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Joshua Shulman: Rights Have to Be Enforced Somehow

by Joshua Shulman on April 18, 2012

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There are two ways to enforce rights. A government agency can do it, or it can be outsourced to private contractors, which means plaintiffs’ lawyers. If we’re going to use a government agency, then we have to make sure they do it efficiently, because our tax dollars fund those agencies. If we’re going to use private lawyers, they’ve got to be able to make good money doing it, otherwise they’ll do something else instead. If neither of those systems works for us, then let’s not pretend that we care about the rights that we’re refusing to enforce. The New York Times presented a front-page article on April 17 about lawyers suing New York City businesses that don’t have good wheelchair access. The story is that the plaintiffs’ lawyers are finding violations — easy in New York City, with its many ancient buildings, narrow-aisled, with aging or nonexistent ramps — and then choosing a plaintiff from a cadre of disabled people. Then the lawyers threaten to sue the allegedly violating business, the plaintiff gets a few hundred dollars, the lawyer gets a few thousand, and it all seems like a shakedown to the poor business owner. Of course, this is not how it’s supposed to work. A wronged person is supposed to seek out the lawyer, not the other way around. So this article has provoked anger against the trial lawyers who are supposedly abusing the system for their own enrichment. Having lived in New York, I treasure the funky old out-of-compliance stores, where even a non-handicapped person has difficulty navigating the aisles. I love those places, and my personal belief is that a variance ought to be available to them so they can preserve their funky old character, even if it means that the “temporarily able-bodied” are the only people who can safely get in and out. But of course, that’s not the law. That’s not the choice that we as a country have made about this issue. The choice that we made, and the law that we passed to enforce that choice, is that almost all businesses open to the public have to be able to safely accommodate handicapped people. And then we as a country made another choice: the government would not be given the resources to enforce this law. Instead, we would give an incentive to private contractors (lawyers) to enforce the law, by forcing out-of-compliance businesses to pay the lawyers’ fees when the lawyer could prove that the business was out of compliance. So now we’re angry at lawyers for being too aggressive in their enforcement? Well, here’s a story about what happens when we choose the other path of having a government agency enforce the laws. The Equal Employment Opportunity Commission (EEOC) is supposed to investigate alleged employment discrimination, then if it finds a violation, negotiate with the violating business to fix it, and if that doesn’t work, then the EEOC may file a lawsuit against the business. Note that the EEOC is required to try to negotiate a workable solution before it files a lawsuit. Seems reasonable. But the EEOC is short of resources. They field about 100,000 complaints of discrimination every year. They recovered more than $450 million for employees last year, with a budget of $343 million. So you could say they’re running a profit, sort of. But they are still constantly understaffed, overworked, and simply don’t have anywhere near the resources needed to investigate every one of those 100,000 claims. So, like all government agencies, the EEOC has to decide how to most efficiently allocate their scarce resources. One obvious choice is to focus on companies that are practicing system-wide discrimination, so they can bring class-action suits. For example, CRST Van Expedited Inc. is one of the largest trucking companies in the United States. They have an “internship” program, in which women who want to become truck drivers are paired with male truck drivers, and left together unaccompanied for weeks at a time, with predictable results . By bringing a claim against a company like this, which has allegedly caused sexual discrimination and harassment against hundreds of women, the EEOC should be able to use its resources efficiently, right? Protect hundreds of women with just one big lawsuit, instead of trying to pick them off one at a time, which would take forever, and lots of agency resources. Well, the Eight Circuit Court of Appeals just slapped down the EEOC , saying that their lawsuit against the trucking company fails because the EEOC did not take the required step of trying to negotiate in good faith with the trucking company about each case individually . But doing that would eliminate the efficiency of having one big case instead of many small ones. The EEOC did negotiate with CRST about their (idiotic) program as a whole, but not about each individual case. Sure, in an ideal world, they would talk about each case separately. But in a world where efficiency matters, that’s a crazy requirement. It’s exactly the kind of requirement, in fact, that makes a government agency unable to perform its function of keeping the workplace free of discrimination. Which leaves it to whom, exactly, to to enforce our rights against workplace discrimination? Why, to the private lawyers, of course. In fact, one of the few women who opted out of the EEOC suit against this trucking company sued CRST privately. The jury awarded her $1.5 million . We as a country have to decide what rights we want to enforce, and whether to enforce them with government agencies, or with private contractors. But whipsawing back and forth is unfair. If we choose government agencies, then we’ve got to let them be efficient. Listen up, Eight Circuit. If we choose private contractors, then we’ve got to let the profit motive motivate them. Listen up, lawyer-bashers.

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Joshua Shulman: Rights Have to Be Enforced Somehow

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A Major Setback For Kamala Harris

by Aaron Sankin on April 18, 2012

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For the nearly two years that Kamala Harris has been California’s Attorney General, she has made the fight against fraudulent foreclosures her signature issue. Now, largely due to pressure from business groups, legislators look like they may soon succeed in tanking her most ambitious plan yet to clean up the state’s mortgage market. Earlier this year, Harris began pushing for California to pass the “Homeowner Bill of Rights,” a collection of six bills that would make significant changes in the way the state regulates mortgages. Harris was scheduled to testify before the California Assembly’s Senate Banking and Finance Committee on Monday; however, only moments before she was supposed to appear, both of the bills she was discussing were pulled by the committee chairman, Democrat Mike Eng of Monterey Park. The sudden change reportedly prompted a chorus of catcalls from the assembled crowd. The pair of laws Harris was scheduled to discuss aim to increasing protections for mortgage borrowers by prohibiting lenders from foreclosing on a property while simultaneously negotiating a loan modification on that property and also simplifies loan documentation by establishing a single, standardized contract for foreclosures and loan restructuring. Other provisions in the bundle require banks to provide homeowners with a single point of contact during the loan modification process and levy a $25 fee on banks every time they register a default. Proceeds from the default fee would then go into a pool of money funding mortgage fraud investigations. As part of the $25 billion settlement between the nation’s five largest mortgage holders and the attorneys general of 49 states, in which Harris was a crucial player , the large institutions that hold nearly 30 percent of all mortgages in the state have already agreed to abide by some of these rules. However, that settlement expires in three years and Harris wants the rules to extend into perpetuity. The banking industry strongly opposes the measures. The Sacramento Bee reports : In letters to legislators, the state chamber said the measures amount to a “de facto moratorium on foreclosures” that would actually hurt the real estate market with a confusing new set of laws, squeeze credit for property purchases and trigger a wave of lawsuits. The chamber also contends the bills are in conflict with federal standards and are an “extraordinarily restrictive and draconian” permanent response to temporary industry abuses. Conversely, the bills have received strong support from civic leaders in San Francisco. “Too many San Franciscans have been devastated by the mortgage crisis and too many families have lost their homes due to deceiving banking practices right here in some of our most vulnerable communities,” said San Francisco Mayor Ed Lee in a statement to the San Francisco Sentinel . “Thousands of foreclosures have happened and are happening in neighborhoods in our cities. I applaud the leadership of Attorney General Kamala Harris for standing up for families and using the powers of her office to protect homeowners from mortgage fraud and abuse.” Last week, the city’s Board of Supervisors passed a non-binding resolution calling for a moratorium on all foreclosures in the city until additional protections, such as the ones in Harris’s bills, are enacted. An audit of 400 San Francisco foreclosures conducted by San Francisco Assessor-Record Phil Ting found that 84 percent were either fraudulent or missing crucial documentation. “This matters because families facing foreclosures are entitled to know exactly who holds their loan and to see for certain that the foreclosure is justified,” Ting wrote in a blog on the Huffington Post . “In one case, our audit showed a foreclosure initiated by a party that had no title to the property–and in a number of other cases, we found two competing claims to the title.” (Full disclosure: Aaron Sankin was briefly an unpaid intern on Harris’s 2003 campaign for San Francisco District Attorney.)

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A Major Setback For Kamala Harris

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SEC Stall Leaves Critical Rules More Than A Year Overdue

April 17, 2012

WASHINGTON — A full year after the official deadline came and went, key regulations necessary to enforce the Dodd-Frank financial reform law remain unwritten, leaving vast areas of the financial market still vulnerable to self-destruction and failing to discourage corrupt practices overseas. Among the overdue regulations from the Securities and Exchange Commission alone are complicated rules, like those that would rein in the derivatives market, and simple rules, like the pending requirement that companies publicly reveal the median compensation of all their employees, the compensation of their CEO, and the ratio of the two. There are also long-delayed but important anti-corruption regulations , including one that would instruct publicly traded companies listed on U.S. stock exchanges to start disclosing exactly how much they pay foreign governments to acquire drilling and mining rights. The idea is to make it more difficult for foreign leaders to abscond with secret stashes of billions of dollars they received from energy and mining companies. The Dodd-Frank legislation specifies that the anti-corruption provision and many others should be implemented within nine months of the bill becoming law — namely, by April 15, 2011. Now another whole year has passed. There is reason to hurry, said Bartlett Naylor, financial policy advocate for the consumer group Public Citizen. “Our financial industry has developed an ability to blow itself up very quickly, apparently unbeknownst to its regulators,” he said. “It’s unclear when the next bomb will explode. But I think defusing it sooner is certainly better.” Naylor is eagerly waiting for the SEC, which must write a significant number of Dodd-Frank’s required rules, to detail and enforce the law’s prohibition on employee bonuses that encourage inappropriate risk taking by financial institutions. “Given that Wall Street was crashed not by philanthropists or people randomly making decisions, but by people who were bonus-based, I think that’s the single most overdue rule,” he said. Some observers worry that the Obama administration is now making a higher priority of eliminating disclosure rules and regulatory burdens for small companies seeking capital. Those are requirements of the recently passed JOBS Act , which won bipartisan support in Washington despite considerable concerns that it invites a new wave of conflicts of interest and financial fraud. The big question, Naylor said, is whether the SEC is taking the 270-day rulemaking timeline for that law more seriously than the 365-days-overdue deadline for Dodd-Frank. “We, of course, don’t think it should,” he said. An SEC spokesperson was not available for comment. The agency generally declines to publicly discuss internal deliberations. Oxfam America and other international humanitarian groups have strongly objected to the delay on the rules regarding disclosure of payments for natural resources overseas. Three activists from a coalition that Oxfam helps lead dressed in suits and monkey masks and stood inside an oil barrel in front of the SEC on Monday to convey the message that “transparency in the oil, gas and mining industry is not monkey business.” Ian Gary, who handles extractive industries issues for Oxfam, said the group has grown increasingly concerned about the rule delay. “The SEC has blown past every timetable and promise they’ve made,” he said. The SEC’s latest estimate is that the rule will be finalized by June at the latest. “But based upon the serial violations of promises in the past, we’re deeply concerned that the agency is not taking the congressional deadline seriously and has really drawn back from rulemaking in general,” Gary said. Indeed, the SEC hasn’t adopted any substantive Dodd-Frank rules this year, a slowdown that is widely seen as the result of a federal appeals court ruling last July that struck down one of its rules on the ground that the agency failed to adequately assess the potential economic effects . Since then, as Reuters reported , the SEC has been “taking extra steps to bulletproof its rulemaking.” That worries Gary. “I think the agency is in some ways being cowed by the oil industry — and other industry — lobbyists to water down this rule and water down other rules so they might withstand a legal challenge,” he said. The powerful oil and gas lobbying group, the American Petroleum Institute, has long argued that the overseas payment disclosure rule would put it at a competitive disadvantage when competing for international contracts. Now it’s demanding that the draft rule be rewritten, and its main argument is that, if not, it will sue and win. Naylor calls the litigation threat “the sharp edge” of an industry lobby that was already relentlessly pressuring the SEC’s members and staff. And he fears the agency is listening. “If you are spending 90 out of 91 conversations talking to a banker rather than a consumer advocate,” Naylor said, “you will begin to speak their language and think their thoughts.”

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WATCH: Scandalous Strip Truck Heats Up Controversy

April 17, 2012

For the past few months, Larry Flynt’s Hustler Club in San Francisco has jumped on the mobile bandwagon with its infamous strip truck: an oversized (and suggestively decorated) truck with glass walls, a stripper pole and scantily-clad dancers inside. And though the truck cruises through popular nightlife districts on weekend nights, it isn’t the truck’s nighttime joyrides that have incited controversy, but its daytime parking spot. (SCROLL DOWN FOR VIDEO) According to City Supervisor Eric Mar, the driver has been taking the truck home and parking it in residential neighborhoods, sparking angry complaints from neighbors. “It’s right by the Anza Branch Library and half a block from an elementary school,” said Mar to CBS . “Mostly [those complaining] they’re women. Parents,” said Mar to the Daily News . “There’s a general feeling from people that these kind of vehicles, with large photographs of scantily clad women, should not be there.” After first receiving complaints, Mar had the truck towed for expired tags, but it soon returned. San Francisco is home to a long-standing law that prohibits vehicles with commercial advertising –- a law that the Hustler Club may have been violating –- and rumors circulated that Mar may have been planning to push the law even further, requiring that such vehicles be towed. But according to Richmond SF Blog , Mar eventually spoke to the manager of the Hustler Club who claimed that the truck has since returned to Las Vegas. “If I had to do legislation, I would have,” said Mar to Richmond SF. “But working with the police and residents has successfully resolved this issue.” Check out CBS’s video of the Hustler truck in the video below:

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Dan Solin: The 401(k) Rip-off May Be Ending

April 17, 2012

It has long been my view that 401(k) plans are a national disgrace. They are rife with conflicts of interest between those who “advise” them and the participants who contribute to them. The investment options in the plan are chosen through a cozy, complicated and little understood process by which mutual funds make payments to brokers and insurance companies in order to get selected for a coveted place in the line-up of funds from which participants are required to make their selections. In any other context, these payments would be called bribes. In the 401(k) industry, they are known as “revenue sharing payments”, justified by tortured logic intended to obscure their real purpose, which is to populate these plans with expensive, actively managed funds likely to underperform index funds of comparable risk over the long term. The inner workings of the 401(k) system are shrouded in secrecy and mired in complexity, which is exactly the way the securities industry wants to keep it. There has been little scrutiny of how investment options are actually selected for inclusion in the plan. Justice Louis D. Brandeis famously stated that “sunlight is said to be the best of disinfectants”. 401(k) plans have been operating in very dense fog. Lawsuits challenging this unsavory process have had mixed results. Most have been dismissed as having no legal merit. Some have been quietly settled. None have gone to a trial on the merits, until now. Tussey v. ABB, Inc ( Case No. 2:06-CV-04305-NKL) is a class action brought in the United States District Court for the Western District of Missouri, Central Division, by present and former employees of ABB, Inc, who were participants in two 401(k) plans. The plans included mutual funds managed by Fidelity Investments. Affiliates of Fidelity served as investment adviser to the mutual funds in the plan and as recordkeeper to the plans. After a four week trial, U.S. District Judge Nanette K. Laughrey issued an extensive opinion. She found that ABB and Fidelity “… violated their fiduciary duties to the Plan when they failed to monitor recordkeeping costs, failed to negotiate rebates for the Plan from either Fidelity or other investment companies chosen to be on the PRISM platform, selected more expensive share classes for the PRISM Plan’s investment platform when less expensive share classes were available, and removed the Vanguard Wellington Fund and replaced it with Fidelity’s Freedom Funds.” The Court was especially critical of the process employed by the Pension Review Committee to replace the Vanguard Wellington Fund with Fidelity’s Freedom Funds. The Court noted the stellar, long term track record of the Wellington Fund. It found that the “… recommendation to add the Freedom Funds to the Plan’s investment platform and remove the Wellington Fund despite its excellent performance record was motivated in part by his desire to decrease the fees that ABB was paying and to maintain the appearance that the employees were not paying for the administration of the Prism Plan.” So much for acting in the best interest of the plan participants. As compensation for the misconduct of the plan fiduciaries, the Court assessed damages of $36.9 million and left open the possibility of awarding attorney fees to the plaintiffs. I contacted ABB and was told by their representative that it “strongly disagreed” with the decision and was “considering its options, including an appeal.” Dan Solin is a senior vice president of Index Funds Advisors. He is the New York Times bestselling author of “The Smartest Investment Book You’ll Ever Read,” “The Smartest 401(k) Book You’ll Ever Read,” “The Smartest Retirement Book You’ll Ever Read” and “The Smartest Portfolio You’ll Ever Own.” His new book is “The Smartest Money Book You’ll Ever Read.” The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

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Date Leaks Finance Guy’s Match.com Spreadsheet

April 17, 2012

From pretending to be an Israeli spy to burning down an ex’s parents’ house , there’s no shortage of press coverage when it comes to dating sociopaths in the financial industry. Now, there’s a new finance guy ready to creep out the Internets. First posted on DealBreaker , this nameless singleton loves to type up all the details about each of his potential Match.com suitors and put them into an Excel spreadsheet. Strangely, the guy actually revealed this on a date and later via email to Arielle, one of his lucky ladies listed in the infamous spreadsheet. But Arielle couldn’t keep a secret and, according to Deadspin, proceded to forward the email to her friends . Now, the attached spreadsheet is making the rounds on the Internet. From ranking attractiveness, to noting the last time they spoke and listing contact details, this spreadsheet is pretty in depth. But apparently it helps the man in demand stay “organized” , he later revealed in a phone interview to Jezebel. Check out the email and the edited spreadsheet below. (NOTE: Photos and contact names removed.) From: [redacted] Date: Sat, Apr 7, 2012 at 12:16 AM To: [26, Oyster Bay, 9.0] Subject: spreadsheet… Well…this could be a mistake, but what the hell. I thought about deleting the names, but figured I might as will give you the whole thing. I only deleted the non-match people’s names (at the bottom) since some I’ve known for a long time. I hope this e-mail doesn’t backfire, because I really had a great time and hope to hang again soon :) . However, I will keep my word! Have a great weekend!

