for the United States.” Sens. Jim Webb (D-Va.) and Edward Markey (D-Mass.) have both suggested the U.S. implemented its no-fly zone out of concerns over the stability of oil prices. Rising oil prices are crimping American consumers amid a fragile economic recovery. But Lugar questioned whether the money being spent on military operations in Libya would be better spent elsewhere. “Estimates are that about $1 billion has already been spent on an undeclared war in Libya, some would say only hundreds of millions, and that that will diminish in the days ahead,” Lugar said. “But [who] knows how long this goes on? And furthermore, who has really budgeted for Libya at all? I have not really heard the administration come forward saying that, ‘We’re going to have to devote these funds, folks, and therefore it’s something else we’ll have to go or it simply adds to the deficit.’” Secretary of State Hillary Clinton also made the Sunday talk show rounds with Gates. In an interview on ABC, Clinton insisted that international cooperation made the U.S. mission in Libya a more manageable operation than the war in Iraq, and one that does not need the same level of congressional approval. Sen. Carl Levin (D-Mich.) made similar statements on CNN’s “State of the Union.” “There was no U.N. support in Iraq. It made a big difference,” Levin said. “We’re part of an international coalition which has been supported now by U.N. resolution, the support of Arab countries, to prevent the slaughter of civilians in Libya.” When Tapper asked why President Obama chose to intervene in Libya, after declining to commit U.S. troops to unrest in other Middle East nations, Clinton said the severity of the violence in Libya had touched a particular humanitarian nerve in the international community. “Each of these situations is different,” Clinton responded. “But in Libya, where a leader says ‘spare nothing, show no mercy’ and calls out air force attacks on his own people, that crosses a line.”

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The World’s Most Misunderstood Brands

March 27, 2011

The process of brand valuation is more an art than a science, or at least that is the conclusion of research done by 24/7 Wall St. The most well-regarded “brand evaluators” rarely come up with similar figures–except for among the very largest brands. Some of their opinions diverge dramatically. 24/7 Wall St. looked at the brand valuations and methodologies of BrandZ, Interbrand, and Brandirectory. The first two list 100 brands each in their public studies. Brandirectory lists 500. Each would defend its valuations which use different “black box” systems for calculating value. That is probably because all three charge hefty fees for their services. The explanations for their methodologies are even more convoluted.

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Man Jailed For Taking Out A ‘Liar’s Loan’

March 27, 2011

On Valentine’s Day, the elder Mr. Engle said, his son had entered a minimum-security prison in Beaver, W.Va., to begin serving a 21-month sentence for mortgage fraud. He then proceeded to tell me the tale of how federal agents nabbed his son — a tale he backed up with reams of documents and records that suggest, if nothing else, that when the federal government is truly motivated, there is no mountain it won’t move to prosecute someone it wants to nail. And it was definitely motivated to nail Charlie Engle.

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Main Jailed For Taking Out A ‘Liar’s Loan’

March 27, 2011

On Valentine’s Day, the elder Mr. Engle said, his son had entered a minimum-security prison in Beaver, W.Va., to begin serving a 21-month sentence for mortgage fraud. He then proceeded to tell me the tale of how federal agents nabbed his son — a tale he backed up with reams of documents and records that suggest, if nothing else, that when the federal government is truly motivated, there is no mountain it won’t move to prosecute someone it wants to nail. And it was definitely motivated to nail Charlie Engle.

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Pentagon Spends Billions To Fight Roadside Bombs, With Little Success

March 27, 2011

In February 2006, with roadside bombs killing more and more American soldiers in Iraq, the Pentagon created an agency to defeat the deadly threat and tasked a retired four-star general to run it.

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Republicans Appear Poised To Take On Entitlements

March 27, 2011

CORAL SPRINGS, Fla. — If there’s any place where tea partiers in Congress might hesitate to call for cuts in Social Security and Medicare to shrink the federal debt, Florida’s retirement havens should top the list. Even here, however, Republican lawmakers are racing toward a spending showdown with Democrats exhibiting little nervousness about deep cuts, including those that eventually would hit benefit programs long left alone by politicians. In fact, many GOP freshmen seem bolder than ever. It’s Democrats, especially in the Senate, who are trying to figure out how to handle the popular but costly retirement programs. Congress, meanwhile, is rapidly nearing critical decisions on the budget and the nation’s debt ceiling. In southeast Florida last week, first-term GOP Rep. Allen West, a tea party favorite, called for changes that some might consider radical: abolish the Internal Revenue Service and federal income tax; retain tax cuts for billionaires so they won’t shut down their charities; stop extending unemployment benefits that “reward bad behavior” by discouraging people from seeking new jobs. As for entitlements, West told a friendly town hall gathering in Coral Springs, if Social Security, Medicare and Medicaid “are left on autopilot, if we don’t institute some type of reform, they’ll subsume our entire GDP” by 2040 or 2050. GDP, or gross domestic product, measures the value of all goods and services produced in the United States. Social Security, the largest federal program, mainly benefits retirees. Medicare provides health coverage for older people. Medicaid helps those with low incomes. Combined, the three consume about 40 percent of the budget. Their costs are growing rapidly. Social Security and Medicare benefits now exceed the payroll taxes that fund them. West, who’s likely to draw serious Democratic opposition next year, showed scant interest in edging toward the center on anything. He didn’t take issue with the man who said congressional Democrats “have joined with the radical Islamists,” or with the woman who said President Barack Obama “certainly doesn’t support Israel.” In Greenville, S.C., a different Republican freshman with tea party ties, Rep. Trey Gowdy, also suggested during last week’s congressional break a paring back of social programs. According to a Greenville News account posted on his website, Gowdy “described a recent school classroom where most children indicated they think it’s the government’s job to provide health care, Social Security and education. ‘We’ve got to do something about the sense of entitlement,’ Gowdy said.” Gowdy’s office later said he thinks Social Security “is a key aspect of a broad effort to fundamentally reform our entitlement system, but any solution must honor our commitment to current retirees.” Indeed, West and many other Republicans say current and soon-to-be retirees should see no benefit cuts. Their calls for changing Medicare and Social Security often lack specifics, and it’s unclear whether the divided Congress will tackle the programs’ long-term problems or postpone action, as has happened many times before on Capitol Hill. West’s desire to slash spending seems to stop at his district’s doorstep. The Coral Springs audience cheered loudly when he said he helped secure a $21 million grant for a new runway at the nearby Fort Lauderdale airport. “Grant money is not pork,” West said. He issued a press release saying the runway project “will generate at least 11,000 jobs” by 2014 and cost $791 million. While West spoke in Coral Springs, several dozen Republicans had wine and hors d’oeuvres in Palm Beach as they awaited a speech by former New York City Mayor Rudy Giuliani. There was ample sympathy in the room for raising the eligibility age for Social Security benefits. Obama’s debt commission recommended gradually increasing the full retirement age, from 67 to 69, over the next 65 years. “No one is going to be hurt by it,” said Steve Stevens, 80, a retired real estate developer. If people, rich or poor, count on Social Security to fund their retirement, he said, “it’s very poor planning.” Obama’s debt commission has recommended gradually increasing the full retirement age, from 67 to 69, over the next 65 years. Cynthia Steele, 51, said anyone making more than $100,000 a year should not receive Social Security benefits, even if it affected her and her friends. In Washington, Democrats are conflicted. Thirty-two Senate Democrats joined 32 Republicans in urging Obama to negotiate a broad-based spending plan that includes changes to Social Security and Medicare. Senate Majority Leader Harry Reid, D-Nev., says he opposes cuts in Social Security benefits. The centrist Democratic group Third Way says the public is ready to embrace gradual changes to entitlement programs and that Republicans are winning the issue so far. “We don’t believe Republicans ‘going too far’ will be their Waterloo,” the group said in a memo. “The party seen as most serious on the issue will win the day.” If Republicans and Democrats cannot agree soon on spending plans for this year and next, the government could face its first partial shutdown since 1996. That prospect worries leaders of both parties, and they are watching to see if last week’s recess hardened of softened lawmakers’ positions. West suggested there is room for compromise, but not much. “I’m not for shutting down the government,” he told the Coral Springs crowd. But he said Obama must lead the budget negotiations, or else. If there is a shutdown, West said, “it’s going to be because the president is not engaged.”

