April 2011

Georges Ugeux: Has Wall Street Lost It’s Way?

April 26, 2011

“Markets are always right.” This assertion loved by market analysts is increasingly losing its relevance. In recent years, we have seen that Wall Street was able to be heavily mistaken. The Dow Jones gained 30% since the lowest level of last year, July 6th. What concerns me most is the evolution since the beginning of this year. The Dow Jones has risen approximately 9%. On an annual basis, this would be somewhere above 30%. However, since the beginning of the year, we had a string of bad news. • Popular uprisings across the Middle East • A tsunami followed by a nuclear crisis that seriously weakens the Japanese economy • A rise of 40% of the yield 10-year US Treasury bonds, from 2.5% to 3.5%, over the last six months • A doubling of the yields of the obligations of countries in difficulty – with Greece’s 2-year bonds yielding almost 24% • A negative outlook on the United States AAA rating by Standard & Poor’s • Mediocre corporate results for the first quarter of 2011 in the USA • A 20% increase in food prices worldwide • A nearly 20% increase in the price of gasoline worldwide • A weakening US dollar against all key currencies Inflation is at our doors, we are going through democratic crises, Europe and the United States have become vulnerable, and interest rates are rising. Each of these factors alone would negatively influence the investment climate and lead Wall Street to decline. All of them combined have the potential to provoke a market collapse. This collective denial, which is reminiscent of 2007, gives the distinct impression that stock markets have lost all reason. Time has come to protect capital. We know what kind of crises Wall Street denials can provoke. Large financial institutions are now in a position to send a signal to sell shares, without being accused of lack of civic-mindedness, sense of responsibility, or both. This is the extent of the independence of financial advice that they publish. Today Equilar , a compensation analyst, reported that the S&P American CEO’s bonus increased 43% between 2009 and 2010, and that their average salary ($ 9 million) increased by 28%. The first press conference on Wednesday, of the President of the Federal Reserve, will most likely tell us nothing more than what we already know. It is good news for the “core inflation” level, namely the Consumer Price Index, without taking into account the price of energy or food ! This betrays the actual purchasing power of the consumers. Bernanke’s optimism will not reassure us: he has a track record for not seeing a crisis coming even if it’s the size of an iceberg. The current euphoria on Wall Street is definitely one of the most compelling signs of a selling opportunity in a long time.

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‘America Wants To Work’: Organizing The Unemployed

April 26, 2011

The community organizing affiliate of the AFL-CIO is coordinating with state labor groups to hold monthly meetings of the unemployed in five U.S. cities, in hopes of connecting the jobless with helpful resources and involving them in local politics. Hundreds of jobless Working America members (and non-members) have attended meetings in Portland, Ore.; Albuquerque, N.M.; Denver, Colo.; Pittsburgh, Pa. and Minneapolis, Minn., officials said. The meetings, which began in February, are part of a campaign called “America Wants to Work,” aimed at helping struggling workers at a time when public officials are more focused on slashing spending on social programs and taking away collective bargaining rights. “We just want to help folks,” Chelsey Evans, state director of Working America in New Mexico, told HuffPost. “We’ve had several meetings and we’re coming together to provide services and support to anyone in the community who is unemployed. We’re finding that a lot of people really struggle to navigate through this extremely complex system, whether it’s unemployment, rental assistance, utility assistance, job counseling.” Evans said that of Working America’s 98,000 members in New Mexico, some 11,000 are unemployed. Working America is launching the New Mexico Wants to Work campaign in collaboration with the New Mexico Federation of Labor, the United Way of Central New Mexico, and the Central New Mexico Central Labor Council. Susan See, laid off early in 2009 from her job doing advertising and administrative work for a local newspaper in Albuquerque, said the New Mexico Wants to Work monthly meetings have been a big help. She’s doing some freelance photography while her search for full-time work grinds on, seemingly endlessly. “It helps a lot just to have a support network, just to know that I’m not alone,” said See, 41. “It starts to feel after a while, ‘What am I doing wrong? Is it my age, is it because I’ve been out of work so long?’ And then you start hearing that from other people, that they’re having the same issues.” Bob Tackett, executive secretary-treasurer of the Northwest Oregon Labor Council, said about 70 people showed up at the first Oregon Wants to Work meeting in February, and that turnout’s diminished slightly at subsequent meetings, which Tackett said has been disappointing. At the second gathering of the jobless, Tackett said, “I got one of the managers from the unemployment office to be there and answer some of their questions. I thought boy, this is good stuff.” Working America member Teresa Berlin of Portland said she’s been at every meeting. “It’s kind of like a support system as a well as a political activist thing,” she said. Berlin, 37, said she lost her job as a server at a restaurant in 2007. She’s been scraping by with part-time work as a cab driver, unemployment insurance, and rental income since then. “I rent out all the rooms in my house to pay the mortgage,” she said. “I have five roommates.” Berlin said she’s networked with other unemployed folks, some of whom seem to be struggling more than she is. “There’s a lot of people that are really depressed, that feel isolated,” she said. “One woman had been putting out resumes for a year and hadn’t got one single interview. I’m really blessed compared to a lot of people.” The America Wants to Work campaign is reminiscent of Working America’s effort last year to mobilize its unemployed members ahead of the midterm elections in November. Among the group’s 3 million members, half a million are jobless, according to a spokeswoman.

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Lois Boyd Appointed Leader of Hertz Equipment Rental Corporation

April 26, 2011

Company Names Advantage VP of Operations/Administration, Gary Fulena, Acting General Manager, Advantage Rent-a-Car

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intiGrow Announces the Appointment of Terry Davidson

April 26, 2011

ATLANTA, GA–(Marketwire – Apr 26, 2011) – intiGrow, an Information Technology consulting firm with US headquarters in Atlanta, GA, has appointed Terry Davidson as Senior Account Executive. intiGrow is a provider of consulting services for IT security, particularly identity and access management. Mr. Davidson will implement sales and marketing programs and manage revenue growth.

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Robert Reich: The Wageless Recovery

April 26, 2011

This week’s biggest economic show occurs tomorrow (Wednesday) when Fed chair Ben Bernanke steps in front of the cameras for the Fed’s first-ever news conference. The question on everyone’s mind: Will the Fed signal it’s now more worried about inflation than recession? Much of Wall Street thinks inflation is now the biggest threat to the U.S. economy. As has been the case in the past, the Street is dead wrong. The biggest threat is falling into another recession. The most significant economic news from the first quarter of 2011 is the decline in real wages. That’s unusual in a recovery, to say the least. But it’s easily explained this time around. In order to keep the jobs they have, millions of Americans are accepting shrinking paychecks. If they’ve been fired, the only way they can land a new job is to accept even smaller ones. The wage squeeze is putting most households in a double bind. Before the recession, they’d been able to pay the bills because they had two paychecks. Now, they’re likely to have one-and-a half, or just one, and it’s shrinking. Add to this the continuing decline in the value of the biggest asset most people own – their homes — and what do you get? Consumers who won’t and can’t buy enough to keep the economy going. That spells recession. Why doesn’t Wall Street get it? For one thing, because lenders always worry more about inflation than borrowers — and, in general, the wealthier members of a society tend to lend their money to people who are poorer than they are. But Wall Street’s inflation fears are also being stoked by several specifics. First are price upswings in food and energy. The Street doesn’t seem to understand that when most peoples’ wages are dropping, additional dollars they spend on groceries and at the gas pump means fewer dollars they have left to spend in the rest of the economy. Rather than cause inflation, this is likely to lead to more job losses. The Street is also worried that the Fed’s easy money policies are pushing the dollar down and thereby fueling inflation – as everything we buy abroad becomes more expensive. But if wages are stuck in the mud and everything we buy abroad costs more, Americans have even fewer dollars to spend. This also spells recession, not inflation. Finally, the Street worries that if Democrats and Republicans fail to agree to a plan to cut the budget deficit, the credit-worthiness of the United States as a whole will be in jeopardy – causing interest rates to rocket and inflation to explode. Standard & Poors, the erstwhile credit-rating agency, has already sounded the alarm. The Street has it backwards. Over the long term, the deficit does have to be tackled. But not now. When job growth remains tepid, when wages are dropping, and when the value of most households’ major asset is declining, government has to step in to maintain overall demand. This is the worst possible time to cut public spending or reduce the money supply. The biggest irony is that the Street is doing wonderfully well right now, in contrast to most Americans. Corporate profits for the first quarter of the year are way up. That’s largely because corporate payrolls are down. Payrolls are down because big companies have been shifting much of their work abroad where business is booming. The Commerce Department recently reported that over the last decade American multinationals (essentially all large American corporations) eliminated 2.9 million American jobs while adding 2.4 million abroad. What the Commerce Department didn’t say is the pace is picking up. In 2000, 30 percent of GE’s business was overseas and 46 percent of its employees; now 60 percent of its business is outside the U.S., as are 54 percent of its employees. Over the past five years, Oracle added twice as many workers overseas as in the US; 63 percent of its employees now work abroad. Corporations are simultaneously finding ways to cut the pay of their remaining U.S. workers — not just threatening job losses if they don’t agree to the cuts, but also automating the work or sending it to non-union states. (The Wall Street Journal’s editorial page, an unremittingly reliable barometer of Street thought, argued earlier this week that such states offer workers the freedom to choose whether to join a union — in reality, the freedom to lose even more bargaining power and be forced to accept even lower wages.) America’s jobless recovery is becoming a wageless recovery. That puts the odds of another recession greater than the risk of inflation. Wall Street and its representatives in Washington don’t understand — or don’t want to. Robert Reich is the author of Aftershock: The Next Economy and America’s Future , now in bookstores. This post originally appeared at RobertReich.org .

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Hedge Fund Managers Give To GOP After Becoming Dissatisfied With Obama

April 26, 2011

Hedge-fund managers made a big bet on Barack Obama and other Democrats in 2008. Now, with the 2012 contest gearing up, some prominent fund managers have turned their backs on the party and are actively supporting Republicans.

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Ecology and Environment, Inc. Promotes Cheryl A. Karpowicz to Senior Vice President, Robert J. King to Vice President

April 26, 2011

LANCASTER, NY–(Marketwire – Apr 26, 2011) – Fueled by continuing global and domestic growth, Ecology and Environment, Inc. (E & E) ( NASDAQ : EEI ) is pleased to announce that Cheryl A. Karpowicz, AICP, has been promoted to Senior Vice President and Robert J. King has been promoted to Vice President.