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White House Threatens Veto Of Tax Cut For The ‘Fortunate’

April 17, 2012

WASHINGTON — In the second major shot in Washington’s ideological battle over taxes this week, the White House on Tuesday slammed a small-business tax-cut proposal in the House as a handout for the “fortunate” and threatened to veto it. The Small Business Tax Cut Act of 2012, sponsored by House Majority Leader Eric Cantor (R-Va.), would slash taxes on the adjusted gross income of as many as 22 million small businesses — those with fewer than 500 employees — by as much as 20 percent for one year. It would add $46 billion to the deficit. The House is set to consider the bill on Thursday. On Monday, Senate Republicans blocked the Buffett Rule, a measure from the ideological opposite end of the spectrum, which aimed to ensure that multimillionaires and billionaires paid at least a 30 percent tax rate. Cantor argues that the average $6,500 tax break resulting from his measure would serve as a potent economic stimulus, which could spur growth by letting entrepreneurs keep more of their money to spend and reinvest as they saw fit. “This is a bill which will directly help small businesses create jobs,” Cantor told reporters on Tuesday. “And as the Senate voted last night and the Democrats brought up their priority, which was to raise taxes, we believe you ought to reduce taxes on small businesses to create jobs. And in fact, there’s a study out, which shows that this bill, when fully implemented, will create an additional 100,000-plus new jobs.” Cantor was referring to a study by conservative tax analyst Gary Robbins, who heads the firm Fiscal Associates. But critics have argued that the benefits would disproportionately land in the pockets of wealthy individuals and businesses such as sports franchises, financial firms and celebrities . Congress’ revenue estimators, the Joint Committee on Taxation, has calculated that the top 11 percent of small businesses would grab 64 percent of the break, while the 125,000 firms with $1 million a year in adjusted gross income would snag 18.3 percent. The 9.2 million small businesses at the bottom of the income heap would share about 15 percent of the break. The bill “is not focused on cutting taxes for small businesses, but instead would provide tax cuts to the most fortunate,” the Obama administration noted in a statement. “Under the bill’s definition of income, many of the ‘small businesses’ that would receive the largest tax breaks are law partners, consultants, and other wealthy individuals and corporations with the biggest profits. The proposal is a giveaway that will cost $46 billion and could, in fact, lead to delays and reductions in investment and hiring.” Rep. Xavier Becerra (D-Calif.), who also opposes the bill, recently told The Huffington Post that this proposal could lead to reductions in investment. That’s because any capital investment that a business counts for a tax break lowers its adjusted gross income. If a business takes that deduction this year, this would lower the income on its books eligible for the 20 percent break. So, he argued, businesses might put off capital investments. “You’re thinking, wait a minute, I want to get 20 percent off as much as I can now. Why don’t I hold off that investment until next year, ” Becerra said. “The reality is this is almost a wait-till-next-year tax break, which essentially makes a lot of businesses hold off making investments today that could lead to jobs tomorrow.” The White House argued that a more “targeted” approach that simplifies tax rates and encourages new hiring would be better. “If the President is presented with H.R. 9, his senior advisors would recommend that he veto the bill,” the administration’s statement concluded. Michael McAuliff covers politics and Congress for The Huffington Post. Talk to him on Facebook .

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What Are The Best Apps For Your Business? (INFOGRAPHIC)

April 17, 2012

Ever wonder if you’re using the right applications to run your business? With so many options, and a whole lot of overlap, choosing platforms for email, data storage, financials and marketing can get complicated. While some applications like Gmail, Salesforce and PayPal are popular among business owners, it’s important to choose business applications that best suit your company’s needs, whether it be on-the-go access or cost efficiency. Check out the top ranking applications and see how businesses are best using them in this infographic from Mavenlink . Small Business Apps

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BJ Gallagher: In Sales — and in Life — Be a Go-Giver, Not Just a Go-Getter

April 17, 2012

I recently met Julie Larson, an Idaho consultant and organizer of a Facebook group called “The Go-Giver Group.” I’d never heard the term “Go-Giver” before and it intrigued me, so I asked her about it. She suggested I get in touch with Bob Burg, who coined the term in his book, The Go Giver . So I found Burg on Twitter and asked if I could interview him to find our more: BJG: I like the sound of your term, “Go-Giver.” Can you tell me more about it? Bob Burg: While my book (coauthored with John David Mann) is a play on the more well-known term “Go-Getter,” the two are actually not opposites. We love Go-Getters because Go-Getters take action and get things done. A Go-Giver is simply a person who has learned that shifting their focus from getting to giving (in this case, “giving” means constantly and consistently providing value to others) is not only a nice way to live life, but a very financially profitable way, as well. A Go-Giver is someone who lives their life and conducts business according the five laws John and I describe in the book: The Laws of Value, Compensation, Influence, Authenticity and Receptivity . Oh, and by the way; what is the opposite of a Go-Giver? That would be a Go-TAKER — a person who takes, takes, and takes without adding value to the other person, to the process, or to the situation. BJG: You and I had a brief exchange on Twitter the other day about the topic of selling. Selling seems to have a negative connotation in many people’s minds — why do you think this is so, and what (if anything) can sales people do about it? BB: Like most things that have a bad reputation, there is a seed of truth to it. That seed is the people who — in the name of “selling” – are actually con artists. They are not there to help the other person; they are there only to help themselves. Let me explain: Selling is simply a way of providing value to another human being and profiting as a result of the value you have provided. The old English root of the word sell — “Sellan” — actually meant “to give.” So, when you are selling, you are giving. What exactly are you giving? You’re giving time, attention, counsel, education, empathy and value. In a truly free-enterprise economy, a sale occurs only when the seller and the buyer both feel they will each be better off as a result of the transaction. Isn’t that beautiful? Therefore, it’s the job of the salesperson to provide value to their customer in a way that the customer sees that value. In other words, the seller must please the consumer. When a transaction takes place between two people who both feel good as a result of the exchange, that’s when mutual value has been created… and the economy expands. A country filled with people engaged in mutually profitable exchanges is indeed a prosperous country. I ask all salespeople to remember this: “Money is simply an echo of value. It’s the thunder to value’s lightening.” In other words, the value comes first. The money you receive is simply a direct and natural result of the value you provide. One of the best pieces of advice I ever received was about 30 years ago, from a very successful salesperson who was getting ready to retire. He probably saw me as a young up-and-comer to whom he could impart his wisdom (and I’m glad he did!). He said, “Burg, if you want to make a lot of money in sales, then don’t make money your target. Make serving others your target. Now, when you hit the target, you’ll get a reward. That reward will be money. But the money is only the reward for hitting your target of serving others — money’s not the target itself.” Wise words. Understanding that is the essence of being a “Go-Giver.” BJG: George Foreman has been quoted as saying: “I don’t care how many degrees and diplomas you have on your wall. If you can’t sell, you’ll probably die.” Since we’re all in the business of selling – ourselves, our ideas, our books, our workshops, our consulting services — what advice would you give business people and those who might not realize that selling is a part of their work? BB: I believe what Mr. Foreman said is absolutely correct. Everyone sells something, whether a product, a service, an idea, a concept, a philosophy, etc. Whether it’s selling a product or service to a client who needs/wants it, or selling a child on not taking drugs or why they should want to do well in school, we are all selling. Selling is simply communicating your ideas in such a way that the person with whom you are transacting comes to understand how they will benefit from them. Focus on the other person; on providing value to them in a way that they find it to be of value. The best, the most successful salespeople understand that in sales, “it isn’t about you; it’s about THEM.” So, my advice would be to learn selling, study selling. And understand that through selling you can help others, as well as yourself. As the great salesperson and sales teacher, Zig Ziglar famously said: “You can have everything in life you want, if you’ll just help enough other people get what they want.” BJG: Any final words of wisdom for my readers? BB: When it comes to sales, I have a favorite saying: “All things being equal, people will do business with — and refer business to — those people they know, like, and trust.” The best, most powerful, most effective way to elicit those feelings toward you is to focus on providing extraordinary value to them – not just through your products and services, but by being genuinely interested in them. For more information about Go-Givers and Bob Burg’s books and workshops, visit www.burg.com

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Gerald McEntee: Let’s Get Women Out of the Red

April 17, 2012

Workers are under attack and women are bearing the brunt of it when it comes to pay . Who’s to blame? Corporate-backed politicians typified by Wisconsin Governor Scott Walker. Last week, in the dead of night, Walker signed a piece of legislation that rolls back progress on pay equity in his state, where women make only 75 cents for every dollar a man earns doing the same job. (Wisconsin’s rate was already worse than the disheartening national average of 77 cents on the dollar.) Walker’s legislation repeals a 2009 law that made it easier for victims of wage discrimination to have their day in court. His action adds another to the growing list of reasons Wisconsin voters want to recall him this June . Republican presidential hopeful Mitt Romney has yet to denounce Walker’s anti-worker, anti-women action. Recently, Romney’s campaign officials were stumped by a reporter’s question on the topic. The reporter asked if Romney supports the Lilly Ledbetter Fair Pay Act , the first law President Barack Obama signed, making it easier for women to sue in wage discrimination cases. Campaign officials were silent, then said only, “We’ll get back to you on that.” No public official should have to stop and think about pay equity. It’s the right thing to do. And it’s the smart thing to do. When women do not get paid fairly, we all suffer. Yet in places like Wisconsin, the systematic attacks on women’s pay and voices continue. Walker’s so-called “budget repair” bill passed last year broke the livelihoods of many women in the state, where the resulting layoffs and pay cuts disproportionally hit working women. Leah Lipska, a member of AFSCME Local 1 in Wisconsin, told her story in a letter to the Washington Post . She wrote, “Aside from my full-time job with the state, I have been forced to take a part-time job at a local pizza place. Even that’s not enough to make up for my decrease in pay since Governor Walker’s law. I got so far behind on my car payments, I had to ask my parents for help. I’ve even had to go to the local food pantry. [Walker] is no hero; he’s stolen our American Dream.” Nationwide, the reality of pay inequity for women of color is even bleaker. African-American women make about 72 cents for every dollar earned by a white man. Latina women, only 62 cents. In the 1970s, pay equity emerged as one of the most significant issues confronting women. AFSCME members in San Jose, Calif., staged the first pay equity strike , and AFSCME members in Washington state reaped the benefits of the largest pay equity court settlement to date. We have made some strides as a nation, through pay equity agreements at the bargaining table and in state and local legislatures. But progress has been far too slow and much too scarce. Today, pay equity remains so troubling an issue that President Barack Obama talked about it in this year’s State of the Union address. “An economy built to last is one where we encourage the talent and ingenuity of every person in this country,” Obama said. “That means women should earn equal pay for equal work.” Wisconsin gubernatorial recall candidate Kathleen Falk echoed these words recently. “As a woman, as a mother who worked full-time while raising my son, I know first-hand how important pay equity and health care are to women across Wisconsin.” Today, AFSCME members across the country are wearing red . We are wearing red because we, like Falk, know how important pay equity is. We are wearing red to stand in solidarity with the women we work with every day, the women who make America happen. We are wearing red to get women out of the red. “Another day, another 77 cents on the dollar,” doesn’t have a nice ring to it. We must finish what we started in the 1970s. We must stop the corporate-backed politicians who are trying to rewind history. We must make sure women earn equal pay for equal work.

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Rep. Carolyn Maloney Seeks To Deny Tax Breaks To Men-Only Businesses

April 17, 2012

If businesses like the Augusta National Golf Club, home to the Masters tournament, can continue to deny women membership , then the government should withhold their tax breaks, says Rep. Carolyn Maloney (D-N.Y.). Maloney’s Ending Tax Breaks for Discrimination Act, which she has introduced multiple times since 2003, prohibits businesses that discriminate on the basis of sex or race from deducting travel or advertising expenses from their taxes. Now, on Equal Pay Day and in light of the prestigious Georgia golf club’s refraining from extending membership to IBM’s new CEO, Virginia Rometty, because she is a woman, Maloney has reintroduced the bill with a new working title: the Equal Play at Augusta Act. “When a woman, Virginia Rometty, took over as head of IBM, it was an excellent time for the [Augusta National Golf Club] to change that tradition of not admitting women,” Maloney told The Huffington Post. “But instead of recognizing her and breaking with this outdated tradition, they decided to continue with this discrimination.” “I am filing a bill that really follows the example of when Congress passed Title IX for athletic equality,” Maloney added. “Any organization or institution that discriminates against women or men should not be able to deduct the cost of doing business, such as their meetings, flights and food.” While there is no official count of how many private country clubs and other organizations in the United States discriminate against women, media outlets have identified at least 24 males-only country clubs since the Augusta club garnered attention in 2003. If the bill makes it out of the House Ways and Means Committee this time around, it could put the GOP in an awkward position, since many prominent Republicans , including presidential candidates Mitt Romney and Newt Gingrich, former aspirant Rick Santorum, and Sen. John McCain (R-Ariz.), have publicly criticized the Augusta National Golf Club for not admitting women. House Speaker John Boehner (R-Ohio) is a member of a Maryland all-male golf club , which makes the issue even more awkward for him. But if Maloney’s ultimate aim is to coax private males-only clubs into changing their policies, the support of influential Republican men can provide her with more leverage to do so. “A woman can run a great company, she can run a country, she can run circles around her competition, she can be at the top of her profession, but Augusta National Golf Club believes she cannot be a member of its club simply because she is female,” Maloney wrote in an April 13 letter to William Payne, the club’s chairman. “There is a wide and growing consensus that this is a policy whose time has long since past. There are not many things in this world that Mitt Romney, Newt Gingrich, Rick Santorum, President Obama and I can all agree on. But this is one of them.”

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Twink-ruptcy: Hostess May Go Under In Labor Dispute

April 17, 2012

Marking the peak of a heated labor dispute, Hostess Brands and the Teamsters union are squaring off in bankruptcy court Tuesday in a case that could decide the iconic company’s future. The union, which represents 7,500 Hostess workers, hasn’t reached a contract agreement with the bankrupt maker of Twinkies, Ding Dongs and Wonder bread, saying the company is demanding too much in the way of concessions. Hostess argues that its pension and labor costs are untenable. A ruling against Hostess in court would force the company back to the bargaining table with the Teamsters. A ruling in favor of Hostess would allow the company to escape its current labor contracts. “And in that case, we will be on strike,” Ken Hall, Teamsters vice president, told The Huffington Post. According to Hall, the union’s Hostess workers voted overwhelmingly to authorize a strike. Though he wouldn’t put a date on it, he said the strike could happen “very soon.” The union recently acknowledged to the court that negotiations were ” in crisis .” Hostess CEO Gregory F. Rayburn said in an emailed statement that a strike by either the Teamsters or the workforce’s other major union, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, would put the company under. “Hostess will be forced to liquidate if there were a strike by either of its largest unions because its lenders would pull their financing,” Rayburn said. “That’s why the company has tried to reach a consensual agreement with its unions that would lower the costs of its union pension and health plans while still providing employees with good, industry standard benefits.” The two sides failed to reach an agreement in advance of the hearing in bankruptcy court in New York, each arguing that the other’s proposals were unreasonable. After an offer made by Hostess over the weekend calling for steep pension cuts, the Teamsters made a counter offer with more modest concessions that amount to $150 million annually, including the temporary suspension of pension payments, according to the union. Hostess maintains that the current employee pension plans are too costly and financially unstable. In a letter to employees Monday, Hostess warned that a strike would cripple the company: “All Hostess Brands operations would shut down and liquidation would begin. The 18,500 jobs, plus the health insurance that comes with them, would be lost for good.” The union’s hard stance suggests a degree of frustration among rank-and-file workers. Dow Jones reported earlier this month that Hostess’ creditors were concerned that the company may have manipulated executive pay leading up to its Chapter 11 filing, possibly allowing Hostess managers to sidestep compensation requirements under bankruptcy law. The company has denied the creditors’ implications. Joseph Ortuso, a Hostess route salesman and Teamster based in New Jersey, said the news about executive pay was galling, given the talk of the need for shared sacrifice as the company struggles. “They’re saying they can’t afford to pay pensions when they’ve given [huge] increases to executives,” Ortuso, 53, said. According to Hostess, the raises put in place for executives last year were scrapped, and the company’s top four executives have agreed to work for $1 until either the end of this year or when the company emerges from Chapter 11, whichever comes first. The company also says unionized employees have had more generous raises than non-unionized employees during the past three years. “It is factually incorrect to claim that union employees are the only ones being asked to sacrifice,” Rayburn said. Hall, the Teamsters official, has been critical of Hostess management since the company came out of its last restructuring three years ago. He said the company needs to steer its branding and image toward healthier products to appeal to modern consumers. “All the other companies have changed with consumers’ desires,” Hall said. “This company hasn’t. We want to make sure whatever our members are giving up will help make this company profitable.” The company maintains that it, too, would like to invest in branding, marketing and research and development, but can’t under its current cost structure. The bankruptcy judge is expected to make a decision on Hostess’ union contracts in several weeks.

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Warren Buffett, Ryan O’Neal And Other Celebrities Affected By Prostate Cancer

April 17, 2012

Warren Buffet has been diagnosed with stage 1 prostate cancer , according to a statement from Buffet and his company, Berkshire Hathaway, to shareholders. In the letter, Buffet says he feels great, and that doctors don’t believe his condition is life-threatening. He plans to begin a two-month course of radiation treatment mid-July. At 81, a prostate cancer diagnosis is not entirely surprising. According to the Cleveland Clinic, 80 percent of men who reach their 80s will have some cancerous cells in the prostate . The severity of prostate cancer is measured in stages. Stage 1 is the least advanced , and only found within the prostate, according to The National Cancer Institute. It is detected by biopsy, testing for a man’s Gleason score and PSA (prostate-specific antigen) level. The higher the PSA level in the blood, the more likely there is cancer. “I discovered the cancer because my PSA level … recently jumped beyond its normal elevation and a biopsy seemed warranted,” Buffet said in the statement. Buffet’s diagnosis comes on the heels of actor Ryan O’Neal’s announcement late last week that he has recently been diagnosed with stage 2 prostate cancer . The actor, 70, who previously battled leukemia , said in a statement: “Although I was shocked and stunned by the news, I feel fortunate that it was detected early and according to my extraordinary team of doctors the prognosis is positive for a full recovery,” People reported. O’Neal and Buffett are among the growing ranks of men who have opted to speak out about their diagnoses, in the hopes of raising awareness for a disease that kills more than 28,000 men a year , according to the American Cancer Society. Here’s a look at a few of those famous faces. For more on cancer, click here . For more on celebrity health, click here .

