Euro Traders’ Patience Running Thin for Broken Greek Promises

February 11, 2012

Fundamental Forecast for the Euro: Bearish ECB rate decision doesn’t bring rate change, but ECB’s participation in Greek effort reviewed Greece receives and loses approval for …

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Forex Trading Weekly Forecast – 02.13.2012

February 11, 2012

US Dollar Surges into Close – Start of a New Uptrend? Euro Traders’ Patience Running Thin for Broken Greek Promises Japanese Yen at Turning Point with Poor GDP Data Due British …

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Switzerland: An icon of endless natural beauty

February 11, 2012

(MENAFN – Arab News) Switzerland does indeed remain a premier icon of natural beauty the world over. A recent trip covered the cities of Montreux, Interlaken and Lucerne, considered by some in the …

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CDEX Inc. Commences Debt Restructuring to Strengthen Company’s Future Competitiveness

February 11, 2012

Will Continue to Operate Without Interruption

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Daniel Wagner: China-Bashing Is a Tiresome Sport in American Politics

February 11, 2012

China bashing has become as much a part of the modern American political tradition as criticizing foreign producers of oil, yet it seems few have actually stopped to think about whether it is justified. The American electorate has become accustomed to the predictable torrent of anti-Chinese rhetoric from politicians of a variety of political persuasions — in large part because of a subtle and uncomfortable recognition that China is beating the U.S. at its own game; Some would even say the Chinese are better capitalists than Americans will ever be. Indeed, China has made remarkable economic progress over the past twenty years — in large part because of its embrace of ‘socialism with Chinese characteristics’ — otherwise known elsewhere as capitalism. A decade ago, American politicians bashed China largely for political reasons. Today, it is for primarily economic reasons. With China having become the second largest economy in the world last year, and poised to overtake the U.S. in economic size in the next decade, it is no wonder American politicians are on the offensive. It should be no surprise that Americans may bristle at the notion that capitalism has helped China slowly dominate the global economy. China is, of course, not above criticism, just like any other country, and American politicians do raise some valid points in criticizing China. For example, the Chinese yuan is undoubtedly overvalued, given that it does not freely float in the foreign exchange markets. And the Chinese government does control large parts of the Chinese economy through state-owned enterprises, which distorts the domestic market and gives some Chinese companies unfair competitive advantages. But China must compete in the global marketplace like any other country and it pays a price for supporting companies that should otherwise fail as a result of being poorly run, inefficient, and bloated. If the U.S. does not like the way China does business, it is free to do business somewhere else. What goes left unsaid, however, is that China has become too important for the U.S. do that, and what U.S. politicians fail to acknowledge is that the U.S. is becoming increasingly irrelevant to the economies of Asia, while China has become the cornerstone of Asia’s fantastic economic growth. China’s trade with the ASEAN countries jumped six-fold between 2000 and 2009, to US$193 billion, surpassing that of the U.S. China’s share of Southeast Asia’s total commerce for the period increased to 11.3 percent from 4 percent, whereas the U.S.’s share of trade with the bloc fell to 10.6 percent from 15 percent. Another thing that gets left unsaid is how important China has become as a destination of U.S. exports. According to the U.S. Treasury’s own report, “in the second half of 2009, U.S. exports to China increased by 15 percent on a year-over-year basis, while U.S. exports to the rest of the world fell by 13 percent. In the first quarter of 2010, U.S. goods exports to China rose by more than 40 percent compared to the same period the year before, while U.S. exports to the rest of the world rose by less than 20 percent.” China’s rapidly growing middle class is the single most important factor for the success of President Obama’s Nation Export initiative. The U.S. not only needs to tap China’s vast foreign currency reserves ( in excess of $3 trillion — more than 10 times that of the U.S.) in order to finance its trade deficit and fiscal deficit, it also needs access to China’s vast market in order to sustain its economic recovery and create much needed jobs for American workers. When was the last time you heard a U.S. politician admit that? Of course, both countries have legitimate criticisms of the other, but they know they need each other, and neither country is going to disappear. So instead of following predictable (and boring) scripts, why not turn the page on Cold War-esque rhetoric and find ways to join hands with China so as to mutually benefit from each other’s comparative advantages? The fact is, China needs and wants the U.S. to succeed economically — as the largest holder of U.S. Treasury Bills — and the U.S. should want China to succeed, so that it has a long-term marketplace for its exports. We are not talking here about some starry-eyed vision of utopia, but rather, a realistic and sensible approach to future bilateral economic relations. Rather than bashing China, U.S. politicians would be well advised to forge a stronger relationship with China. President Obama gets it. Last year he said : “I believe there is much to be gained from a closer working relationship with China. Indeed there are very few global challenges, if any, we can address effectively without China’s active cooperation. They are a global economic power, and engagement with China’s government is an important step in stemming the financial crisis that has devastated economies around the world. Both of our nations seek to lay a foundation for sustainable growth and lasting prosperity. My Administration is also working with China on a number of security issues, including stopping North Korea’s nuclear program, rolling back the advance of extremists in Pakistan, and ending the humanitarian crisis in Dar fur. The United States and China share common interests on a host of issues — including energy security and climate change, food safety and public health, and nuclear non-proliferation and counter-terrorism. We want to work with them to address these issues in the years ahead. Improved relations with China will require candor and open discussion about those issues on which we may disagree. We must address human rights, democracy, and free speech. We must also work to ensure that our nations play by the rules in open and transparent economic competition. These important matters will be essential elements of our ongoing dialogue with China.” The only Republican candidate for president we heard that kind of approach from was John Huntsman, who unfortunately failed to connect with American voters. A sustainable economic recovery in the U.S. cannot be achieved by isolating China. The U.S. and China may seem like the odd couple: the leading proponent of democracy and most individually-oriented nation and the leading communist and most communal-oriented nation. But considering what we can achieve together and what we will lose if we are pitted against each other, forming a Sino-American strategic alliance is critical to the future economic viability of both nations. American politicians, and the American people, would be much better off recognizing this, rather than using demagoguery to sow divisiveness between China and the U.S. The 21st century has no place for tiresome dated Cold War rhetoric. President Obama has the right approach. * Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk consulting firm based in Connecticut (USA), Director of Global Strategy with the PRS Group, and author of the new book Managing Country Risk. Dee Woo is a lecturer in economics at the Beijing Royal School.

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Check Your Statement: Citibank Users Found iPad App Payments Made Twice

February 10, 2012

Customers who use Citibank’s iPad bill-paying app might want to pay closer attention to their bank statements: A technological glitch recently caused the app to charge an undisclosed number of customers twice for bank payments. As early as last summer, Citibank received anonymous complaints, sent to the Apple App Store, about the double charges, according to Andrew Brent, a Citi spokesman. Months later, in late December, the bank detected that its app was to blame for problem. Since then Citibank has alerted affected users and reimbursed them for extra charges and any fees incurred. Brent attributed the lag between when the company first found out about the issue (in July) and when officials began alerting customers (in December) to the small number of complaints involved. One user had anonymously reported in July that a charge was duplicated as a result of double tapping the screen, according to Brent. He added that there was nothing to suggest that the incidents were linked to the iPad app itself. Citi later discovered that the app had been programmed to reattempt any transaction disrupted by a network error on the first try. The bank launched an update to its iPad app on Jan. 31. The glitch was first reported by The New York Times on Thursday. The issue affected less than 2 percent of transactions made via the iPad app, according to Brent. He declined to disclose the number of customers who use the bank’s iPad app and how many people were affected by the glitch. “We take seriously the functionality of our products and services as well as the satisfaction of our clients,” Brent stated in an email. “Upon discovering a technical bug in our Citibank for iPad app had caused a limited number of clients to encounter duplicate payments and/or transfers, we immediately fixed the technical issue. Even more important, we have reached out to clients who were impacted to ensure their individual situations are resolved completely.” Citigroup — which aims to be “the world’s digital bank,” according to Bloomberg — has encountered a series of tech glitches in recent years. Two-hundred thousand Citibank credit card holders fell victim to a hacker attack last June that exposed customers’ personal data. In 2010, Citigroup admitted that the bank’s iPhone app stored users’ confidential information on their phones, making the data vulnerable, according to the Wall Street Journal . The bank subsequently released an updated version of the app that it said patched up the glitch. According to American Banker , 25 percent of all mobile banking apps earned a “fail” rating as a result of security flaws.

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Bill Gunderson: Can a Businessman Run a Country?

February 10, 2012

President Obama sure likes to hold Warren Buffett up as an example these days. After all, it is Warren Buffett that is dying to pay a higher tax rate. Never mind that he is currently fighting the IRS over a paltry billion dollars or so in unpaid taxes. Warren is also hot and bothered about his secretary paying a higher effective tax rate than most millionaires and billionaires. Of course, we still have not seen her tax return, so we really don’t know what rate she does pay. I guess it does not matter however, that Mitt Romney paid several million in taxes while Buffet’s secretary may have paid a few thousand. Who’s counting anyway? My question to you the reader is this: If God forbid, something should happen to Mr. Buffett, would he feel more comfortable hiring Barack Obama or Mitt Romney to take over the management of Berkshire Hathaway? Oh, I know what you are thinking, government cannot be run like a business; it takes politicians to get things done. It is thinking like this that has helped create a current debt load of $15 trillion dollars! Do you think that Mr. Buffett would have gotten us into the mess that we are currently in had he been running the country over the last 10 years? I highly doubt it. Warren still lives in the same humble abode that he has lived in for years. He is known for being pretty frugal. Oh, I forgot however that Mr. Buffett is a businessman though. We can’t have a businessman running our country. Actually, it would be real interesting to know where we would be today had Warren Buffett been running the country for the last 10 years. Maybe he would have consulted with other businessmen like Steve Jobs of Apple Computer or Jim Skinner of McDonald’s about the economy and job creation. Instead our president goes to CEOs like Jeffrey Immelt of General Electric and Antonio Perez of Eastman Kodak to get his advice about job creation. Is that the same Jeffrey Immelt who has had the stock of GE going backwards by an average of 3.3 percent per year over the last 10 years? Is that the same Antonio Perez who just had his company file for bankruptcy ? Eastman Kodak was once a member of the Dow Jones Industrial Average, it is now a penny stock! I don’t know about you, but when I want to lose weight, I seek out a skinny diet counselor. Now back to Berkshire Hathaway. What does President Obama’s resume look like when it comes to investing in companies? Let’s see, there was some $520 million that went into Solyndra. How did that one turn out? Did the investment go there on merit or favoritism? What would Buffet’s shareholders say if Warren made an investment that went from $520 million to zero in the span of 18 months? How did the Obama administration’s investment in Beacon Power go? Oh well, it is just taxpayer money that we don’t have. How about the billions that went into the so-called stimulus program? What kind of return are we getting on that one? While it is intriguing to think where our country might be today had a crackerjack businessman like Warren Buffett been running the show, it is an absolutely frightful thought to think where Berkshire Hathaway might be today, had Mr. Obama been at the helm for the last 10 years. This may sound like a harsh observation, but close your own eyes and ponder these questions for a minute. The bottom line is this: What we have been doing has not been working. The hole that we have to climb out of here in America is getting deeper and deeper and deeper. In fact, it is getting so deep, I think I can see Greece-austerity, strikes, riots, and bailouts anyone? We need a different skill set in the White House right now. We need a turnaround expert in the worst way. Oh, I forgot that a businessman cannot run a country. If a bunch of politicians can run the country into the ground, I feel pretty confident that it will take some businessmen to turn it around.

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Some States Using Funds From Foreclosure Deal To Close Budget Gaps

February 10, 2012

Well, that was fast. Two states have already announced that they won’t be using all of their share of the $25 billion allocated in Thursday’s historic foreclosure settlement to pay its intended recepients — the homeowners and borrowers who saw the housing market collapse beneath their feet. Instead, in some areas, a share of those dollars is likely to be diverted to state budgets, in a bid to offset some of the massive deficits that states have been struggling with since the economic downturn , according to reports. In Wisconsin, Governor Scott Walker and state Attorney General J.B. Van Hollen have announced plans to use $25.6 million of the settlement money — about 18 percent of the $140 million Wisconsin will get in total — to plug holes in the state’s budget , according to the Milwaukee Journal Sentinel . As the MJS notes, this is a reversal of Walker’s previous opposition to using legal settlements to close budget gaps. Meanwhile, in Missouri, state Attorney General Chris Koster has said that he plans to put $40 million of Missouri’s settlement money — about 20 percent of the total $196 million — into the general state fund , apparently in response to Governor Jay Nixon’s call for a stronger college and university budget, Stateline reported. In the wake of Missouri and Wisconsin’s announcements to use the settlement funds for purposes other than directly assisting borrowers — and with similar announcements possibly forthcoming from other states — critics have begun comparing Thursday’s deal to the 1998 tobacco settlement that saw some of the country’s largest tobacco companies agree to pay $246 billion over the next 25 years to fund public-health initiatives. Much of that money has since been spent on other things, according to the Campaign for Tobacco-Free Kids, which estimates that states will receive $25.6 billion from the tobacco settlement this year, but only use 1.8 percent of it to combat tobacco use . If the news that some of the money from the foreclosure settlement won’t end up in borrowers’ hands is disappointing to some, it won’t be the first time this week that the deal has let someone down. While the settlement involves five of the country’s largest banks — Citigroup, JPMorgan Chase, Ally Financial, Wells Fargo and Bank of America — and an amount of money that has been called one of the largest mortgage settlements in history , many borrowers stand to realize practical benefits that are marginal at best. Some 1 million homeowners will receive material mortgage relief that may help them stave off a default, but another 775,000 borrowers who have lost their homes to foreclosure will receive payments of no more than $2,000 . And the settlement excludes mortgages owned by Fannie Mae and Freddie Mac, the massive mortgage agencies currently in government conservatorship, which means about half the country’s mortgages aren’t covered at all by the deal .

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Devon Swezey: Romer Misses the Mark on Manufacturing