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Benedict Clements: Promises, Promises. Better Measuring the Effect of Pension Reform

April 26, 2011

We all hope to retire one day. Our pensions hold the promise of that. But when that promise is a public pension, it’s also a lot like debt the government has to pay at some point in the future. Good fiscal policy means thinking about how policy decisions–especially ones that involve long-term promises, such as pensions–affect government finances both today and in the future. Problems, problems The first problem is that good fiscal policy hasn’t always ruled the day, to put it mildly. Today, pension reform is a priority for the advanced economies as current trends are unsustainable–see Commandment V –and for many emerging and low-income economies that need “to improve coverage of health and pension systems in a fiscally sound manner.” The second problem is that traditional deficit and debt indicators focus on the health of public finances today, but fail to capture the future impact of pension promises. This means that pension reforms, which often strengthen the fiscal position down the road, might not necessarily improve–and sometimes worsen–traditional fiscal indicators today. The risk is that assessments of pension reforms based on traditional deficit and debt indicators could create incentives to delay or even reverse reforms. A “pension-adjusted” budget balance This underscores the need for a fiscal indicator that gives governments credit for pension reforms that improve long-term fiscal health, but also correctly points out when they are moving in the wrong direction. In a recent Staff Discussion Note , we propose a new indicator–the “pension-adjusted” budget balance–that takes into account the long-term nature of pensions. It focuses on the fiscal sustainability of pensions and provides a level playing field for evaluating a country’s pension policies. The new indicator achieves this by recalculating the traditional budget balance to take into account the intertemporal pension balance (that is, future pension imbalances), rather than the current pension balance. In other words, and simplifying a little, this means taking account of the difference between the current value of future pension contributions and the current value of all future benefits, from today to a certain date in the future, say 50 years. And not just the difference between pension contributions and benefits today. Figure 1 shows how pension reforms in selected countries can impact the total amount–or stock–of pension liabilities as measured today (that is, in terms of net present value, NPV), the traditional headline budget balances, and “pension-adjusted” balances. In looking at this chart, it is important to keep in mind that both the headline and pension-adjusted balances are annual flow concepts, while the NPV of pension liabilities is a stock concept (and thus much higher as a percent of a single year’s GDP). The reforms had a large impact on the NPV of net pension liabilities, even though headline balances are worse after the reforms because of the diversion of contributions to second pillar systems with mandatory private accounts. The pension-adjusted balance, on the other hand, improves with reforms that reduce the NPV of pension liabilities. This eliminates incentives to adopt or dismantle particular systems (including second pillar systems) to improve current-period fiscal indicators. Policy design This indicator can help measure when changes in pension policies are improving or worsening long-term fiscal health. One advantage is that it eliminates incentives to adopt or dismantle particular systems to improve current-period indicators. Of course, overall balances remain key for evaluating the risks surrounding short-term financing needs. We draw three main implications for fiscal policy design: We should take account of the future impact of pension reforms, or other public programs such as health care , when we analyze fiscal sustainability. To do that, we should look at the sum of future pension balances, the intertemporal pension balance. The “pension-adjusted” budget balance should be viewed as a complement, rather than a substitute, for traditional fiscal indicators. From iMFdirect blog

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Dylan Reid: Faced With A Grim Job Market, Young Entrepreneurs Create Their Own Employment

April 26, 2011

As June approaches, the million and a half students set to graduate from college in the U.S. this year likely have just one thing are their mind: the job market. For each of these students faced with an uncertain, unstable or imprudent future, there will be a strong impulse to pursue the safest path, often on the periphery of their passions. So to all this year’s graduates wavering between boring job prospects and graduate school admissions, debating backpacking trips across Europe or Latin American missions with the Peace Corps, we propose an alternative. Instead of looking for a job: create your own. The time for entrepreneurship is now. Employment may be scarce, but opportunities for talented students and recent grads to start companies are abundant, especially in the U.S. Increasingly, our national attention is focused on entrepreneurs, with university and government programs supporting R&D and offering low-interest loans for new ventures to start and scale. Tools like crowd-funding and out-sourcing are cutting costs and allowing entrepreneurs to bootstrap from virtually nothing. Accelerators and incubators are sprouting up across the country, transforming once quiet cities into interconnected innovation hubs. And as countries become more connected, more and more entrepreneurs are launching enterprises that operate across countries, continents and around the world, catering to cultural differences and regional needs. The international impact of startups like Facebook, Twitter and Google have laid the groundwork for new wave of global thinking. Growing up on a small farm in New Jersey, Jason Halpern remembered the difficulty of installing solar panels so far off the grid. Small farmers, he realized, had much to gain from solar but its complex and costly infrastructure placed it out of reach for many. While a student at the University of Pennsylvania, Halpern and childhood friend Pat Murphy set out to create a portable and affordable solar generator designed for farmers. After participating in contests and attending conferences at their school and around the area, they pieced together a prototype. They won a $500,000 Edison Innovation Fund Cleantech Grant from the State of New Jersey. And today their company PowerFlowerSolar is developing a range of portable solar generators for farmers, the military and for use in disaster relief. “Bringing power,” as Halpern says “to the places that need it the most.” Not every young entrepreneur has such a clear vision from the onset. Some stumble into entrepreneurship with only a vague plan. Upon graduating Wharton in 2009, Jonathan Hefter turned down lucrative job offers in finance and moved into his parent’s basement where he taught himself to code. It was then that he came up with the concept for the Neverware Juicebox, a super-fast, inexpensive server that speeds up old computers. After getting an invitation to join New York incubator Dogpatch Labs, he was able to perfect the first server. Today, Neverware Juiceboxes are revitalizing outdated computers in public schools across New York and New Jersey. While these entrepreneurs are exceptional, their stories are certainly not unique. They are only a few among the growing number of top students and recent grads in the U.S. and abroad foregoing the arduous process of job seeking for job creation. They are turning their passions into products and experiences into enterprises. They are working across a wide range of sectors and distant geographic locales. They are seeing opportunity in uncertainty and in doing so shaping the future and from the stories of their success a new generation of young talented people might be encouraged to do the same. At the Kairos Society this is not only our hope — it’s our vision. As the world’s most expansive network of student entrepreneurs, we are committed to making our vision a reality. By connecting the world’s most promising young entrepreneurs to each other and the resources they need to succeed, we are helping to foster the businesses that will drive the future and continually question what is possible.

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H&R Block Names William C. Cobb President and CEO

April 26, 2011

KANSAS CITY, MO–(Marketwire – Apr 26, 2011) – H&R Block ( NYSE : HRB ) today announced that William C. Cobb has been appointed president and CEO, effective May 16. Cobb will replace Alan Bennett, who was appointed CEO in July 2010. Bennett will remain on the company’s board of directors through September.

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Socialwise, Inc. Issues Announcement

April 26, 2011

SAN DIEGO, CA–(Marketwire – Apr 26, 2011) – Socialwise, Inc. ( OTCBB : SCLW ) announced today that James Collas is stepping down from his roles as Chairman and Chief Executive Officer to devote himself full time to the internal operations of the Company. Mark Sandson, a director of the company, has been named interim Chairman and Chief Executive Officer and is leading a search for the Company’s next Chief Executive Officer, a proven industry leader, to take the Company to the next level.

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Ron Ashkenas: The Right Response Is Not Always Instant

April 26, 2011

A few months ago, a former client called me in a panic : Her CFO wanted to start several process simplification projects immediately — and she needed a proposal to review with him the next day. Straight away a colleague and I dropped everything and scrambled to meet her request: We pulled together a set of talking points and backup material that she could use and got it to her that evening. The next day we identified resources from our firm that could help, assuming that this work would get started right away. We then waited to hear from our client about next steps — and continued to wait. After almost a month of not hearing anything — despite sending repeated emails and voice messages — the client called to say that her CFO was preoccupied with closing an acquisition and getting ready for the end of the fiscal year, so the streamlining work would be deferred. I don’t know about you, but I see this phenomenon more and more these days: Everything is portrayed as urgent and requires immediate response, as though we’re living in a constant state of emergency . It’s not just in regard to external customers or clients, as in my example. Many of the people who work in staff functions such as IT, HR, Legal, and Finance are also under siege from a constant stream of urgent requests from their internal business partners. For example, the forecasting manager of a large company told me recently that much of her time, and that of her people, was spent creating customized spreadsheets for business areas in response to urgent questions about and adjustments to the official forecast. In reality, when everything is labeled “urgent,” nothing really is. But because friends, family, and business partners often carry smartphones, we assume that they are available to us 24/7, anywhere in the world. As a result, people sit in meetings tapping away at their mobile devices and catch up on phone calls while walking to and from the bathroom. In some ways, technology has turned us into rapid-response junkies. One of the most difficult aspects of this instant-response culture is figuring out how to respond appropriately to clients and customers (both internal and external). On one hand, we know that our customers expect and value responsiveness, which we want to provide. On the other hand, not every request needs an instant response. In fact, doing so too often will not only reinforce the customer’s expectation of instant-response on everything, but also might not always yield the best results. For example, in the forecasting example described earlier, the large number of customized spreadsheets rendered the “official” forecast less and less useful. Over time, business units began using their own versions of the forecast, which created disconnects between units and less confidence in the whole planning cycle. While there’s no easy answer to this dilemma, here are a few ideas to keep in mind: Don’t assume that “urgent” means “immediately.” Explore with your customer what she is really trying to accomplish and when it’s actually needed. Sometimes the sense of urgency is just a way of conveying a person’s importance and power, or even a reflection of personal anxiety.In the case described at the beginning of this post, my client was probably anxious about her meeting with the CFO and didn’t want to go in empty-handed. Giving her an article or two to share with the CFO might have been sufficient, and would have given her the same opportunity to find out where process streamlining fell on the priority scale. Try to distinguish between an urgent crisis and an urgent request . There are times when customers have issues that need to be resolved right away, and diving in immediately is the right thing to do. But, depending on your business, this is often the exception rather than the norm. Probe your customer about what would happen if you got back to her in a couple of days or the next week. Oftentimes, as long as you commit to a specific time, this will be sufficient. Be prepared to say no. Good customer service doesn’t necessarily mean doing everything that the client wants; more importantly it means doing what is best for the customer — even when the customer may not realize it. Talk through the implications and outcomes of what the customer is asking for and make sure it’s the right thing to do. For our forecasting manager, doing this might have avoided a lot of spreadsheets, and put more attention on making the official forecast more useful. How do you deal with the expectation for instant response? Cross-posted from Harvard Business Online

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Struggling Walmart Focuses On Increasing Sales At Existing Stores

April 26, 2011

(Jessica Wohl) Wal-Mart Stores Inc (WMT.N) is making progress bringing items and shoppers back to its U.S. stores, and turning around U.S. sales remains its top priority, President and Chief Executive Mike Duke said on Tuesday. The Walmart U.S. discount chain’s food department has improved and its general merchandise areas are well on the way to having the right assortment, Duke said at a Barclays conference in New York that was also broadcast over the Internet. Duke also said that there is a “tremendous long-term opportunity” in sub-Saharan Africa. Wal-Mart’s plan to buy 51 percent of South Africa’s Massmart Holdings Ltd (MSMJ.J) has been hung up by delays. The government approval process should be completed over the next few weeks, allowing Wal-Mart to move ahead with the deal, Duke said. Wal-Mart is bringing back thousands of items, advertising its low price guarantee and taking other steps to try to win back shoppers who balked at an earlier plan that cut goods from stores and emphasized promotional prices. Duke again said that achieving an increase in U.S. same-store sales — a key gauge of retail health that measures sales at stores open at least a year — is his “first priority.” Walmart U.S., the largest part of the world’s biggest retailer, has reported seven consecutive quarterly declines. Duke declined to say when those same-store sales should turn around, but he did say that he is seeing “traction.” Wal-Mart’s biggest growth opportunity remains the United States, where it is opening more supercenters and other types of stores, followed by the potential to expand in China, he said. (Reporting by Jessica Wohl) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Wall Street Executive To Geithner: Raise Debt Limit Or Risk Crisis

April 26, 2011

WASHINGTON — A Wall Street executive is urging Congress to raise the government’s borrowing limit in the coming weeks, saying failure to do so could lead to a second financial crisis. Matthew E. Zames, a managing director at J.P. Morgan, says in a letter to Treasury Secretary Timothy Geithner that a delay by the government in making payments on its debt obligations would be catastrophic. Zames says borrowing costs could rise for the government, consumers and businesses, and a run on money market funds similar to what occurred after the collapse of Lehman Brothers in September 2008 is possible. Geithner has warned lawmakers that the government will hit its $14.3 trillion debt ceiling by May 16 and that he could only delay an unprecedented default on the debt until July 8.

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Avantis Medical Systems, Inc. Announces Appointment of Rick Randall as Chairman and Chief Executive Officer

April 26, 2011

SUNNYVALE, CA–(Marketwire – Apr 26, 2011) – Avantis Medical Systems, Inc., a technology leader in developing novel catheter-mounted digital imaging devices for use in gastroenterology procedures, is pleased to announce the appointment of Rick Randall as Chairman and Chief Executive Officer.

