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The Biggest Cities Running Out Of Government Workers

June 19, 2011

The drumbeat of negative economic news has continued at an alarming rate. For residents of some regions in the U.S., the noise is even louder. These are the areas where the already tottering recovery is faltering even more than most. Many, such as Detroit, were caught in the downturn of the auto industry. Others, including Miami, were decimated by the decline in the real estate market. These are weaknesses that are difficult though not impossible to overcome.

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Target Workers Reject Unionization

June 18, 2011

NEW YORK — Workers at a Target store in New York voted against joining the country’s largest retail union Friday night, but the union said it would press on and broaden its push to represent the company’s workers nationwide. The United Food and Commercial Workers Union Local 1500 also said it would contest the results and ask the federal government to order a new election, alleging that Target illegally intimidated workers. Target denied the union’s allegations. Both sides said the workers at Target’s Valley Stream store voted 137-85 against unionization. A “yes” vote would have made the store the first of the company’s 1,700 locations to bring in organized labor. “Target did everything they could to deny these workers a chance at the American Dream,” said Bruce W. Both, president of United and Commercial Workers Union Local 1500, in a statement. “However, the workers’ pursuit of a better life and the ability to house and feed their families is proving more powerful. These workers are not backing down from this fight. They are demanding another election.” Target spokeswoman Molly Snyder said the company acted legally. “Target absolutely believes we have followed all the policies and procedures that are outlined by the National Labor Relations Board in a completely lawful manner,” Snyder said. In response to the vote, the union planned to begin a campaign called “Target: Democracy” at the company’s other 26 stores in the New York area and will begin coordinating a nationwide campaign with other union locals in major U.S. cities. “Today is merely the end of the first round of what will undoubtedly be a 12-round fight for fairness, democracy, justice and change for all Target workers,” Both said. Since two-dozen workers from the Valley Stream store approached the union with their grievances regarding hours and pay in February, Target employees from around the country have been reaching out to the labor organization, according to Patrick Purcell, spokesman for the UFCW. The union consists of mostly grocery workers, but also represents employees at retailers that include clothier H&M. The vote comes at a time when union membership in the retail industry has waned. In 1983, 1.2 million retail workers were union members. Today, that number is 703,000, with more than half of those workers in grocery stores, according to the Retail, Wholesale and Department Store Union. At the same time, the quality of retail jobs has fallen. The median hourly wage for retail salespeople has dropped 3 percent since 2006 after adjusting for inflation. And shrinking hours for many workers make it hard to earn a living wage or qualify for benefits. “Workers are seeing their hours getting cut and their take-home pay, while basic costs for gas and food are soaring,” says Burt Flickinger III, president of retail consultancy Strategic Resource Group. “They’re increasingly frustrated.” Workers at the store in Valley Stream are upset about hourly wage increases amounting to eight cents or less, says Patrick Purcell, the union spokesman. Some employees also say their hours have been cut from 30 per week to fewer than 10. Part-timers must bank at least 20 hours a week, on average, to qualify for benefits. A Target spokeswoman says hourly workers at the Valley Stream store average 24 hours a week. Charmain Brown, who’s worked at Target for six years, supports the effort to organize. “I feel like if we get a union it would be better because we’d have a voice, somebody to stand up for us,” he says. Betsy Wilson, a single mom of two who works about 21 hours a week at Target, disagrees. “What do I need a union to fight for me for?” she says. Other retail workers also are putting up a fight. A new group called the Organization United for Respect at Wal-Mart, partly funded by the UFCW, coordinated a small protest at the company’s Bentonville, Ark., headquarters Thursday. And a union representing 4,000 Macy’s workers in New York, including those at the flagship store, authorized a strike on Monday when the department store tried to get concessions on wages, benefits and hours. A tentative agreement was reached on Thursday. “We haven’t seen such unrest in organized labor (in the retail sector) since the 1970s,” Flickinger says. Much of that unrest has been focused on Target’s competitor, Wal-Mart Stores Inc. Over the past decade, the UFCW has failed several times to unionize Wal-Mart stores. In 2004, the company shuttered a Canadian store after it became the first in North America to win union certification. In 2000, 11 workers in the meatpacking department at a store in Jacksonville, Tex., voted to join the UFCW. Soon after, Wal-Mart began stocking only pre-wrapped meats, effectively eliminating the positions. Don Schroeder, a Mintz Levin labor attorney who has represented corporations in similar battles for 18 years, said Target has been successful at defeating union election petitions in the past, even in union strongholds like Detroit. Unions generally don’t file a petition unless they feel they have the vote firmed up, but with a high-profile company like Target, he says, labor may be willing to take a chance. “They know if they win one, it could be a domino effect,” he says. ___ AP Retail Writer Anne D’Innocenzio in New York contributed to this report.