February 10, 2012

A healthy manufacturing sector is essential to America’s economic prosperity in the 21st century. But you wouldn’t know that reading last Sunday’s New York Times , where former Obama Administration CEA Chair Christina Romer writes that there are no compelling reasons for U.S. manufacturing policy. According to Romer, the recent hubbub about manufacturing is due to the fact that people have a “feeling” that “making things” is important. In reality, she writes, consumers “value haircuts as much as hair dryers.” To be sure, all of us need haircuts, some of us more than others. But Romer ‘s argument that we should value all industries of the economy the same is just not true. It’s reminiscent of economist Michael Boskin, another former CEA chair, who said it doesn’t matter whether a country makes computer chips or potato chips. The fact is that some industries are characterized by high productivity and economies of scale that reduce costs and drive economic growth throughout the economy. As Clyde Prestowitz writes of Romer’s own example: Production of hair dryers can be done in large factories that produce economies of scale. Such scale economies lead to lower prices, lower inflation, higher productivity and thus higher wealth creation for the whole economy. In addition, producers of hair dryers invest in research and development to foster innovation of new, more efficient, less energy using, and easier to produce dryers. Investment in new product and process innovations is what drives economic growth over the long-term. And as we discuss in ” Manufacturing Growth: Advanced Manufacturing and the Future of the American Economy ,” manufacturing is absolutely central to innovation, something that many economists like Romer and economic commentators like Matt Yglesias don’t seem to understand. The manufacturing sector comprises two-thirds of the nation’s industry investment in research and development (R&D) and employs nearly 64 percent of the country’s scientists and engineers. But Romer doesn’t mention manufacturing’s importance to innovation in her article. Instead, she prefers to argue with what she sees as the common rationales for manufacturing policy — market failures, jobs and inequality — none of which she finds “completely convincing.” On the first issue, she writes that market failures in manufacturing — where positive spillovers mean that some benefits of a new manufacturing plant go to other companies in the area, thus providing a rationale for government investment — are small, citing two academic studies on the subject. But many other studies have found that manufacturing is a central component of regional industrial ecosystems, and that being near manufacturing can accelerate innovation and strengthen regional competitiveness. As President Bush’s Council of Advisors on Science and Technology wrote in 2004 , “design, product development, and process evolution all benefit from proximity to manufacturing, so that new ideas can be tested and discussed with those ‘working on the ground.’” Indeed, recent research suggests that losing high-tech manufacturing can imperil a nation’s capacity for future innovation. Harvard’s Carl Pisano and Willy Shih write that America’s “industrial commons” — the collective engineering, R&D and manufacturing capabilities that sustain innovation — are being hollowed out and the United States can no longer produce many high-tech products. Moreover, research and design are starting to follow high-tech manufacturing abroad, imperiling America’s historic advantages in innovation. Next, Romer writes that the impact of manufacturing on jobs relative to the employment needs of the economy is small and that we should focus on boosting aggregate demand instead: Unemployment today is high, but not because of a decline in manufacturing. That decline has been going on for 30 years — and for most of the 1990s and 2000s, the unemployment rate was less than 6 percent. Put aside that this obscures the fact that manufacturing employment generally followed the business cycle with only modest declines until 2000 when it fell off a cliff — declining by 5.5 million jobs from 2000 to 2008, or 32 percent. Romer understates the impact of manufacturing on jobs for two key reasons. First, she ignores the fact that manufacturing facilities have extensive backward linkages, generating output and employment throughout the economy. Indeed, manufacturing’s “multiplier effect” in terms of both output and employment is larger than any other sector of the economy. Specifically, studies demonstrate that every dollar in final sales of manufactured products supports $1.40 in output from other sectors of the economy. And the average job in manufacturing produces two to three spinoff jobs elsewhere in the economy. Even if employment on the factory floor never reaches levels of previous decades, when these effects are taken into account, manufacturing’s employment footprint is quite substantial. Second, Romer completely misses the connection between America’s persistent, massive trade deficits and our employment situation. In 2010 the trade deficit stood at nearly $500 billion, down from a record of $760 billion in 2006. With such large deficits, it’s difficult to see how more fiscal stimulus to boost aggregate demand, which Romer favors, will fill the jobs hole in the economy. It would certainly create some jobs, but much of that demand would be filled by imports, which creates jobs in other countries. Rather, eliminating the trade deficit would create millions of jobs in the United States. And the best way to close the trade deficit is by expanding manufactured exports. This is because the large majority of U.S. trade — nearly 70 percent of exports and 83 percent of imports — is still in goods. Manufactured goods in particular comprise 57 percent of U.S. exports. Can exporting services help reduce the trade deficit? Absolutely, and the United States enjoyed a $149 billion surplus in services in 2010. But it took 11 years for service exports to double to its 2010 level of $543 billion. The simple arithmetic shows that the current positive balance in services would need to quadruple to eliminate the deficit in goods. This is implausible, to say the least. What about inequality? Romer writes correctly that while manufacturing pays higher-than-average wages, it is no longer a source of high-paying jobs for less educated workers. Manufacturing is a technologically sophisticated enterprise and today’s manufacturing workers must have a wide array of abilities, including the production skills to set up and operate processes, design and development skills to continuously improve those processes, as well as proficiency in maintenance, repair and supply chain logistics. But then the policy response should not be to ignore manufacturing but ensure that workers have the skills for advanced manufacturing industries. Romer ends by implying that manufacturing policy is driven by economic nostalgia for an earlier age, writing, “public policy needs to go beyond sentiment and history.” To be sure, policy must account for the ways in which manufacturing has changed over previous decades. Some labor-intensive industries are likely gone for good, while the increasing use of information technology, robotics, and high-precision tools means that today’s factory workers must have much greater skills than previous generations. Fortunately, advanced manufacturing policy need not be about sentimentality or history, but about creating the next generation of advanced technologies that spur innovation, drive productivity, and power economic growth in the 21st century. It is about strengthening a sector that is a key catalyst of employment and economic growth. And it’s about ensuring the international competitiveness of the U.S. economy, closing the trade deficit and out-competing other nations whose governments rightly view high-tech manufacturing as a strategic industry. The good news is that the Obama administration has recently recognized that advanced manufacturing is critical for the future prosperity of the U.S. economy, even if its former chief economist does not. For more on the importance of advanced manufacturing to the U.S. economy, see ” Manufacturing Growth, ” a joint report by the Breakthrough Institute and Third Way.

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WATCH: Tilted Kilt Employees File Sexual Harassment Lawsuit

February 10, 2012

Nineteen employees of the Celtic-themed “breastaurant” Tilted Kilt’s Chicago Loop location on Wednesday filed a lawsuit alleging that the eatery’s bar manager sexually harassed them. The lawsuit [ PDF ] contains disturbing details of incidents that allegedly occurred between the manager, the location’s owners and their scantily-clad staff at the restaurant, located at 17 N. Wabash Ave. According to CBS Chicago, Mark Roth, an attorney representing the women, accused the location’s former manager, whom he described as a “predator,” and the location’s owners of making numerous disturbing comments to his clients . “There were requests for sex,” Roth told CBS. “There were degrading comments that were made. Something that no woman should have to put up with anywhere, let alone by their manager in the workforce.” As the Chicago Tribune reports, the women in June filed a sexual harassment complaint with the U.S. Equal Employment Opportunity Commission, upon which they received “right to sue” letters . The women, according to the Tribune , allege a “sexually hostile, offensive, humiliating and degrading work environment” where, among the 30 incidents outlined in the lawsuit, the location’s manager and owners made comments such as “Meow, meow, you’re a dirty kitty” and “You don’t know what I’d like to do to you” to the employees. Women who spoke out against these remarks alleging were giving less busy shifts. According to Fox Chicago, other incidents included grabbing employees’ breasts, putting licking employees’ ears and attempting to kiss the women . The manager and many of the plaintiffs in the lawsuit no longer works at that specific Tilted Kilt location, according to the Tribune. A company spokeswoman said in a statement that Tilted Kilt “does not tolerate sexual or other types of harassment either within its own organization or within its franchisees’ organizations” and pointed out that the company utilizes a franchise model where each location is independently owned and operated , NBC Chicago reports. The chain is no stranger to controversy in its Chicago-area operations. When the chain opened a Schaumburg location, it was met with complaints from several area residents, including one who argued that the restaurant attracted “men that come in there want more than just hot wings .”

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Fake Suicide Call Prompts Woman To Sue Big Bank

February 10, 2012

These days, debt collectors are putting some people through so much pain that it’s landing them in the hospital. Anne Sessions of Lane County, Oregon is suing Wells Fargo after one of its debt collectors reported to police that that the 85-year-old was threatening suicide, a claim she maintains was false, The Oregonian reports . After hitting financial trouble, Sessions says she arranged a payment plan for her credit card debt with Wells Fargo last year, but just days later she allegedly received a call from a debt collector who badgered her with a “contemptous tone,” according to the lawsuit. Sessions told the collector that such abuse may cause other customers to take their own lives, which allegedly prompted a line of questioning that included the collector asking Sessions: “But…if you did [commit suicide], how would you do it – hurt yourself?” Courthouse News reports . Within a half hour police arrived at Sessions’ door and forcibly took her to the hospital. She was released hours later after hospital staff said they “strongly” believed Sessions was not a threat to herself or others, ABC News reports . But the incident left Sessions stuck with a hospital bill worth $1,055, for which she is seeking compensation, as well as $250,000 in punitive damages. Sessions’ suit may involve one of the more puzzling instances of debt collector abuse recently, but harassment of its kind is far from uncommon. Complaints filed to the Federal Trade Commission about debt collectors rose to 140,036 in 2010, up from 119,609 in 2009 . The boost may be explained in part by the industry’s growth in a troubled economy that’s caused many Americans to delay debt payments. Over the next three years, the debt collection industry is expected to expand by 26 percent . Indeed, all the negative reports — collection agencies are responsible for the most complaints to the FTC of any industry — may be beginning to take a toll. The FTC has begun cracking down on illegal debt collecting tactics , including repeated calls to the debtors, failure to notify consumers in writing of their rights, misrepresenting the debt in question as well as using profanity or threats. Last month it settled with Michigan-based debt collection company Asset Acceptance for $2.5 million on charges of misconduct . It also took action against two California-based collection agencies last year, one for attempting to collect debts that didn’t exist and the other for threatening to kill debtors pets and desecrete the bodies of deceased family members .

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’99 Percent’ Protest CPAC

February 10, 2012

WASHINGTON — The Conservative Political Action Conference drew crowds of protesters on Friday, as members of the Occupy Wall Street movement and labor groups demonstrated against the annual confab as a powwow for the “1 percent.” (CLICK HERE FOR LIVE UPDATES) Inside the Marriott Wardman Park Hotel in Washington, D.C., students affiliated with Occupy silently interrupted a speech by GOP presidential hopeful Mitt Romney. The protesters, wearing “We are the 99%” stickers over their mouths and shirts that read “If money is speech, poverty is silence,” were escorted from the building by security. While leading figures in the conservative movement continued to meet inside, outside the hotel the atmosphere was more raucous, with several hundred people rallying at noon beneath a giant inflatable “fat cat.” They held signs, chanted, and set up a few tents at the bottom of the hotel’s winding driveway. But when protesters began marching up the driveway shortly after noon, several D.C. police officers impeded their path and instructed protesters — and members of the media — that they needed to move back. Police said the driveway was private property and that those still on it risked arrest. The protest began moving back down the driveway as CPAC attendees watched from the sidelines. Police continued to keep protesters and members of the media off the driveway but allowed the protest to spill off the sidewalk, blocking the street. The protest saw a number of outlandish attendees, from the Brooklyn “Tax Dodgers,” a faux baseball team who satirically support former Massachusetts Gov. Romney, to “Candidate Walmart,” aka Ben Waxman, who said he was standing up for a corporation’s right to run for president. It also drew a mix of Occupy protesters, union supporters and members of local groups. “We’re protesting CPAC’s propping up of policies that don’t force U.S. corporations to pay their fair tax share, and really promote obscene income inequality in this country,” said James Adams, a coordinator with Our DC , another group of protesters that focuses on jobs. “The dreams of Americans who make up the 99 percent are being squashed by CPAC and their poster boy, Mitt Romney.” Although protesters expressed concern on issues from hydraulic fracturing, or fracking, to foreign policy, most said they were focused on economic policy. “We’re trying to create more jobs here in the District, and we feel by holding Congress and big corporations accountable for not paying their fair share of taxes, they can create more jobs by doing so,” said Dwayne Devoe, another member of Our DC. “A lot of them are talking about creating jobs, but at the end of the day, what they’re saying doesn’t really relate to their message.” Jeanae Paul, a member of Good Jobs Baltimore, said she was trying to call attention to the plight of the jobless. “I’ve been unemployed for over a year now, and it’s been really hard,” Paul said. “I’ve been going on interviews, but there’s no jobs out there. They’re non-existent. And it’s hard to feed my family, it’s hard to buy clothes, to celebrate the holidays.” Paul said she made the trip to Washington because she wanted the Republican candidates for president to hear stories like hers. “It’s important to let them know that we’re people, too,” she said. “We want to be heard. You know, they need to know the real stories, instead of listening to what their 1 percent is saying. Because we’re the 99 percent.” Brendan Duke, a spokesman for the Service Employees International Union, an organization of 2.1 million members, told The Huffington Post that there were 600 protesters on hand, including 300 unemployed workers from the D.C. area. He said the protest was scheduled to last until 2 p.m. Most CPAC attendees simply walked around the rally, but several stopped to speak with protesters. Byron Sanford, a Catholic University student who supports Rep. Ron Paul (R-Texas), seemed sympathetic. “I agree with Occupy Wall Street on one of the things they stand for — I think corporations are ripping off the American people,” he said, admitting that he was actually more comfortable with the atmosphere outside the conference. “I feel much better out here.” Others were less impressed. “I’ve been to a couple of these things, and it’s pretty typical — it’s the same slogans,” said John Sexton, who writes for Verum Serum, CPAC’s 2012 Blog of the Year. “Individually, they can be very reasonable, but in groups, you’re not thinking.” Another protest outside CPAC is planned for Friday evening. Michael Calderone contributed to this report. CORRECTION: The original version of this story quoted James Adams and Dwayne Devoe as members of Occupy DC. They are part of the group Our DC.

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Hundreds Of Millions More Dollars Of MF Global’s Money Thought Missing

February 10, 2012

The trustee overseeing MF Global’s liquidation said Friday that the shortfall between the funds under his control and the amount customers of the failed brokerage are expected to claim is at least $1.6 billion. The gap estimated by the court-appointed trustee, James Giddens, compares with his previous estimate of $1.2 billion. Giddens said in a statement Friday that the new estimate is based on his investigation and it could change again. Giddens has been combing through the accounts of MF Global since it filed for bankruptcy protection on Oct. 31. The collapse of MF Global, which was headed by former New Jersey Gov. Jon Corzine, was the eighth-largest corporate bankruptcy in U.S. history. Most of the $1.2 billion previously reported missing has been traced to customer accounts and banks. Regulators are investigating whether MF Global tapped money from clients’ accounts as its financial condition worsened. That would violate securities laws. Brokerages are required to keep customer money separate from the firm’s money. Unlike the previous figure, the new estimate of $1.6 billion includes about $700 million in customer money located in Britain. Giddens is in a legal dispute over that money with the administrator in Britain overseeing the liquidation of MF Global’s division in London. The new estimate excludes some customer claims that haven’t been filed yet. It also takes into account some funds that have been recovered since the earlier estimate was made in November. Giddens said about 40 percent of the claims filed by U.S. commodities customers of MF Global came from five states: California, Florida, Illinois, New York and Texas. Around 91 percent of the claims are for less than $100,000, according to his statement. Much of the missing money belonged to farmers, ranchers and other business owners who used MF Global to reduce their risks from the fluctuating prices of commodities such as corn and wheat. Giddens has returned about $3.9 billion to customers.

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White House Proposes Tax The Rich, Chop Medicare, In Election-Year Budget

February 10, 2012

WASHINGTON — The White House will propose deep cuts and modest tax hikes Monday in a budget that aims to stick to last summer’s debt deal by trimming Medicare and other programs while making the well-off pay more. Senior administration officials said the spending blueprint would lower tax rates overall. But it would end the Bush-era tax cuts for the rich enacted in 2001 and 2003. It would do that by cutting tax loopholes — or tax expenditures, as they are called — for high earners and corporations. Part of that is implementing the Buffett rule, named for billionaire investor Warren Buffett, which would ensure that no one earning more than $1 million in a year pays less than 30 percent in taxes, as Buffett does now. Overall, the plan calls for $2.50 in spending cuts for every dollar raised in taxes on people making more than $250,000 a year. The proposal cuts the budget by $1 trillion over 10 years, and trims $4 trillion from the deficit. For the first time in five years, the deficit would fall below $1 trillion, at $901 billion in 2013, according to the proposal. The White House projects that by 2018, the deficit would drop to $575 billion, or 2.7 percent of the nation’s gross domestic product. A large chunk of the deficit reduction over the next decade — $1.5 trillion — would come from still-unspecified tax reforms, although the expiring Bush tax cuts would account for much. The largest cuts would come from the defense budget and Medicare. Defense spending would be slash some $487 billion from the Department of Defense’s projected budget, including savings from winding down wars in Iraq and Afghanistan. Health programs, primarily Medicare, would be targeted for $360 billion in savings, with most expected from cuts to providers, not beneficiaries. Another $278 billion in cuts would come from farm subsidies, federal worker retirement and other programs. The numbers in the White House blueprint would look a lot like the assessment unveiled in September. The budget is likely to get a cold reception from Republicans in an election year, and reads itself like the political message President Obama has been delivering since his speech in Kansas late last year. “We now face a make-or-break moment for the middle class and those trying to reach it,” says the introduction to the “fact sheet” summarizing the plans. “After decades of eroding middle-class security as those at the very top saw their incomes rise as never before and after a historic recession that plunged our economy into a crisis from which we are still fighting to recover, it is time to construct an economy that is built to last,” the document says, repeating the president’s State of the Union theme. Officials said the budget to be proposed on Monday was the third part of a three-act play that started with the Kansas speech and continued with the State of the Union address. “We must transform our economy from one focused on speculating, spending, and borrowing to one constructed on the solid foundation of educating, innovating, and building,” the budget introduction says. “That begins with putting the nation on a path to live within our means –- by cutting wasteful spending, asking all Americans to shoulder their fair share, and making tough choices on some things we cannot afford, while keeping the investments we need to grow the economy and create jobs.” The plan calls for more than $350 billion in short-term spending to spur job growth, including extending the payroll tax cut that Congress is battling over now, $30 billion to modernize 35,000 schools, and $30 billion to help keep and hire new teachers, police and firefighters. There is also a commitment to building research, development and manufacturing, with $140.8 billion slated for research and development. Such spending is a sign the president is not backing off initiatives like the green-energy push that has been tarred by the failure of solar company Solyndra. The budget will recommend boosting spending for the National Science Foundation, the Department of Energy’s Office of Science, and the National Institute of Standards and Technology Laboratories. It also calls for a six-year, $476 billion transportation reauthorization bill that the administration says would “create thousands of new jobs and modernize a critical foundation of our economic growth.”