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IRS Drastically Increases Its Audits Of America’s Richest Taxpayers

March 27, 2011

In 2009, the Internal Revenue Service announced plans to unleash a new enforcement unit called the Global High Wealth Industry, the goal being to better investigate the complex finances of America’s wealthiest taxpayers. They weren’t kidding. Recently released IRS statistics indicate that the federal government increased their audits of America’s richest taxpayers — those with incomes above $10 million — by 75 percent last year. Nearly one in five — 18.5 percent — of America’s richest households dealt with an audit. In 2009, the Global High Wealth Industry’s first year of operation, the IRS audited only one in ten of America’s richest taxpayers. Complex tax evasion has become an increasing problem in recent years, with popular strategies including conversion of income into capital gains and stashing cash in Swiss banks . Audit rates also increased among some lower income brackets, but none so much. The second highest audit increase was among the second highest income bracket: those reporting incomes of $5M-$10M. They saw a 55 percent increase in their audit rate, totaling 11.6 percent. High, but much smaller than the increase experienced by the $10M-plus bracket. Audits rate for those with incomes between $1-$75K remained largely the same. Overall, the IRS increased the percentage of audits by about 11 percent from the year prior. That means 1.58 million tax returns — about 1.11 percent of all returns filed — were audited, costing the IRS about 53 cents per $100 collected — a 3 cent increase from 2009. Criminal investigations by the IRS also increased by 14.2 percent this year, according to Businessweek . Demographic breakdowns of the alleged criminals are unavailable.

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Gambits Abound In Wisconsin Union Fight

March 27, 2011

MADISON, Wis. — Wisconsin Republicans were accustomed to getting what they wanted after the election put Scott Walker in the governor’s office and flipped legislative control to the GOP, even gaining some Democratic support for a series of economic measures in his first weeks in office. Then they took on unions. Uproar was swift and furious when Walker unveiled his plan to take away nearly all public employee collective bargaining rights, drawing tens of thousands of protesters to the Capitol and sending Senate Democrats running away from it to stall further action. Delayed but not deterred, GOP leaders found a legislative workaround and passed the measure without even needing the Democrats to be in the state. The move brought quick court action, and a temporary restraining order meant to stop the plan from becoming law while a judge decides whether steps taken to get it approved were legal. But the GOP may have outsmarted the plan’s opponents again. On Friday, in a move Democrats and unions decried as an end-run around the court order barring implementation, Republican Senate Majority Leader Scott Fitzgerald asked the nonpartisan Legislative Reference Bureau to publish the law. Publication typically means a law takes effect. If the law is in effect, the question before the courts would shift from attempting to block it to rescinding it. And the implementation date is significant because the law doesn’t apply to unions that have existing contracts. Those without contracts once the law takes effect cannot enter into new agreements. Fitzgerald defended himself against accusations he has thumbed his nose at the judiciary in a move that appeared to run afoul of the temporary restraining order. He said going to the Reference Bureau was legal because the court order only specifically barred the secretary of state from taking action. Even the Reference Bureau says its move does not put the law into effect. But Fitzgerald insists the bureau’s posting on the Legislature’s website Friday has the same effect as the secretary of state publishing it – meaning the law took effect Saturday. Fitzgerald said he didn’t consult with Walker about the move. “It is not the usual path, I admit that,” he said. “Clearly we’re in this uncharted territory again where we’d like it to be behind us so we can move forward with the budget.” Others doubt the motivations. “It seems to me they must be just offended that their power is questioned by anybody,” said Madison attorney Lester Pines, who plans to file his own lawsuit challenging the law on Monday. Democrats and unions, meanwhile, are flabbergasted. “Their actions continue to show a disregard not only for people’s rights and open government, but also the authority of the courts,” said Democratic Senate Minority Leader Mark Miller. Fitzgerald said he’s only seeking finality and resolution so local governments have certainty in knowing what the law is as they proceed with making budget decisions. The law takes away the ability of teacher and other public sector unions from collectively bargaining for anything other than wage increases no greater than inflation. It also forces them to pay more for health insurance and pensions, amounting to an 8 percent pay cut on average. The concessions are expected to save local governments about $330 million by mid-2013 and without those taking effect it will be much more difficult to absorb more than $1 billion in other cuts Walker is proposing in his pending two-year budget plan. Walker spokesmen did not return messages Saturday seeking comment. Department of Administration Secretary Mike Huebsch said Saturday that he believed the law was now in place. He said he’d begin implementing it, just as the department was required to do after any bill was lawfully published. “We are mindful that this act is continuing to be litigated, and we will continue to be responsive to the courts as the law begins to be applied,” he said in a statement. The head of the Reference Bureau and one of the Legislature’s nonpartisan attorneys both said that despite Fitzgerald’s insistence, the law is not in effect until Secretary of State Doug La Follette acts. The bill passed on March 10 and Walker signed it the next day, after less than 10 weeks on the job. Under normal circumstances, the law would take effect within the next 10 business days. But a judge issued a temporary restraining order on March 18 preventing La Follette from publishing it. That order came in response to a complaint filed by the Democratic Dane County district attorney. He alleged the state open meetings law was violated when a special legislative committee met with less than two hours’ notice March 9 to put the bill into the necessary form so it could pass the Senate without any of the 14 AWOL Democratic senators present. The state appealed and an appeals court earlier this week asked the Wisconsin Supreme Court to take the case. It has yet to say whether it will. La Follette remained adamant Saturday that the law is not in effect until he orders it published and he will not take any action because he remains under the restraining order. “I did not violate the restraining order,” La Follette said. The latest action didn’t spur any massive protests in the hours that followed it like other action had last month that motivated demonstrations of more than 85,000 people. A couple hundred protesters did return to the Capitol on Saturday morning, including one man who stood outside Fitzgerald’s office and repeatedly shouted, “I am the Senate majority leader and I am czar! You will do as I say! I am above the law!”

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Supreme Court To Take Up Sex Bias Claim Against Wal-Mart