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South Carolina Republican: Obama, Labor Board Engaged In ‘Regional Warfare’

June 17, 2011

WASHINGTON — Republicans escalated their attacks on the federal labor board under Obama Friday afternoon, as House Oversight Committee Chairman Darrell Issa (R-Calif.) called a special field session in South Carolina to probe a recent complaint brought by the labor board’s acting general counsel against the Boeing Company. Issa took the unusual step of urging the National Labor Relations Board (NLRB) general counsel, Lafe Solomon, to appear before the committee to answer questions regarding a case that he’s currently in the midst of litigating. “I am here reluctantly,” Solomon said under questioning from Issa, “not because I have anything to provide but because I have a lot to protect.” While Solomon appeared before the committee voluntarily, he mostly dodged Republicans’ heated questions about his complaint against Boeing , saying he didn’t want to jeopardize his case. The toughest inquiry came from Rep. Trey Gowdy (R-S.C.), who effectively accused the Obama administration and the labor board of having a grudge against the South. “This administration is no longer content with class warfare,” Gowdy charged. “It’s going to inject regional warfare.” A spokesman for Gowdy could not immediately be reached for comment. In a complaint filed in April, Solomon alleged that Boeing violated labor law when it moved to establish a production line for its 787 Dreamliner in South Carolina. The company, Solomon said, was retaliating against its unionized workers in Washington state for having exercised their legally protected right to strike in the past. The complaint could potentially scuttle the aerospace manufacturer’s plans in South Carolina and force the company to bring the assembly line to Washington. Along with his Democratic defenders, Solomon, who functions as a prosecutor for the quasi-judicial labor board, has said he brought the complaint only because he has a responsibility to enforce labor law. Although Solomon and many law scholars have said there is nothing unique about the complaint, over the last few months Republicans have held it up as proof that the labor board and the Obama administration have a pro-union agenda and an axe to grind with right-to-work states. Such states, which tend to be in the South and West, prohibit laws that make union membership a condition of working for particular companies. Republican leadership chose to locate the special hearing in North Charleston, S.C., the community most impacted if the production line ends up going to Washington state. The hearing was dramatically entitled “Unionization Through Regulation: The NLRB’s Holding Pattern on Free Enterprise,” an indication that Republicans are eager to turn the Boeing case into an ideological battle as well as a campaign issue. A host of Washington lawmakers, including four Democrats, traveled to South Carolina for the hearing. Among those who testified were South Carolina Gov. Nikki Haley (R), South Carolina Attorney General Alan Wilson, and Cynthia Ramaker, an employee at the local Boeing plant, who testified that “thousands of people will be unemployed if the NLRB complaint is successful.” But on Friday Solomon said that he filed the complaint reluctantly, only after he was unable to bring Boeing and the International Association of Machinists and Aerospace Workers to an agreement. He said that three months of negotiations ultimately proved fruitless. “Workers in North Charleston are feeling vulnerable and anxious because they are uncertain as to what impact any final decision may have on their employment with Boeing,” testified Solomon, a career NLRB lawyer. “These are difficult economic times, and I truly regret the anxiety this case has caused them and their families. The issuance of the complaint was not intended to harm the workers of South Carolina, but rather, to protect the rights of workers, regardless of where they are employed.” Republicans have used the Boeing controversy to paint the president and fellow Democrats as job killers — a point of attack they continued on Friday. Rep. Joe Wilson (R-S.C.) called Solomon’s complaint “an unprecedented expansion of big government determining where companies can locate,” and “an assault on Boeing which kills jobs.” Striking a similar note, Haley accused both the labor board and the Obama administration of encouraging employers to send jobs overseas. “The reason [Boeing] came to South Carolina is the cost of doing business is low,” Haley said. “As governor, my job is to do whatever I can to create jobs. I never thought the president and his appointees would be one of the biggest opponents we would have.” But Julius Getman, a law professor at the University of Texas, testified that Solomon’s complaint was “fairly routine” and had been greatly politicized. “This is not by any means an earth-shaking case,” he said. “It’s a traditional case which should be decided in accordance with principles of law that are over 50 years old.” The case against Boeing got underway before an administrative law judge in Seattle earlier this week. If the parties still don’t manage to settle, the five-member labor board will ultimately decide whether Boeing broke labor law by establishing its production line in South Carolina. The case will mostly likely last several weeks and can then be appealed. Solomon said Friday that he would like to avoid long and costly litigation. Rep. Bruce Braley (D-Iowa), who attended the hearing Friday, told HuffPost afterwards that the “circus-like” proceedings amounted to little more than “political theater” meant to stoke the Republican base and donors. Braley also bristled at the idea of lawmakers compelling Solomon to testify on a case that just got underway this week. “It’s the same thing we saw under the Bush administration: Lawyers who forgot what they learned in law school, who forgot what due process is,” Braley said. “They don’t care because they’re all about doing this for political purposes.”