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Trader Joe’s Relents To Pressure, Signs Fair Food Agreement

February 10, 2012

Trader Joe’s relented this week and signed a Fair Food Agreement with the Coalition of Immokalee Workers (CIW), a community-based organization of mainly Latino, Mayan Indian and Haitian immigrants employed in low-wage jobs in Florida. The agreement requires the grocery store to pay a penny more per pound of tomatoes and to ensure better working conditions for tomato workers. In the past year, protesters have become a common sight at Trader Joe’s locations across the country in response to the chain’s refusal to sign the agreement . Chains like Taco Bell, McDonald’s, Burger King and Whole Foods all signed the agreement years ago. “This is nearly a 50 percent raise for the workers,” Barry Estabrook, the writer behind PoliticsOfThePlate.com and author of the book ” Tomatoland ” (about large-scale tomato agriculture), told The Huffington Post. “These are desperately poor people.” “We are truly happy today to welcome Trader Joe’s aboard the Fair Food Program,” said Gerardo Reyes of the CIW, in a jont press release issued by the coalition and Trader Joe’s. “Trader Joe’s is cherished by its customers for a number of reasons, but high on that list is the company’s commitment to ethical purchasing practices. With this agreement, Trader Joe’s reaffirms that commitment and sends a strong — and timely — message of support to the Florida growers who are choosing to do the right thing, investing in improved labor standards, despite the challenges of a difficult marketplace and tough economic times.” Although jointly issued, the press release did not have a comment directly from Trader Joe’s. The grocery chain told HuffPost via email that it had nothing further to say beyond the release. Estabrook, who last spoke to Trader Joe’s in the fall of 2011, said he found the company’s attitude to be “almost belligerent” when a group of religious leaders tried to present it with a petition in October of last year. But the CIW had a 40-city protest planned for this weekend , and Trader Joe’s may have felt compelled to finally sign on, he said. The protests have now been canceled. “Trader Joe’s presents an image of friendliness and fairness. When you’re doing that, you can’t very well have a group of people demonstrating in front of your stores,” Estabrook said. The CIW now plans to focus its attention on the major supermarket chain Publix, and has a six-day fast planned for next month. Trader Joe’s opened its first Florida store in Naples on Friday, one day after signing the CIW agreement. In a weird twist of fate, the store is located on Immokalee Road.

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S&P Downgrades Huge Number Of Italian Banks

February 10, 2012

MILAN, Feb 10 (Reuters) – Rating agency Standard & Poor’s downgraded 34 Italian banks on Friday, including heavyweights UniCredit and Intesa Sanpaolo, citing a reduced ability to roll over their wholesale debt and expected weak profitability. The move follows S&P’s downgrade of Italy’s sovereign rating last month to BBB+, part of a mass downgrade of nine euro zone countries. In a statement, S&P said its so-called Banking Industry Country Risk Assessment had worsened to group 4 from group 3 — out of 10 groups — reflecting its more negative view on Italy’s banking system. “Italy’s vulnerability to external financing risks has increased, given its high external public debt, resulting in Italian banks’ significantly diminished ability to roll over their wholesale debt,” it said. “We anticipate persistently weak profitability for Italian banks in the next few years, and a risk-adjusted return on core banking products that may not be sufficient for banks to meet their cost of capital. We believe this may be negative for the Italian banking industry’s stability.” Italian banks have borne the brunt of a sell-off in Italian assets since the euro zone’s third-largest economy was dragged into the single currency bloc’s debt crisis last summer. Because of their vast holdings of domestic government bonds, Italy’s top five banks have been asked to find some 15 billion euros by June to meet tougher capital requirements set by the European Bnaking Authority. Lenders have also been effectively shut out of wholesale debt markets and have increased their reliance on cheap funds from the European Central Bank. Italian banks tapped a whopping 116 billion euros of nearly 500 billion euros of three-year funds offered by the ECB last December, easing funding strains. A similar operation will be held at the end of February and analysts expect Italian banks to further increase their borrowing from the ECB. S&P said weak profitability and increased cost of capital could lead Italian banks to write down a large part of the goodwill they booked during a wave of industry consolidation over the past decade. Such writedowns forced UniCredit, Italy’s biggest bank by assets, to announce a 10.6 billion euro loss in the third quarter of 2011. Among the banks downgraded, Banca Monte dei Paschi di Siena and Banco Popolare had their rating cut below that of Italy’s sovereign debt. For a list of the banks affected by S&P’s downgrades, please click on

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White House: Energy Department Loan Oversight Needs Overhaul

February 10, 2012

* Struggling to fill key positions to manage loans * Did not evaluate failed loan to Solyndra * Chu: will review ideas, but program is working By Roberta Rampton WASHINGTON, Feb 10 (Reuters) – The U.S. Energy Department relies on too many consultants and committees for managing its loans and needs to beef up its management, concluded a review commissioned by the White House in the wake of publicity over failed solar panel maker Solyndra. Herb Allison, a former investment banker known for his work helping government agencies manage large, complex financing programs, reviewed the energy loan program, and recommended an overhaul in oversight of the $23.769 billion portfolio. He said the Energy Department has struggled to fill vacancies in key positions without success. “At least one manager is acting head of several departments,” he said in a 75-page report. Decisions should be made by individual managers with expertise, Allison said, instead of using a committee process “where collective responsibility can obscure individual accountability.” Allison did not review a $535 million loan guarantee to Solyndra, which filed for bankruptcy last year and has become a political sore spot leading into the 2012 election season. The loan was once held up by President Barack Obama as an example of how his administration was creating new jobs with “stimulus” funding while promoting renewable energy. It now is featured in at least two attack ads on television, and candidates for the Republican presidential nomination regularly invoke Solyndra as a symbol of what they say is government waste and misguided energy policy. Energy Secretary Steven Chu said he would review the recommendations to find ways to strengthen the program. But he said the program is working as it is intended, and noted that the review rated the overall risk of the loan portfolio as “slightly lower” than the department’s projections. “We have always known that there were inherent risks in backing innovative technologies at full commercial scale, and it is very likely that there will be other companies in the portfolio that won’t succeed, but the vast majority of companies are expected to pay the loans back in full, on time, and with about $8 billion in interest,” Chu said in a statement.

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Obama’s Approval Rating Keeps Inching Up, Driven By One Factor

February 10, 2012

WASHINGTON — On Thursday, the Gallup Daily tracking poll marked a symbolic milestone. For the first time in more than a month and only the third time since last July, Gallup reported an approval rating for President Barack Obama (49 percent) that was slightly higher than his disapproval rating (46 percent). On Friday, the Rasmussen Reports automated tracking survey marked a similar landmark. It showed Obama’s approval rating at 50 percent or greater nationwide for the fifth consecutive day, a popularity not matched on the Rasmussen poll since January 2011. The two daily tracking surveys are not alone. National telephone polls released in the past week by Fox News , ABC News and the Washington Post , Ipsos/Reuters , and the Democratic Party-affiliated Public Policy Polling (also sponsored by the website DailyKos and the Service Employees International Union) have all found increases in Obama’s approval rating since October. Most of the increases range between 4 and 6 percentage points; the Ipsos/Reuters survey found a smaller rise. The improvement since the fall has also been evident in state polls, including such likely battlegrounds in the general presidential election as Ohio , New Hampshire , North Carolina and Virginia . Given the recent upward blip in the two national daily-tracking polls, some have looked for explanations in the events of the past week , particularly last Friday’s Labor Department report of a rising employment rate . While positive economic news is the most likely reason for Obama’s improving job rating, the upward trend in his ratings did not begin in February. In fact, most of the surveys have tracked a gradual increase in Obama’s ratings that began in late October. The HuffPost Pollster chart , based on all available public polls, shows a slow, steady rise of roughly five percentage points in the president’s job approval rating since it hit its all-time low in early October. The longer-term increase in Obama’s approval rating parallels five months of increases in several survey-based indexes of consumer confidence. Specifically: Gallup reported that its index of consumer confidence has risen for five consecutive months to its highest point since May 2011. The pollster also reports that 22 percent of Americans now say they are satisfied with the way things are going, “higher than at any point since last spring.” The Bloomberg Consumer Comfort Index rose to its highest level in a year this week. The Thompson Reuters University of Michigan Index of Consumer Sentiment was up in December for the fifth straight month. A preliminary estimate for January, based on a smaller sample, is slightly down , but confidence remained higher than in previous months. The Rasmussen Consumer Index stands at its highest level in over a year, although it’s down slightly from a peak earlier in the week. The Consumer Confidence Index of the Conference Board showed a slight decline in January, but its December and January measurements were still significantly higher than those of the three previous months . Of course, the overall economic mood remains gloomy. On the Gallup surveys , for example, far more Americans still say that economic conditions nationwide are getting worse (58 percent) than say they’re getting better (36 percent) — though the positive number has more than doubled, from 18 percent, since the fall. And despite big increases since October, the president continues to receive net negative ratings on “the economy” (44 percent approve, 53 percent disapprove) and “creating jobs” (44 percent approve, 51 percent disapprove) in the most recent ABC News/ Washington Post survey . The main point, however, is that the rising tide of consumer optimism directly parallels the upward trend in Obama’s overall job approval rating. That result underscores the promise and the peril for the Obama administration in 2012. Continuing economic recovery will likely further boost his approval ratings and his chances in the November election. Yet we have seen temporary increases in consumer confidence before — most memorably in January 2010 — that quickly ebbed in the face of later negative economic news. Either way, the economic trends of the next six to eight months are likely the most important factor in determining whether Barack Obama wins a second term in November.

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Ron Davis: The Republican Nanny State

February 10, 2012

Republicans who support subsidies should stop their mass-manipulation. Rather than hiding behind hypocritical pro-market rhetoric, it is time to admit they have embraced their very own entitlement-boom that rivals the dreams of any European welfarist. Matt Kibbe recently wailed in Forbes about a “tort litigation nightmare” because a court granted a large award to a woman paralyzed from the neck down by a company’s negligence. And last week in the Wall Street Journal , Senator Ron Johnson of Wisconsin decried the EPA and the Department of Labor’s increased regulation because of its “job crushing… cost” to businesses. “Cost” is a strange adjective to describe all these rules when many actually serve to stop current subsidies. Senator Johnson unsurprisingly failed to mention the excruciating economic cost-benefit scrutiny applied to regulations by the Office of Information and Regulatory Affairs (OIRA), recently famous for rejecting the EPA’s smog rules. Both point toward an ironic truth: mainstream Republicanism has rejected market economics in favor of a subsidy-loving conservative nanny-state. Subsidies, as economists tell us, insulate people from the true costs (or consequences) of their behavior. And market efficiencies and the economic growth they create get undermined when people don’t pay full price. Even more disturbing, these handout-loving Republican pundits and politicians regularly and cynically deceive rank and file believers in personal responsibility by using free-market sounding language to distract citizens from their constituents’ reliance on public support. These interest group puppets start by pretending that the only subsidies come from governments. But any economist will tell you this is nonsense. Inefficient subsidies flow from more than just the national treasury. In fact, sometimes only the government can shut off this golden faucet. Economists call these decision-distorting efficiency killers “externalities.” An externality arises when part of the price of my behavior gets absorbed by someone else, forcing that person to subsidize my choice. For example, costs get externalized if a toy factory’s manufacturing process puts toxic chemicals in the groundwater, and the neighbors get stuck paying for part of the toy making process — by shouldering lowered property value, experiencing illness, or getting stuck with the bill for cleaning up the mess. This is one reason why we compensate people through lawsuits — to make sure the toy factory, not its neighbors, pays the full price for its behavior. But Republicans leaders seem bent on forcing their backers’ costs onto others. House Majority Leader Eric Cantor (R-VA) opposes greenhouse gas taxes, arguing they would “cost our economy billions of dollars [and] destroy jobs.” Certainly such taxes do encourage what economists call “creative destruction,” another market miracle where inefficient providers get put out to pasture. But then better providers take their place, which is why markets are good for business. The supposedly job-killing pollution taxes would remove the ventilator from these market-insulated companies and expose them for what they are — corporate welfare queens. When I drive a car, or operate a coal factory, many people pay the price for my emissions. These hurt other consumers and businesses, future citizens who clean up the mess, or Bangladeshis swamped by floodwaters. Whatever one’s position on climate change, we all know that pollution costs something , and when we pollute without paying the full cost — we act like people do on someone else’s dime. We overindulge. No wonder the misery of traffic. If Matt Kibbe had his way, he would eliminate the “tort litigation nightmare.” But doing so would allow a host of externalities, forcing people to subsidize others’ negligence. Consider medical malpractice compensation caps. If an architect makes $200k a year with ten working years ahead of her, and a surgeon commits professional negligence that destroys the architect’s ability to work, that poor architect faces a $2 million loss. But with a tort liability cap of $1 million, the surgeon will only pay for half the cost of his bad behavior. The injured architect would have to subsidize the surgeon’s practice. Systemic risk, also an externality, recently reared its ugly head. If, after Lehman collapsed, the banking sector had failed, its employees and stockholders would certainly have paid a tremendous price. But this would only amount to a fraction of the total cost paid by the rest of the world. Bailouts may have saved world markets from depression, but our citizens have paid dearly — recession, a feeble recovery, and mounds of debt to cover tax cuts and stimulus spending. But we can’t just bill the banks for this mess after the fact because the tab dwarfs bank resources. Unlike the polluting factory or the negligent doctor, a court judgment cannot make the banks face the full cleanup cost. We don’t begrudge banks for trying to turn a big profit, but citizens shouldn’t be forced to subsidize it either. Since we cannot afford to let the financial markets fail, systemic risk must be regulated up-front, rather than paid for after the fact. Those who fight bank regulations designed to minimize systemic risk actually work to preserve mammoth bank subsidies — because the banks can never take on the full risk-cost of their risky behavior. The list goes on. Globalization displaces workers, which means the displaced pick up most of the tab for our economic gains. The rising tide may lift all boats, but it drowns a few people too. When we refuse to compensate them accordingly — through retraining and other assistance — we force them to subsidize our fortunes. Accordingly, last summer, Senate Minority Leader Mitch McConnell (R-KY) threatened to block a free trade deal with South Korea unless the White House dropped the provision for the Trade Adjustment Assistance program, which helps retrain displaced workers. Mr. McConnell apparently believes these workers should subsidize the rest of us. The issues above are, of course, complex along many dimensions not discussed here. But the truth remains: Some kinds of taxes and regulations actually stop subsidies, and market rhetoric frequently hypocritically helps conceal colossal handouts. These Republican leaders are right about one thing. The jobs that rely on subsidies will be killed if externality entitlements get taken away. But they will be replaced by a more efficient, prosperous economy and the jobs that come with it. Forcing companies and people to internalize the costs of their behavior is not bad for businesses in general. Just the ones with their hands in someone else’s pocket.

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CorpBanca Announces Changes to the Board of Directors and Dividend Payment Proposal

February 10, 2012

SANTIAGO, CHILE–(Marketwire – Feb 10, 2012) – On February 2, 2012, CORPBANCA ( NYSE : BCA ) held an ordinary meeting of the Board of Directors. At the ordinary meeting, Mr. Alvaro Saieh B. announced his resignation as a member and Chairman of the Board. Mr. Saieh B. has been a member of the Board since 1996 and Chairman of the Board since 2008. Mr. Saieh B. publicly announced that the positive growth of CorpGroup, the parent company of the Bank, the sophistication of its subsidiaries and the expertise of their respective management teams allow him to assume a different role. Even though Mr. Saieh B. will no longer serve as a member and Chairman of the Board, he will continue his relationship with the Bank concerning issues related to strategic development, control and new business.

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Guaranty Bancorp Announces New Board Member

February 10, 2012

Keith R. Finger Brings Significant Energy and Financial Expertise to the Role

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Mohamed A. El-Erian: "Half-Time in America" Highlights Our Political Dysfunctionality

February 10, 2012

Viewed as a standalone, the controversy generated by the Clint Eastwood Superbowl commercial is really silly. Yet it points to something profound that has and, if left unaddressed, will continue to undermine America’s ability to regain economic dynamism, create ample jobs, and deal with growing inequalities. In the event that you are one of the few who missed it, Clint Eastwood starred on Sunday in a commercial that NBC aired at half time. The message was powerful. Yes, America has stumbled, with people out of work, hurting and scared. But, by pulling together and acting as one, Americans will come from behind and win. “That’s what we do.” The concluding remarks were particularly potent: “This country can’t be knocked out by one punch. We get right back up; and when we do, the world will hear the roar of our engines.” Given that it was financed by Chrysler, the commercial’s direct reference was, of course, to the impressive recovery in Detroit’s car industry. But the intention, and the impact, went well beyond that. What Detroit has done, America as a whole can and will do. Coming on the heels of a series of favorable economic data releases — which will hopefully persist though this is far from certain unfortunately — the ad spoke to the hope that America is recovering and that our economy is building encouraging momentum. This is particularly important for the job market where we need to improve on the 243,000 positions created in January to meaningfully address our unemployment crisis, tackle the problem of long-term joblessness, counter the mounting obstacles to youth employment, and stop the worsening of income and wealth inequalities. You would think that this feel good message would be a unifying one for our political class. Far from it. Several Republicans complained this week that Clint Eastwood was implicitly supporting Barack Obama. After all, the commercial could be interpreted as suggesting that, under President Obama, America has turned the corner and is now embarking on a path to prosperity — something that most Republicans dismiss. Democrats were quick to counter. On the contrary they shouted. If anything, “Half Time in America” was pro-Republican. It could easily be viewed as implying the need for a change in game plan and personnel substitutions — similar to what a losing team would discuss in the locker room at half time in order to regain control of the game and win. This morning on CNBC’s Squawk Box , Clint Eastwood shared his views. His message was direct and unambiguous: Take the commercial for what it is — a message about Americans’ ability to overcome our problems and march forward to a better future. It is easy, indeed tempting, to dismiss all this political squabbling as indicative of the silliness that is inevitable during an election season. I certainly would like to do so. Yet I fear that it goes well beyond that. This is yet another illustration of the deep political dysfunctionality that continuously undermines DC’s willingness and ability to move forward with the much-needed revitalization of the economy. The longer this continues, the greater the costs and the harder the solutions. In the short-term, the cyclical economic bounce of the last few months — powered by large injections of global central bank liquidity and a once-for-all decline in the personnel savings rate — would end up suffering the same fate as in early 2010 and 2011: fizzling out rather than handing off to durable engines of investment, growth and jobs. In the longer-term, America would find it even more challenging to overcome structural impediments that, each day, are getting more deeply embedded in the construct of our economy. For the sake of both current and future generations, let us hope that Clint Eastwood’s “Half Time in America” commercial will be remembered for more than just igniting yet another round of political bickering and finger pointing.