March 27, 2011

WASHINGTON — Christine Kwapnoski hasn’t done too badly in nearly 25 years in the Wal-Mart family, making more than $60,000 a year in a job she enjoys most days. But Kwapnoski says she faced obstacles at Wal-Mart-owned Sam’s Club stores in both Missouri and California: Men making more than women and getting promoted faster. She never heard a supervisor tell a man, as she says one told her, to “doll up” or “blow the cobwebs off” her make-up. Once she got over the fear that she might be fired, she joined what has turned into the largest job discrimination lawsuit ever. The 46-year-old single mother of two is one of the named plaintiffs in a suit that will be argued at the Supreme Court on Tuesday. At stake is whether the suit can go forward as a class action that could involve 500,000 to 1.6 million women, according to varying estimates, and potentially could cost the world’s largest retailer billions of dollars. But the case’s potential importance issue goes well beyond the Wal-Mart dispute, as evidenced by more than two dozen briefs filed by business interests on Wal-Mart’s side, and civil rights, consumer and union groups on the other. The question is crucial to the viability of discrimination claims, which become powerful vehicles to force change when they are presented together, instead of individually. Class actions increase pressure on businesses to settle suits because of the cost of defending them and the potential for very large judgments. Columbia University law professor John Coffee said that the high court could bring a virtual end to employment discrimination class actions filed under Title VII of the Civil Rights Act of 1964, depending on how it decides the Wal-Mart case. “Litigation brought by individuals under Title VII is just too costly,” Coffee said. “It’s either class action or nothing.” Illustrating the value of class actions, Brad Seligman, the California-based lawyer who conceived of and filed the suit 10 years ago, said the average salary for a woman at Wal-Mart was $13,000, about $1,100 more than the average for a man, when the case began. “That’s hugely significant if you’re making $13,000 a year, but not enough to hire a lawyer and bring a case.” The company has fought the suit every step of the way, Seligman said, because it is the “biggest litigation threat Wal-Mart has ever faced.” A trial judge and the federal appeals court in San Francisco, over a fierce dissent, said the suit could go forward. But Wal-Mart wants the high court to stop the suit in its tracks. The company argues it includes too many women with too many different positions in its 3,400 stores across the country. Wal-Mart says its policies prohibit discrimination and that most management decisions are made at the store and regional levels, not at its Bentonville, Ark., headquarters. Theodore J. Boutrous, Wal-Mart’s California-based lawyer, said there is no evidence that women are poorly treated at Wal-Mart. “The evidence is the contrary of that,” Boutrous said. The company is not conceding that any woman has faced discrimination, but says that if any allegations are proven, they are isolated. “People will make errors,” said Gisel Ruiz, Wal-Mart’s executive vice president for people, as the company calls its human resources unit. “People are people.” Ruiz paints a very different picture of the opportunities offered women at Wal-Mart. She joined the company straight from college in 1992. “In less than four years, I went from an assistant manager trainee to running my own store,” she said. “I’m one of thousands of women who have had a positive experience at Wal-Mart.” Kwapnoski, who works at the Sam’s Club in Concord, Calif., is one of two women who continue to work at Wal-Mart while playing a prominent role in the suit. The other is Betty Dukes, a greeter at the Walmart in Pittsburg, Calif. “It’s very hard for anyone to understand how difficult that is and what courage that is,” Seligman said of Kwapnoski and Dukes. “They’re Public Enemy No. 1 at Wal-Mart and they are known for their involvement in this lawsuit. Nevertheless, they get and up and go to work every day.” Kwapnoski didn’t want to discuss any issues she faces at work as a result of the suit. She said she has seen some changes at Wal-Mart since the suit was filed in 2001. The company now posts all its openings electronically. “It does give people a better idea of what’s out there, but they still can be very easily passed over.” she said. “But before you didn’t even know the position was open.” The suit, citing what are now dated figures from 2001, contends that women are grossly underrepresented among managers, holding just 14 percent of store manager positions compared with more than 80 percent of lower-ranking supervisory jobs that are paid by the hour. Wal-Mart responds that women in its retail stores made up two-thirds of all employees and two-thirds of all managers in 2001. Kwapnoski said she and a lot of women were promoted into management just after the suit was filed, although she has had only a couple of pay increases in the nine years since. She is the assistant manager in her store’s groceries and produce sections. Now, she said, promotions are back to the way they were before, favoring men over women. She said she’s hoping the long-running court fight will force Wal-Mart to recognize that, stories like Ruiz’s aside, women are not valued as much as men are and that her bosses will begin to “make sure that good men and good women are being promoted, not just men.” ___ Online: Briefs in the case: http://tinyurl.com/4ckzfz5

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Herman Cain Speaks Out On ‘Entitlement Spending Crisis’

March 27, 2011

(AP) DES MOINES, Iowa — Former Godfather’s Pizza CEO Herman Cain told hundreds of conservative activists that the nation won’t solve its financial woes until policymakers reform entitlement programs. Cain says the conservative movement is gaining strength and will help Republicans take back the government from what he called radical socialism. Without naming any specific government programs, Cain says the country has “an entitlement spending crisis” that must be addressed. Cain was among several potential GOP presidential candidates to speak Saturday at a conference in Des Moines sponsored by conservative Iowa Congressman Steve King. King says he wants to allow conservatives to shape the debate as Republicans begin seeking an opponent for President Barack Obama. Cain spoke to the crowd after Minnesota Congresswoman Michele Bachmann, Mississippi Gov. Haley Barbour and former U.S. House Speaker Newt Gingrich.

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Budget Impasse Increasing Risk Of Government Shutdown

March 26, 2011

With time running short and budget negotiations this week having reached an angry impasse, Congressional leaders are growing increasingly pessimistic about reaching a bipartisan deal that would avert a government shutdown in early April.

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Automakers Could Lose More Than Half A Million Cars To Japan Quake

March 26, 2011

(Bloomberg) — Global automakers may lose production of 600,000 vehicles by the end of the month as the earthquake in Japan halts assembly lines and work at suppliers including the maker of a paint pigment. About 320,000 vehicles may have been lost worldwide as of March 24, and manufacturing at plants in North America may be affected when parts supplies start running out as soon as early April, said Michael Robinet, vice president of Lexington, Massachusetts-based IHS Automotive.

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Nearly A Tenth Of Japanese Farmland Affected By Tsunami, AP Says

March 26, 2011

SENDAI, Japan — The rice paddies on the outskirts of this tsunami-hit city are ankle-deep in a black, salty sludge. Crumpled cars and uprooted trees lie scattered across them. His house destroyed, rice farmer Shinichi Shibasaki lives on a square of blue tarp on the top floor of a farming cooperative office with others like him. He has one set of soiled clothes. But all he can think about is getting back to work. “If we start washing the soil out now, we can start growing our rice seedlings at the end of April at a different location, and plant them here a month later,” the 59-year-old farmer said. That may prove overly optimistic, but agriculture experts – as well as Indonesian farmers hit by a tsunami in 2004 – say a quick recovery is possible, maybe within a year. A key factor will be how long it takes for the salt to wash out from the fields, some still flooded with seawater. Whenever it comes, the return of bright green stalks swaying in the breeze will be a symbol of rebirth. The affected area may represent only a small part of Japan’s overall production, but rice is a spiritual touchstone in this country. The nation’s soul – despite a modern fascination with all things high-tech – remains rooted in the soil. In the name of preserving tradition, Japan’s mostly small-scale rice farmers are heavily protected from cheaper foreign competition. The emperor plants and harvests symbolic stalks every year, and some city dwellers rent small plots to grow rice on the edge of town. The country’s mythology is filled with references to rice, and the written character for “rice field” forms part of many surnames. In the small city of Natori, Akemi Miura can only laugh as she looks at the land around her home, which her family has worked for more than a century. But the 46-year-old says they will replant, though she thinks it will take a few years for the soil to recover. A fishing boat washed more than a mile (1.5 kilometers) inland smashed into her carnation greenhouse and caught fire. Debris and a thick, sticky mud covers the fields. “I think we’re finished with carnations, but we’ll always grow rice,” she says. There are no official estimates yet of how much farmland was affected. The Associated Press made a rough calculation based on last year’s harvest in tsunami-hit towns. It indicates that at most 8 percent of Japan’s 4 million acres (1.6 million hectares) of rice farms has been hit, affecting about 4 percent of total production. Makie Kokubun, a professor at Tohoku University in Sendai, will soon accompany government officials on a trip to take samples and analyze the soil. Japan’s coastal farmland has been damaged by salt from major typhoons in the past, and farmers have been able to flush it clean. “Recovery may be faster than some think. The key is the water flow through the land, which varies by region,” he said. “There is also some evidence that light salt can actually help crops grow, though this is obviously in far greater amounts.” The 2004 tsunami ravaged rice fields in Indonesia’s Aceh province, and scientists made dire predictions of years without a crop. But many recovered quickly. “Thank God, we were able to harvest rice just one year after the tsunami decimated my rice fields,” said Sulaiman Abdullah, 55, who farms a third of an acre (1,300 square meters) in the village of Beuradeuen. “And the quality is even better than it was before, maybe because the mud, garbage and sea water brought in by the wave made the land more fertile,” he added. “The same tsunami that first destroyed our lives was in the end a blessing of sorts.” Even if the soil recovers, farmers in Fukushima prefecture – known for the light and sticky “koshihikari” strain of rice preferred by many Japanese – face another problem. Radiation from a damaged nuclear power complex has found its way into vegetables, milk and the water supply. Japanese consumers are notoriously fickle about food safety and may shun Fukushima products, even if health experts say the radiation is not a threat. Up and down the tsunami-ravaged coast, a greater concern may be manpower. Many of the tsunami victims came from coastal families that have farmed for generations. Here in Miyagi prefecture, the state that includes Sendai and Natori, farmland was converted from swamps about 400 years ago to generate funds for the local ruler. But the younger generation increasingly doesn’t want to farm. The average age of farm workers in Miyagi topped 65 last year, according to a prefectural survey. Now some older farmers, their homes gone and land in tatters, are saying they will call it quits. “I’m worried that a lot of these elderly farmers are just going to leave their fields and not come back,” said Masao Takahashi, an official in the Miyagi office of the Japan Agricultural Cooperatives, a politically powerful national network of farming groups. In Natori, 60-year-old rice farmer Kikuo Endo points to a shed full of ruined farm equipment, which he estimates was worth 10 million yen ($125,000). He doesn’t know if insurance will cover it. “People shouldn’t give up, but I don’t think I will farm again,” he says. “It’s time to pass the baton to the next generation.” There may not be one. His three sons, he said, have abandoned the fields and moved to the city. ___ Associated Press writer Fakhrurradzie Gade in Beuradeuen, Indonesia, contributed to this story.