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How To Turn Your Instagram Photos Into A Pillow

April 17, 2012

Instagram’s sale to Facebook earlier this month for $1 billion was the crescendo of the startup’s rapid rise and dominance in the mobile photo-sharing market. But within the Instagram universe lies another market — small businesses allowing you to customize products using photos from your Instagram account. From flipbooks to T-shirts to posters, a myriad of websites have sprung up around the ability to turn your Instagram photos into physical or decorative mementos. Apart from creation, startups have also come up with new methods for browsing Instagram and sites where you can look at statistics and insights from your account. Consider it the Instagram Economy. One such Instagram-inspired creation is Stitchtagram , a Washington, D.C.-based company that allows you to craft 15-inch throw pillows with photos from your Instagram account for $95 plus shipping. Stitchtagram is the brainchild of brother-and-sister duo Doug and Rachel Pfeffer. Doug works for Internet ad agency The Barbarian Group while Rachel leads Rachel Pfeffer Designs , a jewelry store. “My sister and I had been talking about it for a while and we wanted to get it out there into the world in time for our Christmas and holiday orders, so it has only been a few months,” Doug Pfeffer said of Stitchtagram’s November launch. “I’m not going to retire off Stitchtagram just yet, but it’s been a great project so far.” For Adrian Salamunovic, co-founder of CanvasPop.com , a site that blows up, prints and frames your Instagram photos, Instagram’s user base of some 40 million people has been a fertile customer pool. “We could tell early on that Instagram was going to explode,” he said. “We knew we had to be the first company to allow this huge marketplace to print large images and we achieved that. Fast forward six months later and we’ve sold tens of thousands of prints to our fellow Instagram fanatics, with almost no advertising.” Instagram’s clean, intuitive interface and easy access for third parties have allowed this secondary market to grow alongside the popular photo-sharing app. Apart from technical matters, Instagram photos are inherently practical for businesses printing and using the pictures. “It’s a simple thing to go in there and access your photos,” Pfeffer said. “Instagram has this great API, so it makes it really easy for third parties to go in and pull the photos out of there. A side effect of this simplicity is that all Instagram photos are the same dimensions so it actually makes it way easier to print.” “What makes Instagram so perfect for doing business is that they have a highly influential, early adopter, connected, creative audience that loves to share stuff — in other words, the clients that everyone wants,” Salamunovic added. “These people look for cool authentic products they can get behind. More importantly Instagram never had a focus on monetizing their audience, so we did it for them via their API that they provide for free to developers.” For CanvasPop, their printing extends beyond purely Instagram photos — offering prints and canvases for SLR photos and even Facebook pictures. Pfeffer echoed that he was hoping to open up his pillow creation tool to Facebook photos to expand his audience and offer more variety in pillow creation for customers. With Facebook’s high-profile — and high-priced — purchase of Instagram, there has been a ton of press and a flood of new users using the application. With the release of the app for Android and the big news of the purchase, Instagram added more than 10 million users in only 10 days , bolstering its user base to 40 million strong. “One reason a lot of people, including me, like Instagram is because it seems like it’s more of a closed network of people you’re interacting with,” Pfeffer said. “As far as business goes, more people is never a bad thing.” Here’s a look at some of the more creative third-party Instagram companies:

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Obscure Chemical Shortage Threatens To Disrupt U.S. Auto Industry

April 17, 2012

An explosion at a German auto supplier two weeks ago could prove to be disastrous for the global auto industry, as auto suppliers are now faced with shortages of a key chemical that could shut down car production in the United States, Europe and Asia. About 200 representatives from auto suppliers and major automaker executives convened in Detroit on Tuesday to figure out how to replace PA-12, a nylon compound used in plastic fuel lines and brake lines; it is favored because it can withstand heat and can stand up to corrosive gasoline additives. The news of the potential shortage was first reported by Bloomberg . “A significant portion of the global production capacity of PA-12 (nylon 12) has been compromised,” declared a statement issued by the Automotive Industry Action Group after the summit. The chemical isn’t easily replaced, the group said, noting, “These are highly engineered products produced via a very complex manufacturing process.” Industry players will work together to stretch current supplies of the chemical to make it last longer. They will also seek alternatives to PA-12 and test new solutions to make sure they can endure the same wear and tear. Evonik is one of the leading producers of PA-12, which is used as a coating for plastic pipes, also used in solar panels, offshore pipelines, sporting goods and household goods. About 40 percent of the global supply of PA-12 was cut off after an explosion at an auto supplier called Evonik Industries in the North Rhine-Westphalia region of Germany. The March 31 accident, which killed two company employees, took place in the part of the plant producing two chemicals that go into PA-12′s manufacture. Evonik told Reuters on Tuesday that it will take three months for its plant to resume normal production. “The possibility for serious disruption is real,” said Paul Blanchard, an analyst with IHS. Auto manufacturing runs on what’s called a “just-in-time” schedule, meaning parts arrive at the assembly plant often just hours before they are needed. This keeps plants clean and lean — they don’t have to store up massive amounts of inventory until those ingredients are needed — but it also makes production susceptible to disruption when something goes awry. And this incident exposes vulnerabilities in the world’s most complex supply chain, whereby 3,000 individual parts go into each car or truck made. Each component contains hundreds of other pieces supplied by multiple other companies — such as the rubberized portion of a windshield wiper, the hard metal parts of that wiper or the electronics used for a wiper to move. All it takes is for one of those parts to be missing and an entire production line can be shut down. The auto industry has faced massive parts shortages in the past. Just last year, the earthquake and tsunami that rocked Japan resulted in widespread destruction of scores of auto suppliers. A company that produced the base chemical for black and red paints was damaged and a maker of car computer components also suffered damage. The industry scrambled to find new sources for those materials. By the end of last year, some shortages had resulted — several dealers had waiting lists for cars like the Toyota Camry — and many people had to choose car colors other than black or red. But for most consumers, the tsunami caused only minor disruptions. This time, however, could be different. “This could prove to me slightly more serious, depending on the industry response, because the material has worked its way into many fuel systems,” Blanchard said. “It’s not as simple as being able to pick a black car instead of a blue one. They are all going to have this material in their fuel systems.” For now, no automaker has canceled production as a result of a shortage of PA-12. But following the Japan tsunami last year, it took several weeks for the impact to surface in the United States.

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U.S. Bank Faces Federal Investigation

April 17, 2012

U.S. Bank on Tuesday joined the ranks of large financial firms facing discrimination charges for the way it maintains foreclosed homes in mostly black and Latino neighborhoods. The National Fair Housing Alliance, a Washington, D.C.-based nonprofit, filed a formal discrimination complaint against the bank with the Department of Housing and Urban Development Tuesday. In the complaint, the organization accuses the bank of maintaining and marketing bank-owned foreclosed properties in predominantly white communities far more aggressively and consistently than it does homes in mostly black and Latino neighborhoods. The complaint filed against U.S. Bank and its parent company, U.S. Bancorp, marks the second charge in as many weeks brought by the National Fair Housing Alliance against a major bank. The alliance conducts housing discrimination investigations and receives some funding from HUD. Last week, the alliance accused California-based Wells Fargo , the nation’s largest mortgage lender, of similar civil rights violations. Minnesota-based U.S. Bank is the fifth largest commercial bank in the United States. On Tuesday, it also faced separate allegations logged by another nonprofit group that it offers pay day loans at annual interest rates approaching 400 percent to vulnerable consumers. Alliance investigators examined 177 U.S. Bank properties in seven cities, said Shanna Smith, the alliance’s president and CEO. Public records indicated each of the homes was owned, not simply managed, by U.S. Bank, she said. In Dayton, Ohio, alliance investigators found that 65 percent of U.S. Bank foreclosures in communities of color had broken widows or doors, according to the alliance’s complaint. Only 15 percent of the bank’s repossessed homes in white neighborhoods were in the same condition. In the Oakland, Calif.-area, 64 percent of the bank’s foreclosed properties in black or Latino neighborhoods were littered with, “substantial” amounts of trash. But, only 17 percent of properties in predominantly white Bay Area neighborhoods had the same problem. U.S. Bank said that the complaint filed with HUD Tuesday does not include the addresses of problem properties, which the bank needs to determine if it owns the properties or if it is simply the trustee managing administrative tasks for investors who own the home loans. Trustees oversee securities — in this case, mortgage securities made up of hundreds or even thousands of home loans — on behalf of investors. The investors are often large pension funds and insurance companies. Trustees, in turn, typically hire companies known as servicers to collect mortgage payments from the home buyers whose loans are part of the security. Banks often function as servicers and are responsible for dealing with loans before and after a foreclosure. So, servicers also often hire asset managers or contractors to maintain foreclosed properties. Nicole Sprenger, a U.S. Bank spokesperson, emailed a statement to the Huffington Post Tuesday that emphasized the complexity of these arrangements. As you may know, U.S. Bank is one of the nation’s largest corporate trustees. Accordingly, in the vast majority of cases where U.S. Bank is involved in a foreclosure, we serve as a trustee for an investment pool where the former mortgage was held, and have no role in servicing or maintaining the property. That is the responsibility of the servicer (typically another bank), and not the trustee. When we do own a property, we have a strong and comprehensive process in place to regularly inspect and maintain properties to marketing standards where we have legal access, regardless of their location. The bank’s argument is illegitimate, said Anne Houghtaling, executive director of HOPE Fair Housing Center in Wheaton, Ill. a city about 25 miles west of Chicago. HOPE is one of the nonprofit organizations that helped the National Fair Housing Alliance evaluate the state of foreclosed homes in cities around the country. “U.S. Bank has a list of its own properties, (and) could go and look at them, and should be going to look at them regularly,” Houghtaling said. “They could do that now.” There is clear evidence that U.S. Bank-owned properties in Chicago are treated differently if located in a community of color, she said. HUD declined to comment on the complaint but confirmed that it had been filed and will lead to a federal investigation. Should HUD find evidence that the alliance’s complaint against U.S. Bank is accurate, the federal agency can attempt to negotiate a settlement with the bank. If the parties are unable to reach an agreement, the Justice Department could file suit against the bank. The complaint filed Tuesday follows a nine-month probe during which the National Fair Housing Alliance evaluated the state of 1,000 bank-owned foreclosed homes in nine metro areas from California to Washington, D.C. Investigators found “overwhelming” and “troubling” evidence that six of the nation’s major banks market and maintain foreclosed homes in predominantly white neighborhoods differently than they do in others, according to a report issued by the agency last week. The pattern was pronounced in communities regardless of income, Smith said.

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Chip Conley: The 7 Practices of PEAK Leadership

April 17, 2012

Why don’t we “practice” business? I’ve come to realize that — unlike medicine and law — we don’t think of our profession as business leaders as a “practice.” A few years ago, in the last downturn, I developed the principles of PEAK as an alternative operating model for my business based upon Abraham Maslow’s iconic Hierarchy of Needs pyramid. Reinterpreting this well-known theory of human motivation helped me to see that all stakeholders associated with a company have their own Hierarchy of Needs. My company Joie de Vivre tripled in size during this difficult period and I came to find out that a variety of other transformational companies like Harley-Davidson have used Maslow’s theory as a foundation for their business model. Business principles are only as good as the practices that back them up. Recently, with the assistance of some good friends, I’ve developed a set of PEAK Leadership practices that can assist any leader or leadership team to move from survival to success and on to being a transformative role model in their industry. When a company embeds these principles and practices in how they grow their leaders, the end result is PEAK performance: a phenomenon of sustained growth — both for the organization as well as for those within the organization. Practice 1: Embody an inherently positive view of human nature. The principles of PEAK have their roots in humanistic psychology and a basic belief that man is meant to “be all that he can be.” So, it’s not surprising that the fundamental first practice is assuring that a PEAK leader believes that humans — at their very core — gravitate to goodness when the right conditions exist for them to flourish. Creating what Maslow called “psycho-hygiene” in a company means focusing on people’s best qualities and believing in what’s been known for a half-century in business as a “Theory Y” perspective on management versus “Theory X.” With Theory X, management assumes employees are inherently lazy and will avoid work if they can. As a result of this, management believes that workers need to be closely supervised and a comprehensive system of controls developed. With Theory Y, management assumes employees may be ambitious and self-motivated. They believe the satisfaction of doing a good job is a strong motivation and seek to create the conditions for the employee to develop their own strengths to be successful. While this latter theory may feel intuitively right to many of us, is your organization still structured in a Theory X style of business? Practice 2: Create the conditions for people to live their callings. Great leaders understand there are only three relationships you can have with your work: a job, a career, or a calling. A job tends to deplete you and a calling energizes you. Most employees live in the bartering world of work. The company gives them a compensation package and recognition and, in return, the employee gives their time and energy. Yet, those that are living their calling have moved from external to internal motivation. And, these employees are not exclusively focused on the specific collection of tasks they perform and are more focused on the impact or purpose of what they do. The best hospitals have more nurses living their calling. The best airlines have the happiest flight attendants (Southwest). What are you doing to help your people find their sense of calling in what they do? Practice 3: Promote and measure the value of intangibles. In business, we are taught that leadership is all about managing what you can measure, but what’s most easily measurable is the tangible in life. Yet, is it the tangible or the intangible in business and life that creates value? In business, the metrics that track the tangible are well known: your profitability, assets & liabilities, cost structure, market share. Yet, in reality, these tangible metrics are the result of a series of intangibles that drive excellence: brand loyalty and reputation, employee engagement, customer evangelism, the ability to innovate. Great leaders nurture, value, and evolve corporate culture — one of the most valuable intangibles — as a key differentiator for their company. These intangibles are the inputs that drive the tangible output that most companies use to evaluate their performance. In the 21st century, great leaders are learning how to measure and benchmark these intangibles so that they’re not out of sight, out of mind. Which intangibles are most valuable to your business and how are you measuring them? Practice 4: Ability to move fluidly between being a “transactional” and a “transformational leader.” Author James McGregor Burns once wrote that, “Transformational leaders look for the personal motives in followers, seek to satisfy higher needs, and engage the full person of the follower.” Yet, most management decisions require only transactional thinking because the goal is purely to optimize existing resources. A great leader is able to move fluidly between addressing the foundational needs that people have, but also helping them see beyond the short-term so that they can be motivated by a compelling vision that helps them transcend their momentary challenges. How much of your time is stuck in the trenches as a transactional leader versus focusing on how to create transformation? Practice 5: Calibrate the balance between “Conscious” and “Capitalism.” Business has quite often been seen as a “zero-sum” game. One person’s win is another person’s loss. Taken to the global level, some believe that capitalism’s short-term gains are often to the long-term detriment of the environment and to certain communities. And, at this crossroads, in an increasingly transparent world, this is why great leaders have to think more broadly about the impact of their decisions, not just on the bottom line, but on their broader stakeholders. In many ways, Walmart took this step when they saw their stock price flat line even with sizable revenue and net income growth. Yet, for those socially conscious business leaders, cash flow is the blood that keeps your organization alive. Make sure the basic survival needs of your company are met. How do you balance the priorities of the broader community versus the financial needs of your company? Practice 6: Focus on your customers’ highest needs. Henry Ford once suggested, “If I asked my customers what they wanted, they would have said a faster horse.” PEAK leaders and companies understand what the customer wants even before the customer has articulated it and they realize that customer innovation requires a certain amount of mind reading and cultural anthropology. By doing this well (with Apple being the best example in the world), you create a movement and evangelists and reduce your need to spend money on traditional marketing. Are your customer satisfaction surveys just asking the obvious questions that will track their expectations and desires, but not their unrecognized needs? How can you “mind read” your customers? Practice 7: Lead to PEAK. Just as a Sherpa does in the Himalayas, great leaders meet their people where they are on the pyramid and help them to see the natural path to the peak. They recognize the value of loyalty and mentoring as a means of sustainable success in business. PEAK leaders champion personal development in tandem with corporate development knowing that there’s a synergistic effect of having a self-actualized individual in the workplace as evidenced at companies like Google. And, most importantly, they embody authentic leadership by being, not just by doing. How are you incubating a collection of great leaders? Conscious people pay attention. It’s true of spiritual leaders. It’s true of business leaders. PEAK leaders pay attention to the higher needs while not neglecting the base needs that provide a foundation for their organization. Leadership is all about making conscious choices and knowing that the higher you are in a company, the more magnified your decisions and behavior will be throughout the organization.

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Kat Griffin: Which Is Better: The Bigger Office or the Better-Located One?

April 17, 2012

The other day, a reader of my blog Corporette wrote in with a great question: should she leave her well-located office and move to a bigger one down the hall? There is a large office that has been vacant in our firm for 9 months or so (another associate was let go). I have a small office, but I like the location of it. It’s right next to the partner I work for and the assistant we share, and there’s always activity around it, which suits my work style. The large office is down the hall a bit, in a quieter area with less activity and visibility, all of which are “cons” for me. I’ve been going back and forth with asking to move (I know they’d say yes). I think the large office looks better to clients, I’ve been here for several years now, and I’m the only attorney still in a small office, the rest are occupied by paralegals. Any thoughts as to size versus location and which is more important? Tough, tough question. My gut reaction is you should stay put because you seem happy in your current office… but your points about the paralegals and clients are serious things to consider. Whichever one you choose, you may want to read our suggestions on office decor. I suppose the first question to ask is whether there are any dream offices — i.e., larger offices, near your partner or in other active areas — even if they may be occupied at the moment? If so, first look at who’s occupying them. Does anyone have their door closed frequently because the activity level is too much for him or her? Is anyone far from his or her assistant? I might approach that person and see if he or she would be interested in moving down the hall to the vacant office, perhaps with the promise of a nice lunch out on you (or help moving?) or something of the like. If that doesn’t work out, have a conversation with whoever is in charge of office assignments and put in an informal request to have your dream office once it becomes vacant. If your choice is still between the small but well-located office or the larger but remote office, I think you have a few questions to ask yourself, such as: What percentage of your time is spent in meetings? Will this percentage greatly increase in one year, or two years? Are there conference rooms nearby that you can use for meetings instead (and a reliable reservation system to make sure you have a room when you need it)? Alternatively, can some of your meetings (such as new business pitches, etc) be held over lunch? If so, invest a little time in perfecting the networking lunch , such as picking one nearby spot with excellent service (and decent food) for lunch, and getting to know the staff there so the meal goes incredibly smoothly. If you would still prefer to hold meetings in your office, continue to the next question… Can you declutter your current office, perhaps by claiming file space near the vacant office? If your office is smaller than everyone else’s, it should be as clean and as orderly as possible (although in general, readers have said that that a messy office only crosses the line “when it looks like you can’t get work done in there.”) Finally: Do you need to break any bad patterns? You mention “the partner I work for.” I don’t know the particulars of your situation — maybe many associates in your firm are assigned to only help one partner. But in some companies, it can be a bad sign if you’re only working with one boss. Seriously take stock of that relationship: are you getting the opportunities you need for growth? Are you learning what you need to accomplish your goals, whether you want to become partner, go in house, open your own practice, etc? (Even if your goal is to be a stay at home mom, I would advise working with as many people as possible so you have numerous doors open to you if/when you return to work.) Would you benefit from feedback from other partners? If you take stock of that relationship and don’t like what you see… moving offices could be a great way to break up the pattern that has been established, and to start working with other partners at your firm. HuffPo readers, what are your thoughts — would you prefer a big office, or a well-located one? How much does “keeping up with the Joneses” play into it, versus having an office that suits your workstyle?

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FCC Chair Blasts Broadcasters For Opposing ‘Technology.. Transparency.. Journalism’

April 17, 2012

WASHINGTON — Julius Genachowski, chairman of the Federal Communications Commission, staked out strong ground Monday in support of a plan to make information about political television ad buys available online. He was speaking in Las Vegas before the National Association of Broadcasters , whose members have lobbied hard against the plan. The FCC proposal would dramatically increase the amount of disclosure around political TV advertising just as the country enters into a general election that many predict will feature greater ad saturation than ever before. Thanks ultimately to the Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission, which freed corporations and unions to spend unlimited amounts in elections, independent groups are expected to pour as much as $1 billion into the 2012 campaign, much of that likely to go to TV ads. Total spending on broadcast political ads is anticipated to reach up to $3 billion . On Monday, Genachowski fired back at broadcasters for the first time over their opposition to the plan, saying that “some in the broadcast industry have elected to position themselves against technology, against transparency and against journalism.” Claims that disclosure would be a financial burden for broadcasters — even a “jobs destroyer” — were unsupported by facts, Genachowski said. He called the cost of online disclosure “nominal.” Indeed, he said, “Once the transition from paper to digital is complete, it will save money — save money for broadcasters and for other stakeholders, including political candidates, journalists and the public at large.” Under the FCC proposal, data from the federally mandated public file on reserved time for political ads, maintained by all broadcast stations, would be put into an online database. These files are currently only available for inspection by those who physically visit the station. Genachowski swatted down the argument that this was not an FCC issue, pointing to the language of the Communications Act. “Congress explicitly requires broadcasters to ‘maintain, and make available for public inspection, a complete record of a request to purchase broadcast time that is made by or on behalf of a legally qualified candidate, etc.,’” he said. Broadcasters’ argument that the information about the ad buys is proprietary was similarly dismissed by the chairman. “Congress explicitly requires broadcasters to disclose this information, and, two, broadcasters already do,” he said. Genachowski then summed up his view of the broadcasters’ argument: “The argument against moving the public file online is that required broadcaster disclosures shouldn’t be too public. But in a world where everything is going digital, why have a special exemption for broadcasters’ political disclosure obligation?” Lisa Rosenberg, government affairs consultant for the Sunlight Foundation, a pro-transparency group that has submitted comments to the FCC in favor of the proposal, put it simply to HuffPost. “[The political file] can’t really be considered public if it’s not online,” she said. Responding to Genachowski’s speech, Gordon Smith, chairman of the National Association of Broadcasters, told Adweek , “[The FCC] has the authority to do what they’re going to do. We’re working with them in good faith. We’ve made it clear [to the FCC] that we’re happy to put online who bought commercial time and how much. What we’re concerned about is putting the rate on the Internet because that has collateral commercial damage.”