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Ben Bernanke: Blame Housing For This Lousy Recovery

February 10, 2012

Housing, with some help from Wall Street, got us into the Great Recession, and it is housing that has made the recovery from that recession so slow and painful, Federal Reserve Chairman Ben Bernanke said today. “The state of the housing sector has been a key impediment to a faster recovery,” Bernanke said in a speech at the National Association of Homebuilders International Builders’ Show in Orlando, Florida on Friday. “In the typical economic recovery, a resurgent housing sector helps fuel reemployment and rising incomes,” he added. “But as you know all too well, that scenario has not played out this time.” Bernanke cited economic studies that suggest the collapse in home prices might be shrinking consumer spending, the largest engine of U.S. economic growth, by between $200 billion and $375 billion a year. Underwater homeowners are also unable to move to find better, higher-paying work or borrow against home equity to help with emergency expenses, Bernanke observed. So begins the vicious cycle in which clusters of foreclosed homes lower property values throughout entire communities and hurt property tax revenues, which lead to cutbacks in municipal services that push house prices still lower. Economists have seen evidence lately that the housing market might finally have hit a bottom after a collapse and slump that has lasted more than six years. But home prices and new-home construction are still in a deep pit despite record-low mortgage rates that have made housing theoretically more affordable than ever . The Fed helped push those interest rates to rock-bottom lows in part to support the housing market. But their efforts have mostly been met with frustration. Bernanke suggested the still-weak housing market might be making it hard for low rates to do much good. Banks, suffering from losses on bad mortgages are afraid of taking still more losses so tighten lending standards, making borrowing more difficult even at low rates. “The Federal Reserve, in its supervisory capacity, continues to encourage lenders to find ways to maintain prudent lending standards while serving creditworthy borrowers,” Bernanke said. “But the slow recovery of the housing market and the economy” and other factors are keeping lenders cautious. He also acknowledged that the recovery in housing will continue to be painfully slow, estimating that one million foreclosed homes owned by banks could hit the market each year “for the next few years,” keeping downward pressure on prices. One possible solution, he acknowledged, would be to turn some of these foreclosed properties into rental properties, to help meet rising rental demand. But he also acknowledged there was no silver bullet for housing. Without it, the recovery could stay slow and painful for a while longer.

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Adele Scheele: Making Meetings Mean Something

February 10, 2012

For some companies, the usual Monday morning meeting is becoming unusual. It is revamping itself, becoming a stand-up, short-lived check-in. For those who still endure the old sit-down conference table version, the format is unbearably predictable: the boss unceremoniously starts the meeting by reading the agenda, reciting the latest sales report, warning of anticipated obstacles, and then spends the remainder of the time discussing the pet peeves and projects of the few most vocal employees excluding everyone else. Or else there are the endless arguments over old issues that never get resolved. For many of us, coping with meetings is more stressful than doing the actual work — it often feels like not much is accomplished. Sixty to ninety minutes of tortuous boredom leads to anger, which, in turn, leads to withdrawing to keep from exploding or else becoming a comedian to camouflage emotions. Most of us are stuck in a frustrating situation we feel unable to change. Maybe the only people who don’t bristle during routine, energy-sapping staff meetings are the managers who call them and those unlucky ones whose jobs are even more unbearable than the meetings. Instead of increasing your blood pressure or clenching your jaws, why not try to turn the situation around to our own advantage? Here are some tactics that can lead you to a more effective meeting outcome and better mood: 1. Start by changing your own role. Play host early and greet people by asking each about some recent good news. Share yours too. 2. During meetings, compliment any good idea out loud and suggest ways it might benefit your group. If two ideas offered are similar or complementary, suggest a way to incorporate both. 3. When factual disputes arise, suggest an immediate decision on principle, rather than fact. 4. When the old, unresolved issue rears its ugly head again, suggest a way towards resolution; perhaps a debate. Offer to find someone who can act as a debate coach, working with your group divided into opposing teams. In a short time, perhaps only two hours, a rational decision can be forged to everyone’s relief. 5. When you want to introduce an idea, be strategic. Don’t bring it up by the usual method — flinging it into the middle of the table and hoping that others will respond. Nobody does. Ideas, even good ones, usually fall flat. Instead, prior to the meeting, garner support from your leader and several members of the team so that you are backed up and can ensure better results. 6. Invent more roles to play during different meetings. Ask questions to elicit action or piggyback on a good idea or project. Just don’t play antagonist or devil’s advocate more than once. 7. Summarize what has already been agreed to; note new agenda items from stray conversations for subsequent meetings. 8. After a major project, suggest that each team member tell what he or she has contributed. Then go around again asking them to tell what they would do differently if the project were repeated. Record their remarks from what they’ve learned and see how you can use them next time. Don’t be deterred by flack by others who think you are overstepping; try to get them involved too. You might talk to your manager about how to gather what’s been learned to make the next projects more effective. 9. Of course, not every plan will work every time. But it’s worth a try. More than a try. Not only does trying keep your anger quotient and your blood pressure down, but it gives you a chance to realize what the rest of your group craves — someone willing to change things so that they will work better. Let that someone be you! Make your luck happen!

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BP Wins Ruling To Keep Old Accidents Out Of Gulf Spill Trial

February 10, 2012

* Evidence of Texas, Alaska incidents excluded * Judge: Older cases too dissimilar from Gulf spill * Feb. 27 trial expected By Jonathan Stempel Feb 9 (Reuters) – BP Plc won a court order to keep references to some previous accidents out of this month’s trial to assess blame for the 2010 Gulf of Mexico oil spill, the oil company’s second victory in as many days to bar potentially damaging evidence. Thursday’s ruling by U.S. District Judge Carl Barbier in New Orleans followed a ruling Wednesday by U.S. Magistrate Judge Sally Shushan to keep out some emails questioning some of BP’s activities before and after the spill. Barbier blocked the introduction of evidence related to two accidents involving BP facilities: a 2005 explosion at a Texas City, Texas refinery that killed 15 people, and a 2006 rupture of a corroded pipeline at Prudhoe Bay, Alaska. In the Texas case, BP pleaded guilty to violating the Clean Water Act and accepted a $50 million fine. BP pleaded guilty to a criminal Clean Water Act violation and was fined $20 million in the Alaska case. Barbier, however, ruled that the prior incidents were “not sufficiently similar” to the April 20, 2010 explosion of the Deepwater Horizon drilling rig and blowout of the Macondo oil well, which BP mainly owned. “The prior incidents were all land-based, while the Macondo incident occurred in the Gulf of Mexico,” Barbier wrote. “Additionally, the circumstances of oil refinery disasters and (an) exploratory drilling disaster are vastly different.” James Roy, a lawyer for some of the plaintiffs, who include people and businesses harmed by the accident, did not immediately respond to a request for comment. BP was also fined a record $87 million by the federal Occupational Safety and Health Administration for safety problems at the Texas refinery. Barbier is scheduled on Feb. 27 to preside over a non-jury trial to assign blame for the Deepwater Horizon accident, which killed 11 people and caused the largest offshore oil spill in U.S. history. Other corporate defendants include rig owner Transocean Ltd and Halliburton Co, which provided cementing services for the well. Plaintiffs also include the U.S. government, Alabama, Louisiana and Mississippi. BP has set aside roughly $42 billion for spill costs. Chief Executive Bob Dudley this week said the London-based company is preparing for trial, but willing to settle on reasonable terms. The case is In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

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Awful Cover Letter To J.P. Morgan Laughing Stock Of Wall Street

February 10, 2012

It takes a lot to get noticed in this town, but there’s a right way and a wrong way to do it. An NYU undergraduate student named Mark has become the laughing stock of Wall Street after his awful cover letter to J.P Morgan made its rounds among NYU Stern alumni, the financial district, and then went viral online. A cover letter can make or break you in the job hunting game and Mark’s letter is a lesson in exactly what not to do. By boasting that he “managed to bench double [his] body weight and do 35 pull ups” while achieving a 3.93 GPA, young Mark invited the inevitable comparisons to the infamous Aleksey Vayner . There’s a fine line between convincing your potential employeer of why they need to hire you, and only you, and coming across as a pompous ass. There is no doubt Mark’s status as a triple major in Mathematics, Economics and Computer Science is impressive on its own, but throw in the fact that he held two part-time jobs, placed-out of two classes and managed to keep himself in top physical shape, and it’s safe to say he crossed the line. Mark’s cover letter also could have used an edit from an English major, who might have advised him to find a different way to express that he “can perform basic office functions with terrifying efficiency.” He ended the letter with a disclaimer asking J.P. Morgan to “Please realize that I am not a braggart or conceited, I just wanted to outline my usefulness. Egos can be a huge liability, and I try not to have one.” Nice. It’s a letter so obnoxious that it’s unclear if Mark sent it as a joke. According to Gawker, Mark is well aware bit of laughter he brought to the bankers on Wall Street. When asked if he’d gotten a job at J.P Morgan, he laughed, telling the website , “No, not at all. Didn’t you see my letter?” Joke or not, Mark is not alone when it comes to terrible cover letters. An applicant for a position as an API Engineer in New York City recently wrote : “I’m super awesome and have incredible experience compared to this — it includes the required experiences below plus I am trained in MMA fighting, am the mayor of multiple Chipotles, Starbucks, and locally famous restaurants in downtown NYC, and I type really fast.” And we can’t forget Roanald Dvorak’s cover letter for a office manager position, where he wrote : “Forget all the other candidates for Aviary, I am the BEST,” and listed his skills in bullet points: “Organizing shit? Check. Calling numbers and shit? Doublecheck. Customer support and shit? Mega-check. Faxing numbers and shit? MOTHERFLIPPING CHECK ALL OVER THAT.” At a time when even the most qualified applicants can’t find jobs , it’s questionable if sending over-the-top or ironic cover letters is a good idea — especially given the fact that there’s no expectation of privacy. Last year, Business Insider even posted 12 of the worst cover letters they received, redacting the names to provide some protection for those who made the list. READ THE COVER LETTER: 1/23/2012 J.P. Morgan Dear Sir or Madame: I am an ambitious undergraduate at NYU triple majoring in Mathematics, Economics, and Computer Science. I am a punctual, personable, and shrewd individual, yet I have a quality which I pride myself on more than any of these. I am unequivocally the most unflaggingly hard worker I know, and I love self-improvement. I have always felt that my time should be spent wisely, so I continuously challenge myself; I left Villanova because the work was too easy. Once I realized I could achieve a perfect GPA while holding a part-time job at NYU, I decided to redouble my effort by placing out of two classes, taking two honors classes, and holding two part-time jobs. That semester I achieved a 3.93, and in the same time I managed to bench double my bodyweight and do 35 pull-ups. I say these things only because solid evidence is more convincing than unverifiable statements, and I want to demonstrate that I am a hard worker. J.P. Morgan is a firm with a reputation that precedes itself and employees who represent only the best and rightest in finance. I know that the employees in this firm will push me to excellence, especially within the Investment Banking division. In fact, one of the supporting reasons I chose Investment Banking over any other division was that I know it is difficult. I hope to augment my character by diligently working for the professionals at Morgan Stanley, and I feel I have much to offer in return. I am proficient in several programming languages, and I can pick up a new one very quickly. For instance, I learned a years worth of Java from NYU in 27 days on my own; this is how I placed out of two including: Money and Banking, Analysis, Game Theory, Probability and Statistics. Even further, I am taking Machine Learning and Probabilistic Graphical Modeling currently, two programming courses offered by Stanford, so that I may truly offer the most if I am accepted. I am proficient with Bloomberg terminals, excellent with excel, and can perform basic office functions with terrifying efficiency. I have plenty of experience in the professional world through my internship at Merrill Lynch, and my research assistant position at NYU. In fact, my most recent employer has found me so useful that he promoted me to a Research Assistant and an official CTED intern. This role is usually reserved for Masters students, but my employer gave the title to me so that he could give me more work. Please realize that I am not a braggart or conceited, I just want to outline my usefulness. Egos can be a huge liability, and I try not to have one. Thank you so much for your time, and I look forward to hearing from you. Best, Mark

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Jed Kolko: The Robo-Signing Settlement: Breaking the Usual Rules of Housing Policy

February 10, 2012

The robo-signing settlement is the latest — and potentially the largest — piece in the U.S. housing policy puzzle. Even though it’s partly punishment for banks’ wrongdoing, it is also another answer by the government to the question of how it can help the housing market. Our own housing policy survey last December showed strong bipartisan support for two key elements of the robo-signing settlement: refinancing by underwater homeowners (82 percent of Democrats, 69 percent of Republicans), and loan modifications to reduce principal balances (74 percent of Democrats, 61 percent of Republicans). With the robo-signing settlement, as with any housing policy, I look at three questions: 1) Is it big or small? Relative to other housing policies, it’s big. It calls for much more money for loan modifications than HAMP has cost so far, and it could mean money or relief for close to two million current and former homeowners. HAMP and HARP have each helped roughly one million homeowners so far. But relative to the housing crisis, it’s small. The loan modifications could yield tens of billions in principal reductions for one million homeowners — but that’s a sliver compared with the 11 million homeowners today who are over $700 billion underwater. And the cash compensation of $1,500-$2,000 for up to a million people who lost their homes will hardly make them whole. 2) Who pays? Usually it’s good politics to keep quiet about who pays for housing policy, but not with the robo-signing settlement. It’s good politics for the government and the attorneys-general for everyone to know that the banks are paying for their robo-signing sins. In contrast, most housing policy announcements hide — or at least don’t broadcast — who is paying, whether it’s investors who implicitly bear the cost of refinancing or taxpayers who implicitly bear the cost of many other policies. 3) Does it reward risk-taking or bad behavior? Delinquency is a disqualification for refinancing but is almost a requirement for getting a principal reduction. The largest piece of the robo-signing settlement is for principal reduction for borrowers who are “either delinquent or at imminent risk of default.” This is opposite of the refinancing rules laid out in HARP and the State of the Union address , which require borrowers to be current on their payments because that shows they’re “responsible.” So much for a coherent message from the government to homeowners about moral hazard. This issue could be fuel for election debates on housing policy: Republicans are much more bothered by rewarding bad behavior than Democrats are. In our December survey of consumers, 61 percent of Democrats agreed that “helping people keep their homes is the right policy even if it helps some undeserving homeowners,” but only 38 percent of Republicans agreed.