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Beth Kobliner: Education Comes With a Price Tag

April 26, 2011

President Obama has made it a goal to add eight million college grads to the American workforce by 2020. To that end, last month Vice President Joe Biden announced an ambitious plan to increase the country’s college graduation rates that includes $50 million in competitive grants for states that succeed in growing their number of graduates and $123 million in other incentives. The administration’s goal sounds like a no-brainer: It would make the US #1 in the world. Right now, the US is ranked 9th. We can do better. But we also need to be careful what we wish for. A higher graduation rate won’t come free of charge. According to a new study by the Higher Education Policy, in Washington DC, an astounding 41% of recent borrowers face delinquency or default on their federal student loans. That makes the mortgage default and foreclosure rate, even at the height of the housing crisis, look like child’s play. In fact, student loan default rates have been rising over the last few years, according to a September 2010 report from the Department of Education. And it’s no wonder, since tuition has been rising above the rate of inflation for decades now. The default numbers are even worse for students at for-profit schools, where the graduation rate is a scandalously low 22%. Clearly, although education may be priceless, it comes with a price tag. Too many young people are being convinced to take on debt burdens they simply can’t afford. And who is helping teenagers make those decisions? Ambitious parents want the dream first but they often don’t ask the money questions until later. Overworked high school counselors are sometimes the only source of information, especially for students whose parents haven’t gone to college. Unfortunately, many students aren’t getting the guidance they need. A Public Agenda survey last year sponsored by the Gates Foundation found that 59% of young adults rated their high school counselors as “poor” or “fair” when it came to informing them about paying for college. So while it’s nice for the country to have an ambitious goal, we need to set up systems in order to get students not just the education they deserve, but the financial aid they need. Since 1965, the government has required that all federal student loan borrowers receive exit counseling about their loans, and the consequences of not paying them. For example, even bankruptcy does not discharge student loan debts, unlike credit card debt. But if that message comes after they receive their loans, it’s too late. In the meantime, we can’t wait for colleges to clean up their acts. High school counselors need to help students make smart choices to avoid these crippling debts. They should be steering kids to good community colleges, with low tuitions, strong academics and successful transfer rates. They should help students and their parents fill out the Free Application for Federal Student Aid (FAFSA) form to maximize their financial aid. They should inform students of programs like Income-Based Repayment (a relatively new federal option that lets many loan recipients make payments based on their incomes, not their debt loads) and Public Service Loan Forgiveness (which forgives federal student loan debts after 10 years if you work for a non-profit, for the government, or another designated “public service” job). These programs may seem too good to be true, but they’re real, and not enough prospective college students know about them. Counselors should also warn their students about the dangers of for-profit schools: poor graduation rates and high costs. Those schools market themselves as training grounds for practical skills, but in fact they too often just profit from students who drop out after year one. Recently, I met a bright teenager who was making extra money for college by checking children’s heads for lice. But then she told me her goal was to attend a for-profit college. I had to wonder: Who was advising this girl and how could we do our jobs better to get her the right information? A college education is part of the American dream for a reason: College graduates’ salaries are higher and their unemployment rate is lower than their peers with only high school degrees. College is truly an attainable goal if students are wise and realistic about the financial realities of enrollment. But for those who carry thousands of dollars in debt — many with no job in sight-it’s instead just another expensive nightmare. We should all be working together to prevent that. * * * * * Beth Kobliner is a personal finance commentator and journalist, the author of the New York Times bestseller ” Get a Financial Life: Personal Finance in Your Twenties and Thirties ,” and a member of the President’s Advisory Council on Financial Capability. Visit her at bethkobliner.com , follow her on Twitter , and fan her on Facebook .

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Top 10 States With The Worst Income Inequality

April 26, 2011

By Douglas A. McIntyre and Charles B. Stockdale, 24/7 Wall St.: There was never any chance that in America income would be distributed like it was supposedly done in the Soviet Union – to each according to his ability and his needs. If capitalism is the key to the rise of the US economy, then the concept that some people can be richer than others is near the heart of the system. Americans worship self-made billionaires such as Bill Gates and Warren Buffett because they believe that it’s possible for them to be that wealthy too. Unfortunately, there are far more poor people than wealthy ones. America is the world’s most visible case of that. A small number of people in the US control most of the income, wealth, and property. More than one in eight people live below the poverty level and that number has grown recently. No matter what the government has done to bridge the difference between the groups, it has been ineffective, and that situation is not likely to change given the current tax laws. The wealthy have a higher tax rate, but even what they keep after taxes is far in excess of what most other Americans have. 24/7 Wall St. looked at the wealth gap by state to find those where the gulf between the rich and poor is the greatest. The formula used to reach this conclusion is a mathematical one called the Gini coefficient. It is a complex calculation which has on the one end of its measurement a world in which everyone makes exactly the same amount of money and on the other a collection of people where the gulf between the haves and have nots is high. The Marxian ideal is a “zero,” and a state in which one group possesses all the wealth and another has none would be “one.” The state in which the inequality is greatest in America, New York, is 0.5. Global statistics show that in come countries, the figure is as high as 0.7. 24/7 Wall St. took the 50 states and measured them according to the percentage of people below the poverty line and the percentage of people who earn more than $200,000. For comparison purposes, we also examined the median household income of each state as of 2009. The $200,000+ level is the highest wealth division of income considered by the Census. Only 3.8% of all households have incomes of $200,000 or more a year, which by itself shows how much wealth is distributed at the higher end of the income scale. The history of US income inequality, as the Census tracks it, began in 1967. The Gini coefficient was 0.397 then. It was 0.468 in 2009. America’s income divide is becoming greater. There are a nearly endless list of reasons for the number of low-income people have increase. The Census gives the most concise explanation. “Researchers believe that changes in the labor market and, to a certain extent, household composition affected the long-run increase in income inequality. The wage distribution has become considerably more unequal with workers at the top experiencing real wage gains and those at the bottom real wage losses. These changes reflect relative shifts in demand for labor differentiated on the basis of education and skill. At the same time, long-run changes in society’s living arrangements have taken place also tending to exacerbate household income differences. For example, divorces, marital separations, births out-of-wedlock, and the increasing age at first marriage have led to a shift away from married-couple households to single-parent families and nonfamily households. Since nonmarried-couple households tend to have lower income and income that are less equally distributed than other types of households (partly because of the likelihood of fewer earners in them), changes in household composition have been associated with growing income inequality.” These are the 10 states with the greatest income inequality. Check out 24/7 Wall St. for more information.

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Renny McPherson: Tech Startups: Turn The U.S. Military Into Your Client

April 26, 2011

This post was co-written with Matt McKnight and Brett Gibson. The U.S. defense and intelligence communities have traditionally been difficult markets to engage. For this reason, most early stage entrepreneurs know very little about these organizations as potential partners or clients. This need not be the case. Today, there are changes on the horizon that endeavor to make government markets more accessible and easier to understand. As a country, we are entering an era of flat security budgets which will drive a necessity for less-expensive commercial-off-the-shelf (COTS) solutions, thereby benefitting innovative young companies. There is a significant effort underway to modernize the IT acquisition cycle, and the government is reevaluating the rules governing the purchase of items like Software-as-a-Service (SaaS) products. Procurement officials are working hard to ensure that new products are not treated in the same manner as big-ticket items like ships and airplanes as many are now. Further, defense and intelligence organizations are focusing massive resources on the persistent and growing cyber-threat, and this will require continued engagement with best-in-class private sector companies. With all that said, and despite potentially positive changes on the horizon, government work can be difficult and dangerous for small businesses who don’t understand the risks that will still exist. As military and intelligence officers and entrepreneurs, we submit this series of notes as a short starter guide for approaching military and intelligence markets in a way that can effectively turn the government into your client. This project is built on our frustration with the lack of access to technology innovation during our time in the military. We wanted to better understand this challenge so we conducted over 25 interviews in the past few months with industry experts to develop recommendations for innovative companies to approach these markets and design and deliver better products to servicemen and women. Based on these conversations with entrepreneurs, government acquisition officials, intelligence and defense professionals, venture investors, and the private equity community, we draw out areas that are most pertinent to entrepreneurs as they begin to look into working with the government. These topics, discussed in detail below, are: Know what is happening in the macro defense/intelligence environment and apply those dynamics to your organizational approach; Target specific user communities and understand what they need; Know what “color” of money you are best positioned to receive; Understand how the government thinks about acquisitions and; Realize you must dedicate resources to this effort. The government really does want to help entrepreneurs. Government acquisition programs can be disorganized and difficult to engage with and contracts are sometimes written by a government customer that does not know the technical scope of the service they are requesting, there is high turnover within the system as military and government personnel work in two to five year intervals in most jobs, and funding is largely dependent on fiscal year cycles. All these factors can contribute to inconsistent and unpredictable contracting cycles. The defense and intelligence communities are aware of these problems, and they are working hard to fix them. Being sure to understand the risks, we believe change is coming and that it is worth the effort for small companies to begin thinking of the government as a clear distribution channel. Even today, a variety of innovative technology transfer organizations funded by the U.S. government are seeking to reduce the friction involved with the traditional contracting structure. We will highlight some resources in the appendix to this article, but entrepreneurs should research In-Q-Tel, OnPoint, the Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) grant programs, the Defense Advanced Research Projects Agency (DARPA), and the Intelligence Advanced Research Products Agency (IARPA) to seek opportunity in this space. Now is an opportune time for entrepreneurs and technology firms to engage with the government customer. In response to increased demands for innovative technology, the defense and intelligence communities are beginning to work more quickly to develop solutions that are flexible and agile. This shift is changing the way defense and IC companies serve their customers, collaborate with partners, and take ideas and solutions to market. Further, a relatively untapped market for Silicon Valley firms, the environment for large strategic defense contractors making purchases of small companies active in these emerging growth areas will likely heat up over the next two to four years. Technology start-ups that have traditionally avoided the government as a market are potentially missing a huge opportunity to leverage an important distribution channel that provides both access to funding and an immediate stamp of legitimacy for emerging products. We will soon post an in-depth explanation on the first five things to know when you start looking for government funding. This post was co-written with Matt McKnight and Brett Gibson. Matt, a former Marine Corps intelligence officer, is currently attending the joint degree program at the Harvard Business School and Kennedy School of Government. Among other pursuits, he consults for the Mayflower Strategy Group. Brett, a former Army officer and second-year student at HBS, will be joining LivingSocial in Washington DC after graduation.