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Pension Funds Leading Investor Lawsuit Against Goldman Sachs

March 26, 2011

(Reuters) – A Manhattan federal judge on Friday named three pension funds as co-lead plaintiffs in an investor lawsuit against Goldman Sachs Group Inc (GS.N) to recover losses tied to the Wall Street’s bank’s alleged misleading statements about Abacus, a product linked to subprime mortgages. U.S. District Judge Paul Crotty designated the Arkansas Teachers Retirement System, the West Virginia Investment Management Board, and the Plumbers and Pipefitters National Pension Group in Alexandria, Virginia to lead six consolidated lawsuits against Goldman and various of its officers and directors. Crotty said the funds had the largest financial losses connected with the case of any of the proposed plaintiffs. The funds are represented by the law firms Robbins Geller Rudman & Dowd LLP and Labaton Sucharow LLP. The litigation arose after the U.S. Securities and Exchange Commission last April 16 sued Goldman and Fabrice Tourre, one of its vice presidents, over Abacus, a 2007 collateralized debt obligation transaction. In its civil complaint, the SEC accused Goldman and Tourre of failing to tell investors that the hedge fund Paulson & Co helped choose bet against securities underlying Abacus. The investors contended that the charges, Goldman’s failure to disclose it had earlier received a “Wells notice” indicating that charges might be brought, and news of a possible U.S. Department of Justice probe caused the bank’s shares to fall 21 percent in just over two weeks. Goldman agreed last July to settle the SEC case for $550 million, without admitting wrongdoing. Tourre, the only individual sued in the case, has also denied wrongdoing, and is still defending against the SEC lawsuit. Other investor lawsuits over Abacus have been brought against Goldman or company officials in other jurisdictions. The case is In re: Goldman Sachs Group Inc Securities Litigation, U.S. District Court, Southern District of New York, No. 10-03461. (Reporting by Jonathan Stempel, editing by Bernard Orr) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Gaddafi’s Son Had Internship In U.S. Just Before Libyan Conflict

March 26, 2011

WASHINGTON (AP) — A son of Libyan leader Muammar Gaddafi toured U.S. ports and military facilities just weeks before he helped lead deadly attacks on rebels protesting his father’s authoritarian regime. Khamis Gaddafi, 27, spent four weeks in the U.S. as part of an internship with AECOM, a global infrastructure company with deep business interests in Libya, according to Paul Gennaro, AECOM’s Senior Vice President for Global Communications. The trip was to include visits to the Port of Houston, Air Force Academy, National War College and West Point, Gennaro said. The West Point visit was canceled on Feb. 17, when the trip was cut short and Gaddafi returned to Libya, Gennaro said. The uprising there began with a series of protests on Feb. 15. By late February, forces controlled by Khamis Gaddafi were leading the brutal assault to retake Zawiya, a city near Tripoli that rebels captured soon after the uprising began. Gennaro said the U.S. State Department approved of the trip, and considered Gaddafi a reformer. He said the government signed off on the itinerary, at times offering advice that affected the company’s plans for Gaddafi. State department officials denied any role in planning, advising or paying for the trip. “We did greet him at the airport. That is standard courtesy for the son of the leader of a country,” said State Department spokesman Mark Toner. Toner said the government was aware of Gaddafi’s itinerary, but “did not sign off on it.” AECOM was not paid to arrange the trip, and did not pay for related expenses, Gennaro said. He said the trip was arranged at the request of a Libyan, whom he declined to name. Gennaro was one of the AECOM executives who met with Gaddafi during the trip, to educate him on U.S. corporate practices. He said Gaddafi was “very, very interested in the planning, design, how do you advance large infrastructure projects.” “That was the nature and the tenor of this internship,” he said. Khamis Gaddafi was killed earlier this week after a disaffected Libyan air force pilot who crash-landed his jet in the ruling family’s headquarters, according to unconfirmed reports cited by ABC News and Al-Arabiya television. He died from burn injuries after the crash, the reports said. Gaddafi, Muammar Gaddafi’s youngest son, was pursuing an MBA at the IE Business School, in Madrid, Spain, until earlier this month. The school expelled him because of his role in attacks on Libyan protestors. Khamis Gaddafi led the Khamis Brigade, one of several professional military units that are loyal to leader Muammar Gaddafi. U.S. diplomats in leaked memos have called it “the most well-trained and well-equipped force in the Libyan military.” In one brutal attack, his forces surrounded Zawiya while rebels in the city celebrated their victory and cared for the injured. The Khamis Brigade then unleashed an all-out assault from three sides, unloading their weapons and artillery as they stormed the city. The city sank into darkness at night due to power outages and the main hospital became too dangerous for patients because it was under the control of government forces. ____ Associated Press writer Matthew Lee contributed to this report.

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Video: Tabitha Soren Reports on Chef Arnold’s Kitchen Gadgets

March 26, 2011

March 25 (Bloomberg) — Bloomberg Television contributor Tabitha Soren reports on chef Dave Arnold and his mechanical creations. She speaks on Bloomberg Television’s “Bloomberg West.” Bloomberg’s Cory Johnson also speaks. (Source: Bloomberg)

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Video: Kedrosky Is `Pessimistic’ on Research In Motion’s Future

March 26, 2011

March 25 (Bloomberg) — Bloomberg News contributor Paul Kedrosky talks about Apple Inc.’s iPad and the outlook for Research In Motion Ltd.’s PlayBook tablet and the mobile device market. Kedrosky talks with Cory Johnson and Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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Millennial Generation Has Its Own AARP To Lobby For Jobs And Deals