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David Woolner: FDR Alleviated Americans’ Anger and Suffering Through Action

February 10, 2012

The news that President Obama has decided to establish a special new task force to investigate abusive and fraudulent lending practices during the housing boom, coupled with yesterday’s announcement of a $26 billion settlement aimed at providing relief to struggling home owners, will certainly be greeted as welcome developments by the millions of Americans still struggling under the weight of the Great Recession. But with many of the details of the practical application of the settlement still to be worked out, and with the task force having just been established, it is too early to tell how much relief will actually reach desperate homeowners or how many banks and/or individuals will face prosecution. Given the devastation caused by the reckless and often fraudulent behavior of many of the nation’s leading banks, and the overwhelming need to stabilize the housing market and provide relief to millions of homeowners, one would hope that these measures would, at the very least, be as effective as the actions taken by the government roughly 80 years ago when we faced a very similar economic crisis. Most Americans are well aware that the Great Depression was initiated by the collapse of the stock market in the fall of 1929. It was a collapse that came about in large part because of the bursting of a large speculative bubble that had built up over time in the reckless and virtually unregulated financial climate of the 1920s. What is less well known or understood are the many other factors that played a role in the onset of the Great Depression: the decline in agricultural prices, the maldistribution of wealth and income, the collapse of the banking sector, and an equally important urban mortgage crisis. Indeed, by the time Franklin Roosevelt took office in March of 1933, it is estimated that approximately 50 percent of all urban mortgages in the United States were delinquent or in foreclosure and that an average of 1,000 homes per day were being lost. To deal with the housing emergency and to get to the bottom of what led to the economic crisis in the first place, FDR did two things. First, he fully supported the activities of the 1932 Senate Committee on Banking and Currency that was established to investigate the causes of 1929 crash. Once in office, he moved quickly to provide relief to home owners through the establishment of the Home Owners Mortgage Corporation (HOLC) . Thanks in large part to the zeal of Ferdinand Pecora, who was appointed to head the Senate committee investigating Wall Street in January 1933 and was quietly encouraged to carry out his work with vigor by President-elect Roosevelt, the ” Pecora Commission ” would uncover a whole series of unscrupulous practices in the banking and financial sector. These included interest-free loans to top executives at National City Bank (now Citibank); National City’s disposal of bad loans to Latin American countries by packing them into securities and selling them to unsuspecting investors; and J.P. Morgan’s list of influential “friends,” including former President Calvin Coolidge, all of whom were given the opportunity to purchase stock at sharply discounted prices. These disclosures, coupled with additional revelations about excessive salaries, bonuses, and the fact that many financial elites — including the head of National City Bank — did not pay any income tax in the past year, outraged the public and helped inspire the Roosevelt administration and Congress to push through some of the most important banking and financial reforms in American history. These included the Glass Steagall Act , which separated commercial from investment banking and gave us the Federal Deposit Insurance Corporation , and the 1934 Securities and Exchange Act , which created the Securities and Exchange Commission. In the meantime, to meet the urgent housing crisis, the HOLC, which was established within FDR’s first 100 days in office, provided direct relief to families facing foreclosure by buying out their existing mortgages and replacing them with new ones. The new ones weren’t based on the typical non-amortized loan of seven to ten years, but rather on the far more affordable amortized mortgage of between 25 and 30 years. Over the course of its brief three-year history, the HOLC refinanced over one million homes — roughly 20 percent of all the urban mortgages in the U.S. In the process, it revolutionized American home ownership through the institutionalization of the 30-year mortgage. It also did not cost the American taxpayer any money, as the HOLC turned a small profit when it finally closed its books in 1951. Taken together, the measures inspired by the Pecora Commission and the relief brought to millions of American homeowners helped restore investor confidence, resuscitate the financial sector, and lay the foundations upon which our banking, financial, and housing sectors rested from more than half a century. In making yesterday’s announcement, President Obama alluded to both the new task force and the bank settlement by stating that with these measures “we begin to turn a page on an era of recklessness that has left so much damage in its wake.” Eighty years ago, the twin combination of a federal investigation and direct action by the government helped alleviate the anger and anguish of the millions of Americans who suffered as the result of the greed and avarice of the wealthy few. Let us hope that the president’s new task force and the agreement with our nation’s major banks will do the same. Cross-posted from New Deal 2.0 .

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The Most HIlarious #FedValentines

February 10, 2012

Whoever said monetary policy isn’t sexy just doesn’t know what they’re talking about. In anticipation of Valentine’s Day, the twitterverse is abuzz with economics nerds tweeting sweet nothings using the hashtag #FedValentines , of course in reference to the Federal Reserve. You can’t blame them. With the Fed’s head, Ben Bernanke, constantly discussing stimulus tactics like quantitative easing, the urge for double entendre is hard to resist. The trend comes as Bernanke addressed the National Association of Homebuilders International Builders’ Show Friday, saying that the Fed’s efforts at spurring economic growth are being thwarted by obstacles to mortgage lending, according to Bloomberg. Tragically, the bearded, bald hearthrob didn’t offer his own #FedValentine during the speech, but rest assured we’ll update this post if that changes. That’s not to say the regional federal reserves themselves can’t have some fun on a Friday. According to its twitter feed , the San Francisco Federal Reserve is “going through extraordinary measures to increase your stimulus.” Check out some of our favorite #Fedvalentines, to get a sense of love in the time of near-record low interest rates:

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Dennis M. Kelleher: First Bank Fraud, Now Political Fraud

February 10, 2012

First the banks committed massive fraud in originating and packaging mortgages, leaving the country littered with millions of little mortgage time bombs set to explode in the years after they lined their pockets and made their get-away. The poster child for this unconscionable conduct is Countrywide (now owned by Bank of America) and its CEO Angelo Mozilo, but they were just one of many, many culprits. Then when those mortgage time bombs exploded a few years later, those very same banks committed more massive fraud, this time by improperly charging homeowners fees and other costs, commencing unjustified foreclosures, and knowingly and intentionally filing false documents in court to foreclose on people when they never even bothered to check to see if they owned the mortgage they were trying to foreclose on. That is lying, cheating and stealing that would get anyone else in this country thrown in jail for many years. And, this was even worse than that because they filed falsely sworn documents in courts throughout the country as a routine practice. That is perjury (not that any of this is called criminal; no, these crimes are covered up with euphemisms ). This is very, very serious criminal conduct that was engaged in for years by the biggest banks in this country as a routine business practice. People go to prison for many, many years for crimes much less serious than that and these crimes merit long prison sentences and crippling fines. But, not if you’re a big bank. That is why people are so mad in this country. There is one standard for hard-working people and there is another standard for the wealthy, well connected, powerful, and, almost always, the big campaign contributors. The law gets applied to the former, often mercilessly and ruthlessly, but the law doesn’t apply to the latter, who get off time and again for nothing, next to nothing or by paying a window-dressing fine usually with other people’s money. As if that isn’t enough insult and injury to the American people, almost always you have politicians, prosecutors and sundry others racing to the microphones to claim a great victory for “punishing” those wealthy, well connected, powerful, and, almost always, the big campaign contributors. It is as if they think the country is populated by idiots who cannot see through the transparent PR political fraud that they spin to cover the fact that the big shots and their buddies are getting away with it again. Yesterday was no different as 49 state AGs, the U.S. AG and the White House all raced to the cameras to tout their claims that the mortgage settlement with 5 banks was a great victory for victimize homeowners. $26 billion, they all blared, coming to a neighborhood near you. Wahooo! Finally, relief, justice and help to beleaguered homeowners and other victims across the country. The problem is that the facts, the actual terms of the deal, as near as they can be determined from what little information was disclosed, suggest that this great victory isn’t going to help hardly anyone. True, it does appear to be better than nothing, but is that really the standard? And, none of those politicians said it was merely better than nothing. No, they claimed that this is going to help millions of homeowners across the country. First, only $5 billion of the settlement was cash (a mere $1 billion from each mega-bank, which is nothing to them) and the other $21 billion will come in the form of mortgage modifications, which isn’t anything like cash and will cost them almost certainly less than half of that cost. Second, as many have pointed out, $26 billion (even if it was real) isn’t much and won’t help much. For example, as a New York Times story today shows, even if all $26 billion was actually used as claimed, it will help, at most, 10 percent of the 20 percent of homeowners under water and even those homeowners aren’t likely to be helped much. Don’t miss the graph . Nothing beats seeing how little the help will be. There are approximately 11 million homes under water by an average of $50,000. The huge victory will help at most 1 million for an average amount of $20,000. So, nothing for 10 million and the 1 million will get to reduce the amount underwater on average to $30,000. It’s like saying rather than drowning in a lake 50 feet deep, you get to drown in a lake that is only 30 feet deep. And, people are taking victory laps? You don’t believe any of that and still think what the politicians said about punishing the banks was true? If this was a real punishment, then the stock of those banks would have taken a hit. They did not. The announcement had no effect. You could say that was because the settlement had been talked about for some time so the cost was already priced into the stock days before, but there wasn’t any hit during that time either. Thus, the markets confirm the facts of the settlement and rip the PR spin off the political fraud that compounds the banks’ fraud and, once again, victimizes the American people by falsely raising their hopes for relief and dashing — again — the claims that the criminals, liars, cheaters and scammers were finally going to be held accountable. Sadly, this is yet another example of the double standard that has been so painfully obvious to everyone in this country since the 2008 financial crisis: pain on Main Street, bonuses , bailouts , and arrogant whining on Wall Street, and nothing but PR spin from Washington, D.C. and elected officials.

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Mathias Terheggen: The Wealth Gap Challenge

February 10, 2012

Philanthropy and the wealth gap challenge Economic growth and the question of its “if and when” is a very popular topic these days. Analysts have been providing outlooks on 2012′s economic development. But in their attempts to foresee the future one thing is already clear: regardless of how the economies will develop, the outcome is going to be more positive for those who already have and earn a lot compared to the financially less fortunate. This phenomenon, the “wealth gap,” is not new and we have become used to the fact that, with few exceptions, particularly in developing countries the wealth disparity is growing steadily. What is new though is that within developed economies — among them are some of the strongest globally — the wealth gap is widening too. Countries as diverse as the U.S., Italy and Germany all have grown their Gini-coefficient, a measure of income inequality, over the last 30 years. And even Hong Kong, whose economy grew by over 6% at 3% unemployment last year, not only holds a global record for growing the number of millionaires but also, or maybe therefore, one for the highest income inequality ratio among developed economies. An ever-growing challenge This has given rise to substantial concern. While low levels of economic inequality are desirable to maintain an impetus for individual economic development, a large wealth gap is known to discourage individual economic efforts which, in turn, results in lessened economic power for large parts of the society. Public upheaval and political revolutions as seen during the Arab Spring are only the most blatant symptoms of the detrimental effect on societies caused by limited economic opportunity and unfair wealth distribution. With low-income households statistically producing a higher number of off-spring, strong income inequality virtually results in an increasing number of children slipping off into poverty, poor healthcare and education. The generation responsible for long-term economic growth is hence disengaged, and a society’s ability to innovate from within itself jeopardized. Ultimately, this will limit the future economic potential also of those on the more fortunate side of the wealth gap, too. Donating doesn’t do the trick The economic crisis of 2008 caused a tightening of public budgets which, in turn, has resulted in reductions of social welfare. This has led to a more critical public view on the financially successful, and so the wealthy nowadays have both an intrinsic and an extrinsic motivation to re-consider their role in dealing with the wealth gap and related social issues. It comes by no surprise that therefore the past years have seen many wealthy go public with their social engagement and openly demand more substantial measures to foster social equality from their peers. The public response has been very mixed with reactions reaching from friendly acknowledgement to acid accusations of fig-leaf efforts. A closer look at the role private philanthropy can play in closing the wealth gap might therefore be appropriate. One myth to make away with at the outset is that donations to the poor won’t solve the wealth gap challenge. While total global private giving is estimated to exceed USD 600 bn annually, this amount represented less than half of the wealth transferred from the bottom 80 to the top 20 percent of households in the US during the financial crisis from 2007 to 2009 alone. Hence, private philanthropy by wealthy individuals must play a different role if it means to prevent societies from getting destabilized. An entrepreneurial approach Indeed, philanthropy can have a catalytic role in encouraging and supporting social innovation: being liable to their own preferences and requirements only, as opposed to donors like most public fund-raising non-profit organisations, philanthropists can take higher risks like funding interventions and organizations in early stages of development. Philanthropists can afford the risk for a project to default, e.g., through a project owner’s unexpected death, knowing that the draw-back will be off- set by other successful initiatives within their portfolio. In addition, today’s private donors are increasingly seeking ways to make their social engagement not only more strategic and long-term in order to achieve systemic change, but they go far beyond their mere financial contributions. Building on their professional success they leverage their knowledge and network, engage non-financial capacities like companies and employees, and most importantly, they apply their mind-set and experience as an entrepreneurs and investors to their philanthropy. Addressing social issues with an entrepreneurial approach including the idea of revenue generation through the provision of social products and services has resulted in efficiency and scalability and triggered some of the most remarkable recent trends in the social sector. On the giving side Venture Philanthropy and Impact Investing have taken giving beyond grants towards actual investments that include the expectation of a financial return for the investor. The ratio of social versus financial return generated by the investment may vary depending on the social investor’s priorities. But the mere fact of making an investment, rather than giving money away, has a groundbreaking effect on the recipient’s commitment, not least as it is an explicit sign of trust in the recipient’s abilities. All these trends yield social interventions that often address social issues that weren’t addressable before. But in all cases they increase the efficiency and effectiveness thereby growing the social impact. Enabler and catalyser It is through this role as enabler, supporter and advocate of social innovation that private philanthropy addresses the wealth gap challenge: not only do they deliver new social interventions, but by using their extensive networks and acting as figures of public influence they promote what ultimately will be adopted by larger non-profit organisations and, increasingly, by governments. Especially the latter are turning towards private philanthropy on their search for social innovation that enables the public sector to fulfill its social mandate while minding the costs. The recent launch of a program by the German bank for economic development, KfW, that provides financing to social entrepreneurs under the condition that they can secure additional funding by private donors, is an apt example of governments trying to harness the innovative power of private philanthropists. These interventions will increase the ability of the less fortunate both in developed or developing countries to have access to appropriate healthcare and education. This will help lay the foundations for future economic growth and participation in it: by linking private philanthropy of the wealthy to the economic participation of the less wealthy, the social fabric that makes for a stable, fair society is strengthened. Transparency to gain momentum Private philanthropy will not balance societies that are otherwise challenged in their social cohesion through an overly inhomogeneous distribution of wealth and income. But it can, if done credibly, be a starting point for systemic change — all the while shaping the future of the wealthy, too. Transparency on individual efforts could create the desired momentum as it allows for discussions on objectives and priorities as well as for collaboration. However, given the reputational risk and the challenges of building a successful philanthropic track record, such transparency may at first only be acceptable within the peer group. Closed conferences, of which there aren’t too many yet, but where leading philanthropists, experts and social-sector professionals gather to exchange knowledge and further their philanthropy, have proven to be a very effective means. Very often such gatherings boost alliances around a shared theme of interest, they build scale and subsequently become visible to the broader public including private, public and civil sector organizations.

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The 10 Tech Companies Taking The Biggest Stand Against Climate Change

February 10, 2012

How are some of the world’s biggest IT companies taking a stand against a climate change? A list released by Greenpeace this week ranks some of the world’s largest information technology companies based on their efforts to mitigate climate change. The fifth edition of the Cool IT Leaderboard puts Google at the top, with Cisco and Ericsson grabbing second and third. According to a press release , the list “ranks 21 IT companies on their clean energy leadership potential, willingness to embrace clean energy solutions and potential to influence energy decisions.” Neither Apple nor Facebook were included in the list, as they have not pursued “market opportunities to drive IT energy solutions” to the same extent as others, according to Greenpeace. Greenpeace International IT analyst Gary Cook said, “Technology giants have a real opportunity to use their power and influence to change how we produce and use energy — Google tops the table because it’s putting its money where its mouth is by pumping investment into renewable energy.” As Wired notes, the highest scoring company, Google, only received a score of 53 out of 100 . Cisco was last year’s winner, with 70 points, but dropped to 49 this year. Greenpeace says Cisco’s fall is due to “a much less forceful support for priority climate and energy policies.” For more information on some of the greenest companies around, check out Newsweek’s 2011 list of the 30 greenest tech companies . List courtesy of Greenpeace . Read their full report here . Scroll down for the companies ranked 11-21. The companies which did not make the top 10 include: 11. Wipro 12. Dell 13. Microsoft 14. SAP 15. AT&T 16. HCL 17. NTT 18. NEC 19. TCS 20. Telefónica 21. Oracle

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Alabama’s Largest City Looks For Alternatives To Payday Lenders

February 10, 2012

The biggest city in Alabama is putting its payday lenders on notice. Bankers and community leaders in Birmingham, Alabama met Thursday to discuss developing new financial resources for cash-strapped residents , according to The Birmingham News . The meeting was part of the city’s broader effort to relax the influence of payday lenders — small loan shops where borrowers can get quick cash, but often end up sucked into a cycle of debt thanks to the lenders’ high interest rates. While Birmingham leaders say they can’t force the payday lenders to close up shop, they are talking about adopting a program similar to San Francisco’s Bank On initiative , which aims to offer safe, non-exploitative resources — including financial counseling, online pay options and inexpensive checking and savings accounts — to people who are hesitant to use traditional banks. Nearly 8 percent of U.S. households are “unbanked,” or don’t have a checking or savings account, according to Federal Deposit Insurance Corporation data cited by The New York Times . Another nearly 18 percent of Americans have a checking or savings account, but still use alternative financial services. In Alabama, more than 20 percent of households have sought loans from payday lenders, according to the Associated Press. Birmingham’s pushback against payday lenders comes at a moment when a vast number of Americans are cash strapped, pushing them to turn to an off-brand loan shop. Thanks to high unemployment and flat wages, a growing number of Americans are struggling to simply put food on the table and cover other basic household expenses . Nearly half of all households in the U.S. are only one financial emergency away from the poverty line . Amid such a weak economic climate, payday lenders have thrived . But consumer-protection advocates are beginning to take a hard line against the industry. Richard Cordray, who recently assumed control of the Consumer Financial Protection Bureau, has put payday loan regulation front and center on his agenda, despite protests from lenders that they provide a valuable service to borrowers in a tight spot. Payday lenders have come under particular criticism for allegations that they target and take advantage of minority borrowers. A study by the Center for Responsible Lending found that in some regions, payday loan shops are clustered disproportionately in African-American and Latino neighborhoods , and that minorities form a large part of their customer base.