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Houses Just Ain’t Worth What They Used To Be

April 17, 2012

It’s a tough time to be a home builder — especially now that so many houses aren’t worth what it costs to build them. That’s the surprising finding of a recent report from the National Association of Home Builders. About one out of every three builders is now grappling with a dismaying problem: once the homes are finished, an appraiser comes around and declares that they’re worth less than they cost to construct , according to the report cited by SmartMoney . That’s bad news in a market where housing sales are already far from robust. Persistently low prices and an overall climate of economic uncertainty are keeping many would-be homebuyers from taking the plunge. The lack of momentum in the housing market, in turn, is thought to be a major factor keeping the economy in low gear — not to mention crowding out low-income renters as more and more people are skittish about buying . Selling a newly built house presents a special set of challenges — not all of which have to do with home appraisers, a group the NAHB has been quick to criticize in the past. As SmartMoney notes, the market is already flooded with cheap foreclosed properties , which homebuyers are more likely to turn to. New-home sales fell in February to a number about 10,000 less than what analysts expected , according to CNN. There are already more than 10 million vacant homes in the country , according to some estimates, but the supply of new houses seems on track to keep going up. Builders requested the most permits in March for new construction projects in three and a half years , according to the Associated Press. That’s good news as far as unemployment is concerned — an NAHB economist told CNN last month that three jobs are created for every new house that gets built — but it remains to be seen what kind of effect it will have on a market where housing supply already far exceeds demand.

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Tech Giant Considered Creating Its Own Android Rival

April 17, 2012

SAN FRANCISCO (Reuters) – Oracle Corp Chief Executive Larry Ellison said the software maker had considered building its own smartphone to compete with Apple Inc and Google Inc, but decided it was a “bad idea” after a weeks-long cost and market analysis. As part of that exhaustive internal analysis, he said, Oracle had pondered at one point buying Blackberry-maker Research in Motion Ltd and Palm — a smartphone maker scooped up by Hewlett Packard Co. On the second day of a legal battle between Oracle and Google over Java patents used in Android mobile software, Ellison added that Oracle felt it lacked in-house expertise on smartphones and hence considered acquisitions. But it ultimately decided to abandon the idea. (Reporting By Edwin Chan and Dan Levine; Editing by Gerald E. McCormick)

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How We’re Spending Our Tax Return

April 17, 2012

If you’re like us, you might be getting a little bit of money back from the federal government this year, so you better start planning what you’re going to do with it now. Below, we’ve used a pie chart to illustrate exactly how we’ll be spending our return, starting with the most money going towards another hilarious presidential campaign, and ending with a couple of quarters going to insignificant things like debt. How are you spending your return?

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Liz Ryan: The Worst Way to Pick a Job Candidate

April 17, 2012

When anthropologists of the future turn their gaze to the 21st-century workplace, they’re going to be surprised at how many pointless, absurd things 21st-century people (that’s us) used to do at work. The anthropologists are going to say, “The 21st-century workplace is a treasure trove of anthropological riches! There’s the formulaic and stilted decision-making process, the hierarchical overtones in every conversation and glance, and the overpowering pressure to conform with the group — and we’ve only just begun our research!” I’d love to read that study, if scientific advances allow me to live another 90 years or so. One of the phenomena that will come up for review when future researchers dig into 21st-century workplace culture is the job interview process. I can’t imagine how we could employ a worse system for choosing people to work on our teams, but the godawful American corporate job interview process is so firmly entrenched that most corporate people are shocked when I suggest overhauling it. We know it stinks. We sit in an awkward room with a resume and a desk between us and another person and we ask, “So, tell me why you left Acme Explosives?” as though we cared about the answer to that question. We ask idiotic questions because we don’t know a better way to get through an hour’s worth of conversation, and we know we have to do that. I’m not blaming the managers who sit through those painful interviews, or the candidates themselves, of course. The system itself is broken. The interview script is brainless. It’s time for smart people to change the way we conduct interviews, and the good news is that it couldn’t be easier to do. If we needed someone to remodel our bathroom, we wouldn’t call a bunch of contractors and have each of them come over to our house so we could ask them: “So, why did you start your own plumbing business in 1997?” We actually couldn’t care less why they started that business. What we really need to know is: “How would you remodel my bathroom? What sorts of similar projects have you done in the past? How did those work out?” We’d want to get a feel for our contractor’s gravity and professionalism. We’d want to get a taste of his communication style and interpersonal manner. Later, we’d check references on one or two of the folks we were thinking about hiring. We’d negotiate a price for the job. Boom! We’d be done. We wouldn’t ask the contractors what their greatest weaknesses are. We wouldn’t ask them why they want our bathroom remodeling job; we would consider it insulting to ask that question, because each of these contractors had already expressed interest in the project. They’re bathroom remodelers — why shouldn’t they be interested in remodeling a bathroom? We wouldn’t ask them to tell us why, of all the contractors in our city, we should hire them for the job. We wouldn’t ask them to grovel, in other words. Here’s what we might do, instead. YOU: So, George, thanks so much for coming over. GEORGE: No problem. What’s the project, now? YOU: It’s my master bathroom. It’s long and narrow, not the perfect footprint, but I want a new tub so I figure it makes sense to remodel the whole bathroom. GEORGE: That’s usually what I recommend, unless you love the way the bathroom looks now. There are tubs in pretty much any size out there. YOU: I hate the colors, so if I’m painting and picking tile anyway… GEORGE: Definitely. Might as well do the whole thing. YOU: You’ve done a lot of these? GEORGE: I used to do just bathrooms, working with a tile guy named Jesse. Jesse moved to Texas, but I work with his cousin Wally now. We do about half and half kitchens and bathrooms. YOU: I got your name from Sue Barnes… GEORGE: Oh right, I did Sue’s addition last year. That had a bathroom in it. We found a really nice antique tub at a salvage place, and Sue had some Italian tile that she got on vacation. YOU: You found that tub? I love that tub! I covet it! GEORGE: I’m an antiques geek I guess. I picked up that tub even before Sue chose it, because it looked so perfect for her job. If she hadn’t wanted it I could have taken it back, but I was 99 percent sure she would love it. YOU: It’s amazing. I’ve never seen one so ornate. GEORGE: It’s perfect in that space, I think, with the window and the green tile… YOU: Well, I love your design sense. Let’s talk about project management. GEORGE: Sure. YOU: Well, I actually don’t know anything about project management, I confess. I’m a massage therapist. I just know that that’s a big part of doing a job like this. GEORGE: I run anywhere from two to six jobs at once. Right now, I have three I’m juggling, but luckily two of them are wrapping up this month. If we can walk through the bathroom and you can tell me a little more about what you want to do, I can get you an estimate and whatever you need to see insurance-wise. If you decided you want to get started and if we could start next month, we’d do the job in about four weeks. YOU: Four weeks for a bathroom? GEORGE: That’s me walking in to everything finished and I’m out of your hair. The bathroom would be out of commission for about two weeks. If you happened to be planning a vacation, you could miss the worst of it. YOU: We could go out of town. You could make sure the place was locked up at night? GEORGE: Oh sure, we do that all the time. It’s easier for us. If you could board the dogs or take them with you — YOU: They’re wuss dogs, they travel with us. GEORGE: Perfect. Then we could do the worst of it, the dusty stuff, while you’re gone and it would be all done when you got home. YOU: Could you share some references with me, George? GEORGE: For sure. Sue Barnes is one of them, and I’ll send you three more. YOU: I’m so excited! When we zero in on what needs to be done and start getting a feel for how the candidate (or contractor) would approach the job and how he or she has managed past jobs, we learn something relevant. We learn tons, in fact. When we’re talking about our project or role in context — sharing a bit of dirty laundry, if needed, to say something like, “Our sales guys are great, but they’re so focused on new business that our largest accounts are getting overlooked and we need to solve that. What else can I tell you?” then we can get to the heart of the matter at hand, namely, does this candidate sitting with me understand what I’m up against it, and have good ideas for surmounting our obstacle? Of course, we can’t have an in-depth, substantive job interview like the one I’m proposing unless we come down off the perch that many hiring managers and HR folks have installed themselves on top of. We have to be willing to say, “Everybody is making an important decision, here. You are deciding whether or not to come and work for us. We are deciding whether you’re the right guy to work with us on this problem. We’ve all got to get beneath the surface, today.” We shouldn’t be asking job applicants lists of pointless interview questions. We should be talking with them about the work at hand. Who gives a rat’s behind what adjectives the job-seeker thinks other people use when describing him or her? Who cares what sort of animal or canned soup the job-seeker identifies with? This made-up garbage falls into the category of what my old mentor Jon Zakin calls “playing business.” It’s pointless, but we do it over and over and over, anyway. Sitting behind a desk asking lists of pre-written interview questions is not only insulting to the candidate, but it’s bad business too. We could have more substantive conversations with job-seekers if we opened the kimono a little bit to say, “Look, here’s what’s going on in the department. I’d love your take on it.” We’d let the candidate ask as many questions as he or she wanted to. Questions show the applicant’s brain moving, and that’s exactly what we want! I can’t imagine how stupid an interviewer would have to be (or how fearful of stepping outside the lines) for the interviewer to say, “No, I’m sorry, you won’t have a chance to ask us any questions today.” I encourage a job-seeker to get up and leave the room, the building and the opportunity at that very moment. Life is too short to waste time with amoeba companies who don’t understand human beings, only spreadsheets and policies and hoary job-interview scripts. Those guys don’t get you, and they don’t deserve you. If you’re in charge of hiring for your organization, ask yourself: Why are we still interviewing job candidates the way we did eighty years ago? The world has changed. We can loosen the bonds of workplace ritual enough to say, “This isn’t working.” We can change the interview frame, and the sooner we do it, the better off we’ll be.

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David Yarnold: Big Oil’s Arctic Bet: A Fool’s Risk

April 17, 2012

“Fool me once, shame on you; fool me twice, shame on me.” We’ve all heard it — and lived it — as individuals and collectively as Americans. We’ve all had to confront someone who has fooled or even misled us. But when Big Oil repeatedly tells us a monumental lie, we’re struck with collective amnesia. Marking the second anniversary of the BP oil disaster in the Gulf of Mexico, which occurred April 20, 2010, we can’t help but remember the rage and heartbreak we all felt when 11 men died and we saw images of oiled Brown Pelicans flattened to the wet sand. Scientists are just now reporting ominous disruptions in the Gulf’s underwater food chain and we still don’t fully understand the long-term impact on birds and other wildlife. It was a case of “shame on you” in 1989, when the Exxon Valdez ran aground in Alaska, spilling tens of millions of gallons of crude oil into the pristine and achingly beautiful southern Alaska landscape. But there was plenty of shame to go around two years ago as the BP oil disaster unfolded in the Gulf, spewing more than 200 million gallons into what, from a bird and human standpoint, is one of America’s most precious ecosystems. William K. Reilly, a lifelong conservationist and moderate Republican, co-chaired the commission investigating the BP disaster. Reilly was EPA administrator at the time of the Valdez, and he was flabbergasted to find that nothing much had changed since 1989. Reilly concluded that the BP spill “evidenced a failure of management, and good management could have avoided the catastrophe … We are not dealing here with a sick or failing or unsuccessful industry but with a complacent one.” Reilly reminds us that we in fact dodged a bullet two years ago: “…there was a point in the management of this crisis when industry experts feared the entire 120-million-barrel reservoir might seep through the ocean floor and wreak total havoc… What would we be talking about today if the well couldn’t be canned?… We’d be having an existential conversation about whether offshore drilling should ever be permitted in US coastal waters again.” Bill Reilly is no bomb-thrower. At the time he co-chaired the BP spill commission he was serving on the boards of ConocoPhilips and DuPont. As we mark this anniversary, two immediate challenges leap to mind: First, we must restore the Gulf Coast. The BP spill was a major blow to a region already under stress from urban sprawl, wetlands loss and pollution. Congress is now weighing a measure — called the RESTORE Act — that would divert most or all of BP’s penalties to gulf cleanup. Bipartisan versions of this measure have passed both the Senate and the House; it’s time for Congress to finish the job and send a final bill to the president. Second, even as you read this, a drilling fleet under contract to Shell Oil is making its way to a patch of seabed less than 15 miles from Alaska’s Arctic National Wildlife Refuge. Incredibly, Shell has secured nearly all the government permissions it needs to begin drilling operations in a body of water that is ice-covered much of the year, in a place where the sun does not shine for months on end, and where extreme weather is commonplace. The U.S. Government’s own non-partisan watchdog, the Government Accountability Office (GAO) thinks this is a terrible idea . We agree. Cleaning up a major spill in the Arctic would make the BP disaster look like child’s play. Last month the GAO issued a report raising fundamental concerns about whether a major spill could ever be managed in icy conditions. If there is a spot on Earth as sacred or as critical to the future of our wild birds as the Gulf of Mexico, it is probably the unspoiled Arctic. Here, hundreds of bird species arrive every spring from all four North American flyways — the superhighways in the sky that birds use to travel up and down the Americas. Here, they mate, lay eggs and raise their young. Here also, many of America’s remaining polar bears make their winter dens along the coasts. The potential harm from a BP-scale spill is almost beyond comprehension. And, there is growing evidence that we simply do not need to take risks like this to meet our nation’s energy needs. Oil imports are down. Oil production from domestic wells is up thanks to new technology. We’re driving farther on a gallon of gas and using less. Energy independence is becoming a real possibility. Since those who cannot remember history are doomed to repeat it, the price of social amnesia has become unacceptably high. A workable balance between powering the nation and protecting our natural bounty is within reach, but only if we remember, learn, and not be fooled again.

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Sarah Damaske: Equal Pay Day: In the Wake of the So-Called "Mommy Wars" Renewal and Partisan Attacks on Equal Pay Bills

April 17, 2012

Equal Pay Day comes this year in the midst of the renewal of the so-called “mommy wars” on the one hand, and a blatant attack on equal pay rights bills on the other. Last week, Hilary Rosen set off a media maelstrom when she said that Mitt Romney’s wife, Ann, “has never actually worked a day in her life.” Just a week before (and to much less fanfare), Wisconsin Gov. Scott Walker repealed Wisconsin’s Equal Pay law and one of the state senate Republicans, Glenn Grothman, was quoted as saying, “You could argue that money is more important for men, anyways.” Both have serious implications for the equal pay cause. The National Committee on Pay Equity started Equal Pay Day in 1996 to bring more public attention to the gender wage gap, the difference between what an average full-time, year-round, male worker earned and what the average full-time, year-round, female worker earned. In 1996, the difference was 73.8 cents to the dollar and, today, the difference is about 77.4 cents. Not a terribly huge improvement over the last 16 years. Researchers have long noted that a number of factors can partially explain the gender wage gap. Notably, women and men tend to work in different industry sectors and different occupations within industry, which can explain a sizable portion of the gap. But differences in pay for various occupations may be due to whether jobs are associated with women or men. In other words, while occupational differences may explain some of the gender wage gap, the pay scale for different occupations is connected to whether or not the occupations are made up of mostly men or mostly women. And as sociologist Paula England and economist Nancy Folbre found in their research , women are more likely to work in caring fields, which offer relatively poor pay given the skill and education necessary for much of this work. Devaluing the hard work of acting as a primary caregiver of children not only dismisses the unpaid labor done in the home, it also contributes to the struggle of the millions of paid female laborers who work in caring fields and find that their work is neither recognized nor justly rewarded. Calling this past week’s maelstrom a renewal of the “mommy wars” dodges the real issue: Caregiving, whether done unpaid in the home or for pay outside of it, is not particularly valued in this country and women (whether in the labor market or not) suffer the brunt of this. Differences in pay are likely also connected to bias. Having children often increases men’s wages, according to research from sociologist Rebecca Glauber , but it often decreases women’s wages and women working in low-wage jobs face the toughest wage penalties for motherhood, as sociologists Michelle Budig and Melissa Hodges found . When Grothman argued, “Money is more important for men,” he may have been tapping a generally unspoken belief — that a woman’s salary is less necessary to her family than is her spouse’s. But, these beliefs are a remnant of times gone by in which men were primary breadwinners and women were primary homemakers (although as historian Stephanie Coontz has noted, even during the 1950s, this gender divide was never as big a phenomenon as we remember it to be). Today, only 20 percent of children are raised in families with a traditional breadwinning father and stay-at-home mother. Most children, then, live in families that depend on the wages of women, and one-third of children live in single-mother households and are most at risk of living in poverty. The National Women’s Law Center reports that bridging the gender wage gap would give the average full-time working woman’s family the money to pay for an additional 4 months’ supply of groceries, 5 months’ of childcare, 3 months’ rent and utilities, 5 months’ health insurance premiums, 4 months’ student loan payments, and 5 tanks of gas. Addressing the wage gap would go a long way in increasing women’s economic security, as well as the financial security of their families. In 2010, all Senate Republicans voted against considering the Paycheck Fairness Act. As both President Obama and presidential hopeful Governor Romney continue to vie for women’s votes, it would be nice to see some serious proposals from the candidates about how to bridge the wage gap.

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Quick Study: Is Linking Money And Lifestyle The Key To Financial Health For Women?

April 17, 2012

Quick Study [kwik stuhd-ee]: The Huffington Post Canada’s tips to make your life a little sweeter, five minutes at a time. Think of it as a cheatsheet for your general well-being. As the tax deadline fast approaches, more people start scrambling for financial help — and like so many other lifestyle choices, women go about getting it together completely differently than men, relying on mentors, family and friends to educate and influence them. Barbara Stewart, a Toronto chartered financial analyst, is the author of the white paper Rich Thinking: A Global Study – A Guide to Building Financial Confidence in Girls and Women . According to a 2010 Angus Reid survey she commissioned , more than 50 per cent of women say their financial knowledge was mainly acquired through informal instruction from other people. “There’s a disconnect between what we’re teaching women about financial literacy and how they actually learn,” Stewart said. “Most of what I see in textbooks and on websites for financial institutions is very dry information.” Last year, Stewart spoke to 50 accomplished women from around the world about the messages on money they received while growing up. For many of the women, linking lifestyle to money was key. SEE: The 10 financial tips Stewart uncovered for women. Full story continues below slideshow. “It’s important to have a conversation with young people. We all hear that sort of corny question, ‘What do you want to be when you grow up?” she said. “Instead of just that, we should ask ‘How do you want to live? and ‘How much money do you think you’ll need to live that lifestyle?” Stewart put together Rich Thinking in an attempt to give young women a 10-step toolbox that she hopes will help them form their live paths. “The main message that came through it all was to be independent. Being independent is the root to building financial confidence,” Stewart said. “Understand that what we want costs money fundamentally and then learn how to deal directly with money yourself.”