March 25, 2011

WASHINGTON — One in six are unemployed, more than any other adult age group. They carry an average of $24,000 in student debt . And one in 10 have been forced to move back in with their parents after school. No doubt about it, these are hard times for young adults. But it takes a leap of faith to start a membership and advocacy group called Our Time as the Millennial generation’s answer to AARP. Launched this week in a Pennsylvania Avenue office down the street from the White House, Our Time seeks to use online organizing to “change corporate practices, create exclusive deals and spark a national conversation.” It wants to “stand up for Americans under 30” while using its bargaining might to get discounts on health insurance and credit card programs. And with a homepage that Friday showed a scruffy dude screaming, “F#%K, I need a job! One in six of us is out of work,” and no annual dues for a generation used to getting everything free online, Our Time is unlikely to be mistaken for the group formerly known as the American Association of Retired Persons. “Our generation has more of an economic reason to engage than anyone,” said il, the group’s 25-year-old president. “We can’t just complain about these things or sit on the sidelines. We need to use our generation’s unique strengths to fix them … This is the civil rights issue for our generation. If you can’t have economic freedom and mobility to become financially independent at an early age, than you are entering society on the wrong foot.” Our Time’s target audience can be summed up by the headline in a recent New York Times op-ed written by a 24-year-old: “Educated, Unemployed and Frustrated.” It is being formed at a time when a growing chorus of commentators — from David Brooks to Fareed Zakaria to Robert Samuelson — are connecting the yawning budget deficit to the nearly 40 percent of the federal budget that goes to Social Security and Medicare. Where, they ask, is the political will to take on those entitlements when, according to a 2009 Brookings Institution report , an elderly person receives $7 in federal aid for every $ 1 that goes to a child. “Everyone’s talking about ‘doing it for the children,’ yet the children are being neglected, or at the very least held hostage for political gain,” Segal said. “We have become cheap talking points for our budget, health care system, tax code and just about every other social quandary.” Segal said his peers worry their generation will be the first economically less well off than their parents’ and doubt the social safety net will be there when it’s their turn to retire. “We want to make sure every generation is willing to put some skin in the game, otherwise we’re just kicking the can down the road,” Segal said. “We’re not here to complain and ask for federal handouts.” Donna Butts of the advocacy group Generations United said Our Time sounds “wonderful,” especially at a time when young people in the Middle East are feeling so empowered. But she worries the group will wind up pitting one generation against another. Millennials aren’t the first to enter the workforce during recessionary times, she notes. “From our perspective,” she said, “it’s not a fight, it’s a family.” Dean Baker, a liberal economist at the Center for Economic and Policy Research, said the group is “founded on a lie” if its creators believe older generations are getting a bigger share of the pie. “It’s obviously wrong-headed,” he said, to blame seniors instead of the rich for taking more than their fair share of the nation’s wealth. Segal said he isn’t interested in sparking a war with his grandparents’ generation or with Baby Boomers. If anything, the early-bird dinner crowd has been an inspiration to a generation that can barely afford anything more elaborate than Chipotle. “Young people don’t have a seat at the table now and that’s because we don’t vote in high enough numbers” like seniors do, Segal said. Indeed, the genesis of Our Time grew out of the 2004 election, when Segal and his friend, Jarrett Moreno, were students at Kenyon College in Gambier, Ohio. They were among hundreds of students who made national headlines when they had to wait 10 hours or more to vote in the presidential election. Segal, who grew up in an affluent suburb on Chicago’s North Shore, went on to found SAVE, the Student Association for Voter Empowerment to help get out the youth vote in the 2008 election. The group eventually grew to more than 10,000 members on 40 college campuses. Young voters turning out in force helped elect Barack Obama president in 2008. Two years later, though, many may have been too busy looking for a job to vote in congressional elections. Segal and D.C. native Jarrett Moreno, a friend from Kenyon, decided there was a need to engage their peers year-round and not just at election time. And that’s where Our Time came in. Neil Howe, a generational expert whose books include “Millennials Rising: The Next Great Generation,” says Our Time has the potential to be “the political and social movement equivalent of Groupon.” He compares today’s 20-somethings to the World War II G.I. generation that made AARP into the powerhouse membership and lobbying group it is today. While today’s seniors lacked Facebook or other social network sites, they were joiners who believed in what Howe calls “collective entitlement.” Just as the generation that came of age in the Great Depression energized the union movement, Howe said Millennials like those who recently marched in Madison, Wis., could lead a revival for organized labor. “They are a strong civic generation with a strong sense of peer cohesion,” Howe said. “They probably will reoccupy the civic void left behind by Generation Xers and Boomers and will create the same sense of solidarity that the G.I. generation, or greatest generation did.” And they will do it in a style very different than the Baby Boomers. Before they began qualifying for Social Security this year, many Boomers didn’t trust anyone over 30 — a credo taken to the extreme in the 1968 cult classic “Wild in the Streets .” The Millennials at Our Time prefer to use humor to dramatize their plight, as in a series of online videos entitled, “Living at Home Sucks.” And Segal said the emphasis is on entrepreneurship: “If you can’t find a job, create your own.” Baker said there is nothing wrong with being entrepreneurial “but they are deluded if think they can all get by running their own businesses,” noting the vast majority of start-ups fail. Whether Our Time will be among the failures remains to be seen. “The economic challenges they face are not overstated,” Howe said. “Their challenge is politically whether they can get other people to see them as having legitimate grievances, that the system owes them something.”

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Video: Mehrotra Says YouTube Is Home for All Types of Content

March 25, 2011

March 25 (Bloomberg) — Shishir Mehrotra, director of product management for Google Inc.’s YouTube, talks about the company’s strategy to increase advertising revenue and lengthen the time viewers spend on the video website. Mehrotra speaks with Emily Chang and Cory Johnson on “Bloomberg West.” (Source: Bloomberg)

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Video: Kodak Wins Round in $1 Billion Apple, RIM Patent Dispute

March 25, 2011

March 25 (Bloomberg) — Eastman Kodak Co. has won the latest round in its patent dispute with Apple Inc. and Research In Motion Ltd., a case with the potential to generate more than $1 billion in new licensing revenue for the camera company. Bloomberg News San Francisco Bureau Chief Jeffrey Taylor reports on the stakes involved with Cory Johnson and Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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Video: Kodak Wins Round in $1 Billion Apple, RIM Patent Dispute

March 25, 2011

March 25 (Bloomberg) — Eastman Kodak Co. has won the latest round in its patent dispute with Apple Inc. and Research In Motion Ltd., a case with the potential to generate more than $1 billion in new licensing revenue for the camera company. Bloomberg News San Francisco Bureau Chief Jeffrey Taylor reports on the stakes involved with Cory Johnson and Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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Video: Kodak Wins Round in $1 Billion Apple, RIM Patent Dispute

March 25, 2011

March 25 (Bloomberg) — Eastman Kodak Co. has won the latest round in its patent dispute with Apple Inc. and Research In Motion Ltd., a case with the potential to generate more than $1 billion in new licensing revenue for the camera company. Bloomberg News San Francisco Bureau Chief Jeffrey Taylor reports on the stakes involved with Cory Johnson and Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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Video: Kertzman Says `Window Opening Wider’ for Technology IPOs

March 25, 2011

March 25 (Bloomberg) — Mitchell Kertzman, managing director at Hummer Winblad Venture Partners, talks about the outlook for initial public offerings in the technology industry. Kertzman also discusses Facebook Inc.’s valuation, the secondary market and his investments. He speaks with Cory Johnson and Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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Triangle Factory Fire’s Legacy Under Threat