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Lost Japan Sales Cut Into Profits Of U.S. Companies

April 26, 2011

NEW YORK (Phil Wahba) – The Japan earthquake, tsunami and nuclear crisis are cutting into the sales and profits of U.S. companies that serve Japanese consumers, from Coca Cola (KO.N) to Coach Inc (COH.N) and 3M (MMM.N). Japan, the world’s third-largest economy, was stagnating economically before the March 11 earthquake, but it remains a major market for many U.S. companies, particularly consumer product makers and store chains. Coach, known for its fancy leather handbags, gets nearly one-fifth of its sales from Japan. But the aftermath of last month’s earthquake and the nuclear disaster which followed could cost it between 2 and 3 cents in profit per share in the current quarter, or roughly 5 percent of Wall Street’s profit forecast. Coke reported results that disappointed Wall Street in part because of lost revenue in Japan, and the soft-drink maker said disruptions to its supply chain are hampering the bottler’s ability to produce its beverages in time for the summer. “Overall, I think the supply chain is still stressed in Japan in terms of being able to supply the market,” Coke Chief Executive Muhtar Kent told analysts on a conference call. Coke said the events could cut earnings per share by another 2 to 4 cents for the rest of the fiscal year. Wall Street is expecting Coke profits of $3.01 per share in the year’s three remaining quarters, according to Thomson Reuters I/B/E/S. Even companies that produce relatively few items sold directly to people in Japan are feeling the impact as Japanese manufacturing output has taken a hit. Industrial and consumer goods conglomerate 3M Co (MMM.N) has a higher exposure to Japan than most of its industrial peers, with 9 percent of its sales generated there. 3M sells to auto and electronics businesses in Japan that have seen production disruptions since the March disasters. The maker of Scotch tape, Post-It notes, industrial abrasives and health-care and electronics products, said the Japan crisis cut first-quarter earnings by about 3 cents a share and will reduce full-year profit by 10 cents to 13 cents a share. Wall Street analysts expect a full-year profit of $6.22 per share. Delta Air Lines Inc (DAL.N) expects to lose about $75 million in Japanese business in the current quarter. The reduced profit forecasts on Tuesday from Coach, Coke and 3M echoed those in recent weeks from jeweler Tiffany & Co (TIF.N) and clothing store chain Gap Inc, (GPS.N) which still get the bulk of their Asian sales in Japan even as they eye fast-growing China. Yet, for all the disruption, the damage has been relatively contained. “We don’t see any long-term damage. In fact our business has rebounded in our full-price locations,” Coach CEO Lew Frankfort told Reuters. “We believe Japan will return to normal.” (Additional reporting by Martinne Geller and Nick Zieminski in New York and Karen Jacobs in Atlanta. Editing by Robert MacMillan) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Varolii Names Craig Kruck as Vice President of Professional Services

April 26, 2011

Senior Technology Executive to Drive Process Change and Customer Satisfaction to New Levels

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Advantage for Analysts, Inc. Expands Its Nationwide Presence in Renewable Energy Finance

April 26, 2011

SAN FRANCISCO, CA–(Marketwire – Apr 26, 2011) – Advantage for Analysts, Inc. (“Advantage”), an advisory and analytics firm in renewable energy finance, has added Mr. Mitch Eskew to its staff of finance professionals. Mr. Eskew joins Advantage with two decades of project finance experience at Citicorp, Babcock & Brown and most recently as an independent consultant serving investors and developers in renewable energy.

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Konica Minolta Business Solutions U.S.A. Promotes Rick Taylor to President and COO

April 26, 2011

RAMSEY, NJ–(Marketwire – Apr 26, 2011) – Konica Minolta Business Solutions U.S.A., Inc. ( Konica Minolta ), a leading provider of advanced imaging and networking technologies for the desktop to the print shop, today announced Rick Taylor has been promoted to President and Chief Operating Officer . Taylor will continue to report directly to Ned Umehara in his capacity as Chief Executive Officer of all of Konica Minolta Business Solutions U.S.A.

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La Fabrique d’Images ferme ses portes

April 26, 2011

MONTRÉAL, QUÉBEC–(Marketwire – 26 avril 2011) – Après 39 ans d’existence, La Fabrique d’Images a été contrainte de mettre un terme à ses activités. Les quatre dernières années ont été particulièrement difficiles pour la production de commerciaux télévisés, notamment en raison de l’exode de la production vers Toronto, des ententes d’exclusivité de certaines agences publicitaires avec quelques maisons de production, et des réseaux de télévision qui produisent directement avec d’éminents annonceurs sans se soumettre aux normes de L’AQTIS (Alliance québécoise des techniciens de l’image et du son).

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Anti-Tax Billionaire Steve Schwarzman: Even Rich Americans Need To ‘Give Something Up’ To Help Narrow Deficit

April 26, 2011

The billionaire who last year compared Obama’s attempts to raise taxes on private equity firms with Hitler’s invasion of Poland, on Monday said even rich Americans will have to “give something up” to help narrow the deficit. In response to a question about raising taxes on the richest 2 percent of Americans, Stephen Schwarzman, the billionaire founder of private equity giant, the Blackstone Group, said the deficit was serious enough that almost everybody in society would have to “give something up.” (Scroll down for video.) “And no one’s going to like it,” Schwarzman told Bloomberg. “It’s like medicine in the old days that tasted really bad, but if you didn’t take your medicine, you weren’t going to get healthy,” he said of the attempts to effectively end the Bush-era tax cuts. “I think this is a widespread issue where everyone is going to be giving something up, and if you don’t, you’re not going to be able to solve the problems we have.” If Americans didn’t make sacrifices, he said, people’s livelihoods would be under threat — and everybody but the poorest Americans, who need protection, he said — would have to chip in, he reiterated. The comments appear to mark a reversal for the billionaire, who last year, compared an Obama administration push to increase taxes on private equity firms — so they would pay the same tax rate as the rest of America — to a “war… like when Hitler invaded Poland in 1939.” In Monday’s Bloomberg interview, Schwarzman noted that the rhetoric from politicians has been more sympathetic towards business since the mid-term elections in November. Earlier in 2010 Schwarzman also controvertially said that Wall Street-bashing would make banks “insecure” and tighten up lending. The remarks come as a battle rages over how to make up the budget shortfall. The Obama administration and Congress must come up with an aggressive long-term plan to reduce the currently $1.5 trillion budget deficit , roughly equivalent to 9.8 percent of U.S. economic output. Earlier this month, the Obama administration proposed a plan that would cut $4 trillion from the budget deficit over the next 12 years, mostly through spending cuts and tax hikes on the rich. Just before, the Republican-controlled House of Representatives approved a different deal to reduce deficits by $4 trillion over the next 10 years while also extending President George W. Bush’s tax cuts at all income levels and repealing Obama’s health care law. The two factions must strike a deal before the country reaches its $14.3 trillion debt ceiling — the maximum amount it can borrow under law. Treasury Secretary Tim Geithner has warned Congress that the debt limit will be hit by May 16, but that he can take “extraordinary measures” to make sure the nation’s debts are paid until roughly July 8, at which point the government would default on some of its debts.

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When Fed’s Stimulus Ends, What Next?

April 26, 2011

NEW YORK — When Federal Reserve chairman Ben Bernanke holds his first-ever press conference on Wednesday, he will have some explaining to do. Two months from the scheduled end of the Fed’s stimulus program, the economic recovery remains weak. Since the Fed’s asset-purchase strategy began last fall, corporate America has gotten a boost, as borrowing has become cheaper and the stock market has rallied. But the broader economy still struggles. Home prices hit a new low in February, and unemployment, though improved, remains high. Most recently, rising oil prices have wounded consumer confidence, stoking fears that the nation could slip back into recession. The $600 billion asset-purchase program, dubbed “quantitative easing” or “QE2,” is intended to spur the recovery. Since November, the New York branch of the central bank has been buying new U.S. government debt from private firms, bidding up the price of Treasury securities and causing yields to fall. Those falling yields, in turn, have pushed down interest rates across the economy, making borrowing cheap and, in theory, stimulating business activity. Once this quantitative easing program ends, the economy will be missing a major source of support . Interest rates could rise if demand for U.S. debt slackens, or they might fall further if investors pile into Treasuries for shelter. In either case, the economy will face a test as it attempts to stand on its own two feet. “The Fed is trying to walk this very difficult, fine line,” said John Silvia, chief economist at Wells Fargo. While the Fed isn’t likely to initiate a third quantitative easing program, there will be some on the Fed committee who will say, “Wait a minute. We can’t really pull this back until we see more sustainable growth, or some kind of direction of where inflation is going,” Silvia said. The economic recovery has been uneven, and the Fed’s stimulus seems to have given a disproportionate boost to the corporate sector. “The Fed took away the downside uncertainty,” said John Richards, head of North American strategy at the Royal Bank of Scotland. “It signaled to the market loud and clear that it was willing to do almost anything it had to do to have the U.S. not go into a deflationary situation.” But some economists fear that with the end of quantitative easing, the market will fall to where it otherwise would have been without the Fed’s help. It’s this possibility, among others, that Bernanke will likely be asked to explain Wednesday. Investors will hang on his every word. * * * * * * Just a few months ago, it seemed the recovery was picking up steam. Holiday sales were stronger than expected. In February, as the unemployment rate dipped below 9 percent, consumer confidence reached a three-year high. But then, conflict in the Middle East helped push oil prices to their highest level since 2008, when months of record-high prices dragged the economy into recession. A devastating earthquake and tsunami struck Japan in March, crippling that country’s exports and sparking global fears of nuclear contamination. That month, consumer sentiment fell to its lowest level since November 2009. In April, the International Monetary Fund cut its forecast for annual U.S. economic growth by the same degree as it cut its forecast for Japan. Brent crude oil, an industry benchmark, is now trading above $124 a barrel, perilously close to its 2008 high of $145. Some economists fear a scenario in which weak growth combines with steadily increasing prices, driven upward by oil. “Prices do pass through to things like airfares and distribution costs,” said Kevin Logan, chief economist of HSBC. “Instead of seeing a downward pressure on other prices — so that everybody cuts their margins, or looks to whatever productivity gains they can squeeze out of the processes to keep their prices down — instead, you just get slightly higher increases all along the line. That’s a risk.” Still, the stock market has surged despite these drags. Since Bernanke first hinted in an August speech that the Fed might launch a new round of asset purchases, the Dow Jones Industrial Average has climbed 24 percent. The Standard & Poor’s 500 Index has gained more than 26 percent. With the Fed buying massive amounts of U.S. debt, interest rates have fallen, and investors, in search of yield, have been pushed into riskier assets, such as equities and corporate bonds, propelling the stock market to highs last seen in the heady days of 2006. That’s created a situation in which the value of these assets is partially determined by government intervention. Since quantitative easing began last fall, the Fed’s purchases of U.S. debt have amounted to more than 80 percent of the Treasury’s debt issuance, according to Fed and Treasury data. Those purchases have effectively crowded out private investors, pushing them into equities, which, in turn, have rallied. The Fed’s balance sheet has grown 17 percent since the program began, to nearly $2.7 trillion, according to Fed data. The central bank’s holdings of Treasury securities have increased by more than two-thirds in that time. The program is scheduled to wrap up by the end of June. When that happens, stocks could experience a jolt. “The thing that you get here with the end of QE2 is an equity market that is probably overdue for a correction,” said Richards, of RBS. “The end of QE2 could maybe trigger it.” Economists disagree on how the end of quantitative easing will affect interest rates. Some take the view of Pimco co-chief investment officer Bill Gross, who wrote in a note last month that the Fed’s exit from the Treasury market will create a sudden dearth of demand, causing bond prices to fall and interest rates to rise. That problem could be compounded if Japan, the foreign country with the second-largest holding of U.S. debt, shows weaker demand for Treasuries as it spends its money on domestic rebuilding, noted Bernard Baumohl, chief global economist of the Economic Outlook Group. Higher Treasury yields would push up rates across the economy, making it more expensive for prospective homeowners to get mortgages, for students to take out loans and for small business owners to get lines of credit. It could constitute yet another strain on the economy. But other economists expect interest rates to fall once the Fed’s program ends, as the economic outlook remains uncertain. Investors will seek the safety of Treasury bonds and thereby push yields downward, said Logan, the HSBC chief economist. Long-term interest rates fell after the Fed’s first round of quantitative easing ended early last year. But while these effects are unknown, the timeline likely won’t be. The Fed’s main policy-making body is meeting on Tuesday and Wednesday, and is expected to announce the official end date for quantitative easing, giving investors time to prepare. “The vast majority of people in the market expect QE2 to end in June, on schedule,” said Andrew Tilton, an economist at Goldman Sachs. “If everyone’s expecting that, it would be odd for there to be a sudden disruption in the market as soon as that actually happens.” With the unemployment rate high and core inflation low, economists and investors expect the Fed to keep the main interest rate near zero for at least several months after the asset-purchase program ends, in an effort to keep money flowing through the economy. New York Fed President William Dudley said in a speech this month that the economic recovery is “still tenuous,” and still short of the central bank’s goals. Traders in the Chicago Mercantile Exchange are betting the Fed won’t raise the main interest rate until sometime between December and January. Further, some economists say the Fed will maintain the size of its Treasury holdings even after quantitative easing ends, by reinvesting maturing debt. That might help wean the economy from the Fed’s stimulus, Bloomberg News reported last week. But there’s yet another risk: that Bernanke will spook investors when he speaks to reporters on Wednesday. “One of the great challenges he’s going to have is being very, very careful to use the right adjective or right adverb,” said Silvia, the Wells Fargo chief economist. “What is ‘sustainable growth’? I’m not sure what that means. What is ‘accelerating inflation’ as opposed to ‘modest inflation’?” A misplaced word could move markets.