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Nathan Gardels: Democracy Is Not Self-Correcting

February 10, 2012

Recently, I wrote an article posted here about the protests in Italy against the “undemocratic” government of meritocrats in Italy led by Prime Minister Mario Monti. Many responders, following the German philosopher Jurgen Habermas, worry that Europe is entering a “post-democratic” phase, not just because of a government like Monti’s, but because European institutions, such as the appointed European Commission, are seen to be beyond the accountability of the public. Behind such sentiments is a suspicion of delegated authority of any kind in democratic societies. My response is to consider this: The argument against the delegated authority of meritocracy based on experience and expertise is that it can get it wrong without adequate feedback. Without the capacity to self-correct it can end up oppressing the people instead of serving them. The argument for one-person-one-vote democracy always is that it gets is right because, like the free market,it is self-correcting. But that is no truer for democracy than for the market, as we saw in the 2008-09 financial crisis. Democracy, both representative and direct, also has its rigidities (ideology, populism, self-interest of voters, money as free speech). Often the accumulation of individual choices produces unintended consequences against the public good. As I pointed out in my earlier article, after a series of direct democracy initiatives to curb property taxes and punish criminals, California now spends more on prisons than higher education, thus undermining the foundations of its future. What matters for good governance is an open society — freedom of expression and the rule of law to protect feedback — not whether the system is meritocratic, democratic or a hybrid. Is China’s “monitory webocracy,” where the Communist government is acutely responsive to the public clamor over weibo on everything from tainted milk or toys to train wrecks to pollution, any less self-correcting than American democracy where the Wall Street banks that precipitated the financial crisis and were bailed out because they were “too big to fail” are now even larger and remain unregulated?

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R. Paul Herman: Warren Buffett’s Billions at Risk; Berkshire Hathaway Is Lowest-Rated on Sustainability

February 10, 2012

Co-authored with analyst Maximilian Lichtenheld of HIP Investor. Warren Buffett is known as the “Oracle of Omaha,” but does his view towards sustainability warrant this title in the 21st century? Not according to the ” HIP 100 ” investment index and portfolio. Berkshire is rated dead last of the 100 largest companies in the U.S. based on low sustainability results and lack of information on its conglomerate’s actions and results. Why? Because Warren Buffett, vice chair Charlie Munger and the Board of Directors — including Bill Gates –have yet to embrace sustainability, the concept that human, environmental, social and governance factors can drive increased profitability and shareholder value. The shareholders and Board voted down a proposal at last year’s shareholder meeting in Omaha to quantify the risks related to pollution and carbon emissions, as well as rejecting the need for setting goals to reduce them. This is strange: because reducing waste and greenhouse gases leads to lower costs, fewer liabilities and reduced risk. At that shareholder meeting, Buffett stated that climate change is not a material risk to Berkshire. Yet $30.6 billion, or 29%, of Berkshire Hathaway’s operating company revenue is heavily contingent on the issues related to climate and energy. Berkshire’s earnings growth has not met analyst projections as the reinsurance businesses of BRK suffered heavy losses due to extreme weather. Moreover, the potential impact of climate change on BRK’s equity holdings (partial rather than full ownership, like Coca-Cola, Kraft and Wells Fargo) is even higher. Approximately 40 percent of revenues are facing increased risk, representing about 1 in 4 employees, according to our analysis at HIP Investor. An analysis of BRK’s operating companies resulted in a peculiar result as sustainable business practices are incorporated at home construction and manufacturing firms, yet two of the biggest insurers, GEICO and General Re, appear not to pursue any strategies considering environmental impacts on their business models. Including these factors could lead to more sustainable profits with a largely reduced exposure to high-impact risks. The industry finally has to recognize that “black swans” risk becoming the “new normal.” Another crucial aspect that might be detrimental to BRK’s performance is also rising prices of clean water. The Coca-Cola Company, in which BRK holds a major equity stake, uses 2.36 liters of water to produce 1 liter of soda — consider that next time you drink a soda. In India, the water-to-soda ratio amounts to 4:1, resulting in the waste of 75 per cent of water input. As water is the main ingredient for all beverages, even a slight increase in its price could lead to a fall of profits. An improvement in water efficiency might incur capital expenditures in the short run, but will reduce costs in the long run, serving as a competitive advantage. Some of Berkshire’s businesses are actively expanding in the alternative energy sector, such as Mid American Energy Holding’s acquisition of the Topaz project , one of the world’s largest photovoltaic power plants, for $2 billion. Imitating this strategic expansion across the conglomerate could be quite beneficial for BRK. For BRK’s last fiscal quarterly statement, ending October 2011, Berkshire said “profit from underwriting insurance fell 83 percent to $81 million amid the most costly hurricane season since the record storms of 2005.” As profits associated with the insurance subsidiaries fell by more than 77 percent on investments, it is time for Berkshire’s board — which includes Bill Gates — to accept the importance of climate for business. A study by the Intergovernmental Panel on Climate Change (IPCC) entitled ” Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation ” (SREX)’ supports the notion that extreme weather occurrences are going to increase in frequency, hugely affecting BRK’s potential for generating sustainable revenues in the insurance and re-insurance businesses. “Extreme events will have greater impacts on sectors with closer links to climate, such as water, agriculture and food security, forestry, health, and tourism,” requiring economies to adapt and not stick blindly to a status quo. If weather-related disasters increase in frequency, profits could quickly evaporate, unless the issue of climate change is actively included in company strategies. Other reinsurers, namely Swiss Re, do acknowledge the impact of climate change and estimate that the associated market accounts to $5 billion , which consists of various over the counter contract weather derivatives, as well as other insurable risks regarding renewable energies. However, the acceptance of the changed circumstances does not only create new markets, but allows to incorporate these changes into the risk models. Ignoring the tremendous risks of climate change can be lethal for a firm. If BRK would take steps to counter these challenges through systematic implementations of sustainable business practices across all operating companies, as well as pushing for sustainable changes at their equity stakes, then revenues could be more stable, avoiding losses and positively impacting society. Warren Buffett’s potential impact on sustainability would go far beyond BRK though, as typically his investments are widely followed and influence investors in their decisions. Once this self-reinforcing cycle is initiated, economies and firms could become more sustainable in performance, hence they could weather economic shocks better. Volumes on IBM trading doubled days after Buffett announced his investment in the company in 2011. Forging ahead on sustainable firms could thereby lead to a large multiplier effect for the entire industry. Will Buffett become more “HIP,” supporting the theme that solving human, social and environmental challenges can increase the potential for more profit? Will BRK survive without adapting to more sustainable business practices? That is up to Mr. Buffett, Charlie Munger and the Board — but it will determine whether BRK can continue its 20th century leadership into the 21st century. Co-author Maximilian Lichtenheld is an Analyst at HIP Investor Inc., an MBA candidate at London School of Economics (LSE), and the Founder and President of LSE’s M&A (Mergers&Acquisitions) Society, President of LSE’s Swiss Society and Vice-President of the Austrian Society. NOTE: This is not an offer of securities nor a solicitation. The information presented is for information and education purposes, and does NOT imply any investment recommendations. Past performance is not indicative of future results. All investing risks loss of principal. The authors, HIP Investor and HIP’s clients may invest in the securities mentioned above, including in the HIP 100 Index portfolio. Details and full disclosures are at www.HIPinvestor.com

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Van Jones: Bank Settlement: $25 Billion Down, $675 Billion to Go

February 10, 2012

This week a $25 billion settlement was announced in which big banks pay up for a portion of their bad deeds in the home foreclosure crisis. Everyone is trying to determine whether this is a good deal or a bad deal. Here is how I score it. This deal represents small progress on a small problem. Now it’s time to make big progress on the big problem. Don’t count on finding many good points in the deal itself, because there aren’t a lot. In fact, the main win can be found in what’s NOT in the deal. A truly horrible deal would have let the banks write a small check and then seal the door on all further investigations and pursuits of accountability. This deal does NOT do that. Because this settlement limits legal immunity for banks, this deal does not automatically let the banks off the hook for all of their wrong-doing. Except for a few issues like robo-signing, state attorneys general can still fight for more compensation and relief for the banks’ victims. Government officials can proceed with investigating and prosecuting banks for their role in crashing the economy and the housing market. In other words, the door is still open to solve the much bigger problems we face. Our fight for justice can, and will, continue. That is small comfort, perhaps, but it was hard won. So we should honor the hard work of New York State Attorney General Eric Schneiderman, California Attorney General Kamala Harris and others, including many grassroots progressive organizations like New Bottom Line. They fought courageously to prevent a total sweetheart deal for the banks. This outcome is the result of determined activism, and without this heroic effort, the deal would have been drastically worse. That said, there is a reason why many progressives and housing advocates are furious, and why many struggling homeowners are left wondering, “How does this help me?” Millions of homeowners and families are still suffering under the tremendous weight of a debt blanket that is smothering the economy. This $25 billion settlement helps only a fraction of those homeowners and addresses only a very limited set of fraudulent behaviors. A number of homeowners will get some cash payments, but the amounts are negligible compared to the pain and injustice they have experienced. The actual total cash paid out by the banks is only $5 billion dollars, to be split among the nation’s largest banks — hardly a stiff penalty considering that the six largest banks in the U.S. paid $144 billion in bonuses last year. And enforcement mechanisms remain murky. We must not forget the more than 14 million homeowners (one in five) whose homes are underwater, beneath a crushing total $700 billion in negative equity. We must not forget the more than 4 million families who have lost their homes. We must not forget the millions of families who are in some form of foreclosure proceedings on this very day. These are the Americans who have suffered and continue to suffer. They are worried today, like yesterday, whether they will still have a home to live in tomorrow. They are the ones who must choose every month whether to pay bills or to feed their children. Here are three things that must happen next: 1) The U.S. Department of Justice and state attorneys general must investigate and prosecute banks more aggressively than ever, at a much larger scale than anything that has happened to date. 2) We must force banks to make massive principal reduction of hundreds of billions of dollars, to immediately relieve the 14 million homeowners in the country who have underwater mortgages. 3) We must change laws and regulations to prevent this kind of crisis and fraud from ever happening again. Two weeks ago, I called for hundreds of billions in principal reduction for homeowners. This would free up Americans to start new businesses, spend money on worthwhile products and services, and invest in their children’s futures. We still need to address the $700 billion in negative equity, which in turn is only part of the nearly seven trillion dollars in total lost equity created by the banks’ irresponsible, and in some cases, illegal practices. We need a solution at the scale of the problem, so that families can get back on their feet, the economy can get working, and people can reach for their American dreams again instead of watching them drown. That is why I say: $25 billion down, $675 billion to go.

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Owner Of ‘Illegal’ California Gold Mine Surrenders To Face Charges

February 10, 2012

SACRAMENTO, Calif. (AP) — A man who state and local officials say is running a massive illegal gold-mining operation in California’s Sierra Nevada surrendered Thursday to face 14 criminal charges of operating without permits and polluting a creek. Joseph Hardesty also faces state fines of nearly $900,000. He was booked into El Dorado County Jail on the charges, which include four felonies, and was being held in lieu of $75,000 bond. His attorney, William Brewer, says Hardesty turned himself in after investigators from the district attorney’s office searched for him at his mother’s home and the home of his partner in the Big Cut Mine, near Placerville. Hardesty surrendered a day after The Associated Press published a story about the mine, which is in the Sierra foothills between Sacramento and Lake Tahoe, and his three-year battle with authorities. “It’s unfortunate that our government has decided in this case to take away our liberties and our rights without adequate process,” said Brewer, of San Diego. “Joe really is a very honorable person and I just wish things were different.” He denies his client is mining gold, saying he is operating a sand and gravel business to complement another he owns in Sacramento County. State and local officials say they have evidence and statements indicating the site is being mined for gold at a time when the precious metal’s price is hovering near $1,700 an ounce. Hardesty, 54, had promised to surrender last week but failed to appear. Authorities said Hardesty turned himself in at the sheriff department’s office in Placerville about 11:30 a.m. and was taken to jail without incident. Brewer said investigators had looked for his client everywhere except where he was — his home in Elk Grove, south of Sacramento. Hardesty contends that he has a historic right to operate the Big Cut Mine on nearly 150 acres he bought seven years ago, based on a reclamation plan he had filed with El Dorado County in 2009 and $188,000 in bonds. Local authorities and the State Mining and Geology Board disagree. On top of the mining board’s fines, El Dorado County charged Hardesty with mining and grading without permits, working despite stop orders, releasing sediment into Weber Creek, violating zoning laws, and using hazardous materials without proper permits. Hardesty, his wife, Yvette, and his partner, Rick Churches, brought in heavy equipment to cut into a steep ridge high above the creek, although Joseph Hardesty is the only one facing charges. The site is guarded by locked gates covered with “no trespassing” signs, but an AP reporter and photographer were able to view the mining operation from a heavily forested ridge a few hundred yards away. Late last month, local and state inspectors with a warrant entered the property and documented at least 30 acres stripped bare, four drainage ponds and a football-field-sized gravel bed about 60 feet deep. Inspectors previously found gold on what is called a shaker table, which is used to separate the heavy metal from sand and gravel. Bruce Person, an engineer with the county transportation department who helped inspect the property, said a previous owner found an ancient riverbed on the property could produce between 1 and 3 ounces of gold for every ton of material. El Dorado County Deputy District Attorney Michael Pizzuti declined to comment Thursday on Hardesty’s arrest. He previously told the AP that Hardesty’s partner told a county inspector that they intended to remove gold and sell the rocks it was separated from as gravel. Hardesty already was on probation after pleading no contest last year to a misdemeanor charge of storing unpermitted hazardous waste in Sacramento County. He now faces allegations that he violated his probation by continuing to operate at both the Sacramento and El Dorado locations. The fines were levied in January by the State Mining and Geology Board, a division of the California Department of Conservation. The penalty climbs by $15,000 for each day he continued to operate.