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Gulf Oil Sheen’s Likely Source Revealed

April 17, 2012

NEW ORLEANS (AP) — A federal agency says it has confirmed a natural seep of oil from the Gulf of Mexico near where a large oil sheen was spotted last week. The Bureau of Safety and Environmental Enforcement said Monday that experts confirmed a “modest” amount of oil is seeping from the Gulf floor after viewing video provided by Royal Dutch Shell PLC. The oil giant used remotely operated vehicles to aid in the investigation of the sheen. Experts say such seeps are common in the Gulf. The seep is suspected to have caused a light sheen, about 10 miles long, that was spotted last Wednesday afternoon off the Louisiana coast. Authorities said the sheen was dissipating Thursday and Friday. A Coast Guard spokesman had no new information Monday.

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Investors Run To Surprising Place

April 17, 2012

Investors around the world are getting more anxious, and they’re choosing to put their money in an unusual safe haven: the U.S. stock market. A new Bank of America Merrill Lynch survey of global mutual-fund managers, released on Tuesday, finds that investors scrambled for safety last month as worries about the European debt crisis once again flared. The percentage of money managers hoarding what they consider to be an unusually high amount of cash jumped to 20 percent from 10 percent in February, according to the BofA survey. And global money managers pulled some money out of the global stock market last month, according to the survey — not surprising at a time when there are worries that the global economy is slowing down. But on balance money managers around the world poured more cash into the U.S. stock market in March. The percentage of investors “overweight” U.S. stocks — meaning they had more money in U.S. stocks than usual — was higher than the percentage “underweight” the U.S. market by 27 percentage points, up from 14 percentage points inFebruary At the same time, global investors pulled some money out of the stock markets of Brazil, India and other “emerging” markets. And they continued to avoid the European, British and Japanese markets like a sneezing guy on the subway. This behavior isn’t too surprising if you think about it: Europe is in recession , with debt crises rolling around the continent. Japan is in a shaky recovery from a recession last year, and China’s growth appears to be slowing sharply. The U.S. economy, meanwhile, is still doing OK, though data on Tuesday suggested manufacturing and home construction slowed toward the end of the first quarter. But there was another funny wrinkle in the survey: While foreign investors might see the U.S. as a safe haven, U.S. investors are starting to sour on the prospects for U.S. economic growth and corporate profits, according to the survey. “A net 8 percent of U.S.-based investors say the country’s economy will get stronger in the coming year, down from a net 29 percent in March,” BofA said. “A net 8 percent predicts corporate earnings will fall – last month, U.S. investors were evenly split on whether earnings would improve or deteriorate.” So far, global investors’ faith in U.S. stocks has been both tested and rewarded: By putting more money into U.S. stocks in March, global money managers suffered through the stock market’s mini-swoon in mid-April. But they may also be enjoying the market’s sudden, neck-breaking rebound, which continued on Tuesday, with the Dow Jones Industrial Average up 170 points at midday in New York , thanks in part to better-than-expected corporate earnings. This sort of market volatility, this unpredictability, is the sort of thing a lot of money managers hate. But it’s not nearly as bad yet as it was last fall, when a 170-point swing up or down in the Dow was considered a relatively calm day. And money managers globally are still more cautious than terrified, noted Michael Hartnett, chief stock strategist at BofA Merrill Lynch Global Research. Last fall, for example, the percentage of investors hoarding cash jumped to 30 percent and stayed there for months. And during the crisis about half of all money managers were parked in cash.

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Ted Harro: 7 Kinds of Smart You Need to Look for When Hiring

April 17, 2012

I work with smart people all of the time. They are often products of the best schools in the world, have impressive accomplishments, and can do super mental gymnastics. If you haven’t watched a Harvard MBA do a mental triple somersault with a twist in the layout position, you really ought to. It’s stunning. And I confess that I love these people. But sometimes smart people do the darnedest things when hiring employees. Here’s one. When evaluating a job candidate, smart people often have a short-hand that sums up their thoughts. “She’s crazy smart!” They actually use a different adjective, but this is a family-friendly blog and I never know when my mom might drop in for a read. Or if they don’t like someone, they might say, “He’s not that smart.” This is the kiss of death. You can be awkward, ugly, or downright rude. But don’t be “not that smart.” There is plenty of evidence assembled by the smart people that intelligence is a key factor to success. But here’s the question I’m sometimes courageous enough to ask: “What kind of smart does this job require?” Anyone who has hired employees will recognize the pitfalls of trying to nail down what kind of smarts they need. I have a friend who has been very successful in the publishing world. Once, she was asked to do a first interview of a highly recommended candidate for one of the biggest news websites in the world. The kid launched into a speech on a 14th century French play and seemed so introverted that she recommended against hiring him thinking he was a bad personality fit as well as better suited to graduate school than a popular website. Fortunately, someone else saw his talents and he went on to become a star business reporter, known for his focused and thorough research. If you’ve hired more than one employee, you recognize that story. It’s easy to be imprecise about what kind of “smart” we are looking for when hiring. Asking, “is someone smart” is a smart thing to do. It’s a simple way to screen a candidate. Just be sure that you’re not going from being simple to being simplistic. Know what you need and where you need it. Ask what kind of smart. Here’s your starter list: Analytically/Technically Smart — These whizzes can weave magic with spreadsheets and numbers. They can model out a business with breathtaking elegance. They can take overwhelming data and turn it into meaningful information. They can discover the algorithm that will make your product do backflips for your customers. They’re smart. You want them in finance, R&D, and IT. Book Smart — These brainiacs know all of the right answers based on the established research. They can check and double-check and yes, triple-check your facts and figures to be sure your answer is supported in the literature. You want them on your legal team. They just might find that one thing cracks the case or covers your backside. People Smart — These geniuses are good at what a lot of academically gifted folks struggle with: dealing with people. They have a natural read for how others are interacting and they can find ways to connect with almost anyone. I have client who has made a considerable fortune largely based on being people smart. He says he’s not that smart. Actually, he’s a genius at making connections with people and being genuinely friendly and helpful to them. This means that he is probably two to three phone calls away from talking to virtually anyone of influence in our country. Now that’s smart. You want people like that on your Business Development team or your board. Quick-on-Their-Feet Smart — When I started in consulting, my first boss used to joke about how important it was to have a good pair (or three) of “dancing shoes.” He was pointing out that certain roles demand people who can think on their feet. They have to walk into situations and conversations with a general approach in mind, but then adjust on the fly with seeming ease. They need to be able to see around corners in a conversation and know what to say and what not to say. They’re smart. You want them on your sales or PR team. Politically Smart — We all know there are two realities: how organizations say things get done and how they really get done. Politically smart people know both but they’re experts at the latter. They can read where influence really lies in any situation and how to get powerful people moving in the same direction. They figure out what matters to different constituents and they can shape options that turn into deals that turn into action. They’re smart. You want them on your negotiation team and in any part of your company that drives significant change. (I’m looking at you, IT!) Organizationally Smart — Any fast moving organization manages far too many details. These people can cut through the clutter and bring order to the chaos. They sort out what matters and find ways to make tasks work. They’re realists and keep us honest about what can be done. They’re smart. You want them on your project management teams. And any executive lucky enough to have one as an admin will bite your hand off if you try to recruit theirs. Wisdom Smart — Some situations just require experience. You can be smart in any of the ways above, but without having seen it before you’re going to struggle. Having been a successful salesperson isn’t the same as having successfully run a regional sales team. Reading books about a startup just isn’t the same as having effectively dealt with the chaos of rapid growth with scarce resources. Having visited Europe on vacation just isn’t the same has having lived and done business there. These people are smart. You want a balance of people with battle scars along with your bright up-and-comers. One caveat: experienced and crusty don’t have to go together. Pick Wisdom Smart people who are humble enough to know that they can learn from those unburdened by experience.

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Grandpa’s Old Suit Is Now A Wallet

April 17, 2012

You know what they say: One man’s trash is another man’s treasure. That’s the idea behind Jetsam, a fashion startup that uses discarded or unwanted fabrics, castoff clothing and vintage textiles to make wallets. The eco-friendly production model carries all the way down to the recycled gift box packaging. The creative mind behind Jetsam is Laura Skelton, a Columbia University graduate who comes from a background in sustainable architecture. Starting as a teenager, Skelton roamed thrift stores and costume departments to see what vintage items could be revived, modernized and made into something new. That eventually led to the idea for Jetsam, her line of sharply designed wallets, which retail for about $40 each. After success selling the wallets on Etsy in 2007 and an incredible fundraising campaign on Kickstarter , the visibility and exposure of Jetsam products has skyrocketed. Jetsam wallets are now in almost 100 stores across seven countries and have even found a spot at New York’s Museum of Modern Art. In the past Jetsam meant “unwanted material thrown overboard to lighten a ship’s load” — but now, Skelton is making the unwanted desirable again by taking historic, masculine textiles and re-configuring them for the future. You’ve been making products from vintage accessories since your teens. What about this process still gives you such joy? It’s a little hard to explain but it’s like I have this drive to create things with my hands. Even when I take a break from making products for Jetsam I ended up making these elaborate costumes and crazy installations just for fun. Part of what I really love about Jetsam is the challenge of tackling something with constraints. There’s only certain size pieces you can get out of an old necktie or an old jacket, so making them all work together can become a bit of a challenge. It’s sort of like putting a puzzle together. I get joy from it because it’s a combination of the satisfaction I get from making things but it’s also the intellectual satisfaction of solving these design puzzles. You’ve built your presence through different online forums like Etsy and Kickstarter. How else are you planning to grow your business? It was this crazy whirlwind thing at the beginning. I quit my job, started this artistic and creative company and moved to New Orleans and worked three jobs to make this all possible. I think I made over 3,000 wallets personally during this time. Then I built up this following through Etsy and also a series of craft fairs in different cities. I began this Kickstarter thing this past fall because as a broke artist you can’t come up with the capital needed to make that leap from being a one person shop to a mass production. So I turned to Kickstarter thinking I would just raise a little bit of funding to help get me started from friends and family. Then what happened was somehow the Reddit community got behind my idea It was this explosion of support for Jetsam from all over the world — something like 34 countries where people were excited about these wallets. On Reddit people are very honest, so it was nice to talk with people who liked my work but also to hear their criticisms and direct feedback on what new designs they wanted to see and how I could improve. Your project blew by that initial fundraising goal of $4,000 — you ended up raising $26,000 on Kickstarter . What kind of freedom has that extra money given you? I was able to ramp things up much more quickly. It’s a scary thing taking that leap to mass production and it gave me so much confidence having that support out there for what I was doing. On top of getting things on the fast track and getting in a secure position, when you’re manufacturing on this scale one of the big problems is cash flow. In order for me to produce this line on a large scale, I have to come up with enough capital to buy all these materials and keep with the labor for potentially months before I can see that cash back from the actual sale. Without that money I would have had to make a small batch, get my money back, then a medium batch, get my money back and then a large batch to get my money back. But that $26,000 upfront meant that I could make a huge batch as my first batch. I can’t see how any of that would have happened without the support of Kickstarter and the Reddit community. Do you think you’ll continue in the “time-honored style of male iconic figures” or branch out to other styles for different products as your brand grows? I’m working on a new collection right now actually, but I feel like that heritage menswear thing is just something that’s really speaking to me at the moment. Masculine style is really exciting right now and I’m sure as the line grows and matures that I will explore other things, but I think we’ll keep going with this sort of timeless debonaire feel. If you look at photos of men from 50 years ago they dressed incredibly well and they looked dapper in a masculine way. I think that’s something that got lost in the 90’s and early 2000’s, that’s kind of starting to come back now. I find that exciting especially because someone could be dressed in a modern style but you can pull out something like a wallet or an accessory that represents the elegance of a different era. Do you see the green and sustainable clothing model catching on with other products and companies? What do you feel the advantages are? I’ve got this mindset when I’m designing something that there are certain function requirements you have to meet. It has to work and it has to work well. The sustainable eco-friendly design is just one of those things that in the modern era we live is a basic component of the design for me. It is eco-friendly design but I try to have that be almost incidental because I think that in the age we live in all good designs should be sustainable. If you have a choice between making something with leftover or excess material versus making it with new material that’s good for the environment, it feels like basic common sense to take advantage of these wasted products. What’s exciting to me is how sustainability is being incorporated into mainstream design so that hopefully in five or 10 years, most of what you buy will be designed with sustainability in mind versus it being just a niche thing. What’s your advice to other entrepreneurs out there? The main piece of advice I would give is a parallel thing. One is to keep going and not get discouraged the first time something doesn’t work out and you have to go back to the drawing board, or if you design something you think is great and it’s not recieved well. The flip side of that is to really listen to the feedback that you give about your work, and use that to really strive to make your product as awesome as possible. I think there’s a tendency to dismiss critics as “haters” when really it’s sometimes the haters that can give you some of the most valuable insight into what you’re doing and how to make it better. I think when you’re striving for excellence in your business it’s important to have a sense of pride and confidence in what you’re doing but also a real openness to taking that feedback and improving all the time. Entrepreneur Spotlight Name: Laura Skelton Company: Jetsam Age: 28 Location: San Diego Founded: 2011 Employees: 1-3 Website: www.carryjetsam.com

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Janis Bowdler: Homeowners Can’t Afford Another Missed Opportunity

April 17, 2012

When the housing bubble burst more than four years ago, many banks and federal regulators argued that the impact would be limited and the damage contained to the subprime market. Famous last words. Now we know the full story: unregulated finance companies and malfeasant brokers peddled toxic loans designed to earn originators a quick buck at the expense of unsuspecting homeowners, investors, and taxpayers. The damage has spread well beyond the subprime market and helped usher in the worst recession of our generation. The majority of financial trickery was carried out at the hands of lenders that operated outside the scope of federal oversight. The Federal Reserve could have reined them in, but reacted too late. This trend persisted under Bush and Obama when both administrations missed opportunities to get ahead of the market crash and the ensuing tidal wave of foreclosures. Last week, the National Fair Housing Alliance (NFHA) released a report on the treatment of REOs–real estate owned properties, meaning foreclosed properties owned by banks–in nine cities. Their research found that REOs in predominately minority neighborhoods were scarred with the signs of neglect and blight while those in predominately White neighborhoods were well maintained even though they are serviced by the same company. The impact goes beyond the aesthetic. Abandoned properties are estimated to reduce neighboring home values by an average of $7,200 and cost cities millions in maintenance and lost tax revenue. The disparate treatment by servicers comes on the heels of unfair targeting of these same communities by deceptive lenders. Black and Hispanic families were more than twice as likely to be sold subprime loans, even though they had the credit to qualify for regular prime loans. The foreclosures that followed have wiped out 58 percent of Black and 66 percent of Hispanic wealth. Now neglected REOs are threatening to set our neighborhoods and families back even further. The slide show below shows the contrast between in Miami between two REOs in two different communities. See if you can tell which one is in which community. When done right, REOs can be a neighborhood asset. Creative reuse of REO properties can fuel community revival and expand housing opportunities for a broad range of families. Because many bank-owned properties are in neighborhoods close to good schools, jobs, transportation, recreation, healthy foods, and other amenities, they provide a unique avenue for expanding access to opportunity for all families while also breaking down barriers of segregation and isolation. Banks should work with mission-driven local partners like Chicanos Por La Causa in Phoenix, which is acquiring REO properties and converting them into ownership opportunities for families who have completed their housing counseling program. Another NCLR Affiliate in Stockton, Calif., Visionary Homebuilders of California , has established a lease-purchase program for reclaimed REO homes where renters partner with a financial coach to work their way toward an opportunity to buy the home. NCLR is exploring ways to expand these kinds of programs to other cities throughout the country. In a recent speech, Federal Reserve Chairman Ben Bernanke stated that over the next couple of years an additional one million foreclosed properties per year could be added to the REOs held by banks, guarantors, and servicers. Beyond the fact that mortgage servicers are legally required to maintain the properties they own, it would go a long way to healing their relationship with those communities if servicers also participated in and supported those innovative programs to repurpose properties with the community’s social goals in mind. To get there, regulators–starting with the Federal Housing Finance Agency–must set and enforce strong standards to make sure that servicers treat all borrowers and all communities fairly, including standards for maintaining and marketing foreclosed homes. The Department of Housing and Urban Development and the Department of Justice should fully investigate the disparities uncovered in the NFHA report. If no action is taken, abandoned and vacant properties will continue to drag down home prices and infect neighborhoods with crime and blight. But with a little creativity and cooperation, REOs can become a driving force in neighborhood stabilization. Homeowners cannot afford for banks and regulators to miss another opportunity like this.

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Apple Pays Shockingly Low Corporate Tax Rate

April 17, 2012

How much of your income went to taxes this year? There’s a decent chance Apple Inc. paid a smaller share. That’s the contention of a report released Tuesday from the Greenlining Institute, a research and public policy non-profit based in Berkeley, Calif. The report argues that Apple, which reported profit of $13 billion in its latest quarter, paid just 9.8 percent of its 2011 income in taxes. Apple, the world’s most valuable company, is one of many blue-chip tech companies whose 2011 federal income taxes checked in at something well below the marginal 35 percent corporate rate. “We looked at high tech specifically because they were making so much profit,” Samuel Kang, general counsel for Greenlining and a co-author of the report, told The Huffington Post. “They were one of the few industries making not just profits, but record profits, during the economic downturn.” Greenlining’s report arrives just as tax season draws to a close — and as debate continues in Washington over how much of a burden the country’s wealthiest people and corporations should be asked to bear. The U.S. tax code, and the leniency it often affords the well-off, has emerged as a dominant theme of this election cycle, with figures as diverse as Warren Buffett and Occupy Wall Street demonstrators citing it as a concern. President Barack Obama’s campaign team has used the relatively low tax rate paid by Mitt Romney, the presumptive Republican nominee for president, as ammunition against Romney , even as Obama has called for a lower top tax rate on U.S. corporations . For anyone dismayed at the way those corporations often seem to sidestep the brunt of their tax burden — sometimes paying nothing at all in federal income tax despite billions in profits — Greenlining’s report offers much to fret over. The report, which examined 30 tech companies within the Fortune 500, argues that these companies paid an average corporate tax rate of just 16 percent in 2011 — less than half the official 35 percent tax rate that Obama and Romney have each said is too high . Apple paid a top tax rate of just 9.8 percent in 2011, the report says. Google paid a rate of 11.9 percent, while Yahoo paid 11.6 percent and Microsoft paid 18.9 percent. Xerox paid 7.3 percent of its income in taxes, while Amazon paid only 3.5 percent, according to the report. None of these instances is as egregious as, say, General Electric, which was once infamously reported to have paid no federal income taxes in 2008, 2009 or 2010 — an assertion that the company disputed — and which has reportedly paid an average corporate tax rate of just 2.3 percent over the past decade, according to an analysis by the group Citizens for Tax Justice. Still, among those familiar with tax policy, the practices described in the Greenlining report might raise some eyebrows. For the sake of comparison, the report says, Apple (and Xerox and Amazon) paid a lower tax rate in 2011 than an American household making $42,500 a year. While Microsoft’s tax rate was lower than the nominal corporate rate, it was higher than the 16.4 percent rate the company paid last year, according to Greenlining. Apple, Google, Amazon, Yahoo and Xerox, on the other hand, all paid a lower rate this year than they did last year. Greenlining researchers said their figures are based on company filings with the Securities and Exchange Commission. A representative from Xerox told The Huffington Post that the company’s effective global tax rate in 2011 was 24.7 percent, higher than the 7.3 percent U.S. rate described by Greenlining. A Yahoo spokesperson declined to comment. Google did not respond to a request for comment. Apple and Amazon did not make spokespeople available to discuss the report. Many of the companies named in the report keep large portions of foreign earnings overseas, rather than bring them back to the U.S. where they can be taxed. Greenlining estimated that the 30 companies analyzed in the report have a combined $430 billion offshore — money that the U.S. government, for the moment, can’t tax, even as the country scrambles to plug budget gaps at the federal, state and local levels. “it’s unfair, and ultimately it’s going to have an impact on all of us,” Kang told HuffPost, in reference to companies’ efforts to keep their earnings beyond the reach of the tax collector. “When you look at who’s left holding the bag and who has to make up the difference, it’s all of us as individuals.” Several of the tech companies examined in the Greenlining report, including Apple, Google and Microsoft, support a legislative push for a so-called tax repatriation holiday — a one-time event that would allow companies to bring their overseas cash into the U.S. at a drastically reduced tax rate, which advocates say would spur new economic activity. Congress approved a repatriation holiday in 2004, but the consensus among economists has been that its effects on investment and job creation were negligible . “The firms that brought money back [in 2004] were not the same firms” that engaged in new hiring or investment, said Fritz Foley, an associate professor at Harvard Business School. “Most of the studies didn’t find much evidence of job creation among repatriating firms.”