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Blair Mountain: Protesters March to Save Historic Battlefield

June 11, 2011

A week long protest calling for the preservation of West Virginia’s Blair Mountain has rehashed conflicts within a coal mining community torn between the need for profits and the desire to preserve the past. The protest, arranged by environmental activist group Appalachia Rising, aims to preserve Blair Mountain, strengthen labor rights, end mountaintop removal mining and invest in sustainable job creation in the Appalachian region. It included a five-day trek that emulated the 1921 march of 10,000 people from Marmet to Blair, an event that ultimately led to a battle over miners’ inability to join labor unions. Over 300 people participated in this year’s march, which spanned a distance of over 50 miles. More than 1,500 people are expected to ascend Blair Mountain on Saturday for the culmination of the protest. Notable guests expected to attend include environmentalist Robert F. Kennedy Jr., actress Ashley Judd, author Denise Giardina and singers Emmylou Harris and Kathy Mattea. While environmentalists, historians and union supporters are calling for the preservation of the mountain because of its historical significance, groups like the West Virginia Coal Association and Alpha Natural Resources are adamant in their desire to mine the area around Blair. “What good is a mountain just to have a mountain?” asked Jason Bostic, vice president of the WVCA. “It’s steep and rugged terrain, and I don’t know a lot of tourists who would visit. Would it be better to implement measures protecting the space, or to harvest artifacts from Blair Mountain — which is private property, by the way — and put those in a proper setting like a museum where descendants of those involved can go to understand what truly happened?” Blair Mountain is a symbolically important site. Ninety years ago, it was the site of what is now known as the Battle of Blair Mountain , where 10,000 coal miners fought mine operators for the right to form a union in what was the largest armed uprising in the U.S. since the Civil War. Hundreds of miners and scores of soldiers in the private militias hired by the coal companies were killed in a battle many consider to be one of the primary catalysts for America’s early 20th century labor movement. The mountain was added to the National Register of Historic Places in March 2009, but was delisted December of that year because of protests from coal operators who wanted to mine the area. Since 1991, six mountaintop removal mining permits have been issued around Blair Mountain, protest organizers told HuffPost in May . No mining has yet occurred on the historic battlefield, but a site formerly owned by Massey Energy is now encroaching on it. Massey and its former chairman and CEO, Don Blankenship, had already developed a negative reputation within the coal mining community thanks to a number of violations, controversial work practices and accidents — most notably the Upper Big Branch mine explosion in April 2010 that killed 29 miners. Blankenship stepped down from his position in December of that year, and in January 2011, Alpha Natural Resources agreed to buy out the troubled company. The WVCA, which counts Alpha Natural Resources as a member, opposes this week’s protests but has no plans to actively counter-protest, according to Bostic. “We’re not in the confrontation business,” he said, noting that his organization’s concern was for the workers and the communities surrounding the area where Blair Mountain is located. “The folks who are marching to save it and trying to help the people in the communities surrounding Blair aren’t from there, and that’s pretty damn offensive,” Bostic said. “But there’s other aspects of this, not the least of which is the social fabric of the mining communities. You take the mine away, and the social fabric deteriorates pretty quickly. If you save Blair Mountain you’ll watch the entire social and economic structure of that community dry up.” Unlike Alpha, the United Mine Workers of America — the largest labor union for coal miners and an organization that helped pioneer modern-day labor laws — opposes mining around Blair Mountain. This isn’t the first time the UMWA has disagreed with Alpha; earlier this year, the organization openly questioned Alpha’s choice to hire top-level Massey executives. The UMWA has filed legal briefs and contacted the National Register of Historic Places to support the protection of Blair Mountain. However, the organization chose to separate itself from this week’s events because participants are arguing for the elimination of mountaintop removal coal mining altogether. “With the work we’ve been doing from a legal standpoint, we believe we’re showing our support [for Blair Mountain],” said Paul Smith, director of communications for the UMWA. “Do we have to get out there and have a rally and a picket line every time we want to show our support? I’m not sure we need to do that. It’s important preserving Blair Mountain, but at the same time, the decisions aren’t going to be made walking down the side of a road. We want to be in the area where decisions are going to be made when it comes to preserving it.” Despite a lack of involvement from the UMWA, Smith noted that several local branches and individuals involved with the organization have chosen to support this event. Kenneth White of Cabin Creek, W.Va., is a retired former coal miner who has been a member of the UMWA for 42 years, 16 of which he spent working as a district representative for the union. Though White isn’t participating in the march, he has expressed his support for the event and the preservation of Blair Mountain because of its historical significance and meaning to all labor unions. “We shouldn’t have to fight to try and preserve history — that’s what’s irritating about it,” he said. “We’ve got to fight for everything we get, and everything we’ve gotten, it wasn’t just given to us. Somebody gave their blood for it.” “I think it’s sad [the coal companies] will put the dollar over history,” White added.