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Elliott Negin: Monsanto’s Great Expectations (and Not-So-Great Results)

February 10, 2012

Photo: Russell Max Simon With apologies to Charles Dickens, whose 200th birthday was this week, it’s the best of times and the worst of times for Monsanto, the agribusiness giant that is aggressively marketing genetically engineered crops — and millions of tons of pesticides — worldwide. It’s the best of times because its stock is soaring. Sure, the St. Louis-based leviathan has been up before — and down. In 2009, Forbes magazine proclaimed it company of the year. The next year its stock tanked, and Mad Money TV host Jim Cramer proclaimed it the worst of 2010. Now its up again, and last month Forbes was hyperventilating over the fact Monsanto has outperformed most high-tech stocks over the last five years. But just like the plot in Charles Dickens’ Great Expectations , Forbes ‘ rosy scenario is not the whole story. You may vaguely remember the 19th century novel from high school English. According to a column in last Sunday’s Washington Post , its main lesson is: “You will never fully comprehend the most important events in your life while they are happening. Any plans you make will not work out — and you may grow up to be a jerk. If you are lucky, however, a series of traumatic events will wake you up and show you how insufferable you have become.” If you replace the book’s protagonist Pip with Monsanto and look at the company through the prism of science instead of its stock profile, my tortured analogy makes sense. Despite more than 20 years of research and 15 years of marketing, Monsanto’s great expectation that genetic engineering would dramatically increase food production and reduce pesticide use has been dashed. Unlike Pip, however, the company has not yet woken up to the fact that its products don’t perform as advertised. That’s why it’s also the worst of times. Doug Gurian-Sherman, a molecular biologist with the Union of Concerned Scientists (UCS), has spent quite a bit of time investigating Monsanto’s track record. In April 2009, he published ” Failure to Yield ,” the only comprehensive study to date that separates genetic engineering’s contribution from other factors that can increase yields. After reviewing two dozen academic studies of corn and soybeans — the two primary genetically engineered food and feed crops in the United States — he found that genetically engineered traits in herbicide-tolerant soybeans and herbicide-tolerant corn have not increased yields, and insect-resistant traits have improved corn yields only marginally. The substantial increase in yields for both crops over the previous 13 years was largely due to traditional breeding and better agricultural practices, not genetically engineered traits. More recently — just a few days ago, in fact — Gurian-Sherman and his colleagues in UCS’s Food and Environment Program posted a web feature, ” Eight Ways Monsanto Fails at Sustainable Agriculture ,” documenting how Monsanto has broadly failed to deliver on its promise to increase yields, safeguard the environment, and protect farmers’ livelihoods over the long run. “Monsanto talks about ‘producing more,’ ‘conserving more,’ and ‘improving lives,’ but it’s a PR fantasy,” said Gurian-Sherman. “In reality, the company is doing a great job selling more engineered seeds and herbicide and fattening its bottom line at the expense of the environment. To be sure, there are a lot of farmers who buy Monsanto seed, but they buy it mainly because it’s convenient, it saves them time, and it does kill some pests. That doesn’t mean that it’s better for the environment.” Besides the fact that Monsanto’s genetically engineered traits have failed to substantially increase yields, its heavy promotion of crops designed to be impervious to the company’s RoundUp herbicide has inadvertently created resistant “super” weeds, UCS experts report. That not only can make farming more difficult and costly, it forces farmers to use even more herbicides, which threatens the environment and public health. UCS also found that Monsanto’s focus on genetic engineering and chemical fixes thwarts research and development of cheaper, more effective solutions, including public sector classical crop breeding and environmentally friendly farming methods. Given the unvarnished facts, how has Monsanto been able to convince anyone that it is, according to its latest PR effort, “improving agriculture and improving lives”? In large part by spending tens of millions of dollars annually on advertising, lobbying and campaign contributions. In the fall of 2008, Monsanto launched an advertising campaign that continues to this day. An outgrowth of the company’s “sustainable yield initiative,” it has targeted opinion leaders and federal policymakers with full-page ads in the Atlantic Monthly , New Yorker , New Republic and other elite publications, as well as with posters in subway stations, on bus shelters, and on the sides of metro buses here in Washington. Last year, Monsanto spent $100 million on the ad campaign, down slightly from the $120 million it spent in 2010, according to Securities and Exchange Commission figures . The company also spent $6.37 million on lobbying –more than any other agricultural company or trade group–and so far has contributed more than $170,000 to political campaigns in the 2011-2012 election cycle, the third highest in the agricultural sector. Monsanto’s claims in earlier ads were more explicit than ones circulating now. For example, an ad on the New Yorker ‘s back cover that ran the same week Gurian-Sherman released his “Failure to Yield” report back in 2009 stated : “Providing abundant and accessible food means putting the latest science-based tools in farmers’ hands, including advanced hybrid and biotech seeds. Monsanto’s advanced seeds not only significantly increase crop yields, they use fewer key resources — like land and fuel — to do it. That’s a win-win for people, and the earth itself.” The company’s latest print ads , which all feature the headline “Improving agriculture, improving lives,” are toned down by comparison. They insinuate that Monsanto is accomplishing something grand and noble instead of making demonstrably false claims. For example, one ad states: “In the hands of farmers, better seeds can help protect resources and promote biodiversity.” Another one states: “In the hands of farmers, better seeds can help meet the needs of our rapidly growing population, while protecting the earth’s natural resources.” They all wrap up with: “That’s improving agriculture. That’s improving lives. And that’s what Monsanto is all about.” The best response to Monsanto’s misleading ad campaign? A well-worn quote from Great Expectations : “Take nothing on its looks; take everything on evidence. There’s no better rule.” Elliott Negin is the director of news and commentary at the Union of Concerned Scientists. For information on how to get involved with UCS’s effort to set the record straight on Monsanto, click here .

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Greek Police Union Threatens To Arrest EU, IMF Officials

February 10, 2012

Greece’s largest police union has threatened to issue arrest warrants for officials from the country’s European Union and International Monetary Fund lenders for demanding deeply unpopular austerity measures.

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Athens Burns As Eurozone Rejects Greece Bailout Deal

February 10, 2012

ATHENS, Greece (AP) — Thousands took to the streets of Athens as unions launched a two-day general strike against planned austerity measures on Friday, a day after Greece’s crucial international bailout was put in limbo by its partners in the 17-nation eurozone. Clashes broke out in Syntagma Square, outside Parliament, as dozens of hooded youths threw fire bombs and stones at police, who responded with tear gas. No arrests or injuries were reported. Police said some 7,000 people took part in the demonstration. Another 10,000 Communist supporters held a separate, peaceful march, chanting slogans against cutbacks that include reducing the minimum wage by 22 per cent and cutting one in five government jobs in a country which is in its fifth year of recession. Bailout creditors say Greece has not yet met demands for all the required austerity measures and, frustrated by days of dithering, have given political leaders in Athens until the middle of next week to do so. Otherwise, the country will lose its rescue loan lifeline, go bankrupt next month and likely leave the euro. “We are experiencing tragic moments,” Deputy Prime Minister Theodoros Pangalos told Parliament Friday. “These days are the last acts of a drama that we all hope will lead to a happy conclusion with a voluntary reduction in our public debt and implementation of a framework by 2015 that will allow the economy to stabilize.” The Greek coalition government, led by Prime Minister Lucas Papademos had hoped some of the heat had been taken out of the crisis after leaders agreed Thursday to a raft of austerity measures they hoped would pave the way for the €130 billion ($173 billion) bailout package. However, finance ministers from the other 16 eurozone states put up a roadblock later in the day by insisting that Greece had to save an extra €325 million ($430 million), pass the cuts through a restive parliament and guarantee in writing that they will be implemented even after planned elections in April. A Cabinet meeting has been called for the afternoon, while the majority Socialists and the conservatives were later to hold party meetings to discuss the cutbacks. The new hurdles Greece has to clear to avoid a default that could send shock waves around the global economy dented sentiment in the markets Friday. Stocks were down all over Europe, with the benchmark index in Athens 1.8 per cent lower in early afternoon trading. While facing intense pressure abroad, Greece is having to deal with another strike. The country’s two biggest labour unions stopped railway, ferry and public transport schedules, and hospitals worked on skeleton staff while most public services were disrupted. Unions were planning protests in Athens and other cities around midday. Prime Minister Papademos and heads of the three parties backing his government have already agreed to deep private sector wage cuts, civil service layoffs, and significant reductions in health, social security and military spending. But the party leaders balked at demands for more cuts to already depleted pensions, later issuing nebulous assurances that a solution had been found. “Unfortunately, the eurogroup did not take a final, positive decision,” Finance Minister Evangelos Venizelos said after Thursday’s talks in Brussels. “Many countries expressed objections, based on the fact that we did not fully complete the list of additional measures required to meet our targets for 2012.” “The choice we face is one of sacrifice or even greater sacrifice — on a scale that cannot be compared,” Venizelos added. Once all the demands have been fulfilled, the eurozone will give Greece the green light to start implementing a separate bond swap deal with banks and other private investors designed to slice some €100 billion ($132 billion) off Greece’s debt load. EU Commission President José Manuel Barroso on Friday offered hope a deal could still be struck. “I am confident that a solution will be reached next week as this is critically important for Greece and the Greek citizens first and foremost but also for the whole euro area,” he said during a visit to India. “I therefore call on the responsibility and the leadership of the Greek leaders and all members of the eurozone so that we can obtain this goal that is important for the euro area and indeed for the global economy.” France’s central bank chief Christian Noyer also urged Greece to accept the “reasonable and indispensable” austerity plan. “Greece needs to do what other countries are doing, countries that have been in difficulty but are completely in line with the recovery plans,” Noyer said on Europe-1 radio Friday. “Greece has to accept all of this.” But on the streets of Greece, the mood is grim, after two years of severe income losses, repeated tax hikes and retirement age increases that failed to signally improve the country’s finances. Unemployment is at a record high of 21 per cent — with more than a million people out of work — while the economy is in its fifth year of recession and is expected to contract up to 5 per cent in 2012. The country’s politicians have taken a lot of criticism for the situation, and polls show the majority Socialists, elected in a 2009 landslide are now languishing at around 8 per cent. A Greek Socialist lawmaker resigned his seat Friday to protest the new austerity, a day after the country’s deputy labour ministry stepped down from his position for the same reason. But the resignation of Pavlos Stasinos will not affect the party balance in Parliament, as he will be replaced by another Socialist deputy. “It is unacceptable that right now our politicians’ petty political and public relations manoeuvring should be leading the country to bankruptcy,” respected Kathimerini daily said in an editorial. “The country is tumbling towards a cliff-edge, and a tough European establishment is putting out the view that Greece cannot be saved and lacks credible politicians. Our politicians back that view with their carryings-on.” Ta Nea daily accused Greek politicians of “theatrics and shilly-shallying,” and urged lawmakers to back the new measures in the Parliamentary vote, tentatively planned for Sunday. “Nobody can happily back the painful agreement with the troika,” it said in an editorial. “But neither can anyone shoulder the burden of the consequences, if the agreement is not completed.”

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When The Poor Have Health Care Coverage, The Cost Goes Down For All

February 10, 2012

The concept of support for universal health care is taboo among Republicans who scrutinize the Affordable Care Act — dubbing it the “Job-Killing Health Care Law Act” — and call for its repeal. But a new UC Irvine study challenges the GOP argument that the health care law is too costly, with data illustrating that health care costs on the whole fall when poorer, uninsured patients are provided with insurance. “In a case study involving low-income people enrolled in a community-based health insurance program, we found that use of primary care increased but use of emergency services fell, and — over time — total health care costs declined,” David Neumark, a co-author of the study, said in a release accompanying the findings. The study — which focused on uninsured people in Richmond, Virginia who fell 200 percent below the poverty line — found that over three years, health care costs fell by almost 50 percent per participant, from $8,899 in the first year to $4,569 in the third after they received insurance. Participants who enrolled in health coverage made fewer trips to the emergency room, which are notorious for running up patient bills. Instead, insured participants went for more primary care visits. “A lot of the debate about health care reform surrounds the issue of whether we’re setting up something that’s going to cost us more by increasing use of medical services or something that will cut costs through more appropriate and timely use of medical services,” Neumark said in the release. “[O]ver time, costs can be reduced through increased use of primary care and reductions in emergency-department visits and hospital admissions, but it may take several years of coverage for substantive savings to occur.” Health care spending in the U.S. has been on the rise for years. Americans spent more than three times on health care in 2008 than they spent in the 18 years before, according to a Kaiser report. Low-income, uninsured individuals tend to rack up exorbitant health-care bills because they often rely on emergency room visits instead of primary care. In the long run, these bills are paid by taxpayers. The Affordable Care Act “is set to extend Medicaid benefits to about 16 million uninsured, low-income adults and children by the end of 2014,” according to the study. In an extreme example of the societal cost of leaving some uninsured, New Yorker writer Malcolm Gladwell once chronicled the medical costs of a homeless man in Nevada who “used more health-care dollars, after all, than almost anyone in the state.” “It would probably have been cheaper to give him a full-time nurse and his own apartment,” Gladwell wrote. Mandatory health care already saw some success in Massachusetts last decade, when current GOP presidential candidate and then-Massachusetts governor Mitt Romney signed a health care law that inspired the Affordable Care Act. Today, Massachusetts has the highest percentage of insured residents of any state . Though he initially supported the plan, Romney’s rival, GOP candidate Newt Gingrich, continues to slam Romney for enacting the health care law. “Your plan essentially is one more big-government, bureaucratic high-cost system.” Gingrich said . Gingrich’s views are reflective of a majority of Americans who say they are in favor of repealing the health care law. A repeal of the act could potentially add “at least a trillion dollars to the deficit,” according to HealthCare.gov .

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Weil: A Trader Has To Be ‘A Total Numbskull’ To Get Caught

February 10, 2012

The guilty pleas last week by two former Credit Suisse Group (CS) traders, on charges of falsifying their company’s asset values, revive an age-old question: How dumb do you have to be to get criminally convicted for a fraud you committed while working at a bank deemed too big to fail?

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The Woman Some Are Dubbing ‘The Female Barack Obama’

February 10, 2012

By Tim Reid and Aruna Viswanatha Feb 9 (Reuters) – California Attorney General Kamala Harris, a veteran prosecutor with acute political instincts and a reputation for thick skin, gambled big in the settlement negotiations with banks over illegal foreclosures. It’s a gamble that appears to have paid off spectacularly. Harris, whose state has been one of the hardest hit by the U.S. foreclosure crisis, pulled out of talks with the banks last September, saying what they were offering was grossly insufficient. At the time, her office said on Thursday, California was being offered between $2 billion and $4 billion. The gambit carried significant risks. California is a non-judicial foreclosure state, meaning foreclosures can happen outside the court system. Thus there are no court files filled with the notorious “robo-signed” documents, leaving Harris with less leverage than other states in negotiating with the banks. Yet on Thursday, Harris held a press conference in Los Angeles to herald a deal that looks exceptionally favorable to California. Out of the $40 billion in total benefits that are expected to flow from the $25 billion settlement that the banks agreed to pay, California is set to emerge with some $18 billion. Harris wrung a commitment from the banks to reduce loans to distressed homeowners by $9 billion, and to provide $3 billion to assist short sales. Another $6 billion will fund restitution and anti-blight programs, among other things. There are also enforcement and penalty provisions unique to California that Harris said will make sure the banks comply with the terms of the settlement. Harris’ hardball tactics reflect a woman who has prospered in the rough and tumble politics of the Golden State. Born in Oakland, California, she is the daughter of a Tamil mother, a breast cancer specialist who emigrated to the United States in 1960, and a Jamaican American father, a Stanford University economic professor. Her parents divorced when she was a toddler and her mother raised Harris and her sister to be proud African Americans during the tumult of the Civil Rights era. By virtue of her gender and her parentage, Harris is the first female, the first African American and the first Asian American attorney general in California, and the first Tamil American attorney general in the United States. A career prosecutor, she was elected district attorney of San Francisco in 2003 after defeating two-term incumbent Terence Hall. She was re-elected unopposed in 2007. Convictions in San Francisco increased sharply during her tenure. But her unshakeable opposition to the death penalty led to a bitter stand-off with the city’s police department when, just four months into the job, a police officer was gunned down and killed by a gang member and Harris declined to seek the death penalty. She also came under fire when a scandal engulfed the San Francisco crime lab, resulting in the mass dismissal of drug cases. Yet she remained a highly appealing political figure, dubbed “the female Barack Obama” by some wags. In 2010, she prevailed over a weak field to win the Democratic nomination for attorney general, and then barely edged her Republican rival, Los Angeles district attorney Steve Cooley, in the general election. Harris is widely considered to be a likely future candidate for higher office; if the mortgage settlement proceeds as planned, it could ultimately help more than just the troubled homeowners. (Reporting By Tim Reid and Aruna Viswanatha; Editing by Jonathan Weber and Richard Chang)

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The Story Of Obama’s Brush With Political Disaster

February 10, 2012

Shortly after four o’clock on the afternoon of Wednesday, April 13, 2011, U.S. Treasury Secretary Tim Geithner walked down the hallway near his office toward a large conference room facing the building’s interior. He was accompanied by a retinue of counselors and aides. When they arrived in the room — known around Treasury simply as “the large” — four people were seated at a long walnut table on the side near the door. Geithner and his entourage greeted them, then walked around to the far side and took their seats.

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Lehman Brothers Suing Citi Over Huge Account

February 10, 2012

NEW YORK — Lehman Brothers Holdings Inc. and its creditors are suing several units of Citigroup Inc. to recover $2.5 billion the failed investment bank transferred to a backup account at Citi months before seeking bankruptcy court protection. In the complaint filed on Wednesday with the U.S. Bankruptcy Court for the Southern District of New York, Lehman claims that Citibank is wrongfully withholding the money as a potential source of funds in a dispute over derivative contracts. Lehman also is asking the court to disallow what it says are $2 billion of “inflated and legally unsupported” claims that Citibank has asserted against it. In a statement Thursday, Citigroup vowed to defend itself and its right to recover losses from Lehman’s collapse. It called the lawsuit unjustified and accused Lehman of trying to renege on its obligations and claw back assets to which it has no right. According to the lawsuit, Citi demanded on June 12, 2008, that Lehman transfer between $3 billion to $5 billion into an account to cover potential overdrafts by Lehman subsidiaries that were using Citi’s clearing and settlement services. Lehman agreed that same day to set aside $2 billion from its account at Citibank into a segregated account, on the condition that the bank would have no lien or other rights to the funds. In its statement, Citi said that it tried to help Lehman prior to its bankruptcy filing, but needed to obtain the guarantees and cash deposits from Lehman in order to protect its shareholders from potential losses. Lehman claims that by holding on to the $2 billion, Citibank is violating the U.S. bankruptcy code, state law and going against the conditions both agreed to when the funds were set aside. In addition, Lehman asserts that Citibank has refused to return another $500 million in cash that was transferred into its broker-dealer subsidiary just hours before Lehman filed for bankruptcy protection. Lehman’s bankruptcy filing in September 2008 was the biggest in U.S. history and triggered more than 75 separate bankruptcy proceedings. The company listed more than $600 billion in debts when it filed. Lehman Brothers Holdings is the company that controls what’s left of the investment bank’s assets. Citigroup shares ended regular trading down 57 cents to $33.66 on Thursday. The stock slipped another 8 cents to $33.58 in extended trading.