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Buffett Rule Goes Down

April 16, 2012

WASHINGTON — Democrats’ attempt to pass a Buffett Rule tax on the super wealthy failed Monday in the Senate, as Republicans blocked the measure in a sharply partisan debate. Democrats cast it as a bid for fairness that would end the circumstance in which billionaires like Warren Buffett pay a lower percentage of their income in taxes than their secretaries. Republicans cast it as a political gimmick and an attempt by President Barack Obama to give more Americans a “free ride.” It was blocked 51-45 in a filibuster vote. Republican Sen. Susan Collins of Maine and Democratic Sen. Mark Pryor of Arkansas were the only politicians to cross party lines. “The wealthiest one percent takes home the highest share of the nation’s income since the early ’20s, the roaring ’20s,” Senate Majority Leader Harry Reid (D-Nev.) said . “Times are tough for many middle class American families. Millionaires and billionaires aren’t sharing the pain or the sacrifice, not one bit. Last year there were 7,000 millionaires who didn’t pay a single penny in federal income taxes.” Sen. Jon Kyl (R-Ariz.) countered that statistics show the rich are paying plenty, and that it’s the bottom half of the income ladder that is doing too little. “You’ve got the top 10 percent of taxpayers paying 70 percent of all the taxes, earning 45 percent of the income. Those are certainly the wealthy, and they’re certainly paying a big share,” Kyl argued. “How about less wealthy? The bottom 95 percent — in other words, everybody but the top 5 percent — pays 41.3 percent of income taxes, earns 65 percent of the money, of the income. Is this fair? “The Joint Committee on Taxation estimates that 51 percent of all households, which includes both filers and nonfilers, had either zero or negative income tax liability in 2009,” Kyl said, suggesting it was the middle class and poor who were not sacrificing. “People who do not share in the sacrifice of paying taxes have little direct incentive to care whether the government is spending and taxing too much. Maybe that’s why the president has no problem with even more Americans getting a free ride.” The measure does not lower rates for the poor, but Democrats have said the $47 billion raised by the measure over 10 years would either go to deficit reduction or to help for middle class families. “There are lots of ways that I think the American people would prefer to spend $47 billion than tax breaks for millionaires and billionaires who aren’t paying what the average person pays,” Sen. Chuck Schumer (D-N.Y.) said on a conference call with reporters before the vote. Republicans countered that the evening vote was a “political gimmick” — cooked up by Obama’s campaign team — that ignores the nation’s critical problems, starting with its mounting debt. “The problem is, we’ve got a president who seems more interested in pitting people against each other than he is in actually doing what it takes to face these challenges head on,” Minority Leader Mitch McConnell (R-Ky.) said on the call, arguing that the Buffett Rule will never pass. “By wasting so much time on this political gimmick that even Democrats admit won’t solve our larger problems, it’s shown the president is more interested in misleading people than he is in leading.” “President Obama looked at the options in front of him, sat down with his political advisers, and he said, ‘You know what, let’s go with the poll-tested tax increase on investment and job creation that won’t fix anything and won’t pass anyway,’” McConnell continued. Indeed, the Democrats’ position is popular. A CNN/ORC poll released Monday found that 72 percent of Americans favor taxing the very wealthy at 30 percent. The Buffet Rule would start phasing in at earnings above $1 million, and reach the full 30 percent for annual incomes above $2 million. Democrats found McConnell’s positions disingenuous, arguing before the vote that a GOP-waged filibuster would be the only reason for the Buffett Rule’s failure. “All of their arguments just don’t stand up because they’re so afraid of this issue,” Schumer said on the call. “Are they for it or against it? They say, ‘Well, it won’t pass.’ It won’t pass because they are opposed to it,” he said, adding that Republicans are the ones guilty of chicanery. “The gimmick is when they block something and say, ‘Let’s not pay attention to it because we won’t let it pass.’” Schumer vowed to keep bringing the Buffett Rule back until Republicans give in, the way they did on the payroll tax cut fight. “We’ll keep pushing this issue all year long, and we think we’ll pick up more and more Republicans,” Schumer said. He added that the idea is not just to score campaign points, but to show people that Democrats are more in line with them on tax policy, and to ultimately pass the bill. He suggested that the likely presence of Mitt Romney atop the GOP presidential ticket would help, because Romney has already been dubbed a poster child for the issue after paying a 13.9 percent tax rate on his last public return — less than many in the middle class. “It could be called the Buffett Rule, it could be called the Romney Rule,” Schumer said. “I don’t think he’s going to want to have this present inequity remain when he’s an example of it.” House Republicans are planning to counter the Buffett Rule push later this week with an attempt to cut taxes. A proposal by House Majority Leader Eric Cantor (R-Va.) would cut small business taxes by 20 percent. Since his bill would provide a disproportionately large benefit for the wealthy, it would mark an especially sharp contrast with the Democratic measure. This story has been updated with a final vote tally. Michael McAuliff covers politics and Congress for The Huffington Post. Talk to him on Facebook .

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NFL Plays Ball With Gambling Industry

April 16, 2012

Despite the NFL’s vocal opposition to betting on its games, the league’s move to allow teams to accept casino ads has generated a great, big … ho-hum. Scott Andresen, a sports attorney and Northwestern professor, said the new deal is “somewhat hypocritical” but didn’t bother him, he told The Huffington Post Monday. It could even boost teams’ payroll, he said. University of Michigan sports economist Rodney Fort said the advertising could help fill the hotel and convention space attached to the casinos. “There’s nothing hypocritical about it.” The NFL last week approved local casino advertising at stadiums and during game broadcasts for the next two seasons, the Associated Press reported. The ads are limited to the upper bowl of the league’s venues, local radio broadcasts and in-game programs. They must also include a “gamble responsibly” message. Casinos that host sports betting are prohibited from advertising. The decision could represent a jackpot for teams like the Philadelphia Eagles, who have 20 casinos within driving distance of their stadium, the Philadelphia Inquirer reported Monday. The New York Jets and Giants could also both gain as much as $5 million apiece , the New York Post estimated. NFL spokesman Brian McCarthy clarified Monday that it was the teams that could accept the advertising, not the league. And the clubs were restricted in how they can deploy the marketing. “There is no use of team logos, no special sections or clubs sponsored by casinos, no events, no promotions, etc. This is in contrast to what other sports have done for years,” he wrote in an email to HuffPost. McCarthy had said in an earlier statement distributed to the media: “We remain steadfast in our opposition to the proliferation of gambling on NFL games. There is a distinction between accepting advertising in this limited fashion and gambling on the outcome of our games.” That said, Andresen pointed out football’s uncomfortable yet profitable relationship with gambling. “Let’s be honest: a substantial part of the NFL’s popularity is based in gambling activity or gaming of some sort, whether it’s sports books out in Vegas or parlay sheets or even fantasy leagues.” Concluded Andresen: “The hypocrisy has always been there.”

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Andrea Sittig-Rolf: The Audacity of Nope: Why Hearing "No" Can Help Salespeople Get to "Yes"

April 16, 2012

You may often think, “How can I increase my number of face-to-face appointments when so many companies aren’t buying right now?” The problem lies in the question itself. If you’re scheduling an appointment just to sell something, you may have a tough time getting the appointment. If the perception of your prospect is that the very reason you’re calling is to either sell them something over the phone, or schedule a meeting to sell them something, you’ll likely hear things like “It’s not in our budget,” “We’re not making any purchases now,” “We don’t have any money,” “We’re not in the market,” and “Our budget has been frozen.” In other words, you may be setting yourself up to hear “no.” If, however, you position your introduction over the phone as an opportunity to meet in person so you can learn more about your prospect and their potential future needs, you may have better luck. After all, if your goal is simply to learn about the prospect, you may not have an opportunity to sell them anything at all, so there’s less resistance to setting up a meeting. If you still encounter “no” when asking for that first meeting to start the discovery, and potentially selling process, here are some tips to get the meeting anyway. First, if you have a good sense of humor, use it, and you’ll be half way there. Making someone laugh breaks down the barrier between two otherwise strangers. If the response to your question in asking for a meeting is, for example, “We don’t have any money,” say “Neither do I, that’s why I’m calling YOU!” Now of course, part of the humor in this is your delivery, so you may want to practice a few times before trying it live. Another response to the all too common, “It’s not in our budget” objection is “In that case, now is the perfect time to meet! We’ve found it very beneficial to discuss future needs and our solution early so that if you decide to proceed, we can be of help during your decision-making process.” Notice I said, “If you decide to proceed” which implies that you’re not going to shove the sale down their throat, but that the prospect will be making the decision to proceed or not. It’s also a good idea to present yourself as a resource to the prospect, regardless of whether they’re in the market at the moment or not. Then, actually BE a resource for them, even if it means meeting several times, providing valuable information that will help them and offering advice in your area of expertise even if it’s outside of the potential solution you may have to sell them. Another good rule of thumb is to give something of value to your prospect three times before asking for anything in return, like an order. Providing something of value might mean something as simple as sending an email with an article relevant to a recent discussion the two of you had about their needs, or introducing your prospect to another member of your team or resource within your company who can provide expertise, such as an engineer or project manager. If you’re genuinely interested in helping them with their plight, regardless of having the entire solution to sell yourself, your sincerity will become obvious to the prospect and it will only make sense they buy from you when they’re ready to make a purchase. Also, the rule of reciprocity is at play here. It’s human nature to give back to those who have helped us. By helping the prospect first, you set up the dynamic of the rule of reciprocity and they will be likely to reciprocate the favor you’ve done for them, by placing their order with you. Once you’re ready to close the sale, if budget is still an issue, you can discuss payment plans, leasing options, no money down, 90-day payment and other terms that may make your solution more appealing to your prospect. Your willingness to work with them and their budget will increase your chances of ultimately closing the sale. You can also reflect back with the prospect to your earlier discussions about what was important to them which will help build the value of your solution, framing the money issue more as an investment than as a cost. Finally, sometimes the answer is “no,” but you know what? That’s okay too. Part of learning to love hearing “no” is knowing that it’s only a matter of time before you hear the word “yes.” The more “nos” you get, the closer you get to “yes.”

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Romney Campaign Soft-Pedals Private Remarks

April 16, 2012

PHILADELPHIA — Mitt Romney’s aides soft-pedaled his latest tax pronouncements on Monday, insisting he wasn’t tipping his hand when he told donors privately that he might seek to end the tax break for mortgages on second homes and curb other deductions for the wealthy as part of tax reform. “He was just discussing ideas that came up on the campaign trail,” said former Sen. Jim Talent of Missouri, a frequent campaign surrogate. The remarks, made at a closed-door fundraiser in Florida and overheard by reporters, did not mark any “change in policy,” Talent said on a conference call with reporters. Whatever his intention, Romney’s remarks drew a tepid response from Rep. Dave Camp, R-Mich., the chairman of the tax-writing House Ways and Means Committee. “I’m going to listen very carefully” to Romney’s ideas, the lawmaker told reporters. “Obviously, as a presidential candidate, he is going to have some ideas on tax reform.” Camp added: “They’re not necessarily views the committee has adopted yet. But we’re going to be looking at all those items.” Camp said he has spoken to Romney several times about tax policy. Twice during the day, Romney himself passed up an opportunity to repeat his weekend comments. Speaking to the Independence Hall Tea Party, he said he wants to reduce taxes while President Barack Obama wants to raise them. “Taxes by their very definition limit our freedom. They should be as small as possible to do things that are absolutely vital,” he said. Earlier, in an ABC interview, he said: “I’m going to limit certain deductions and exemptions for high-income individuals so that even as we lower the rates for all Americans, we’re not going to shift the burden from – middle-income people to higher-income people.” As for abolishing federal agencies, he said, “I’m not proposing any eliminations at this point.” In his remarks over the weekend, Romney also mentioned possible elimination of the Department of Housing and Urban Development, and dramatically scaling back the Education Department. Romney mentioned possible elimination of state and local tax deductions for the wealthy as part of a plan to reduce income tax rates across the board. Democrats quickly accused the former Massachusetts governor of telling his financial supporters plans he has yet to share with the public. Ironically, the weekend fundraising flap took place less than two weeks after Romney accused Obama of conducting a “hide and seek” campaign in which he left the public in the dark about his plans for any second term. If nothing else, the attention Romney’s remarks drew underscored the increased scrutiny he faces as the party’s presidential nominee-in-waiting. With former Sen. Rick Santorum on the sidelines after suspending his campaign, Romney was campaigning across Pennsylvania for two days in advance of next week’s primary, then flying to North Carolina and Arizona. Romney has said he wants to keep all the broad tax cuts from expiring that were first approved under President George W. Bush. He also has said he wants to reduce tax rates by 20 percent, but he has not previously offered much detail about how he would pay for the costs of doing that. Nor has he defined an income level that would place a taxpayer in the class of the wealthy. Democrats have favored extending the Bush tax cuts, but not for the wealthiest Americans. Tax treatment of the rich has become a defining issue in this year’s presidential and congressional campaigns as the two parties vie for votes, with each arguing that it has the best ideas for reviving the economy. Romney’s weekend remarks were first reported by The Wall Street Journal and NBC News. ___ Fram reported from Washington.

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The Risk Of Foreclosure Scams Is Rising

April 16, 2012

If you’re a struggling homeowner watch out! The chance that you’ll get scammed is way up. The number of reported mortgage foreclosure scams has shot up 60 percent so far in 2012 , according to the nonprofit Homeownership Preservation Foundation. About 50 percent of the scams involve attorneys or others claiming to offer “specialized services.” The surge in schemes comes in the wake of recently launched federal programs that scammers have been able to exploit. “Regretfully, every new government initiative spawns a slew of foreclosure avoidance scams, often from the same cast of characters doing business under various names to avoid easy detection and identification,” Colleen Hernandez CFO of the organization said in a release that accompanied the findings . In one recent example, New York Attorney General Eric Schneiderman has warned that scammers may exploit the recent national mortgage settlement to take advantage of homeowners. The scammers claim to be government officials involved in the settlement and try to pry personal financial information, Schneiderman said earlier this month. In another example, a judge shut down a Santa Ana mortgage relief operation last month after the band of five companies and three websites raked in more than $1 million by allegedly taking advantage of hundreds of consumers, according to the Los Angeles Times . The operation allegedly used two scams: One that charged homeowners thousands of dollars to join a class-action lawsuit and another that for a price of at least several hundred dollars offered to do a home loan audit that would find lender violations at least 90 percent of the time. With the threat of foreclosure constantly looming there are many potential victims available for these scammers. One in every 662 housing units received a foreclosure filing in March, according to RealtyTrac. That’s an uptick from the month before indicating that there might be a surge in repossessed properties.

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Bob Edgar: ALEC Tries Humor as Defense

April 16, 2012

Did you know that some of the biggest, baddest names in American business have funnybones? Walmart, ExxonMobil, Pfizer, even the Koch brothers — plus hundreds of others, actually — are cut-ups. Who’d have guessed? But it’s true. Last week, as tens thousands of Americans voiced our collective outrage at the work of the American Legislative Exchange Council (ALEC), a lobbying front underwritten by these and other major companies, they delivered a side-splitting response . “This is an attempt to silence our organization… This is an all-out intimidation campaign,” groused Ron Scheberle, ALEC’s executive director. “America needs organizations like ALEC to foster the discussion and debate of policy differences in an open, transparent way and not fall back on bullying, intimidation and threats.” Scheberle’s comment was written, so I can’t tell if he was grinning when he uncorked it. But the notion that people like me, who’ve been publicly taking on ALEC and its political/policy agenda, are somehow intimidating, is a laugher. And the suggestion that ALEC fosters open, transparent debate is absolutely hilarious. Think of it. We’re just a bunch of everyday folks — working moms and dads, students, retirees, small business owners, a cross-section of Americans — who object to the way that multi-billion dollar companies, through ALEC, have been pushing laws that encourage vigilante justice, threaten to block millions of people from voting, attack our public schools and deny climate change. And somehow, because we dare to speak up and challenge these behemoths, we’ve become fearsome intimidators? C’mon man! Nobody’s trying to silence ALEC. Silence and secrecy are ALEC’s biggest weapons. At Common Cause, where I work, we’re trying to amplify — not suppress — ALEC’s voice. That’s what they don’t like. For years, ALEC’s corporate members have quietly poured money into the campaign funds of thousands of our elected representatives, entertained and lobbied them at resort hotels far from the eyes and ears of the public and press, and used them to advance ALEC’s “model” legislation. It worked because nobody knew about it. Well, now folks are learning. Because Common Cause and other groups have picked up a megaphone and spread ALEC’s message and tactics, companies are re-thinking their involvement with ALEC. And some of them — smart, responsible companies like Coca-Cola, McDonald’s, Wendy’s, Kraft Foods and Intuit, are getting out. That’s not bullying. It’s democracy.

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Coffee Prices Fall To Lowest Level In 18 Months

April 16, 2012

— Coffee prices fell to their lowest level in 18 months Monday on expectations that Brazilian growers will produce a robust harvest. Coffee fell 4.5 cents to end at $1.747 per pound Monday. That’s the lowest level since Oct. 7, 2010, when the price was $1.7345 per pound. Good weather during the growing season has triggered speculation that Brazil will produce large quantities of coffee when the harvest gets under way in June. That is expected to offset lower production in Colombia, which has had large amounts of rainfall. At the same time, demand appears to remain strong globally. That’s causing some confusion among traders and analysts about where the market is headed, said Jack Scoville, vice president of Price Futures Group. Despite the falling futures prices, coffee drinkers aren’t likely to see much change at the retail level because businesses still are paying more to produce and ship products, analysts have said. In other trading, prices for corn and wheat fell after weekend rains scattered across fields from the Dakotas to southern Texas. Although it’s early in the planting season, the rains should benefit crops in the field and moisten fields that are being readied for planting, said Northstar Commodity analyst Jason Ward said. Investors speculated that could improve yields at harvest time. In May contracts, wheat dropped 7.25 cents to $6.1625 per bushel, corn decreased 6 cents to $6.2325 per bushel and soybeans ended down 16.75 cents at $14.20 per bushel. Wet weather also may have played a factor in falling cotton prices, Scoville said. May cotton fell 4 cents, or 4.3 percent, to 88.08 cents per pound. Other commodities were mixed after lingering concerns about Europe’s debt problems overshadowed stronger-than-expected U.S. retail sales. Spain’s borrowing costs climbed above 6 percent rate mark before falling back to 5.96 percent later Monday. In the U.S., retail sales rose 0.8 percent in March, twice as much as analysts had expected. Gold for June delivery fell $10.50 to finish at $1,649.70 an ounce and May silver dropped 1.7 cents to $31.373 an ounce, May copper rose 0.1 cent to $3.628 per pound, July platinum fell $12.10 to $1,575.80 an ounce and June palladium increased $3.50 to $650.70 an ounce. Benchmark oil rose 10 cents to finish at $102.93 per barrel on the New York Mercantile Exchange. Heating oil fell 5.8 cents to $3.1166 per gallon, gasoline futures decreased 7.91 cents to $3.267 per gallon and natural gas rose 3.5 cents to $2.016 per 1,000 cubic feet.