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Mike Lux: Our Economy’s Best Chance

June 6, 2011

The terrible wrongness of the Ryan budget plan combined with the strangest, craziest Republican presidential candidate field ever makes it rather obvious how important it is to get President Obama re-elected. To have extreme right Republicans (that seems to be pretty much all of them these days) control every branch of government would do even more damage now, as weakened economically as we are, than the 2003-2006 run they had with Bush and Congressional Republicans running everything — and think how ugly that was for the country. The good news is that Republicans are doing a very good job right now showing how bad they are, with this weak field of presidential hopefuls in all-out pander mode to the far right of their party, and the lockstep support for the Ryan budget showing how extreme they are — not just on Medicare but on a wide range of other major issues. And I feel good about many of the Obama team’s moves so far this cycle, especially creating Democratic unity around opposition to Ryan’s budget. However, as is obvious to pretty much everyone who follows politics at all (and probably a fair share of people who don’t), the continued problems with our economic trajectory is going to remain a serious problem dragging down the president’s re-election chances. Conventional economists and D.C. politicos, who generally focus on fiscal policy to the exclusion of just about everything else, feel stymied because they feel like the economy needs another fiscal stimulus package, and they know that is the exact opposite direction that House Republicans want to go. As a result, most people in Washington have pretty much given up on improving the economy between now and the 2012 election, and are devising strategies for Obama around running without the background of an improving economy. It is a very bad thing that Republicans, for all their lip service about jobs, don’t want to do anything to actually promote, and that their budget policies will force many more people to lose their jobs as well. But the ironic thing is that President Obama does not have to depend on Republicans to provide a major boost to the economy right now. What the president can do to boost the economy is to put his energies into restructuring and rebuilding the housing market. The fact is that the single biggest thing dragging the economy down right now is the housing sector, which is in terrible shape right now and continues to get worse. Home prices, already at lower levels than at the worst point in the housing crash of 2008-9, are dropping like a stone. Almost 30 percent of mortgage holders are underwater (what they owe on the house is more than what it is worth). Foreclosures are sky high for the foreseeable future. With middle-class families’ biggest financial asset by far being their house, and home prices low, while foreclosures are high, it means middle-class assets are being decimated. And with no one buying homes, it means no one is building homes either. With the housing sector as huge a part of the economy as it is, as long as these kinds of trends prevail, we are not going to make the economy work well for the broad middle class. But look at what could happen if we address this issue head on. SEIU did a report a few months back on the economic impact of shoring up the housing market, and it showed some pretty remarkable things. Here’s what I wrote when their report came out: … this report does a great job of laying out the numbers in stark detail. Bank robber Wee Willie Sutton famously said that the reason he robbed banks was because that was where the money was, and if we are looking to get our economy moving again, we should be looking to get the money to do it where the money is. Right now, more than ever, the Big Banks are where the money is concentrated. The most important fact by far in Big Banks Bonus Bonanza is this one: Right now, 11,000,000 American homeowners owe $766 billion more on their mortgages than their homes are worth, but if the banks were to write down those mortgage principals to market value and refinance them into 30-year, fixed-rate loans, you would get $73 billion pumped directly back into the economy — every year for the next 30 years. Now unlike extending tax cuts for the rich or reducing the estate tax, which tends to be saved and invested in long term bonds, this money would go directly into stimulating the economy and creating jobs. Think about who those 11,000,000 underwater homeowners are: They are almost entirely middle- and working-class families who have spent the last couple of years sweating bullets to save their main life investment after its value plummeted by 20 percent, 30 percent, or more. They haven’t been spending money on new products, they haven’t been taking any vacation trips with their families, if they own a little mom-and-pop business they sure haven’t been taking any risks to expand it: They have just been desperately scrimping and saving and trying to hang on by the skin of their teeth. But if their mortgage is reduced to what their house is actually worth in today’s market, that means their overall financial situation is far more stabilized, and it means their monthly mortgage payment will