March 25, 2011

“We have been legislated to death.” – James T. Hoyle, Secretary of the Manufacturers’ Association, explaining his opposition to new laws proposed in the wake of the Triangle Shirtwaist Co. factory fire, May 19, 1914 “The regulations are killing us” – Congressional candidate George Pendergrass during the Nevada Republican primary, May 12, 2010. Susan Harris’s voice grows hoarse with emotion when she discusses last year’s BP oil spill and the Upper Big Branch mine disaster, two of the biggest industrial accidents in the nation’s history. But the 62-year-old artist from Los Angeles gets even more passionate expressing her disappointment that the two incidents have not prompted more safety rules, instead lost amid a backlash against government regulations to protect worker safety and health. “How do people become so hard? It’s disgusting,” she says. “What are our priorities as a country? It’s really ironic that this is happening right now on the anniversary of the fire.” Harris is referring to Friday’s 100th anniversary of the Triangle Shirtwaist factory fire , in which 146 workers, mainly young immigrant women, were burned to death or jumped to their deaths. The workplace tragedy, which was caused by dramatically unsafe conditions and blocked exits, inspired dozens of reforms, later helping pave the way for the New Deal, and invigorated the union movement. That tragedy has a special poignancy for Harris — her grandfather, Max Blanck, was the owner of the factory and was tried for manslaughter due to the unsafe conditions, which included a locked door that trapped dozens of young seamstresses in the burning ninth-floor room of the Asch building. Haunted by the tragedy, Harris recalls how she did not even find out about her family’s legacy until she was a young teenager and stumbled across her grandfather’s name in a book — the family changed its name slightly in the wake of the accident. “It has affected me deeply. As I grew up, I reflected more on what was going on in my world,” says Harris, who has met with relatives of victims and created an art exhibit to honor the victims’ memories. “I definitely became more sensitive to workplace conditions — when I see and hear about young women working in sweatshops in Bangladesh, females who are raped on their way out of work, it has an effect on me. Look at what is happening today — people are trying to deregulate all these important workplace protections at an exponential rate.” Harris is referring to an assault that has only grown in the first few months of the Republican-led House of Representatives. The GOP’s budget proposal includes slashing $99 million from the Occupational and Safety Health Administration, a 40 percent reduction in the budget of the federal agency most responsible for making sure the nation’s workplaces are safe — Democrats claim that translates into 8,000 fewer workplace hazard inspections and 740 fewer whistleblower discrimination probes. And the new chairman of the House Oversight and Government Reform Committee, Rep. Darrell Issa (R-Calif.), has vowed to take a tough look at regulations that impede job growth , soliciting suggestions from industry groups that included OSHA regulations. Last month, Rep. Tim Walberg (R-Mich.) led a hearing that largely criticized OSHA’s impact on business, during which the freshman lawmaker thundered about “needless rules and onerous regulations.” During Walberg’s hearing, which was dominated by discussion of the costs of OSHA regulations on corporate bottom lines, one of the most emotional moments came when Tammy Miser, an advocate for worker safety and founder of United Support and Memorial for Workplace Fatalities, undercut the lawmaker’s thesis. Miser said she was there to deliver “a personal story of why OSHA regulations are needed” and cried as she described how her brother, Shawn Boone, was killed in 2003 in an aluminum dust explosion at a factory that produced aluminum wheels, where fires happened on a regular basis and she claimed that workers were instructed not to call the fire department “because it was costing them too much money.” Despite Boone’s death and the tragic dust explosion at the Imperial Sugar refinery in 2008, which killed 13 and injured 42, OSHA has still not issued a final rule to regulate combustible dust. “Some companies choose to gamble with workers’ lives because there are no OSHA standards,” said Miser, in discussing the Imperial Sugar disaster. “The buzz that the regulations kill jobs … that’s just nonsense,” said Miser, noting that only two regulations have been passed by OSHA in the past 10 years. And one of them — applying to cranes and derricks — came too late for Steven Lillicrap, a 21-year-old construction worker who was killed when he was pulled into the cables of a 100-ton crane in 2009 while OSHA was still revising the standards for the rule. “It was finally issued in July and is expected to prevent 22 deaths and 175 injuries and millions of dollars in property damage per year. The benefits far outweigh the costs of this rule.” Miser paused and added, “There’s no price tag that can be put on seeing your husband walk your daughter down the aisle or seeing your baby born. I’ve talked to family members that have had children and their husbands are gone. Their babies are never going to know their father. It’s nothing like seeing your child graduate from college or holding your grandbaby.” Locked Doors, Charred Bodies On Saturday, March 25, 1911 , the end of the workweek, many of the young men and women toiling at sewing machines and cutting cloth at the Triangle Shirtwaist factory near Washington Square Park were getting ready to leave for the day when flames suddenly burst from a trash can on the eighth floor. The fire spread quickly through the factory, which had no sprinklers and where fire drills were not required, consuming the ninth and tenth floors as workers tried in vain to put it out with buckets of water. They quickly unraveled a water hose, but no water came out. Hundreds of workers raced to an exit door where a young man screamed, “The door is locked? The door is locked!” Dozens made their way onto freight elevators, whose operators risked their own lives to save 150 people, but those who were crowded out jumped down the shaft or out of the windows onto the street below. The wet sidewalks were covered with 146 bodies — mainly Jewish and Italian women struggling to earn a living making blouses in the sweatshop — many of them charred beyond recognition. Over 100,000 took part in the funeral procession, which was watched by over 300,000 New Yorkers — many of them expressing rage at the factory owners, who had put profits before safety and prevented the workers from forming a union. Two years earlier, a general strike of garment workers, mostly Jewish women, had led to improved wages and working conditions, but that didn’t change the union status of Triangle workers. It was still a dangerous time to toil in a labor-intensive industry. “About 100 workers were killed on the job every day in 1911 — mine collapses, railroad accidents, steel mill accidents,” says David von Drehle, the author of “Triangle: The Fire That Changed America.” “If you go back and read the newspapers from that period, it’s shocking how common the headlines show up.” At the manslaughter trial of Blanck and factory co-owner Isaac Harris, witnesses were galvanized when one of their employees testified that Harris told him after the fire: “The dead ones are dead and will be buried.  The live ones are alive and they will have to live.  Sure the doors were locked; I wouldn’t let them rob my fortune.” Despite the public outcry, changes were not immediate. A year after the fire, many proposed regulations and laws were clogged in legislative inertia. Though The New York Times ‘s news pages were full of graphic accounts of the tragedy and unsafe conditions at the factory, the paper’s editorial page somberly cautioned against excessive regulation, arguing, “Excited persons rarely accomplish anything … No new laws are needed.” Four years after the tragedy, one letter writer to the Times decried industry-supported amendments that threatened to gut the new laws, including one that would exempt New York City and other cities “altogether from the operation of all safeguards affecting the safety and health of factory operatives.” And factory owners Blanck and Harris were acquitted of manslaughter due to too much conflicting evidence — two years later, Blanck was fined $20 for having the doors locked at another of his garment factories. Shocked and outraged citizens demanded better working conditions, and New York state enacted almost 40 labor laws in the following three years. In 1935, Congress passed the National Labor Relations Act to ease union formation and protect collective bargaining and the rights of striking workers. Though previous tragedies — from the Great Chicago Fire of 1871 to the fire that engulfed the General Slocum steamboat — sparked reforms, the political consequences of the Triangle fire were the most widespread, forming a political alliance between labor, liberals and lawmakers that shaped the Democratic Party for decades to come. “There are a handful of catalytic, galvanizing moments where history really gets a big push to give us the world that we live in today, and the Triangle fire is one of those,” von Drehle said. Unlike the sinking of the Titanic, he said, “Triangle led to changes that influenced the way every American lives .” Still Unsafe To Work A century later — despite the