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Home Prices Drop For Eighth Straight Month, Survey Finds

April 26, 2011

U.S. single-family home prices fell for an eighth straight month in February, inching closer to an April 2009 trough, a closely watched survey said on Tuesday. The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.2 percent in February from January on a seasonally adjusted basis, slightly better than economists’ median forecast for a drop of 0.3 percent. The 20-city composite index was at 139.27, holding just a hair above its 2009 low of 139.26. Average home prices across the United States are back to levels where they were in the summer of 2003. Prices in the 20 cities have fallen 3.3 percent year over year, in line with expectations. “There is very little, if any, good news about housing. Prices continue to weaken, trends in sales and construction are disappointing,” David Blitzer, chairman of the Index Committee at S&P Indices, said in a statement. “Recent data on existing-home sales, housing starts, foreclosure activity and employment confirm that we are still in a slow recovery.” The glut of houses up for sale has kept prices low and the market has struggled to regain traction since a home buyer tax credit expired last spring. Other data in the last week has suggested some stabilization in the market with sales of new and existing homes rising in March. Financial markets were unchanged by the Case-Shiller data on Tuesday, with U.S. stock index futures pointing to a higher open with investors focused on earnings from major companies. (Reporting by Leah Schnurr, Editing by Chizu Nomiyama) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Debt Ceiling Politics: ‘Few Exercises Produce As Much Cynical And Overtly Partisan Behavior’

April 26, 2011

Iowa has two Senators, one a Republican (Charles Grassley), the other a Democrat (Tom Harkin). Each has voted seven times since 2002 on a bill to raise the nation’s debt ceiling. Look back at those votes, and an interesting pattern emerges: Every time a Republican president has needed the debt ceiling raised to keep government functioning, Sen. Grassley, the Republican, has voted to raise it, while the Democrat, Sen. Harkin, has voted against it. But when a Democratic president has asked for an increase, their votes reverse: Sen. Harkin has voted in favor, and Sen. Grassley has voted against it.

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Rent Or Food? Soaring Costs Forcing Americans To Choose

April 26, 2011

NEW YORK — Around 10 million American households — or one in every four families that rent their homes — could have to chose between paying rent, buying groceries or keeping current with bills, according to a report released Tuesday. The number of households spending more than 50 percent of their income on rent and bills jumped by 2.6 million over the last decade, according to a Harvard Joint Center for Housing Studies report . Economists generally consider “affordable” rent to cost about 30 percent of a tenant’s income. When housing costs hit certain levels, many Americans are forced to choose between rent and food. “In real terms, it means more people have less money to spend on household necessities such as food, health care, or savings,” Eric Belsky, director of the Harvard Joint Center for Housing Studies, said in the report. Households which spend 50 percent or more of their income on rent also spend almost 40 percent less on food and over 50 percent less on health care than households with more affordable rent. “In the last decade, rental housing affordability problems went through the roof,” Belsky said in the report. “And these affordability problems are marching up the income scale,” he added. Already, rising rents mean the household budgets of working-class and middle-class families are under strain. Growing numbers of middle-income, and lower-middle-income renters are spending between 30 percent and 50 percent of their incomes on rent. And the report found that rents could start to soar as the recovery takes hold. Belsky said that after a boom, the rental market took a brief hit during the recession. “Rental housing costs went up and up. There was a brief dip in 2009, now they’ve moved up again,” he told The Huffington Post. Affordability could become such a problem, Belsky said, that even financially secure Americans could start to struggle to make rent. Even before the recession, rent increases and growing bills outpaced many stagnant salaries. Now, with modest improvements in the job market, there is renewed upward pressure on rents. Many former homeowners who faced foreclosure are now looking to rent, and people who ordinarily would have bought homes are struggling with tighter mortgage lending, while others are waiting for home prices to sink even lower. Mortgage lending for apartment buildings — the multifamily sector — was severely hit during the financial crisis, and financing for the sector has dropped by $40 billion, according to the report. Since 2008, the only refinancing for loans on apartment buildings has come from federally-backed sources: Fannie Mae, Freddie Mac and the Federal Housing Administration. And for Americans with lower incomes, the availability of federally protected affordable housing is shrinking. The report found 700,000 affordable rental units had either been removed from federal programs or demolished since the mid 1990s, with very little new housing being offered at the lower end of the rent scale.

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Client Trust Returns TO UBS’s Wealth Management Arm

April 26, 2011

ZURICH (Emma Thomasson) – UBS looked to put the financial crisis behind it on Tuesday, with money pouring into its core wealth management arm in the first quarter and its struggling investment bank doing better than expected. Inflows of 11.1 billion Swiss francs ($12.6 billion) — the highest since the end of 2007 and outstripping forecasts — showed client trust was returning, the Swiss bank said. Clients had withdrawn nearly 400 billion francs from the world’s second-largest wealth manager in recent years after it was bailed out following huge writedowns on toxic assets and was hit by U.S. charges that it helped wealthy Americans dodge tax. UBS said it had had strong inflows in the Asia Pacific region and emerging markets as well as from the ultra wealthy, although it continued to see outflows in Europe, where countries have been chasing tax evaders using secret Swiss accounts. Vontobel analyst Dirk Becker said the biggest positive was the wealth management inflows: “This … shows that UBS has now left the crisis behind even in this division, where client trust and confidence were shattered.” UBS expected sustainable inflows from now on, outgoing chief financial officer John Cryan told an analyst conference call. UBS shares were up 5.7 percent to 17.53 francs by 1045 GMT, while rival Credit Suisse — which reports quarterly earnings on Wednesday — rose 2.1 percent to 39.66 francs, compared to a 0.7 percent firmer European banking index. FIXED INCOME IN FOCUS UBS reported a pretax profit of 835 million francs at its investment bank, up from 100 million the previous quarter, performing well versus its peers in fixed income — where U.S. rivals have struggled — and in equities trading. But the bank did slip up in equity capital raisings — traditionally one of its strongest businesses — after the division was among the worst hit by departures, including that of global capital markets head Matthew Koder. Chief executive Oswald Gruebel’s plans to turn around the investment bank — which made the massive losses that almost felled UBS — are under scrutiny after an exodus of top bankers. “It was a decent result in investment banking which should reassure after the headcount turbulence of the last few months,” said Matthew Clark, analyst at Keefe Bruyette & Woods. UBS said it expected to see some improvement in parts of the investment bank, despite constraints imposed on some of the fixed income currencies and commodities (FICC) businesses by a focus on controlling risk. It also noted the competition for staff and base salary increases will increase costs. U.S. bank results showed fixed income profits falling from an unusually strong first quarter of 2010, while Goldman Sachs warned of layoffs if trading volumes do not pick up and said investors are holding their money close. UBS said the disaster in Japan, unrest in North Africa and the Middle East and the ongoing euro zone debt crisis had dampened usually strong first-quarter client activity. The bank said it expected second-quarter equity market trading volumes to stay around the levels seen in the first quarter, which should support transaction-based income in wealth management and flow trading in the investment bank. It expects short-term interest rates in the West, including Switzerland, to remain low, continuing to constrain interest margins, although wealth management’s gross margin on invested assets rose by 6 basis points to 98 basis points in the quarter. Florian Esterer of Swisscanto, which holds more than 9 million UBS shares, said the bank should benefit more than peers from the shift from offshore to lower margin onshore business. “Longer-term we expect the margin headwind to be more of an issue for Credit Suisse than UBS,” he said. REGULATORY PRESSURE ON TARGETS Gruebel said the quarterly result was satisfactory but still fell “short of our overall ambitions.” Sarasin analyst Rainer Skierka said the figures might counter recent doubts in the market about Gruebel’s mid-term target for a pretax profit of 15 billion francs — including 6 billion from the investment bank. “However, even after a rebounding first quarter there is still a long way to go especially in investment banking where a high compensation ratio remains a hot topic,” Skierka said. CFO Cryan said UBS was not deviating from those targets today but said the bank was carefully assessing the impact of new regulation, most notably on the capital-intensive FICC business, although it was too early to say what it might do. Gruebel has said stiff Swiss capital standards — which the government sent to parliament last week and could be approved this year — could force UBS to move units abroad. UBS said it was monitoring the effect of new rules in Switzerland, Britain, the United States and elsewhere on the corporate structure and would take action when needed. UBS is not paying a dividend for 2010 or for some time to come as it retains earnings to meet the tough new requirements. (Additional reporting by Martin de Sa’Pinto in Zurich, Edward Taylor in Frankfurt and Sarah White in London; editing by Alexander Smith) ($1 = 0.8843 Swiss franc) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Nintendo May Seek Outside Help

April 26, 2011

(TOKYO) – Nintendo said on Tuesday that alliances with other companies may be necessary, a day after the game maker reported its second straight fall in annual profit and said it would launch a successor to its aging Wii console. “I now regret that we didn’t tie up with someone outside the company to market the Wii. If we had done that, the fate of the Wii might have been different,” Chief Executive Satoru Iwata said at a conference for investors and analysts. “Now I am aware that we should not rely too much on ourselves. You will see what I mean by this when we market the 3DS and the Wii in the future.” (Reporting by Junko Fujita; Editing by Michael Watson) Copyright 2011 Thomson Reuters. Click for Restrictions

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Ford Post Best First Quarter In 13 Years

April 26, 2011

DEARBORN, Mich. — An improving economy and new vehicles like the Ford Explorer propelled Ford Motor Co. to a $2.6 billion profit, its best first-quarter performance since 1998. The company earned 61 cents per share from January through March, compared with 50 cents per share in the same quarter a year earlier. The results beat Wall Street’s expectations. Analysts surveyed by FactSet were forecasting earnings of $2.1 billion, or 50 cents per share. Revenues rose 18 percent to $33.1 billion. The company was profitable in all regions, but saw strong growth in Asia, where sales rose 28 percent. Sales rose 12 percent in North America. “Our team delivered a great quarter, with solid growth and improvements in all regions,” Ford President and CEO Alan Mulally said. The March 11 earthquake in Japan, which has hurt Japanese automakers, has had little impact on Ford so far. Chief Financial Officer Lewis Booth said the company has lost production of 12,000 to 14,000 vehicles at its Asian operations, but doesn’t expect that to have a major effect on the bottom line. Three Asian assembly plants are closed this week because of parts shortages. Rising prices of commodities like steel cost the company $300 million in the first quarter, and are expected to increase costs by up to $2 billion by the end of this year. Ford offset some of those increases by raising prices by an average of $117 per vehicle at the end of the first quarter. Booth said Ford also continued to make progress paying off debt. The company, which took out a $23 billion loan in 2006 to revamp its operations, ended the quarter with $16.6 billion in debt, down $2.5 billion from the beginning of the year. Ford said it now has $4.7 billion more cash than debt, an improvement of $3.3 billion from the start of this year.