go down as well. With a stabilized debt and lower monthly mortgage payments, with the psychological weight of probable foreclosure off their shoulders, these middle-class homeowners (at least the ones with jobs, which is most of the folks who still have homes) are exactly the kind of people who will be likely to start spending a little money in this economy. Maybe they will finally buy the car they have been holding off on now for years. Maybe they will do a little home improvement now that they know they will be able to stay in their home. Maybe they will feel able to finally make the investment in their small business they have been wanting to make, and hire a few extra folks as a result. The economic multiplier effect of this $73 billion would be as good as any money injected into the economy right now. You want to know what the second most important fact in this report is? The $73 billion it would cost to write down those mortgages would be only half what the top six banks alone are getting ready to write in bonuses and compensation for 2010. If forced to write down these mortgages, the banks will scream bloody murder, even claiming it would endanger them and the entire economy. But all they have to do is cut their bonus and compensation packages, the vast majority of which go to top executives and traders, by 50 percent. Given all the cash these banks are sitting on, all the profits made and bonuses distributed in recent years, I have no doubt they can afford the hit. The ironic thing is that if they wrote down these mortgages, they would be getting monthly mortgage checks from all these homeowners, plus avoid the costs of all those foreclosure proceedings, but they don’t want to write down the property because of their own phony accounting that claims the properties are worth far more than they actually are. So here’s the other little nugget the report alludes to: If you injected $73 billion into the economy through these write downs, the multiplier effects I was referencing earlier — homeowners being able to free up cash to buy things and invest in small businesses and do home improvements — would mean 1.8 million new jobs. That is a lot of jobs, folks: enough to drop the unemployment rate from the almost 10 percent it has been sitting at for a very long time down to the mid 8s. And it would finally begin to stabilize the housing market, which would do a lot for the economy all by itself. The problem is this: you have to take on the biggest banks on Wall Street to clean up this mess. And let’s be clear: Congress would not be on the side of the administration if they did take on those banks. Even when Democrats controlled both Houses of Congress by wide margins, Sen. Dick Durbin famously commented that that banks “own the place,” and now of course it is far worse: the Republican chair of the banking committee told bankers that his mission was to serve them, and the entire party is doing everything it possibly can to slow Elizabeth Warren down in her efforts to help consumers. But with all their sound and fury on behalf of Wall Street, let’s be clear on one other thing: the Obama administration does not need the Congress to do anything on this issue. The executive branch proved conclusively during the financial crisis that when something is important enough to them, they can do what they need to do and get the bankers to play along. If the regulatory agencies, the Department of Justice, and the Treasury Department, along with state AGs like Eric Schneiderman who already are putting the heat on — these bankers would have to go along with writing down a very big number of underwater mortgages, and cleaning up their foreclosure servicing operations in general. With fiscal stimulus out of the question, nothing the Obama administration could do right now would do more to help this economy. This makes economic sense and political sense, but Tim Geithner continues to stand firmly in the way. He continues to tell members of Congress and consumer and labor advocates he privately meets with that his hands are tied, there is nothing he can do, but in fact there is plenty he could do, he just doesn’t want to. Geithner is convinced that if you harm the banks, you harm the American economy — and if you help the banks, you help it. And the banks, whose balance sheets look so much better because the Mark-To-Model accounting system they use allows them to value the housing assets they hold at some inflated rate they project in the future when they assume the housing market will suddenly be better than it was in 2006, are telling Geithner that if they are forced to write down these mortgages, their accounting will show they have lost money. God forbid their books show their assets at what they actually are worth, because then they won’t be able to pay executive bonuses at such a high level. Given the makeup of Congress, Obama has just one chance to dramatically improve the American economy before the 2012 election, and that is to move aggressively to revitalize the housing market. He’ll have to take on Wall Street to do it, and he’ll have to pick a fight with them and their Republican allies in Congress. It’s a political fight worth having, and most importantly it would put our economy on the right path by giving it the jumpstart it needs.