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The Faddish Past And Big Money Future Of Chia Seeds

April 16, 2012

Five years ago, the word “chia” made most Americans think of one thing: Chia Pets. The association lingers. But today, chia seeds are beginning to gain recognition as one of the world’s healthiest foods. The seeds, which are completely tasteless, are high in protein and fiber and contain incredibly high levels of Omega-3 fatty acids, which have been shown to protect function of the heart and other vital organs. The shelves of Whole Foods are brimming with chia-packed products, from juices to energy bars. You can buy four one-pound bags of raw chia seed at Walmart for $37.56. “Chia could be the next big superfood,” John Roulac, CEO of Nutiva Foods, the leading producer of organic chia, told The Huffington Post. “The growth in demand for chia is almost like a hurricane, it’s so intense.” What makes that transformation so remarkable is that for centuries, almost no one was even aware that chia seeds were edible. Chia had been the third-most important crop for the Aztec empire, after corn and beans. But because it was used in Aztec religious ceremonies, conquistadors suppressed its cultivation by all but a few remote tribes for 500 years. Wayne Coates, an ultramarathon-running professor of agricultural engineering at the University of Arizona, entered the picture in 1991. He was trying to find a profitable crop that could be grown in northwest Argentina, as part of a project he was working on with Argentinian farmers. Someone — he said he doesn’t remember who — suggested chia. He found that it was easy to grow, so he started to investigate its potential uses. What he found astounded him. “Chia is the highest plant source of Omega-3s. It has tons of fiber, and even a lot of antioxidants and minerals. It’s 20 percent protein — which is, compared to wheat, or even soy, incredibly high,” Coates told The Huffington Post. Further analysis convinced him chia had vast potential. Initially, he thought it might work well in livestock feed, to increase the amount of Omega-3s that made it into eggs and milk. That worked, but the relatively high price of chia kept farmers away. So Coates started to think about selling chia directly to consumers instead. He began visiting trade fairs, hoping to find a company that would include chia seeds in its products, but he said no one wanted to be the first to bet on an unproven ingredient. In 2005, Coates published a book on the topic entitled “Chia: Redisovering A Forgotten Crop Of The Aztecs,” but it attracted little notice outside of his native Arizona. But in the late 2000s, two high-profile supporters emerged. Dr. Mehmet Oz started promoting chia as a “superfood” on “Oprah.” He showed fans how to incorporate chia into their diets by adding it to smoothies and to muffins. His endorsement encouraged health-food early adopters — who were eager for a new fad after tiring of acai and pomegranate — to seek out chia seeds. Then chia was featured in Christopher McDougall’s “Born To Run,” a best-selling inspirational tract for runners. McDougall profiled a legendary long-distance runner named Micah True, who learned about chia from the Tarahumara tribe of native Mexicans. The book increased awareness of chia in the athletic community. Chia sales skyrocketed, and Coates quickly found that its popularity had ballooned far beyond what he had imagined. (His second chia-related book, “Chia: The Complete Guide To The Ultimate Superfood,” comes complete with recipes and will be released on May 1.) New companies, including Nutiva, began producing it, as many others in the food industry began to realize that the seeds’ blandness gave them a wide range of potential applications. One such person is Janie Campbell, a self-declared health food nut from Southern California and the founder of beverage company Mamma Chia. She started adding chia to juice after realizing that it worked to reduce symptoms of an autoimmune disorder she’d faced for decades. Campbell said her friends were so enthusiastic that she decided to sell the juices commercially in 2010. Mamma Chia is now available in 2000 stores, including most Whole Foods locations. As the chia market became more competitive, people began to make bold claims about the seeds’ benefits. Many — including Coates — started to say that chia seeds help people lose weight, that chia seeds increase energy and that they lower peoples’ cholesterol. The problem was that controlled studies had continually failed to bear those claims out. “The people who are involved in the chia seed world are almost like a cult,” said David Nieman, a doctor who has conducted numerous studies on chia seeds. “They just think it’s god’s gift to mankind, that it can do all sorts of magical things. But it’s not true.” The cautionary tale in this arena is that of the acai berry. It, too, was a newly-introduced food from South America that was often billed as a “superfood.” And it, too, started to attract unsupportable claims, which ultimately sullied its image in the eyes of many consumers. For that reason, those who market chia seeds have shifted their focus away from specific health claims and toward simple statements about the uncontroversial nutritiousness of the chia seed. April Hallaway, head of marketing for Australia’s The Chia Company, which now grows nearly half the world’s chia, explained, “The last thing we do is to market chia as a fad.” In Australia, the seeds’ appeal stretches far beyond health food nuts and athletes. They’re included in foods as pedestrian as mass-market white bread. But before that can happen in the U.S., many argue that the supply of chia — currently dominated by The Chia Company and small farms in Latin America — needs to become more reliable. Enter Kentucky Chia, founded by a group of business students at the University of Louisville with the goal of making chia into a commodity crop. The company holds the patent for a new strain of chia that can be grown in the U.S., which was developed using a process that accelerates genetic mutation using gamma rays. (The technique does not technically qualify as genetic modification, but it’s close enough to unnerve traditional chia fans like Coates and Roulac.) Kentucky Chia hopes to start selling its chia as horse feed in 2013. But CEO Zack Pennington says that’s only the beginning. “Right now, we mostly eat chia raw, by itself, but I think its ultimate trajectory is as an ingredient,” he told The Huffington Post. “Sometime soon, I think we’ll see chia added to everything: Vitamin Water with chia, Kashi cereal with chia, chia-seed bread at Subway.” Is he worried, though, that chia might just be a temporary fad — as its terra cotta brethren turned out to be? “As long as people recognize not only how good it is, but also its limitations, it will last,” he said. “iPods were a trend — and now they’re just part of your daily life. That’s where we think chia seeds are headed.”

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Toy Company Allegedly Laundered Drug Money

April 16, 2012

LOS ANGELES — Five people were arrested Monday in connection with a money laundering scheme that allegedly funneled millions of dollars in Colombian and Mexican drug money through an American toy company, federal officials said. Immigration and Customs Enforcement said the two owners of Industry-based Woody Toys and three company employees were arrested on charges of evading federal reporting requirements for financial transactions. Two Mexican toy dealers were arrested earlier this month in the case on similar charges, the agency said in a statement. Woody’s co-owner Jia Hui Zhou and toy dealer Luis Ernesto Flores Rivera are also charged with conspiring to launder money in a scheme that officials said channeled at least $6 million to the California toy company between 2005 and 2011. The case is the second involving a Los Angeles-area toy company accused of laundering drug profits and comes as countries such as Mexico tighten banking regulations, said Claude Arnold, special agent in charge for ICE homeland security investigations in Los Angeles. “They can’t walk up with duffel bags of money and continue with their business,” Arnold said. “They have to find creative ways to convert that money into pesos and launder it so it doesn’t look like illegal proceeds.” All seven of the defendants were due in federal court in Los Angeles Monday afternoon. The indictment was handed up last week against the seven defendants and the company. A message was left for Zhou’s attorney, David Elden. Flores Rivera had no attorney listed as of Monday afternoon, ICE officials said. The Mexican toy dealers bought U.S. dollars made off drug sales from currency brokers in a “black market peso exchange,” officials said. That exchange enabled drug traffickers to get rid of drug dollars and gave the toy dealers a more favorable exchange rate so they could then purchase toys in the United States, authorities said. The dealers would then send the money to Woody Toys via courier or bank deposits. Authorities said Woody Toys failed to file required paperwork when the company received deposits of more than $10,000 and also intentionally structured bank deposits in smaller increments to avoid having to do so. If convicted of evading federal reporting requirements, the defendants could face up to five years in prison. The money laundering charge can carry a sentence of up to 20 years in prison. The investigation started in November 2010 following a money laundering probe at Los Angeles-area toy wholesaler Angel Toy. That company’s two top executives were sentenced earlier this year to more than three years in prison after pleading guilty to conspiracy to structure currency transactions. The probe into Woody Toys – which features teddy bears and blond-haired dolls on its website – was carried out by immigration officials, Internal Revenue Service investigators and a Southern California task force headed by the Drug Enforcement Administration. No one at the company’s offices in Industry would comment for this story.

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Anheuser-Busch Pays $1.24 Billion For Majority Stake In Presidente Beer

April 16, 2012

BRUSSELS — Anheuser-Busch InBev says it is paying $1.24 billion for a majority stake in Dominican brewer Cerveceria Nacional Dominicana as it pushes deeper into the Caribbean. AB InBev said Monday it is paying $1 billion to Cerveceria Nacional Dominicana’s parent company Grupo Leon Jimenes for a 41.8 percent stake in a holding company that will own 83.5 percent of Cerveceria Nacional Dominicana. The holding company will also include AB InBev’s Dominican subsidiary AmBev Dominicana. On top of that, it will pay $237 million for Heineken’s 9.3 percent stake in Cerveceria Nacional Dominicana, which will leave AB InBev with 51 percent of Cerveceria Nacional Dominicana. Belgium-based AB InBev says the deal will “create the leading beverage company in the Caribbean.” It will sell Cerveceria Nacional Dominicana’s popular Presidente beer brand as well as malt and soft drinks.

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Terry Connelly: We Have Seen This Stock Market ‘Horror’ Movie Before

April 16, 2012

Here we go again. It’s the second quarter of the year, and once again — as in 2010 and 2011 — the hedge fund investors that missed the rally in the U.S. stock market have rebooted their “sky is falling” pitch to scare the rest of us out of our shareholdings. They do this so they can buy back into the market on the cheap and enjoy the rally that will occur in the second half of the year — just like the previous years. Two months ago, “a few” members of the Federal Reserve Board were favoring a QE. Now, they say it’s just “a couple.” So, one day it’s a strained reading of month-old Federal Reserve Board meeting minutes that concludes that the Board has taken additional monetary stimulus “off the table” because just “a couple” as opposed to “a few” have agreed that action may be necessary. (What if the “couple” happened to be Chairman Bernanke and Janet Yellen, his deputy?). In the end, a couple and a few are the same thing, but the market has overread “a couple.” Curiously, CNBC, the main market news outlet on cable, started promoting this thesis right away (presumably as part of its virulent anti-Obama campaign to talk down the market lest the President’s re-election campaign get any bounce from better stock prices and fatter 401(k)s and sure enough the market went down by triple digits. Then came the monthly jobs report showing only 120,000 net jobs created in March. Clearly a disappointing number compared with the more than 200,000 in February and January, except for the fact that these monthly estimates (which are based on a projection model for a set of interviews with employers, not an actual numerical “headcount”) are always wrong and corrected in subsequent months. On a corrected basis, the QUARTERLY jobs report — a more reliable indicator — shows a step up in hiring for each of the past THREE quarters, rising from 300,000 plus in Q3 2011 to 400,000 plus in Q4 2011 to more than 600,000 plus in Q1 2012. Of course, this data never made it onto CNBC. Then came the hedge fund hit to Spanish and Italian sovereign debt interest rates when the European markets opened Tuesday after the Easter holiday. Here’s how that happens: the hedgies don’t have to actually sell Spanish and Italian government bonds and take losses. All they have to do is bid up the price of credit-protection (the famous credit default swaps (CDS) that helped bring on the U.S. financial panic in 2008) on Spanish and Italian debt. The CDS contracts pay out only if the debt defaults, so a higher price implies a higher risk of default on the underlying debt. When that happens, investors tend to dump the underlying debt, sending the interest rates up. The hedge funds and other big investors know from the past two years of experience that such movements in the CDS markets move the European sovereign debt markets down and in turn, spook the U.S. stock markets into their now famous “chicken little posture.” Translation: you can manipulate the U.S. stock market down by 500 points or more over two or three days just by bidding up a few Euro debt CDS contracts on Italian and Spanish debt! But you won’t hear that on the supposedly informative CNBC. You just hear about the Spanish and Italian interest rate spikes, just like last year and the year before. You also hear about other European sovereign debt at just about this time of the year — after a run up in the U.S. market that some of the “big boys” missed out on. And so, on Tuesday after Easter, we went down 200 more points on the Dow. As CNBC cheers on the incipient “market correction” and puts on a series of chartists warning of free-fall. Just to top it off, the CNBC mavens chat incessantly about the coming downturn in corporate earnings on the first day of Q1 reporting season, quoting of course unnamed experts that earnings will actually fall for the quarter. Never mind that 3/4th of the early reporters — a small but at least “actual” sample — have already reported earnings that EXCEEDED estimate. Never mind that Alcoa, which was panned all day long by the cable Cassandras, actually reported earning revenues and earnings after Tuesday’s closing bell that also significantly exceeded estimates! Are we seeing a pattern here? It’s déjà vu all over again, as Yogi Berra would say. Fool me once, your fault; fool me twice, my fault; fool me three times, well, that’s the lot of U.S. equity traders, as they again fall for the hedge funds’ head-fake apocalyptic scenario in the second quarter, and take the rest of us down with them. What the hedgies and their shills at CNBC count on is the fact that average investors aren’t used to short selling, so they don’t understand that folks who come on TV and talk the market down might actually be “talking their book” just like the typical stock “promoters” they are justly suspicious of. Wise up, stock investors — you are being had, again — by some real pros that count on you having a short memory from the games they played the last two years, at just this time of the year. They, not you, made the money in the second half of the past two years. Wise up!

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Al Norman: Wal-Mart’s ‘Terrifying’ Attack on the First Amendment

April 16, 2012

Cathy Kern is somewhat of a folk hero in North Tonawanda, N.Y. But if you ask folks at city hall, or at Wal-Mart corporate headquarters, what they think of Cathy Kern, you’ll get the opposite response. Over the past six years, Kern and other anti-Wal-Mart activists have filed 5 lawsuits that effectively staved off the development of a Wal-Mart superstore in their community. Ultimately Wal-Mart prevailed, and their huge store is now in its final stages of completion. North Tonawanda (NT) is located midway between Buffalo and Niagara Falls, in Niagara County. There are already 6 Wal-Mart’s within 16 miles of NT, including a supercenter in Niagara Falls 9 miles away. In November, 2006, Wal-Mart submitted an application to the City to construct a 183,000 square foot superstore. In May, 2008, the city’s Planning Commission approved the environmental impact statement, and by September, 2008, the site plan was approved. Kern and other NT residents formed a group called NT First, and filed a lawsuit to annul the Planning Commission’s decision. In June, 2009 the state court did annul the site plan approval, saying that the city was required by its own code to submit a stormwater pollution prevention plan — which had not been done. The court sent the case back to the city to complete. Between November, 2009 and July, 2010, Kern et al. filed three more lawsuits against Wal-Mart, each raising a different point of law. In the fourth lawsuit, Wal-Mart and the City filed a motion to impose sanctions against Kern and her lawyer, David Seeger, for “frivolous” litigation. In September, 2010, Judge Ralph Boniello, III dismissed the fourth lawsuit, and permitted Wal-Mart and the city to seek the sources of Kern’s funding. Boniello ruled that the lawsuit was “filled with re-statements of matters previously litigated and half-truths [and] has only served to further delay the project and cause the Respondents to incur additional legal fees.” Boniello added: “In fact [Wal-Mart and the City] have raised the possibility that such delay tactics are consistent with a national campaign allegedly funded by outside groups whose sole goal is to block Wal-Mart developments.” The Judge ordered Kern and Seeger to produce their funding sources and NT First membership names, or face contempt of court. In a letter dated December 9, 2010 , Attorney Seeger informed the Judge that the group NT First had “terminated its existence,” ended its representation by Seeger, and liquidated its checking account balance of $13.22 — donating it to The Salvation Army. Seeger noted that under New York law, “an unincorporated association’s financial exposure is limited to those assets held by it and for it through its members.” Seeger noted, “The Association, now that it has laid bare its financial records [and] membership lists… has no reason to continue its existence, and no means to afford any further legal representation.” Seeger told the Court that the members of NT First “remain concerned that Wal-Mart, in furtherance of its nationwide campaign to legally attack its opponents, will attempt to force additional disclosures and otherwise terrify its member and officers.” Attorney Seeger warned, “The First Amendment secures Petitioners members’ various First Amendment freedoms including… the right to petition the government for redress of grievances.” Citing the Citizens United case, Seeger wrote: “disclosure of donations and funding is off limits, except upon a demonstration of compelling state interest.” Citing three U.S. Supreme Court cases between the NAACP and the State of Alabama (1959 to 1964), Seeger argued that unincorporated associations are immune from state scrutiny of memberships lists. “At bottom,” Seeger said, “Wal-Mart is not entitled to the requested disclosure, unless there is a compelling state interest overriding the First Amendment Protection.” In June, 2011, a group called The Clean Water Advocates of Western New York , led by Cathy Kern, filed a fifth lawsuit under the Clean Water Act in federal court. This suit was originally filed against Wal-Mart, North Tonawanda, and the N.Y. State Department of Transportation. A U.S. District Court Judge signed a consent decree requiring the NYSDOT to comply with its stormwater permit. To fight her contempt charges, Cathy Kern is now represented by Buffalo civil rights attorney Frank T. Housh. “When Wal-Mart began an illegal, permitless construction of its Superstore,” Housh told me, “North Tonawanda First did what citizens groups are supposed to do: they petitioned the Courts for relief. Their efforts were hugely successful. Wal-Mart and its rubber-stamp local government were forced to get a construction permit, divulge its plans to the public, and follow the procedures in the Clean Water Act.” Housh says because of this success, “my clients have been targeted for reprisal. Put simply, Wal-Mart is seeking the bankruptcy and public humiliation of a woman in her sixties who lives alone with her cats because she succeeded in making them follow the law. They want her ruined life to stand as an object lesson to anyone who believes the rules which apply to everyone else apply to the world’s largest corporation.” Judge Boniello has made it clear, Housh says, that he may order Kern to pay hundreds of thousands of dollars in fees to Wal-Mart’s attorneys. Boniello’s Order was stayed pending an appellate court ruling on the propriety of the Judge’s Order, which should be issued in the next few weeks. In December of 2010 — three months after Justice Boniello’s decision to allow Wal-Mart to pursue NT First documents — the New York Daily News reported that Wal-Mart had donated $10,000 to the Niagara County Republican Committee. NT Mayor Robert G. Ortt, and NT City Attorney Shawn Nickerson — both strong proponents of the Wal-Mart project — are Niagara County Republican office holders. So is Justice Ralph Boniello, III, who was elected to the Niagara County Supreme Court in 2001. As of 2010, Boniello’s salary is $146,700. The Republican Judge is up for re-election in 2014. Wal-Mart has used its legal muscle countless times to appeal local zoning decisions to the county courts, to the appeals courts, and beyond. The corporation has more lawsuits than men’s suits. In North Tonawanda, Wal-Mart’s hounding of local residents for legal fees, membership lists and donor lists, is just another attempt by a 1 percent corporation to chill public participation and to narrow the First Amendment freedoms not just of Cathy Kern — but of citizen activists everywhere across America. Al Norman is the founder of Sprawl-Busters. He has been helping communities fight big box sprawl for almost 20 years. His latest book, Occupy Walmart will be released in early May.