regulations, laws and a more educated workforce — such workplace tragedies continue to happen. Within the last two months in the New York City area, these accidents occurred: Limin Min Huang was crushed to death at the dry-cleaning plant in Jamaica, Queens, where she worked, when her scarf got caught in a flatwork ironer, pulling her into the machine. At least six workers fainted and vomited after being overcome by carbon monoxide poisoning due to the lack of ventilation at a warehouse in South Brunswick, N.J. And construction workers Brett McEnroe and Roy Powell died after falling 65 feet in an elevator shaft inside a building site that lacked several safety precautions on Manhattan’s Upper West Side. Among the clothing and garment industries, there remain potentially unsafe working environments, sometimes due to new hazards that didn’t exist at the time of the Triangle fire. Last September, OSHA cited New Jersey’s Miskeen Originals for numerous workplace safety and health violations, including employee exposure to methylene chloride, a hazardous chemical linked to cancer and adverse effects on the heart. But the penalties remain paltry. For one willful violation, the company was slapped with a $28,000 fine, along with a $15,150 penalty for 12 serious violations. “Even a hundred years later, workplace safety concerns are still a problem,” says Catherine Ruckelshaus, the legal co-director of the National Employment Law Project, which released a report last year concluding that workplace violations are severe and widespread in New York City’s low-wage labor market. “You hear about the locked doors at the Triangle factory and it’s shocking. But to this day, we hear about grocery store workers in Brooklyn who are locked in the stores at night and it’s a very common practice in retail and the garment industry to lock the doors — they say it’s to prevent theft, which is what the Triangle factory owners claimed.” Ruckelshaus says that though there are much better laws and regulations on the books than there were back in 1911, many of them are not being enforced and there are many parallels between now and then. “In many ways, we haven’t made much progress,” she says. “The Triangle fire was a mostly immigrant population in a very competitive business. We have that now with janitorial, home health care, security workers, the garment industry — any labor-intensive industry, you have the same pressures.” Among the NELP report’s findings: only 11 percent of injured workers file a workers’ compensation claim and 16 percent were fired or told not to file a claim when they told their employer about the injury. Every week in the city, $18.4 million is lost to “wage theft,” meaning violations such as paying less than minimum wage. “It happens all over the place — unsafe construction sites, sweatshops tucked away in all corners of NYC, just blocks from the Triangle factory site,” says Leigh Benin, who worked briefly in the garment industry. “The other part of it is, which is just as shameful, is that 95 percent of garment manufacturing is now offshore. Clothes are being made in Bangladesh, where they have very similar conditions to the Triangle factory, where workers are locked in.” Benin , whose grandmother’s cousin Rose died in the Triangle fire, says that “it was routine to lock doors, to search people when they left.” For him, the Triangle tragedy was a living memory and he would hear the details from his grandmother’s lips. “I felt that deep sadness in her and I felt close to her,” he says. “And then it came to me, that there is something I can do, to try and make sure that we will never forget them, that they shall not have died in vain. That they could look back and say, ‘They died, but we did something to make sure that won’t happen again.’” Benin, now a professor at Adelphi University, is taking part in ceremonies to mark the anniversary but says he worries that the fire’s legacy of workplace reform is under threat, partly because so many people have no memory of the fire. He cites the example of Frances Perkins, a young social worker who was having a cup of tea across the park on the day of the fire when she heard the commotion and saw women jumping out of the windows to their deaths. “From that day forward, she made the determination to make that tragedy count for something, that those lives were not in vain,” he said. Perkins, as a member of the Factory Investigating Commission, helped push through dozens of workplace safety laws that became a model for the rest of the country. She later became President Franklin Roosevelt’s first female Cabinet member, serving as Secretary of Labor and helping push through the Social Security Act, laws against child labor, and the Fair Labor Standards Act, which established the first minimum wage and overtime laws. The factory commission report had an enormous impact, says Kirstin Downey, the author of ” The Woman Behind the New Deal ,” a biography of Perkins. Speaking at a recent symposium on the Triangle fire sponsored by the National Consumers League, Downey held up a volume from the 13-volume report, explaining that it revealed unsafe and unsanitary conditions in numerous factories and led to workplace innovations like fire escapes, sprinklers, lighted exit signs, occupancy limits, regular fire drills and bans on smoking in factories that Americans take for granted. At the ceremony to mark the 50th anniversary of the Triangle fire, Perkins and Eleanor Roosevelt were at the podium, says Benin. “They could look back and talk about the legacy of reform, at all the progress that had been made in the decades after the fire. But if you look back at what’s been going on the last few years, it’s been an attempt to undo the reforms and the union movement, to return us to an era before the New Deal, even prior to the progressive era, to some new Gilded Age.” Benin argues that people don’t die of excessive regulation. “Was there too much regulation of the mining industry after 29 people died or BP where 11 people died? Let’s assume that it’s impossible to find a completely reasonable approach to everything and that inevitably we’re going to err on one side — I’d much rather err on the side of too much, because too little ends up harming people or killing people,” he said. Considering the lobbying forces marshaled by corporation and industry groups, Benin says that it’s an unequal fight. “The forces arrayed against regulation are the wealthy and powerful, whose vision doesn’t extend beyond the bottom line,” he said. “The largest question is, ‘Who is responsible for the public good? Corporations are only responsible to their shareholders or to their own egos. So, it can only be government officials.” Similar to the anti-regulatory zeal displayed in the industry response to Rep. Issa’s recent request for lists of burdensome regulations, there was an “incredible litany of business lobbying groups in New York state and New York City who had the exact same arguments as the Chamber [of Commerce] has today,” says Peter Dreier, a professor at Occidental College and HuffPost blogger. Describing the arguments found in transcripts of the factory investigation commission hearings, Dreier recounts: “‘If you make us put fire sprinklers in,  if you require fire escapes’ and other things we now take for granted, ‘industry will leave New York and it will become a ghost town.’” Dreier is alarmed by today’s anti-regulatory climate. “If today’s Chamber of Commerce were around in 1912, they would say fire sprinklers are burdensome government regulations that will drive out jobs,” he said. “They would call for voluntary corporate responsibilities to fix mine safety and oil rigs. … What we learned from the Triangle fire is you have to have a set of rules and standards that protect workers.” The Chamber strongly disputes that characterization. The preeminent business lobby’s executive director of labor law policy, Marc Freedman, says that the group supports OSHA and that workplace safety is a primary concern of employers. Freedman argues that there are valid questions about how OSHA spends its money and whether it overemphasizes enforcement at the expense of efforts to work with employers on compliance assistance. “What I seem to be seeing from a number of voices is to connect the Triangle tragedy with some of the contemporary efforts surrounding unionization or other workplace accidents and disasters,” he says. “Clearly, Triangle Shirtwaist had a deep meaning and resonates as one of the signature events that triggered workplace reforms, and it’s a good thing we’ve moved on since then.” He adds that companies have made serious investments to achieve the goal of no workplace accidents or fatalities, explaining that “there are going to be employers worthy of enforcement by OSHA, but the question is whether the agency is only going after employers who have truly disregarded the safety of their workers.” Freedman argues that the chamber’s focus on regulation is more about what the Obama administration is trying to do and not about the rules and regulations that are already on the books, adding that some of OSHA’s regulatory ideas are not well-founded. The legacy of the Triangle fire is palpable to every American, says Benin. “If you’re sitting in a workplace right now, you’re enjoying safety regulations that came about because of the fire — sprinkler system, fire drills, clear exits,” he says. “Over 30 fire safety laws came about and we are all benefiting from the loss of those 146 lives and what that tragedy did to shake up the country.”