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Apple Leaves Facebook Out In The Cold

June 6, 2011

Apple has revamped the software that powers its iPhone, iPad and iPod touch to include, for the first time ever, a major integration with a social network — but not the one you might think. For the social media features in the new version of its iOS operating system, Apple, the world’s most valuable technology company, did not partner with Facebook, the world’s largest social networking site. Instead, the Cupertino company opted to team up with Twitter, a micro-blogging service that has around half as many members as Facebook and remains far from attaining its mainstream status. Twitter will be built in to iOS 5 and integrated across multiple Apple applications. By signing into Twitter just once, users will be able to instantly send tweets containing photos, videos, links and more. Experts suggest the Facebook snub stemmed from Apple’s desire to maintain control over the user experience and preserve its direct relationship with its customers, aims that clashed with Facebook’s own ambitions. As media companies, record labels and television studios know all too well, Apple wants to be the first point of contact for its users when they purchase a subscription, when they see an ad or when they browse for apps. The company has scrupulously maintained an iron grip over the entire experience consumers have with its products, whether at an Apple Store or in the App Store, which offers only applications that have been vetted by Apple. Just as Apple has expanded its reach onto music players, television sets and computers, so too has Facebook grown its own platform, spreading its presence throughout the Internet in order to serve as the connective tissue for consumers’ interactions online. The social networking site, once the online equivalent of the hard-copy Facebook directories given to college students, now serves as a hub for gaming, dating, sharing articles, renting videos, shopping, finding discounts and much more. “We haven’t seen the same antagonism between Apple and Facebook as we have between Google and Facebook, but I think there’s the same underlying concern about being at center of customers’ life and experience,” said Charles Golvin, an analyst with the research firm Forrester. “Facebook desires to be at the center of the consumer experience and while it will work with others, it wants the Facebook experience to be at the core.” Facebook already has its own plans to spread onto cellphones — and they don’t have to include Apple. Though Facebook has denied rumors it plans to build a “Facebook phone,” the social networking service has already been deeply integrated into smartphones such as the INQ Cloud Touch and Microsoft’s Windows Phone 7 smartphone operating system. And this may just be the beginning. Asked about Facebook’s ambitions in mobile, CEO Mark Zuckerberg has said that Facebook should serve as “a platform for making all of these apps more social,” offering “an extension of what we see happening on the web.” The lack of Facebook integration in iOS 5 may also stem from the social network’s close ties to Microsoft, an early investor in Facebook that has partnered with the site on everything from smartphones to search. Microsoft has made Facebook front and center on Windows Phone 7, syncing photos, status updates, contacts and more from the social network. “Microsoft is an investor in Facebook and Facebook is very deeply integrated into the Windows Phone operating system, so there may be contractual agreements there that would preclude integration with a competitor to Windows Phone,” said Ross Rubin, an analyst at NPD. At the same time, Facebook’s relationship with Apple has been far less cozy. Talks between the two companies to integrate Facebook into Ping, an iTunes-based social networking service, reportedly fell apart last year. Rubin also noted that Facebook “has not been supporting the iPad up to this point”—Facebook has yet to release an official iPad app, whereas Twitter has shown more consistent investment in developing for a range of Apple devices, with different versions of its app customized for the iPad , iPhone , and Mac . Analysts concur that the success of Apple’s iOS devices isn’t likely to be hampered by Facebook’s absence as an official partner. But there may be winners. Apple’s competitors, like Microsoft, have a way to instantly differentiate their products, and Twitter will likely get a major boost from Apple’s brand.

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You Will Need A Debt Recovery Solicitor To Deal With Business …

June 5, 2011

Article from PROPERTY INVESTOR LANDLORD and entitled You Will Need A Debt Recovery Solicitor To Deal With Business Oriented Debt – By Jo M Robinson.