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Madoff Chronicler Discusses The Mind Of America’s Most Notorious Swindler

April 26, 2011

Perhaps the only individual more qualified than veteran New York Times financial reporter Diana Henriques to write the book on Bernard Madoff’s epic Ponzi scheme is Madoff himself. Hardly a stranger to the devastation wrought by white-collar crime, Henriques covered the Enron aftermath and a host of financial misdeeds and foul-ups and twice has been a Pulitzer Prize finalist. Henriques was born in Texas, grew up in Virginia and has lived in Hoboken, N.J. with her husband since 1988. Over tea in the study of her Hoboken brownstone, she discussed her experience writing “ The Wizard of Lies .” She said the book, for which she interviewed over 100 sources, was the most difficult project she’s ever undertaken. Unflinchingly cordial, Henriques speaks with a measured, authoritative tone, occasionally pausing to contemplate her answers. Every now and then, for a fleeting syllable or two, the remnants of a southern accent make their presence known. In “Wizard of Lies,” out today , she describes her prison meetings with the disgraced financier in detail, identifying what she calls the “Madoff magic,” and attempts to uncover what Madoff’s wife Ruth and his two sons knew about his decades-old scheme. She said the family made characters “straight out of Shakespeare.” You were the first reporter to visit Madoff at Butner Federal Correctional Complex and interview him face-to-face. I was. The Financial Times reporters visited him in March, but I was the first. It took about 18 months to set it up. Tell me about how you got the interview. Well, I started asking for the interview when he was at MCC [Metropolitan Correctional Center] in Manhattan, right after he pleaded guilty. I had a mailing address for him. I wrote him my first letter requesting it and I just kept after it. Note to young reporters: never give up. I kept asking and then he was moved to North Carolina, and I kept asking again. I didn’t even get an answer back for months. Then, I got a letter in September ’09, handwritten from the prison, full of flattery, saying that he’d followed my career, admired my professionalism — all this stuff. He wasn’t free to talk right now, he said. But when he was, I would be at the top of his list. So I folded that up and continued research on the book, assuming I was going to have to write this book without Bernie Madoff. So I interviewed everybody in the world that I could. Finally, in the early summer of 2010, his lawyer reached out and suggested to me that it was looking a little more promising that he would talk to me. He eventually agreed and then it took a month to get the prison paperwork done because the warden has to approve any media visit. Eventually the warden approved it; I got a call that gave me six days notice to be down there on the particular day. That was in August 2010 and that was my first visit. It was a little over two hours and I still had pages of questions. And he volunteered — he said, “Write them out and I’ll answer them by letter.” And he did. I exchanged letters and then emails and a phone call or two between that visit and my visit in February, which was my second visit. And we continue to trade emails. I just got one from him yesterday. Have you given him an advance copy of the book? No. So he has no idea. He hasn’t seen it yet. And do you expect that he’ll read it? He says he wants to. He’s asked if the publisher can ship him one. They have restrictions in prison on what they can receive through the mail. But he certainly wants to get one. He didn’t like the title, though. He did tell me after the interview in February he thought the title was “too sensationalistic.” [Laughs] Come on? A Times reporter sensationalizing the title? I didn’t pick the title, but, you know, we changed the title actually, after the first visit. It was originally going to be called “A World of Lies” to reflect this global Ponzi scheme, this web that he had stretched from Palm Beach to the Persian Gulf. But after I visited him that first time and really got a taste of the Madoff magic, and began to see how he tried to manipulate people and how he dealt with selling his story, it was clear to me and my editor that he belonged at the center of the title, because he kind of shifted the center of gravity for the book. So that’s when we changed the title to “The Wizard of Lies.” And once I heard it, I knew it was the right one. I like it even if he doesn’t. How did he strike you at first as a human being? Well, I had known him slightly, before he was arrested. He had been a middling prominent figure in a topic I covered for the Times back in the 1990s, when stock exchanges were going through this great upheaval, similar to what newspapers are going through now — where technology was radically changing the way of doing business, the cost of doing business. And Madoff was quite visionary and quite a pioneer in the effort to computerize stock trading. And I covered a number of conferences where he was on the panel or he was a keynote speaker. I talked to him. I got to know his firm because they were pioneers in after-hours trading. When he was first arrested, the name instantly rang a bell with me and I immediately went to the [ Times ] business editor and said, “We’ve got something big here. Bernie Madoff’s just been arrested for fraud.” So, I knew him before. And then I thought of him as a very down-to-earth, plainspoken, very approachable person. A typical trader, a typical roll-up-your-sleeves, up-from-the-neighborhood kind of guy. When I first met him in prison, my first impression was how polished he had become since I had known him 15 years earlier, even in his prison uniform. Every crease is crisp, every button is buttoned. His belt is shiny, his shoes gleam. Very much the dandy, even in prison. And very much in control of our conversation. He had a very engaging, low-key style. Never took his eyes off of me. [He] leaned forward and was very interested in everything I had to say. A few little jokes, a little bit of flattery. But very much on-message. When I saw him the second time, after his son’s suicide, I was stunned at the change in him. From across the room, I would not have recognized him as the same man. So much thinner. In fact, the uniform involves one of the those web belts and he had the belt pulled so tight that the end of it was folded under to keep it from flopping. One of his buttons on his shirt was undone and he didn’t notice it until about halfway through. He buttoned it up. This had been an immaculately groomed, crisp, confident man back in August. In February, he seemed to holding on to his control with both hands. Fiercely. No jokes. No humor. Barely a smile. And this was two months after his son’s suicide. He was clearly devastated by that. I want to come back to that, but you mentioned a minute ago the “Madoff magic.” Can you elaborate on that? Is he a charming guy? You know, he isn’t. And that makes him a very unusual Ponzi schemer. I’ve covered at least half a dozen Ponzi schemers during my career. Unfortunately, there are a lot of them around. Nothing on this scale, of course. But they are typically bon vivant, swashbuckling, charismatic guys. They’re the guy over in the corner telling the funny stories that everybody wants to hear. Madoff was never the most charming man in the room. But, he could make you feel like you were the most charming person in the room. That was the magic. He could reflect back on you a very attractive image of yourself that made you feel good. I felt it. I’m sitting there interviewing him in this prison and I’m feeling like I’m one of the best reporters he’s ever known. He bounces it back — that feeling of, “Oh, you’re so interesting, you’re so competent, you’re so professional.” It’s an amazing gift. And I’ve never before met a Ponzi schemer who’s so low-key in terms of his gregariousness and yet able to sprinkle that pixie dust on you and make you feel like, suddenly, you were so special. It’s an amazing gift. And he is so believable. I did not ask him to grant me an exclusive interview. But when he asked that the interview in August and emails and conversations be embargoed for use in the book, and his lawyer explained why, I agreed to that. But I also explained to him that an embargo is a two-way street. If he broke it, then I’m off the hook. He repeatedly assured me that he would not talk to any other reporters, that he would not let any other interviews get ahead of my book. Well, of course he was lying. But you know, he had me for just a little while. Here I know he’s the biggest liar in North America, but for just a little while, I said, “Phew, there’s one less thing I have to worry about. Good. That’s fantastic. Thank you, Bernie!” And, of course, it wasn’t true and I realized the next morning, you wake up and say, “Oh yeah, that’s Bernie Madoff giving me this promise. I can’t rely on it too heavily.” He is a fascinating character. Do you like him? Did you find that you built a rapport with him after the meetings and emails and phone calls? No, I did not. To be candid, he frightened me a little because he was so unpredictable and so untrustworthy. Absolutely no predictability. And he’s extremely intense. When he seizes on a topic, it’s hard to pry him away. But, I didn’t expect to like him. It was relatively easy to work with him, but I was always uneasy about it because he was so unpredictable and untrustworthy. I owe it to him to say that he’s an extremely bright man, he’s extremely intelligent. So there’s a level at which you can converse with him about things that is satisfying. He knows an enormous amount about financial history, which is one of my favorite topics, so we had that in common. He is smart and engaging to talk to. On that level, I felt we found a little common ground. But just in terms of dealing with him as a human being, [there was] something uncomfortable about him. Were you able to interview any of his immediate family members — Ruth and his kids — for the book? Everyone I interviewed on the record is identified by name in the book. People who are not identified by name in the book — and the immediate family members are not — either did not talk to me or spoke with me in confidence and it would not be fair to either group to start playing guessing games like that. But my research about the family was pretty intense and pretty broad. And I feel confident that I have a fairly clear picture of the family dynamics. There’s no doubt the family has been shattered by this crime. It’s almost a blinding glimpse of the obvious to say so. Madoff’s sons were deeply upset that Ruth did not walk out on him. I worked very hard to try to understand, through as many confidential sources as I could, why she didn’t go. And I asked Madoff himself why she stayed. That’s the one point in the first interview where he broke down and cried. And I do think it was genuine. He didn’t even have a Kleenex with him. His lawyer had to find some little paper napkins in the snack bar area. But he said all her friends told her she should leave, which I knew to be true. He told her she should leave, that she didn’t have to stay. As the firestorm of criticism and vitriol was growing, he could see that it was hurting her to stay with him. But she would not walk out on him. And, as I understand it, how she has explained it, is that she had a love affair with this man for 50 years and she just felt she couldn’t abandon him at this time of his near destruction. You know Larry and I have been married for 42 years and I can sort of understand it. I don’t think younger couples can. She met and fell in love with Bernie when she was 13 years old. He was a lifeguard, she wasn’t even in high school yet. Pretty girl. And he was handsome, sun-bleached hair. She fell in love the first time she met him and married him at 18. You have to keep that in mind when you weigh the decisions she made after his arrest. It was a lifelong love affair. Everybody who knew them agreed that they were still like sweethearts. One person said that the only person who thought more of Bernie than Ruth was Bernie. She really worshipped him. Do you believe the story that she had no idea about the Ponzi scheme? I do. What about his sons? I do not believe they knew and I explain in the book my reasoning. My goal with “The Wizard of Lies” was to assemble the available evidence, offer my analysis of it and let the reader make the decision. My starting point was: innocent until proven guilty. Fairness requires that. And then as a reporter, I began looking for the evidence that would change that verdict, if you will. I couldn’t find it. I couldn’t find one victim that could ever remember talking to Ruth, Mark or Andrew about their investments. And there are some pretty strong and, to me, convincing bits of evidence that argue in the opposite direction. For example, Frank DiPasquale, Madoff’s key lieutenant, is facing a 125-year sentence, having pleaded guilty. He has given grand jury testimony that has resulted in five indictments of people who worked at the firm, none of them are Madoff family members. None of the employees who have been indicted have made any move to try to get leniency or to cut a deal to make a plea bargain by providing evidence implicating the Madoff family members. But even more telling to me, there’s a scene in the book where Bernie is notifying Ruth, Mark and Andrew that it’s all falling apart, that the firm in insolvent, that he is ruined, that it is all a fraud. Now, if they’re his accomplices, what happens next? They pack their bags, they empty the bank accounts, they take the keys to the private jet, they fly off to the ocean-going yacht in the Mediterranean and they wind up in some country with no extradition treaty with the United States and live the life of the comfortable fugitive. I mean, it’s worked for [indicted commodities trader] Marc Rich for decades. That didn’t happen. They had the means to flee. They had the time to flee. And if they were his accomplices, they certainly had the motive to flee. Nobody fled. That’s pretty telling to me. After he confessed to his sons and his wife, they acted like people who suddenly learned they were financially ruined. They did not act like people who expected to be arrested and locked up for the rest of their lives any minute. And if they were his accomplices, it’s hard to believe that would not have been their fear. Frank DiPasquale was in a lawyer’s office within less than 24 hours of Madoff’s arrest. Everybody on the staff was hiring lawyers and looking out for themselves. The reader will make their own decisions. I could not find any convincing evidence, really almost no evidence at all, that they knew. I pored through every lawsuit that’s been filed against them, both by the Madoff trustee and by the private litigants. There’s not an email, not a conversation, there’s nothing presented in any of that litigation that casts any doubt on them at all. My conclusion is the odds-on likelihood is that they didn’t know. How does that speak to the pressure he was under, not being able to share the secret with his wife, his kids, who worked for him? Did you sense a really strong individual when speaking with him? He is a strong-minded man. Even after Mark’s death, in the first few emails we exchanged, there was no mention of it. There were things he wanted to talk to me about, questions he wanted answered, research he wanted me to do about something he remembered reading that he thought was significant for his case. He’s operating on this completely cerebral level and only about the third email after Mark’s death did he even acknowledge that I’d sent a condolence note. He is what psychiatrists call a very well-defended mind. He has defended himself against that which with he cannot cope. I think that defense — his ability to lock things away and not acknowledge them — which I’ve seen dealing with him in prison, is the same quality that enabled him to live with what he was doing on a daily basis. Were you able to interview Harry Markopolos, who repeatedly tried to notify the SEC that something was up with Madoff. I know Harry. In fact, I attended Harry’s book party when his book came out. Harry was helpful to my research. I think that’s as much as I can say. After being brushed off by the SEC many times, why do you think he didn’t seek out a reporter? Or did he? It’s a wonderful question and I put it to his lawyer and everyone who knew him. It almost seems like you’d want to do something like that just to stick it to the SEC for rebuffing him so many times. There are any number of places that might’ve taken his accusations, if acted on. But he didn’t, and I have never found his explanations particularly satisfying. He claimed that he and his investigative friends were in fear for their lives. That Madoff had so much to lose that he would think nothing of snuffing them out in order to avoid detection. And yet he kept reporting this allegedly murderous criminal to a civil regulatory agency that doesn’t even carry handcuffs. The explanations never made any sense to me. He publicly acknowledges that he’s a failed whistleblower. What’s the state of the SEC today? Have they improved since the Madoff scandal broke? Certainly they’ve addressed many of the management problems that the Madoff case exposed. It’s a much flatter management pyramid. More boots on the ground, fewer people behind desks. They have recruited some very impressive talent. Trying to hire top-flight accountants, forensic lawyers and investment experts at a time when the economy is so bad is pretty easy. They were able to pull in some talent they might not have been able to get in an earlier age. They have really amplified their technology, their computer analysis, their ability to use data analysis. They certainly have become far more aggressive about the cases they’re taking on. If you look at the cases they’ve brought in the two years since Madoff, look at who’s been sued and settled: Goldman Sachs, UBS — I could go on and on. I think the foundation is there to rebuild, but the SEC wasn’t undermined in a day and it won’t be rebuilt in a day. It’s going to be a process that’s going to take time and continued budget commitment. And that’s what I’m not sure we’re seeing — a continued commitment by Congress to provide the SEC with the money everyone thought it should have in the aftermath of the financial meltdown and the Madoff scandal. Stay tuned to see whether the promises of reform at the SEC get financed. Do you think there’s another similar type of fraud out there the SEC doesn’t know about, but is kind of under their nose like Madoff was? I would be surprised for this reason: A whistleblower like Harry Markopolos knocking on the door of any SEC office in this country today is going to get a very different reception. One of the things the SEC did was to completely revamp how it deals with incoming tips, whistleblowers, anonymous letters. It has created a new structure for incoming tips and whistleblowers so that they don’t get lost and don’t fall off the table. Fool me once, shame on you. Fool me twice, shame on me. I can guarantee you that there is another Ponzi scheme out there that we haven’t heard about yet. Ponzi schemes are, to me, one of the most fascinating crimes on Wall Street, one of the most fascinating financial crimes that there is. The air they breathe is trust. A Ponzi scheme cannot grow in an environment that’s devoid of trust. Nothing else can either, so in order to eliminate Ponzi schemes, you’d have to create a world completely devoid of trust. And when you’ve got a world like that, number one, none of us wants to live in it. And, number two: You can’t run a modern economy without a minimal level of trust. But that level of trust is exactly the level of trust a Ponzi schemer needs to get away with it. Now, Ponzi schemes are a peculiar crime in that you don’t feel any pain until the very end. I think the Madoff story introduces a new species of Ponzi scheme. Traditionally, we’ve thought of Ponzi schemes as the classic, too-good-to-be-true fraud. Fifty percent returns a month. Double your money in 10 days. The classic Ponzi scheme, all the way back to the first one in the 1920s, appealed to our greed. The get-rich-quick itch. The Madoff scheme did not appeal to people’s greed; it appealed to their fear. Through most of the Madoff scam, you could’ve made more money somewhere else. There were years when the Magellan Fund at Fidelity was producing much better results that Madoff’s investors were getting. It wasn’t that they were greedy: He was so consistent. He was so safe. They felt safe with Bernie in an increasingly volatile, scary, complicated market. If a Ponzi scheme appeals to your greed, a Madoff scheme appeals to your fears. I can’t tell you how many people told me, “He made me feel safe.” Those are the kinds of frauds I worry we’re going to see more of. Should the SEC just hire Bernie Madoff to help investigate tips that come in? No, I don’t think we would go there. Why not? When they finally caught up with him after all those years, the FBI hired Frank Abagnale, Jr. to help it investigate forfeiting crimes. Could Madoff do the same for the SEC? That’s an intriguing question. No one’s ever asked me that. I guess it’s a two-part question. Would he want to do something like that and would the SEC ever entertain something like that? I think he would. In fact, some academics have written to him in prison and asked him to contribute his thoughts on Wall Street ethics. They essentially are asking him, “What do you think would have helped alert people to what you were doing?” And Madoff has told me he’s interested in talking to them, corresponding with them. So, I do think he feels like he’s got something to teach. But I don’t think he understands himself well enough yet to teach people how to avoid con artists like him. Would the SEC ever entertain the idea? Not in this universe. Is there any way he can redeem himself, even in the smallest sense? Is that something he’s expressed to you that he’s interested in doing? He does. He certainly says he wants to. He claims he’s tried to help the bankruptcy trustee recover assets for Madoff victims. Would that amount to a form of redemption? Well I think Irving Picard could say, “Thanks, but no thanks.” Picard and his legal staff are doing a pretty remarkable job of going after assets without much help from Madoff, although I think that Madoff has provided them with some information. I know that Picard’s lawyers have met with him and spent 16 hours interviewing him in prison a couple of weeks before I was down there. And I’m told he was a confirmatory source, as lawyers say. He confirmed much of what they thought they knew, confirmed that, in some cases, they were on the right track. But he has subsequently said things that in many cases contradict the allegations they are making in the lawsuit they’re filing. He told me in the very first visit something that shocked me so that I included it in the prologue of the book: He said that with the money that investors had already gotten out of the Ponzi scheme and with the money that the bankruptcy trustee was going to be able to raise for them and return to them, his victims were probably going to make out better than people who were legitimately invested in the stock market during the meltdown of 2008. He thinks that about all of them? Not the ones who committed suicide and their families. Not the ones who’ve had to uproot their entire lives and sell their beloved homes. The human cost of the crime is part of the equation that he just doesn’t see. He’s utterly in denial about that. And what should the finance industry, lawmakers and America at large take away from this story? A moral if there is one? Self-deception is an extremely dangerous practice. Lying to ourselves is how we get in the most trouble. If there is a lesson, it is the oldest human lesson. To thine own self be true. If people take nothing else away from the book, I hope they take that. Lying to yourself is a luxury that you just can’t afford. How’s it feel to get this project done? I’ve never worked harder on any project. This is my fourth book, but without a doubt the most laborious, most fascinating. This is like a novel, but it’s true. Bernie had four near-death experiences before he was finally caught, some of which people will read about for the first time in the book. I fell in love with the story. At the beginning of this process, I kind of flippantly said that to do this story justice would take a collaboration between Shakespeare and Woody Allen, without the jokes. But it truly is such a timeless drama. I felt kind of humbled at the challenge of trying to live up to the potential.