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Wisconsin Union Law Published Despite Court Order

March 25, 2011

MADISON, Wis. — Wisconsin officials couldn’t agree Friday about whether an explosive law taking away nearly all public worker collective bargaining rights was about to take effect after a nonpartisan legislative bureau published it despite a court order blocking implementation. The Legislative Reference Bureau took the action at 3:15 p.m. Friday, sending confused lawmakers and legal experts scrambling to determine what’s next for the measure that has brought waves of chaos to the state since it first was proposed by Republican Gov. Scott Walker. Legislative Reference Bureau director Steve Miller insisted the action doesn’t mean the law takes effect Saturday. He says that won’t actually happen until Secretary of State Doug La Follette orders the law published in a newspaper, and a judge ordered last week that La Follette not do anything. “It’s not implementation at all,” Miller said. “It’s simply a matter of forwarding an official copy to the secretary of state.” La Follette said he didn’t know what the action means, but he’s not doing anything given the court order. “I think we’re going to have to get some legal opinion on this,” he said. But Republican Senate Majority Leader Scott Fitzgerald, who said he went to the Reference Bureau with the idea, said the action means the law takes effect Saturday. “It’s my opinion it’s published, it’s on the legislative website, it’s law,” Fitzgerald said. “It was clear to me after our discussions this morning, if it in fact it is posted and it says published and there’s a specific date on it, it would be very hard to argue this was not law.” John Jagler, a spokesman for Republican Assembly Speaker Jeff Fitzgerald, said he also assumed the action means the law takes effect Saturday. Walker’s top aide Mike Huebsch, secretary of the Department of Administration, issued a statement saying he had been notified that the law had been published. “The administration will carry out the law as required,” Huebsch said. Requests for additional clarification about whether the governor believed the law was indeed in effect were not returned. A judge last week issued a temporary restraining order blocking any further implementation of the law while the court considers challenges to its approval. The order specifically blocked La Follette from publishing the law. But the Reference Bureau said it’s still required to publish every new law within 10 working days after it’s signed by the governor, on the date designated by the secretary of state. Walker signed the collective bargaining measure March 11 and La Follette had designated Friday as the date of publication. But after the judge’s restraining order, La Follette sent a letter to the Reference Bureau saying he was rescinding his setting of the publication date. The Wisconsin Department of Justice issued a statement saying it would evaluate how the publication of the law, which it said was lawful, affects the pending lawsuit. The bureau’s action did not require anything to be done by La Follette and he was not in violation of the court’s order, the DOJ statement said. The statement did not say whether the action means the law takes effect Saturday. Dane County District Attorney Ismael Ozanne, who filed the lawsuit challenging the law that led to the restraining order, did not immediately return a message seeking comment. Ozanne’s lawsuit and two others allege lawmakers broke the state open meetings law by hastily calling a special committee meeting to put the bill in a form that the Senate could pass it without any Democrats present. All 14 Senate Democrats had fled the state three weeks earlier to block a vote on the measure by preventing quorum. The new law requires nearly all public sector workers, including teachers, to contribute more to their pensions and health insurance, changes that amount to an average 8 percent pay cut. It also strips them of their ability to collectively bargain for anything except wages no higher than inflation. Consideration of the proposal spurred massive protests that grew to more than 85,000 people the day after Walker signed the measure and made Wisconsin the national focus the fight over union rights. Union leaders were outraged with the latest twist in the ongoing saga. “This is another sign that the governor and Legislature are in a desperate power grab to take away the voice of teachers, support staff, nurses, home health care workers and other public employees,” said Mary Bell, president of the statewide teachers’ union. “These tactics are not in the Wisconsin tradition of open government and do not represent the will of the people.” Marty Beil, executive director of the state’s largest public employee union, said he didn’t think the action meant the law was going to take effect. “The problem is they’re (Republicans) the dictator here so we have to go into a court of law and reaffirm it,” he said. “This is Scott Fitzgerald and Scott Walker’s gulag here. It’s craziness. These guys are off the wall. They’re drunk with some kind of power or misconception of reality.” Phil Neuenfeldt, president of the Wisconsin State AFL-CIO, called the action an “illegal backdoor maneuver.” “This is a dark day for Wisconsin and a travesty to our democracy,” he said. ___ Associated Press writer Todd Richmond contributed to this report.

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Video: Newport’s Ortel Warns Retail Investors Not to `Rush In’

March 25, 2011

March 25 (Bloomberg) — Charles Ortel, managing director at Newport Value Partners, talks about his investment strategy. Ortel also discusses Europe’s sovereign debt crisis and transparency at the Federal Reserve. He speaks with Pimm Fox and Julie Hyman on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

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Fed’s Dividends Decision Helps Shareholders, Might Hurt Taxpayers

March 25, 2011

Four groups of people were directly affected by the Federal Reserve’s decision late last week to allow major banks to increase their dividends and to buy back shares. Bankers, bank shareholders and government officials were somewhere between happy and delighted.

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Video: Romer Says 2011, 2012 Not Time to Cut Deficit `a Lot’

March 25, 2011

March 25 (Bloomberg) — Christina Romer, former chairman of the Council of Economic Advisers, talks about the outlook for reducing the U.S. budget deficit. Romer, a Bloomberg contributing editor, speaks with Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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José Viñals: Government Bonds: No Longer a World Without Risk

March 25, 2011

The risk free nature of government bonds, one of the cornerstones of the global financial system, has come into question as the global crisis unfolds. One thing is now very clear: government bonds are no longer the risk-free assets they once were. This carries far reaching implications for policymakers, central bankers, debt managers, and how the demand and supply sides of government bond markets function. After a recent IMF conference on a new approach to government risk, I’d like to highlight three key aspects: In a world without a risk free rate, the health of the financial sector and the government are closely interconnected. We need to better understand the linkages between sovereign and financial risks, and conduct a thorough analysis of the channels of cross-border spillovers. Policies to help manage sovereign risk will have a positive impact on financial stability, and measures to stabilize the banking sector will have a favorable impact on sovereign balance sheets. Countries with large potential liabilities from their banking sectors need to identify, assess, monitor, and report related risks closely. The impact of these contingent liabilities on the government’s financial position, including its overall liquidity, needs to be assessed when making borrowing decisions. The risks involved call for stronger emphasis on stress tests. There is anecdotal evidence that some debt managers are complementing existing analytical approaches with a greater focus on stress scenarios, including extreme financing shocks. Policymakers could take the extra step and contemplate the role for a joint stress test for systemically important financial institutions and sovereigns. The outcomes of such stress tests could help inform crisis preparedness, debt strategies, as well as financial supervision and regulation. Implications for supply and demand These views are the result of some recent profound changes in the way government bond markets operate. On the demand side of the market, dealers and investors no longer treat these bonds as purely interest rate products. Far from it, government bonds have assumed characteristics typical of credit products, for which prices mainly provide measures of borrowers’ probabilities of default. Many are not as liquid as before and their investor base is not as diversified as it used to be. During phases of risk aversion, they do not benefit from flight to quality flows. On the contrary, they correlate with risky assets. Credit rating downgrades play a procyclical role and can exacerbate these adverse dynamics. Central bankers generally accept government bonds as collateral in refinancing operations, but, below certain thresholds, lower ratings could trigger sizeable haircuts, in other words, revaluing the bonds substantially below their market value. Regulators could also assign them a non-zero risk weight under the standardized approach and suddenly these bonds are not risk-free rates any longer. And even if bonds such as United States Treasuries and German Bunds have retained most of their risk-free characteristics, the once solid dividing line between interest rate and credit products has become blurred. In the long run, such changes can profoundly affect investors’ choices. One example of these changes is that more capital may flow towards emerging markets. These economies have been able to absorb the recent inflows, but the increase in corporate and financial leverage, rising asset prices, and building inflationary pressures may soon translate into growing imbalances and open the door to a new set of challenges to financial stability. On the supply side of the market, debt managers in advanced economies have started behaving a bit like their emerging market colleagues. Given the increased exposure to economic and financial risks, they have started placing stronger emphasis on risk mitigation strategies , well beyond what traditional debt management objectives would indicate. Confronted with the usual trade-off between being predictable or flexible, most of them have erred on the side of flexibility. While retaining an open dialogue with financial markets, they realize that annual programs have to offer sufficient flexibility to cope with the challenges of issuing and managing larger amounts of debt. Finally, debt managers are putting a high premium on proactive and timely communication as well as on understanding the evolving nature of the investor base. These are precisely the elements that were outlined in the ‘Stockholm Principles’ IMF facilitated with the debt managers in September 2010. The global crisis is sending many of us back to the drawing board to take a fresh look at old assumptions and long cherished principles, and the risk free nature of government bonds is no exception. From iMFdirect blog

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Video: Stocks Advance on Oracle Forecast, Economic Expansion

March 25, 2011

March 25 (Bloomberg) — Bloomberg’s Deborah Kostroun reports on the performance of the U.S. equity market today. U.S. stocks advanced, giving the Standard & Poor’s 500 Index its biggest weekly rally since February, after Oracle Corp.’s profit forecast beat analyst estimates and the rate of economic growth was revised higher. Bloomberg’s Pimm Fox also speaks. (Source: Bloomberg)

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