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The Elusiveness Of Presidential Pardons

June 3, 2011

A 1975 felony conviction and three-year prison stint ended Randy Eugene Dyer’s career as a bad guy who imported drugs from Mexico and started his career as a God-fearing family man who ministers to prisoners. In 2004, after nearly 30 years jailhouse preaching, Dyer applied for a presidential pardon via the Office of the Pardon Attorney with much help from his wife, Karla Dyer. The application took them most of the year, she said, as they gathered more than 100 affidavits from business associates and friends who could speak to Dyer’s good character. Collecting the affidavits, plus gathering info on every place they’d lived since the 1970s and every job he’d had, amounted to hundreds of hours of work. On May 20, it paid off off: President Barack Obama pardoned Dyer, forgiving him for his bad deeds. “I think it’s a great honor,” Dyer told HuffPost. “We know Jesus Christ forgave us, but sometimes society has a lot of difficulty forgiving people for the things they’ve done.” American presidents have found it increasingly difficult to forgive felons. Over the past century, acts of executive clemency have dwindled, with President Obama on track to be among the stingiest presidents in history. So far, Obama’s granted just 17 pardons. In May, the president denied 791 pardon requests and 1,947 sentence commutation requests, giving no explanation for his decisions. Obama has rejected at total of 3,976 requests for forgiveness. George W. Bush wasn’t any more generous after two years in office, but he also hadn’t denied as many petitions as Obama. Over eight years in office, Bush handed out 189 pardons and 11 commutations. P.S. Ruckman, a professor of political science and pardon expert at Rock Valley College in Rockford, Ill., said the lack of pardons is a shame. “In an era of booming federal prison populations, mandatory minimum sentences, three-strikes laws, the growth of the ‘nanny state’ and over-criminalization, the need for regular use of the pardon power is greater than ever,” Ruckman said. “Amazingly, the most popular explanation for scarce use of the power — that controversial pardons expend tremendous political capital — is altogether flimsy. The typical pardon simply restores the civil rights of an unknown, average person who has committed an offense and served their time a long, long time ago.” Obama pardoned seven others besides Dyer in May. Among them was Mike Neal of Palm Coast, Fla., who said he spent six months in a federal prison camp in the early 1990s for the “manufacture, assembly, modification and distribution of equipment for unauthorized decryption of satellite cable programming.” Neal ran a company called T&M Communications in Virginia that de-scrambled satellite signals, he said, even though he knew it might be against the law. A 1991 story in Communications Daily reported that Neal and his business partner realized more than $900,000 in illegal proceeds from their business. The FBI had to figure out what to do with the 3,000 people who’d purchased illegal decoders after Neal and his partner were arrested, the article said. Neal told HuffPost he pursued the pardon in 2007 because he’d changed since the early ’90s — he was only 26 years old when he was arrested. Neil is proud of the way the pardon reflects that change. “When I was young I could care less about voting, about holding public office,” he said. “But later on in life when you grow up, you get married, you have kids, you want to be able to make a change in society. But you can’t do it? Man, that really affects you. You run for office of any sort -– you can’t do it? Back when you’re a kid that didn’t matter.” Neal, now 46, said he recruited three people to sign affidavits on his behalf, which is all that the pardon application requires. Each person provides a few lines to describe his or her relationship with the petitioner, whom the signer affirms “has behaved since the conviction in a moral and law-abiding manner.” Neal said he handled the application himself. Marveling at the number of applications rejected, Neal asked, “What made me stand out? Was it the luck of the draw? The Justice Department looked at these and said, ‘This one looks good,’” he said. “My lucky day, I guess.” Dan Levitz of Angola, Ind., and Edwin Alan North of Wolcottville, Ind., both received pardons after being sentenced in 1980 to probation for felonies relating to the sale of a machine gun. North had sent it home from the Vietnam War as a souvenir, according to the pair’s lawyers, Jackie Bennett and Jayna Cacioppo of Taft Stettinius & Hollister LLP, who represented them pro bono. North traded the gun to Levitz, and Levitz told HuffPost that he sold it almost immediately. “I was told it was illegal to have it so I got rid of it,” he said. The gun apparently wound up in the wrong hands: Years later, Levitz said, federal authorities traced it back to Levitz, North, and a third friend, all of whom were arrested and charged with felonies. Attorney Bennett said a strength of Levitz’s and North’s 2006 pardon applications was a transcript from their sentencing hearing that strongly suggested the judge didn’t think the government should have pursued the case so aggressively. “The judge thought this was not the case that should have been brought,” he said. “I think that fact was one of the most compelling aspects of their pardon application.” Another boost came from former Rep. Mark Souder (R-Ind.), who sent a letter supporting the applications after the lawyers brought it to his attention, Bennett said. “I feel like I was very lucky that [President Obama] looked at it,” said the 59-year-old Levitz. As for his felony record, he said, “Other than I couldn’t hunt with my sons with cartridge guns, it really didn’t have no effect.” Yet Levitz said that he’s still “really relieved” to have been pardoned and that he’s looking forward to now going hunting with his sons and grandkids. “I’m sure that those who were pardoned are all deserving, but it isn’t clear to me what distinguishes them from many hundreds of others who applied and were turned down,” said Margaret Love, a U.S. pardon attorney from 1990 to 1997 who now represents clients seeking clemency. Though it may be difficult to distinguish pardon winners and losers, there is a pattern to who gets pardons these days, P.S. Ruckman said. Drug offenders have been regulars among the pardoned for the past 30 years. And for the past 50 years, it’s been unlikely for presidents to commute prison sentences, he said. “And the people who are pardoned are typically people who were sentenced a really long time ago,” Ruckman said. “People who are suffering right now are not getting pardons. People whose previous convictions are causing them the most inconvenience — the ones who could benefit the most — are the ones least likely to get it.” Another trend, Ruckman said, is pardons for minor offenses. He cited the December pardons for “mutilation of coins” in 1963 and the guy who’d been busted for stealing plywood and nails from a construction site. The president’s pattern of pardons, Ruckman said, has been identical to that of George W. Bush. “I don’t think you could point to a single thing about Obama that suggests he’s doing different in any way.” One man who had his pardon request denied by Obama in 2009 said it was “devastating” when he found out. “There’s a whole way of life I cannot participate in, and there’s no mechanism for me to get my rights back,” said the New York resident, who spoke on condition of anonymity because he wants to re-file his pardon request eventually. In 2000, he was sentenced to four years of probation and slapped with a $5,000 fine for mail fraud and conspiracy after being accused of inflating the cost of a building renovation contract with a local government agency. Since serving the probation and paying the fine, the man said his life has changed for the worse. Some real estate investors won’t deal with him, he says, and he can’t go hunting like he used to. “I’m affected in business, I’m affected socially, and mostly, I love my country as I love my family, and it is so insulting for me,” he said. “As it stands now, I’m going to die as a convicted felon.” HuffPost readers: Denied clemency by a president? Tell us about it — email arthur@huffingtonpost.com . Please include your phone number if you’re willing to do an interview.