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U.S. Clamps Down On ‘Sex In The City’ Counterfeit Perfumes

February 10, 2012

The ladies of “Sex and the City” are still cool enough for China’s massive counterfeit market. Counterfeit perfume seizures by the U.S. Customs and Border Protection surged in the United States last year, jumping 471 percent to a total value of $9.4 million. And of all perfumes seized, the one most often found was called “Sex in the City,” a counterfeit variation on the HBO trademark. The surge in fake fragrance raids was the result of new partnerships between U.S. Customs and Border Protection and American companies like HBO trying to protect their trademarks, the agency said in a report . “The collaborative effort that we’ve had with Customs have been incredibly effective and we’ve been happy with the results,” said HBO spokesman Jeff Cusson of the seizures. U.S. fragrance companies have turned to law enforcement for help in battling counterfeits after nearly a decade of weak sales, which dropped 20 percent between 2005 and 2010, according to Euromonitor International , a market research group. While the recession is partially responsible, the groups says, top-level brands may no longer hold the same weight over imitations that they once did. “Fragrances have lost their mystique and become less ‘special’ and commoditised,” Euromonitor wrote in a May 2011 report . “With over a hundred new fragrance launches a year, the glut of fragrances in the marketplace has also created consumer confusion.” Or perhaps Americans are simply no longer willing to pay $100 for designer fragrances when cheap versions abound. The “Sex in the City” fake, for example, is sold all over the Internet for less than $10. Versions like Lust, Kiss, Love and Dream are currently available on Amazon.com , Overstock.com and many other beauty sites. Three of the four countries most often responsible for counterfeit perfumes seized in 2011 are located in Asia — China, India and Hong Kong — but the perfumes also often originated from Germany, according to Customs seizure data. Most fans of the fragrance likely don’t know that the “Sex in the City” perfume is a fake at all, especially since the HBO-approved scent was only

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Seven And A Half Things To Know: Income Gap, Whining Wall Street, Charlie Bit The Interwebs

February 10, 2012

Eight days a week are not enough to show I care, but seven and a half things are all you need to know today. Here they are: Thing One: Income Inequality Feeds Itself: There’s an old saying that you’ve got to have money to make money. It typically means you’ve got to be able to blow some money in order to win big jackpots. But The New York Times today reports on a particularly pernicious aspect of the old adage, pointing out that the children of the wealthy are doing increasingly better in school than their underprivileged counterparts, increasing the chances that they will make even more money later in life. The income gap is creating its own fuel to keep growing, in other words. “Education was historically considered a great equalizer in American society, capable of lifting less advantaged children and improving their chances for success as adults,” writes Sabrina Tavernise. “But a body of recently published scholarship suggests that the achievement gap between rich and poor children is widening, a development that threatens to dilute education’s leveling effects.” Thing Two: Wait, Wait, We Really Don’t Like The Volcker Rule: Goldman Sachs CFO David Viniar raised some eyebrows this week when he suggested Goldman could actually make more money because of the scourge of Wall Street, the Volcker Rule, which forbids banks from taking their own money to Atlantic City and play the slots. Now Goldman is downplaying those comments, reports Politico’s Ben White , who says the bank plans to unveil a 50-page screed against the rule on Monday, explaining why it murders capitalism, turns your teeth yellow and makes puppies cry. Thing Three: Barclays Warning: Yesterday it was Credit Suisse, today it’s Barclays: The banking sector’s pain is international. The British bank today reported its worst quarterly results in three years and warned it might miss its target for a key profitability measure. The reason, as it was for Credit Suisse, is the ongoing euro-zone debt crisis, and not Dodd-Frank or the Volcker Rule, as Matt Taibbi discusses in his new piece, ” Why Wall Street Should Stop Whining .” Thing Four: Bachus In Focus: The independent Office of Congressional Ethics is investigating whether Rep. Spencer Bachus (R-Ala.), chairman of the House Financial Services Committee, violated insider trading laws, the Washington Post reports . This comes as the House has just passed a new law gently reining in lawmakers’ ability to trade on inside information. Bachus told the Post he is cooperating with the OCE. Thing Five: Still Waiting For Greece: European stocks and US stock futures are falling this morning because of — wait for it, this will shock you — Greece. Yes, we’re still waiting for a resolution to the latest round of never-ending Greek debt talks. Euro-zone finance ministers withheld a new loan to Greece yesterday, preferring to wait for the results of weekend votes in Greek parliament on new austerity measures, while Germany wagged a wienerschnitzel disapprovingly in Greece’s direction. It seems Greece is not meeting its budget targets! That tends to happen when your economy is dead in the water, which tends to happen when you pass round after round of austerity measures, causing your populace to constantly go on strike . Rinse, repeat, default already. Thing Six: Mind the Trade Gap: At 8:30 a.m. Eastern time, the Commerce Department is due to report on the international trade balance in December. Economists, on average, think the trade gap widened a bit, to $48 billion, from a wider-than-expected $47.8 billion in November. A bigger trade gap sends mixed signals on growth. If we’re buying more imported stuff, then that means consumers might be feeling a little friskier. But a wider trade gap also subtracts from gross domestic product, for whatever that’s worth. Update: The gap was a bit wider than expected , at $48.8 billion. Thing Seven: Consumer Temperature Read: At 10:00 a.m. ET, Reuters and the University of Michigan release their preliminary consumer sentiment reading for February. Economists think the sentiment index rose to 74 from 75 in January. But given the recent rally in the stock market and better approval ratings for President Obama’s handling of the economy lately, economists might be under-estimating consumer sentiment. Anyway, what’s more important is what consumers do, rather than how they feel. Thing Seven And a Half: Charlie Bit The Interwebs: Back when J.C.R. Linklider was dreaming of an “Intergalactic Computer Network” in the 1960s and developing ARPANET, the precursor to the series of tubes that has delivered this post to your eyes, he probably could not have imagined that the most successful product of his great vision would be a video of one kid biting another kid’s finger . But so it goes. The New York Times does a deep dive on the now-famous family that produced the video, which has been seen nearly 418 million times, and asks the question: What makes a video go viral?

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The States Where Companies Are Hiring

February 10, 2012

From 24/7 Wall St.: Companies across the country are hiring more workers, at least if you ask their employees. In 2011, 31 percent of U.S. workers reported that their employers were hiring, according to Gallup’s Job Creation Index . Only 18 percent said that their employers were laying workers off. Of course, residents of some states report much higher rates of job creation than others. 24/7 Wall St. reviewed the Gallup Index, as well as a number of other economic indicators, and identified the eight states where residents think companies are hiring most. Read The Eight States Where Companies Are Hiring To develop the Job Creation Index, Gallup asked those surveyed whether companies are hiring or letting employees go. While the national score reflects that most states believe employers are hiring, 24/7 Wall St.’s analysis suggests that self-reporting by workers may not perfectly align with reality. These states are not experiencing the greatest recoveries — including in employment — as they have little to recover from. The states’ strong economies may be affecting their residents’ perception of the economy. Five of the eight states on this list are among the top nine states on another recent Gallup poll ranking states’ confidence in the national economy. Those who live in states that are doing well see the entire country as doing well. The majority of states where high percentages of workers reported job creation also have extremely low unemployment rates to begin with. Six of the eight states have among the 10 lowest unemployment rates in the country. North Dakota, the state where the largest share of workers reported that their employers are hiring, has the lowest unemployment rate in the country. And while unemployment rates are low, the majority of these states have had relatively low unemployment rates for some time. Most did not have particularly impressive improvements in unemployment last year. Other than Utah and West Virginia — the only states with exceptionally large drops in unemployment — the rest have had low unemployment rates since 2006 and throughout the recession. Housing markets in most of the states where respondents believe jobs are plentiful also have been stable. Seven of the eight states on the list are among the 15 markets that suffered the least from the third quarter of 2006 to the third quarter of 2011. Five of the states actually experienced increases in home prices over this period. These are the eight states where workers say companies are hiring, according to 24/7 Wall St. :

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Another Big Bank Slashes Its Bonus Pool

February 10, 2012

LONDON — Barclays PLC revealed Friday that it is slashing its bonus pool after earnings at its investment banking division fell sharply and dented overall profitability. The bank said it was taking the action as it reported that its profit after taxes fell 15 percent last year to 3 billion pounds ($4.8 billion) from 3.56 billion pounds the year before even though income rose 2.6 percent to 33 billion pounds. Much of the profit decline was due to a 32 percent fall in pretax profit at the Barclays Capital investment banking unit to 2.97 billion pounds. The bank said the average bonus for Barclays Capital employees will be 64,000 pounds ($101,000), down 30 percent from 2010. The total bonus pool was cut by 25 percent and the average bonus per employee will be 21 percent lower at 15,200 pounds. “We need to balance remaining competitive with being responsive to the public mood,” Chief Executive Bob Diamond told reporters after the publication of the results. Bonuses are a highly sensitive political issue in Britain, particularly at Royal Bank of Scotland and Lloyds Banking Group which were bailed out by taxpayers. Lloyds chief executive Antonio Horta-Osorio and RBS CEO Stephen Hester have both waived their bonuses, though Hester did so only after coming under intense political pressure. Barclays said bonuses for executive directors and the eight highest paid senior executive officers would be down 48 versus 2010 on a like-for-like basis. Diamond received a bonus in shares worth 1.8 million pounds last year. Barclays said no one would get a cash bonus of more than 65,000 pounds. A more detailed look at the results show that the bank’s adjusted pretax profit of 5.6 billion pounds fell short of the consensus forecast of 5.8 billion pounds. After initially opening lower, Barclays shares in London were trading 2.9 percent higher after an hour of trading. Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers, said the initial sell-off appeared to respond to the disappointing top line results and that the upturn fed on more positive news within the earnings report. Hunter noted a 48 percent gain in pretax profit in the retail and business banking, a return to profit in the corporate division, a 9 percent hike in the dividend to 6 pence and a “sturdy” Tier 1 capital ratio of 11 percent. Barclays shares are now at their highest level since July. A year ago they were trading at about 330 pence but fell as low as 139 pence in September.

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David Kiley: The Great Debate Over Chrysler’s Super Bowl Ad

February 10, 2012

When I saw Chrysler’s Super Bowl ad at halftime on Feb. 5, I emailed the executive who conceived it, Chrysler marketing chief Olivier Francois, and told him I didn’t like it so much. It was my first viewing of the ad, and thus my initial reaction from the gut. I thought it was too dark. Unlike last year’s Eminem Super Bowl ad, I thought it didn’t do enough to lift Detroit or Chrysler — and wasn’t that the point? But after watching the video perhaps 10 times since that initial viewing, I have warmed to the ad, and recognized that my initial reaction seems to be in the minority. I’ve also come to think my response was tainted by all the election year claptrap and hogwash I watch and listen to on cable TV and satellite radio on a daily basis. Driven by the sharp reactions to the ad communicated via Twitter and in post-game interviews from political pundits and power-brokers like GOP fundraiser and former Bush Administration official Karl Rove , the media seized on the fact that the ad seemed to feature working-class folks from a Midwestern industrial town and the ad copy seemed to be right out of an Obama campaign speechwriter’s notebook, extolling the virtues of the auto industry bailout. The charge that Chrysler was somehow sending an early Valentine to the Obama campaign as thanks for the 44th president green-lighting the federal bailout of Chrysler in 2009 started to take shape on the airwaves. I initially thought the ad was a clever piece of marketing Jiu Jitsu, designed to create maximum buzz and chatter for the Chrysler after the game. Casting well-known Republican libertarian-cum-bailout criticizer Clint Eastwood was supposed to inoculate Chrysler from the pro-Obama charge. How could it be, I asked myself, that all these smart people at Chrysler and the ad agency Wieden & Kennedy had no clue their commercial would be seen through a political lens, especially just a couple weeks before the Michigan GOP primary? Even the line, “It’s Halftime in America,” made me think immediately of Ronald Reagan’s “Its Morning Again in America” spot — and that it’s coming up to “halftime in the Obama two-term presidency.” Francois says a possible political interpretation of the ad never come up in conversations during the two months of its development. He also says “creating buzz and chatter was never even part of the consideration.” Should we believe this very clever, intelligent, French-born executive heading both Fiat and Chrysler’s global marketing? No buzz intended? Olivier says the ad’s aim was to offer a logical sequel to last year’s Eminem ad, which ushered in the “Imported From Detroit” tagline as a slogan for the Chrysler brand. That line, repeated in this year’s ad, is now being used as an umbrella theme for all the company’s brands, including Dodge, Jeep, Ram and Mopar. “We are trying to shine a light on the values we hold in Detroit, values that we are trying to embrace for Chrysler and the values we think our customers identify with,” Francois said. “I know I am French and come from an Italian company, but I feel very much like I am gaining cultural citizenship in America, if not legal citizenship. And our team, which is led by Sergio Marchionne, is very serious about communicating what we think is great about this place and these people to the rest of the country.” Francois said Marchionne, the Fiat and Chrysler CEO, was intimately involved in the creation of this year’s ad, right down to writing and editing copy. Chrysler brand marketing chief Saad Shehab also had a hand in its writing and editing. And Clint Eastwood also had a lot to do with shaping the ad, choosing locations and writing copy. Eastwood was surprised Republican critics and Obama supporters felt that the ad was “pro-Obama.” But Eastwood’s spoken lines tee up, like it or not, an inevitable political discussion that will take place this month in advance of the Michigan GOP primary and into the fall, especially if Michigan native Mitt Romney goes on to face off against President Obama in the general election. Was the bailout the right thing to do? Was it money well spent? Was it fair to industries and companies that did not get bailed out? Was it too generous to the unions? The key lines: “[The people of Detroit] almost lost everything. But we all pulled together. Now, the Motor City is fighting again … but after those trials, we all rallied around what was right, and acted as one, because that’s what we do. We find a way through tough times. And if we can’t find a way, then we make one … how do we come from behind … how do we come together, and how do we win … it’s halftime, America, and our second half is about to begin.” The vast majority of Republicans, including all the current presidential candidates, were against the government-assisted bailout of General Motors and Chrysler. They believed the companies should have been allowed to go into bankruptcy court without aid from Uncle Sam, so that creditors could just pick over the companies, buy or be granted what they thought was valuable — Chevy, Jeep, Ram truck, Cadillac, real estate, etc. — and liquidate the rest. But amid the meltdown of the financial sector, there was no financing for an organized bankruptcy that would have allowed the companies to come out as whole at the end of the process, meaning it would have been a liquidation free-for-all. And as private equity companies usually do, there would have been a fire-sale of assets, followed by an inevitable move to get as much headcount and production out of Michigan and into Southern states and Mexico — as far away from the stronghold of the United Auto Workers as possible. The reason Southeast Michigan is clawing its way back is because hiring is happening. GM is the biggest automaker in the world again, and making billions. Chrysler is in the black and posting solid progress. Ford is making billions. Suppliers are bouncing back financially. The companies did not close or move away. GM and Chrysler have made substantial investments in the city and surrounding suburbs. Communities are still fighting to get back to par, but they haven’t been destroyed. The sentiments and words in Chrysler’s ad reflect the way the automaker’s executives and Eastwood feel about the values they find in the working people who design, engineer, market and sell the vehicles produced by the company. Their words also seem to support the idea that high-value manufacturing, such as automobiles, is an important industry to protect and nurture in the U.S. Those values and thoughts also happen to be shared by Obama’s administration, and they are a cornerstone of his campaign rhetoric and prose as president. It all seems to be a right-cross to the jaws of the GOP presidential candidates and the establishment conservatives who both opposed the auto bailout and regularly express disdain for the UAW. All on the biggest TV day of the year with over 100 million people watching. So it’s not difficult for many people to think the content and timing of Chrysler’s commercial could have been planned and calculated to maximize buzz, the currency on which most successful ads trade these days (no matter what Francois says he was looking for). The Chrysler executives and Eastwood say these political themes some of us think we saw were not in their minds or conversations. They sought to make an ad, they say, that simply touched and engaged everyone, not one party or another. Late Thursday, four days after the game, there were 5.8 million YouTube views of the ad. A cursory patrol of comments left by real people — not pundits or members of the media — shows those of us in the media are, indeed, in the minority of those who found it possibly pro-Democrat or pro-Obama. We won’t see the ad on TV again, says Olivier. Unlike last year’s Eminem ad, it won’t be shown in shorter versions for normal ad break. It was meant as a one-time-only event. My guess is that it will be remembered and talked about for at least a few days more. Then the YouTube hits will slow down, and we will move on to other topics. But the ad — intentionally or not — meshes well with the Obama message for the Midwest and especially Michigan. So it wouldn’t surprise me if we see the ad pointed to by the president and Democrats for months to come as a reminder of the grit, determination and values of Detroiters and Southeast Michiganders — and of just who kept the Michigan economy from falling of a cliff.

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