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Meet The Company Behind Hologram Tupac

April 16, 2012

A hologram of deceased rapper Tupac Shakur stole the show at Coachella 2012, capturing the fascination of more than 100,000 fans at the annual music festival, and sparking a wave of reactions across Twitter and other social media. Accolades for the high-definition projection, which performed as part of a live set by rappers Snoop Dogg and Dr. Dre, lauded it for its impeccable details. The lifelike hologram captured ‘Pac’s athletic swagger and iconic swag as it romped around the stage, brandishing tattoos and Timberland boots. Details like these are what allow audiences, even large ones like at Coachella, to suspend disbelief. Fortunately, such details happen to be the speciality of AV Concepts , the production company that so convincingly resurrected Tupac. As a small company in a competitive industry , it must to prioritize client relationships and adopt new technology to succeed — and pave the way forward. Their latest win is just case-in-point. In an interview with MTV , AV Concepts president Nick Smith said that his company worked meticulously with the project’s mastermind, Dr. Dre. Everything about the hologram, from its movements to its clothing, was “recreated under the direction of Dre and his team,” according to MTV. The Tupac hologram “was [Dr. Dre's] idea from the very beginning and we worked with him and his camp to utilize the technology to make it come to life,” Smith told MTV. The technology in question uses “uncompressed [high-definition] video that can be projected as holograms… or as 3D imagery on building exteriors, interior walls, stage sets and other structures,” according to the Sun-Herald. AV Concepts previously produced HD graphics for Chris Brown’s performance at the 2012 Grammys , and has flaunted its holographic projections at the San Diego Convention Center. While Smith would not divulge an exact cost for the Coachella hologram to MTV, he offered a price range for a comprable event at between $100,000 to more than $400,000. He called the pricing “affordable” compared to the cost of pulling in entertainers form around the world to preform at concerts. As live visual performance technology such as Musion Eyeliner , the holographic projection system utilized by AV Concepts and its partner in the Coachella endeavor, Digital Domain Productions , becomes increasingly sophisticated, it might pave the way for a new kind of entertainment experience. While AV Concepts has helped other groups, such as Gorillaz, utilize holographic technology, their Tupac seems to have broken new ground in realistic rendering. If companies can deliver a convincing live hologram performance for less what it costs to send a band on tour, this resurrection might signal a new dawn for live entertainment. With the right technology, companies can “take people that haven’t done concerts before or perform music they haven’t sung and digitally recreate it,” Smith told MTV . This is to say nothing of the priceless opportunity given to hip-hop fans at Coachella. Hologram Tupac might be an elaborate surrogate, but to many, including real live perfomers like Rhianna and the Roots’ Questlove , the vibe was real enough. Imagine what it might mean to fans of the Beatles to see a live, hologram-performed rendition of “Sgt. Pepper’s Lonely Hearts Club Band.” The Huffington Post attempted to contact AV Concepts for comment via phone and e-mail, but no reply was received by press time. WATCH: Madonna Performs With Hologram Gorillaz

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Private Equity Doing Just Fine, Thanks

April 16, 2012

The boom times are back, sort of, for private equity, but don’t break out the champagne just yet. More companies backed by private equity went public or were sold in the first quarter of this year than in any first quarter since 2007, according to data from the private equity research company PitchBook Data, as CNN Money reported . During the first quarter of this year, private equity firms either sold or took public 112 companies, bringing in roughly $21 billion. That represents a 17 percent increase from the first quarter of last year, when 96 private equity-backed companies were sold or issued shares to the public, according to PitchBook. “A lot of things are gradually improving,” John Gabbert, founder and CEO of PitchBook, told The Huffington Post. While this marks the best first quarter for private-equity firms selling their stakes since 2007 — a big year for private equity deals — it’s too early to say if the market is back to full health. To put the latest results in perspective, private-equity firms sold or took public a total of 510 companies during all of 2007. Kathy Smith, a principal at Renaissance Capital, an institutional research and asset management company focusing on IPOs, said, “2012 looks like a good year to me.” But, “the markets are still volatile; we’re not really out of the woods with all of this panic,”added Smith, referring to the stock markets. “And when you get panic, you get a shutdown of the IPO market.” Last week, California solar power developer BrightSource Energy announced that it was withdrawing its IPO, citing poor market conditions. Meanwhile some large-scale private equity firms have been taking themselves public as well, with lackluster results. Last week, the IPO of private equity firm Oak Tree Capital Group proved lackluster when the firm raised 27 percent less than the amount expected after the shares premiered. On Monday, the Caryle Group announced plans to make 10 percent of its firm available for public trading. The firm’s valuation would be just slightly more than $7 billion , a fairly cautious estimate, ranking it below rivals Blackstone and KKR, according to Bloomberg . Contributing to the recent boom might be the plum tax benefits that private equity firms enjoy when they spin off a company, as CNNMoney noted. Revenues from the sale of a company owned by a private equity firm are currently taxed at the 15 percent capital gains rate, which matches the rate that partners of private equity firms personally pay on the profits from their deals. (This compares with the top tax rate on income of 35 percent, as CNNMoney pointed out.) Venture capital-backed IPOs are off to a good start this year as well. Twenty U.S.-based venture capital-funded companies went public in the first quarter, raising a total of $1.4 billion. That makes it the most active period since the fourth quarter of 2007, which had 27 VC-backed IPOs raising $2.1 billion, according to data from Dow Jones VentureSource. Yet, in spite of the massive, well-publicized $1 billion acquisition of VC-backed Instagram by Facebook last week , the market for venture capital-backed acquisitions — that is, one company buying another company financed by VC funding — is down, according to VentureSource. Ninety-four VC-backed companies were acquired in the first quarter, raising 18.1 billion — a 32 percent decrease from the same period last year.

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Many More Teens Dying From Prescription Drug Abuse, Government Study Shows

April 16, 2012

An uptick in teenagers overdosing on prescription drugs drove the almost doubling of fatal poisonings among American children, the Centers for Disease Control and Prevention reports Monday. From 2000 to 2009, the number of children aged 15 to 19 who died from poisoning increased by 91 percent, the CDC says. The big jump in poisonings ran counter to the overall rate of deaths from unintentional injuries to people up to age 19, which fell 29 percent to 11 in 100,000 children, or 9,143 fatalities, in 2009. Childhood death from poisoning rose 80 percent over the 10-year time period, owing largely to the huge increase in such deaths among children aged 15 to 19. Prescription drug abuse is to blame, according to the CDC. “The percentage of poisoning deaths among those aged 15–19 years with prescription drugs as a contributing cause increased from 30% in 2000 to 57% in 2009,” the report says. The Obama administration’s Drug Enforcement Agency has stepped up efforts to target physicians, pharmacies and other medicine suppliers it suspects of facilitating sales of prescription medicines that make their way onto the black market. The White House issued a multi-agency plan to combat prescription drug abuse last year. Narcotic prescription painkiller overdoses kill 40 people a day, according to the CDC. Thirty-seven percent of all children who died in 2009 were killed as a result of unintentional injuries, making it the leading cause of death for children from ages 1 to 19. “In 2009, child and adolescent unintentional injuries resulted in approximately 9,000 deaths, 225,000 hospitalizations, and 8.4 million patients treated and released from emergency departments,” the CDC report says. Boys are more likely than girls to die this way. Automobile accidents remained the number-one cause of unintentional injury-related deaths among children, despite a 41 percent reduction in the rate of these fatalities between 2000 and 2009, the CDC reports. In 2009, 4,564 children died as a result of motor vehicle incidents. Like poisonings, suffocations also increased and were the cause of death for 907 babies in 2009. Photo by Flickr user TerryJohnston

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For Once, Apple Drags Down Markets

April 16, 2012

NEW YORK — For most of the year, Apple has propelled the Nasdaq composite index forward. The stock climbed from $405 at the start of the year to more than $630 last week, and the Nasdaq easily beat the gains of other indexes. Now Apple is sliding the other way and taking the Nasdaq with it. Apple stock dropped more than $25 on Monday, its fifth straight day of declines. The losing streak has wiped out about $60 billion of Apple’s market value. That’s more than the most optimistic projections of the value of Facebook. Apple helped push the Nasdaq composite index down 22.93 points on Monday to 2,988.40. The index is now up about 15 percent for the year after almost reaching 20 percent by the end of March. “It’s been a very quirky market because it’s been a few companies that have delivered most of the rally this year,” said Mark Lamkin, CEO of Lamkin Wealth Management in Louisville, Ky. “It’s not been a broad-based rally.” Apple, still the most valuable company in the world, accounts for 12 percent of the Nasdaq, more than any other stock. It has been on an almost uninterrupted climb for three years, powered by its hot iPhones and iPads. But last week, a veteran technology analyst boldly issued a downgrade for Apple. He predicted that cellphone companies would probably stop offering such generous subsidies for customers to adopt the iPhone. Investors may also be locking in profits and getting out before Apple reports earnings April 24. Even after the five-day decline, Apple stock is up 43 percent for the year. “It’s had a huge run,” said Burt White, chief investment officer of LPL Financial in Boston. “Some investors probably said, `Might as well take some profits.’” The broader stock market was flat, helped by strong March retail sales but hurt by continuing concerns about rising borrowing costs for debt-troubled Spain. The Standard & Poor’s 500 index dropped 0.69 point to 1,369.57. Apple dragged down other technology stocks, which fell more than any other industry group in the S&P. Google, which went to trial Monday against Oracle in a copyright case over the Android phone, dropped for the second day in a row. Utility stocks and banks rose, while energy companies and so-called consumer discretionary stocks fell. The Dow Jones industrial average rose 71.82 points to 12,921.41, a gain of 0.6 percent. All but six of the 30 stocks that make up the Dow rose for the day, explaining why it rose while the S&P was flat. Apple is not part of the Dow. The government reported that retail sales rose 0.8 percent compared to the previous month, twice what analysts had been expecting. Skeptics noted that was less than February’s 1 percent increase. They also wondered whether the buying was just a result of the mild winter, rather than a sign of recovery: If people are buying lawn mowers and other warm-weather goods now, then they probably won’t be later in the year. Building materials and garden equipment enjoyed the biggest jump in March. “It’s nice to see the retail sales were strong, but it’s one month and it’s one data point and it’s not even the biggest data point,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati. “Honestly, jobs are much more important.” Earlier this month, the government reported that the U.S. added 120,000 jobs in March, about half the pace of the previous three months. Spain’s borrowing costs climbed above the closely watched 6 percent mark as investors grew more worried about the country’s ability to pay its debts. Seven percent is the rate at which other European countries have been forced to seek bailouts. Sweden cut its economic forecast for the year, saying that problems elsewhere in Europe were spreading its way. The yield on the 10-year Treasury note was steady at 1.98 percent. Among stocks making moves: _ Mattel plummeted more than 9 percent after reporting a 53 percent drop in first-quarter earnings. The country’s largest toy maker is wrestling with lower sales of Hot Wheels and Barbies. It just bought HIT Entertainment, the company behind Thomas the Tank Engine and Bob the Builder. _ Endocyte doubled to $7.62 after reporting that Merck, the world’s second-largest drugmaker, will develop and market its experimental cancer drug. Endocyte, based in West Lafayette, Ind., has no products on the market.

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Ben Hecht: Mainstreaming Social Innovation With the Public Sector

April 16, 2012

Social innovation has been a hot topic for a number of years now, but never more so than today. Conferences, awards, magazines, even a White House-led Social Innovation Fund, are dedicated to it. And for good reason. People have lost confidence in the institutions that they historically relied upon to solve our most pressing problems. Leaders have realized that if they want to change the status quo in their lifetimes, they need to stop waiting and start building their own solutions. More often than not, however, when we refer to social innovation, what we really mean is innovation sponsored by the social sector (“social sector innovation”). We’re talking about nonprofits created to fill gaps in a terribly broken system, such as connecting patients and their families with the basic resources they need to be healthy ( HealthLeads ) or providing urban young adults with the skills, experience and support that they need to reach their potential through professional careers and higher education ( YearUp ). Organizations like Echoing Green , Ashoka and New Profit , have accelerated the creation of a social sector innovation field by supporting the emerging leaders of these organizations with grants, business planning and connecting them to a network of similar ‘social entrepreneurs.’ As I stood atop the trading floor of the New York Stock Exchange (NYSE) last Wednesday however, I realized how incredibly self-defeating this narrow definition of social innovation is if large scale change is our goal. I was literally witnessing one of the most effective and lasting social innovations in the U.S. and it had been done by the public sector. The more I thought about it, the more I realized that public sector-led social innovation (“public sector innovation”) differs from social sector innovation in one absolutely fundamental way: it actually has a much better chance of having permanent, lasting impact from the outset. Many social sector innovations, like ones I’ve helped lead over the past 20 years, toil for years to build a successful model and then struggle for years thereafter to both get the attention of government and the adoption of the model by the public sector. In contrast, public sector innovation is undertaken with the assumption that if it is successful, it will go straight, “intravenously” into effect. No annual fundraising or advocacy necessary. The innovation and related funding will quickly displace the old way that government did business. For instance, what Linda I. Gibbs, New York City’s Deputy Mayor for Health and Human Services, has done in New York is one example of the extraordinary power of public sector innovation strategies. After her appointment, Gibbs created the Center for Economic Opportunity (CEO) to design and implement evidence-based initiatives to reduce poverty. On the policy side, the Center developed an updated poverty measure that it not only adopted but has also been adopted by the Obama Administration. On the program side, for example, CEO created Financial Empowerment Centers to help citizens take control of debt, improve credit ratings, deal with debt collection and learn to create budgets. After serving over 13,800 residents, helping them to reduce over $6.9 million in debt, build more than $900,000 in savings and achieve financial stability, the innovation went straight into the mainstream — it’s now the way the city does business. Not a pilot. Nice but that’s not all especially given how cities compete with their peers. In 2008, Mayor Michael Bloomberg of New York City and then-Mayor Gavin Newsom of San Francisco, two mayors committed to this issue, created the Cities for Financial Empowerment (CFE) Coalition . Since then, a dozen cities have come together to share promising approaches, build a unified policy program and adopt innovations into their mainstream operations. I was standing atop the NYSE because I was celebrating, with CFE co-chairs Jonathan Mintz, NYC Department of Consumer Affairs Commissioner, and José Cisneros, City of San Francisco Treasurer, the announcement of The Cities for Financial Empowerment Fund (CFE Fund) at Living Cities as part of NYSE’s Financial Literacy Week. The Fund will institutionalize this loose-knit collaboration of cities interested in financial empowerment. In essence, it will help cities to skip a generation of innovation and go right to intravenous adoption of what works. We need to do more to celebrate and replicate these types of successes. We need to honor the vision of public sector innovation trailblazers like Linda Gibbs, Jonathan Mintz and Jose Cisneros as much as we honor the extraordinary efforts of social sector innovation leaders like Wendy Kopp and Geoffrey Canada. The more the better.

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Javier Garcia-Martinez: Science Deficit

April 16, 2012

The current worldwide economic situation is bringing scrutiny to how developed countries balance their national budgets, and for the scientific community this provides a timely and interesting opportunity to observe how public investment in scientific research and development (R&D) is being either increased or significantly reduced by different countries. Some countries believe that investment in R&D is one to help get out of the crisis; heavily investing in R&D can diversify their economies and increase their competitiveness. For example, France has announced a €35,000-million ($4.6-billion) investment in research. Germany has implemented a 5-percent increase in the budget of its main research institutions until 2015. But other countries are trying to reduce public expending at all costs. Recently, Spain announced a whopping 25.6-percent cut in its budget for R&D. It is interesting to note that Spain is, along with the countries that have been bailed out (Portugal, Italy, Greece, and Ireland), among the countries that spend the least amount in R&D. Conversely, countries that invest more in R&D have very low-risk premiums. It seems that public investment in R&D is the effective recipe against the contagious economic illness that many developed economies are suffering. One could think that at least the markets will react positively to short-term radical measures to reduce national deficits. Unfortunately, for those countries that are dramatically cutting in R&D, although markets will be benevolent to dynamic and competitive economies, they will be merciless to economies with high unemployment rates, lack of opportunities, and brain drain, trends that underinvestment in R&D will only aggravate. A good example was seen when Spain was significantly punished by the markets in the days after announcing these austere but unselective measures on March 30. Just few days later a national call for promoting scientific culture was announced by Fecyt, a government organization devoted to promoting science and technology. A crucial issue is how to convince now-young Spaniards that there is a future in science when there is no money there, and when the leaders of the country have decided that is not a priority. Furthermore, what does this mean for those who already decided to go for a career in science? In the past, companies have been incentivized via tax deductions to invest in innovation, but now many of those incentives are gone. How can we convince others to place a bet on R&D when the leaders of the country have decided that this is something superfluous, something that has to go in difficult times? However, the unprecedented reduction in government investment in R&D is only one of the recent measures announced that exacerbates our “science deficit” and that will impact our ability to create a more competitive and diverse economy in Spain. Since the end of last year, by law, no public institution can hire any new scientist, teacher, or professor, no matter how good, how capable of attracting funding, or how able to create new companies he or she is. This is especially dramatic for the researches under the Ramón y Cajal program, which include some of the most brilliant scholars of Spain, typically between 35 and 45 years old. Sadly, it seems that bright futures for these individuals exist only abroad. Suddenly closing programs that took years to build doesn’t make any economic sense, as the losses and opportunity costs will be far greater than the money saved. Similarly, pushing the best and the brightest away at their best time of their careers after investing so much in their education and training is possibly the worse decision a government can make to recover from an economic crisis. A similar cut has been announced in education (22-percent reduction), which is significantly higher than the average reduction in the national budget (16.9-percent). This is despite the fact that three out of 10 students in Spain are unable to finish the Obligatory Secondary Education (ESO) and Spain is 12 points below the average of the OCDE countries (18 points below in science) in the PISA study. As in the case of public investment in R&D, those countries at the top positions of the PISA ranking are also the ones with lower-risk premiums; more sustainable, competitive, and diversified economies; and better-paid jobs. Research and education seems to act as vaccine against the worst consequences of the crisis, which in the case of the Spain is unemployment, which reaches almost 50 percent for young people. In the U.S., the Obama administration has identified education as one of the key strategies for the future of the country, specifically focusing on the teachers, announcing a nation-wide program to train 100,000 teachers of STEM in the next 10 years. Balancing public budgets is not only necessary but urgent in many developed countries, because their economies are not able to grow at the level that will allow maintaining many public services. However, dramatic reductions in strategic programs and education, and closing the doors to the most talented, will have only limited, short-term budget impacts, and they come at the expense of making it impossible to create conditions that foster growth, competitiveness, and a dynamic economy.

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