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Greece’s Government Deficit Even Worse Than Predicted

April 26, 2011

BRUSSELS — Greece’s government deficit was significantly bigger than forecast last year, European Union data showed Tuesday, underlining the difficulties the debt-ridden country is having to get its finances under control. Greece’s deficit hit 10.5 percent of economic output in 2010, well above the 9.6 percent the European Commission, the EU’s executive, predicted last fall. The country’s debt swelled to 142.8 percent of gross domestic product, according to data released by EU statistics agency Eurostat – the highest in the eurozone and above the 140.2 percent the Commission had forecast. Greece had to be saved from bankruptcy with euro110 billion ($160 billion) in rescue loans last May, but continues to struggle to raise revenue as its economy shrinks. Most economists expect the country will eventually have to restructure its debt – either by asking creditors to give it more time to repay or even cutting the total amount owed. However, EU officials have so far ruled out a restructuring. The Greek finance ministry attributed the larger deficit to a deeper than expected recession, which cut into tax revenues and social security contributions. “In any case, the Greek government remains committed to achieving its deficit targets under the Economic Adjustment Programme and will take all necessary measures in that direction,” the ministry said in a statement. In its bailout program – which spells out Greece’s path to financial health – Athens promised to get its deficit below the 3 percent maximum allowed by EU rules in 2014. The 17 countries that use the euro had an average deficit of 6 percent last year, double the 3 percent allowed under EU rules. The highest deficit was produced by Ireland – the second country that needed to be bailed out by other EU nations and the International Monetary Fund – reaching a record 32.4 percent of GDP because of expensive bank bailouts, only slightly above the 32.3 percent forecast. Portugal, which is currently negotiating its own package of rescue loans, had a deficit of 9.1 percent, way above the 7.3 percent the Commission had expected last fall, but Lisbon had warned markets of the upward revision on Saturday. There were some good news for Spain, the country that most analyst view as the next weakest link in the eurozone. It’s deficit was 9.2 percent of GDP, slightly below the 9.3 percent forecast by the Commission. Euro newcomer Estonia was the only eurozone country to produce a surplus – 0.1 percent of GDP – last year, but the tiny Baltic nation adopted the common currency this January. Bond markets quickly reacted to the news. The yield – or interest rate – on Greek 10-year bonds hit 15.18 percent, up from 15.06 percent at the open, while Portugal’s rose to 9.54 percent from 9.47 percent. Spain’s 10-year yield meanwhile inched down to 5.47 percent, from 5.48 percent, but remained way above the 4 percent they traded at just last October. The United Kingdom, which is not in the eurozone, recorded a deficit of 10.4 percent of GDP – the third highest in the EU behind Ireland and Greece. However, Eurostat said it had some reservations on the quality of data reported by the U.K. because of the way the country records its military expenditure. Eurostat spokesman Tim Allen said it was too early to tell for which years and by how much U.K. deficit figures would have to be revised to comply with the agency’s rules, but because the issue was only related to the timing of the expenditure rather than the overall amount, any revisions should not affect the U.K.’s debt levels. Overall, the eurozone managed to cut the massive deficits it built up during the financial crisis faster than predicted. The average deficit stood at 6.3 percent in 2009 and the Commission had expected that figure to remain stable in 2010. Apart from the three most troubled countries, Greece, Ireland and Portugal, only Austria failed to undercut the Commission’s autumn forecast. The small Alpine nation’s deficit rose to 4.6 percent in 2010, above the 4.3 percent forecast, due to changes in the way countries have to record debts they take on from public companies. ___ Elena Becatoros in Athens contributed to this story.

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In Many States, Pensions Gap Continues To Grow, Report Says

April 26, 2011

WASHINGTON (Lisa Lambert) – U.S. states are short $1.26 trillion in paying for public employee pensions and other retirement benefits, a gap that grew 26 percent in one year and will take many more years to wipe out, according to a report released on Tuesday. A total of 31 states had pensions that were underfunded in fiscal 2009, the latest year for which data is available, up from 22 states a year earlier, the Pew Center on the States reported. The financial crisis in 2008 crushed many pension funds’ investments, just as historic budget woes forced governments to cut contributions to those funds. The combination “made a serious problem even worse,” said Susan Urahn, the Pew Center’s managing director. In fiscal 2009, which for most states began in July 2008, states were short $660 billion for future pension payments and $604 billion for other retiree benefits, namely healthcare. Growing unfunded pension liabilities on top of still daunting state budget gaps are a top concern of Wall Street rating agencies and investors in the $2.9 trillion municipal bond market. Most states are legally bound to pay retirees benefits, and they must make up for any investment loss from their already depleted treasuries or by borrowing. Pensions are deemed “underfunded” when they are unable to pay at least 80 percent of liabilities. Preliminary data for fiscal 2010 shows that pension funding levels of 10 states deteriorated further, while just three registered increases, Pew found. “Overall, these results suggest that while states benefited from better returns in fiscal year 2010, the legacy of the financial crisis … will remain an issue for years to come,” Pew said in the report. Last year, Pew found states were short $1 trillion in fiscal 2008 on promises to retirees, using data that came from before the financial crisis. States typically assume an 8 percent annual return and their pension plans suffered a median 19.1 percent drop in their assets’ market value in fiscal 2009, Pew said. One critic said the lagging data does not reflect the improvement in current conditions. “Given where we are in time now, talking about 2009 numbers just isn’t useful. The world has changed in the last 18 months,” said Hank Kim, executive director of the National Conference of Public Employee Retirement Systems. “The market has come roaring back.” On Monday, Kim’s group released a survey of 216 public pension funds showing the average return over the last year was 13.5 percent. Illinois consistently has had the lowest pension funding level among states, one that worsened to 51 percent in fiscal 2009 from 54 percent in fiscal 2008, according to the Pew report. In fiscal 2010 and 2011, the state sold $7.16 billion of taxable bonds to raise money for its annual pension payments. A year ago, Governor Pat Quinn signed into law a pension reform measure reducing benefits for new state workers, which he said would save more than $200 billion over nearly 35 years. The U.S. Securities and Exchange Commission is looking into “communications” by the state regarding potential savings or reduced contributions to pensions resulting from the law. Five other states, including cash-strapped Rhode Island, have funding levels of less than 60 percent, according to Pew. Conversely, New York’s pension is 101 percent funded, followed by Wisconsin at 100 percent and Washington at 99 percent. States must increase their contributions when returns are low. From 2000, when the systems were well funded, to 2009 these payment requirements grew 152 percent, putting pressure on states to take dollars away from other spending areas. Of late, Republicans in the U.S. Congress have pressed states to assume investment return rates closer to 4 percent, which they consider “riskless.” Using assumptions that private pension plans rely on, which are linked to returns on corporate bonds of about 5.22 percent, Pew found the pension shortfall for states could be as much as $1.8 trillion. By relying on a rate based on a 30-year Treasury bond, Pew found the states’ shortfall could be $2.4 trillion. (Additional reporting by Karen Pierog in Chicago. Graphic by Stephen Culp; editing by Leslie Adler) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Foreign ownership law helping Cambodia’s property recovery

April 26, 2011

Cambodia’s property market is still somewhat depressed.

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New Details About Facebook’s Groupon ‘Killer’

April 26, 2011

Whoops. Looks like The New York Times has a little embargo breaking situation on their hands. (Which we love — chaos!) They’ve just put up a story with the URL: http://bits.blogs.nytimes.com/2011/04/25/latest-rival-to-groupon-livingsocial-facebook- embargo-till-midnight / (bolding mine). That page is obviously no longer found, but it was live for a bit. And it is a big one: Facebook’s Groupon/LivingSocial “killer”.

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US Steel Tower Sold for $250M

April 26, 2011

An investment group led by New York-based real estate mogul Mark Karasick purchased the U.S. Steel Tower, Pittsburgh’s tallest office building, for $250 million, or about $107 per square foot. The 64-story, 2.3 million-square-foot, class A office tower is located at 600 Grant St. It was designed by architecture firm Harrison, Abramowitz & Abbe in the 1970s, and is noted for its triangular shape with indented corners and its corrosion-resistant…

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YouTube Reportedly Planning Imminent Launch Of Major New Service

April 26, 2011

YouTube will imminently launch a movie-on-demand service charging users to stream movies off the world’s largest video sharing site, TheWrap has learned.

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John Boehner Open To Repealing Oil Company Tax Breaks

April 26, 2011

WASHINGTON — House Speaker John Boehner said Monday that Congress should “take a look at” repealing the multibillion-dollar tax subsidies enjoyed by the major oil companies. The Ohio Republican told “ABC World News” that the government is low on revenues and that oil companies “ought to be paying their fair share.” A gallon of gasoline exceeds $4 in some parts of the country. “We certainly ought to take a look at it,” Boehner said. “We’re at a time when the federal government’s short on revenues. We need to control spending but we need to have revenues to keep the government moving.” For example, Boehner said big oil companies don’t need the so-called oil depletion allowance, but that taking it away from smaller producers would mean even less domestically produced oil. The allowance allows producers a tax deduction comparable to the break given manufacturers for depreciation of the value of an investment in plants and equipment. Boehner is the most powerful Republican in Washington and his remarks could signal a significant change of heart. Republicans have blocked attempts by Democrats to curb oil company subsidies. Boehner did not endorse the idea, however. “I want to see the facts. I don’t want to hear a bunch of political rhetoric,” Boehner said. “I want to know what impact this is going to have on job creation here in America.” Cutting tax breaks for oil companies also could be part of any effort to overhaul the extraordinarily complicated federal tax code. Any tax reform effort would curb tax breaks in exchange for lowering personal and corporate income tax rates. Boehner also said again that any move this year to increase the federal government’s ability to borrow money to meets its obligations must be accompanied by significant cuts in spending. “I believe it’s responsible to increase the debt limit,” Boehner said. “It’s time to cut up the credit cards. And that means that we’ve got to have real cuts in spending. And we’re not going to be talking about billions here. We’re going to be talking about trillions.” WATCH:

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Video: Abbasi Says Informatica Lets Companies Retain Cloud Data

April 26, 2011

April 25 (Bloomberg) — Sohaib Abbasi, chief executive officer of Informatica Corp., discusses the company’s software and challenges related to cloud computing. Abbasi talks with Cory Johnson on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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Defense Secretary Completes Cancellation Of Targeted Weapons Programs

April 26, 2011

By Colin Clark Editor, AOL Defense Robert Gates today crowned his tenure as Defense Secretary by formally cancelling the last major weapons system he had targeted for termination: the second engine of the Joint Strike Fighter program. “The Department of Defense today notified the General Electric/Rolls Royce Fighter Engine Team (FET) and the Congress that the F136 Joint Strike Fighter (JSF) engine contract has been terminated,” began the short, five-paragraph Pentagon press release announcing the news. But the General Electric/Rolls Royce team that has already spent $3 billion developing the engine said it remains “committed” to the project, according to GE spokesman Rick Kennedy. Both companies are working with their congressional supporters “during the 2012 budget process in pursuit of incorporating the engine into the [aircraft] program, and preserving competition,” he said in an email to AOL Defense. Engines programs are run and funded separately from aircraft initiatives. The F136′s termination “represents an important victory for our men and women in uniform and the American taxpayer,” said Marty Houser, the spokesman for GE’s arch nemesis in the engine wars, United Technologies. It is the parent company of rival engine-maker Pratt & Whitney. “United Technologies appreciates the [Department of Defense's] and the U.S. House and Senate’s confidence in the F135 engine by eliminating funding for a wasteful extra engine,” Hauser said. For the last five years, UT has argued that money spent on the F136 sucked money from their engine, the F135. Still, GE and Rolls Royce hope their congressional friends will fold money for the second engine into the larger aircraft program. And GE knows that, should that happen, they would have to pour “some substantial share” of their cash into the kitty, Kennedy confirmed. “We are going on the assumption that there will be some expectation for self-funding in the future,” he said. The Pentagon previously supported the second engine program for the F136 because, in the past, it found weapons systems competition spurred innovation and drove down prices. But Loren Thompson of the Lexington Institute said he doesn’t think GE’s program has much of a chance. “GE has never made a convincing case for how buying two engines could cost less than buying one,” the defense analyst said in an email. “Since the government is the sole customer, it would have to pay for two design teams, two production lines, two supply networks and so on — and then split its annual buys into two uneconomical lots to keep both teams viable.” This is “an industrial subsidy to one of America’s wealthiest companies,” Thompson wrote. (Readers will remember this is the same GE that managed, through masterful command of the tax code, to avoid paying a single dime in taxes to the US Treasury last year.) “Gates has now managed to prevail on every major program kill he decided to pursue, from the Air Force’s F-22 fighter to the Army’s Future Combat System to the Navy’s next-generation destroyer,” Thompson added. “No other defense secretary has managed to get his way so consistently, so the logical conclusion is that once Gates goes, the Pentagon will see less effective management.” At a time of flat or declining defense budgets, less savvy management bodes ill for the Pentagon, the taxpayers, and the defense industry writ large. Cutting wasteful programs saves money, maintain political support for weapon systems, and results in better weapons, in the long term. While GE is fighting to secure new funding for the second engine program, Kennedy said it would “take all necessary steps to ensure that the F136 assets and intellectual property are protected.” That is not insignificant since there is more than $200 million in F136 hardware scattered across 17 facilities. That includes, the spokesman said, nine engines in various stages of assembly. GE and Rolls Royce have already shrunk their FET program to a core technical group of about 100 people. The team’s job? “To protect, enhance, and advance the vital F136 propulsion technologies for JSF and future combat aircraft,” Kennedy wrote in his email. The GE spokesman clearly foreshadowed some of the arguments supporters in the House and Senate will utter when they try to revitalize the program. He noted that the engine ”has been under development since 1996 and is 80% complete with six development engines tested.” And, he said, the program “has been on or ahead of schedule.” Whether the two companies can raise the program from the near-dead –- as happened twice to the V-22 Osprey aircraft –- cannot yet be determined. But the chairman of the House Armed Services Committee, Buck McKeon (R-Ca.), is a fervent supporter of the second engine. The program has powerful supporters in the Senate, as well. Their task will be extremely tough in the face of the current fiscal climate, especially with the Tea Party watching in the House. Launching in Spring 2011, AOL Defense will provide news, insight and tools about the defense sector. Follow Colin on Twitter at @colinclarkaol . Follow AOL Defense at @aoldefense .

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Video: Bloomberg’s Johnson Discusses Outlook for Informatica

April 26, 2011

April 25 (Bloomberg) — Bloomberg’s Cory Johnson discusses the outlook for Informatica Corp., a provider of data-organization software. Johnson speaks on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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Video: Pachter Says Netflix Investors Are `Crazy’ to Pay $250

April 26, 2011

April 25 (Bloomberg) — Michael Pachter, an analyst with Wedbush Securities, talks about Netflix Inc.’s first-quarter earnings and outlook. The mail-order and online movie-rental service’s second-quarter profit forecast missed analysts’ predictions. Pachter speaks with Emily Chang and Cory Johnson on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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An Intraday CAD/JPY Sideways Channel is Creating Scalping Environment

April 26, 2011

An Intraday CAD/JPY Sideways Channel is Creating Scalping Environment

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South Korean growth accelerates during the first three months of the year

April 26, 2011

South Korean growth accelerates during the first three months of the year

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Australian Power And Gas Company Limited (ASX:APK) Releases Forecasts For Financial Year 2012

April 26, 2011

Australian Power And Gas Company Limited (ASX:APK) Releases Forecasts For Financial Year 2012

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Buccaneer Energy Limited (ASX:BCC) Release Kenai Loop No.1 Drilling Report

April 26, 2011

Buccaneer Energy Limited (ASX:BCC) Release Kenai Loop No.1 Drilling Report

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Coventry Resources Limited (ASX:CVY) Intersected Bonanza Grade Gold In First Pass Drilling At Cameron Gold Project In Canada

April 26, 2011

Coventry Resources Limited (ASX:CVY) Intersected Bonanza Grade Gold In First Pass Drilling At Cameron Gold Project In Canada

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ABM Resources NL (ASX:ABU) Extensional Drilling Underway At Buccaneer Western Zone

April 26, 2011

ABM Resources NL (ASX:ABU) Extensional Drilling Underway At Buccaneer Western Zone

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Sino Gas And Energy Holdings Limited (ASX:SEH) Secures A$29.4M Funding To Increase Gas Sales

April 26, 2011

Sino Gas And Energy Holdings Limited (ASX:SEH) Secures A$29.4M Funding To Increase Gas Sales

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