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Loans for Freelancers or Unemployed | Move Apartment and Home Trends

June 1, 2011

Loans for freelancers, unemployed or others without a verifiable income are more difficult in today's market. Check out this article on Move Trends for more information.

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Loans for Freelancers or Unemployed | Move Apartment and Home Trends

June 1, 2011

Loans for freelancers, unemployed or others without a verifiable income are more difficult in today's market. Check out this article on Move Trends for more information.

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Jason Alderman: Financial Advice for Graduates

May 31, 2011

If you — or one of your kids — are about to graduate from college or high school, congratulations on successfully navigating the twists and turns of the education system. You don’t need me to tell you what a challenging, rewarding and expensive road it has been. But, as someone who’s learned a few financial lessons the hard way, I would like to share a few steps you can take now to ensure you’ll start the next chapter of life on sound economic footing. First, live within your means . The temptation to go on a spending spree after landing your first full-time job can be overwhelming. But if you’re a college grad, unless you sailed through on a full scholarship, you’re probably already saddled with thousands of dollars in student loan debt. (If you’re about to enter college, avoiding future loan debt is something to keep in mind.) Add in rent, car payments, credit card and personal loan balances and all your other monthly bills — not to mention payroll taxes — and your new salary may not go as far as you’d hoped. If you don’t already have a budget, get started on one now. Numerous free budgeting tools, including interactive budget calculators, are available online at sites such as the U.S. Financial Literacy and Education Commission’s MyMoney.gov , the National Foundation for Credit Counseling , Mint.com and Practical Money Skills for Life , a free personal financial management program run by my employer, Visa Inc. Speaking of student loans, here are a few repayment tips: Most federal loans offer six- or nine-month grace periods before repayment must begin, but many private loans do not. Carefully review your loan documents to see where you stand. Ask if your lender will reduce the interest rate if you agree to automatic monthly payments or after you’ve made a certain number of on-time payments. If you anticipate repayment difficulties, contact your lender immediately to try and work out an agreement to defer payments, extend the loan’s term or refinance at a lower rate. Many people with federal loans who are low-income, unemployed or working at low-paying, “public service” jobs in education, government or non-profits qualify for income-based repayment, where monthly payments are capped relative to adjusted gross income, family size and state of residence. To learn more, visit this Department of Education FAQ or read my previous blog, Federal Student Loan Changes . Also, read IRS Publication 970 for information on deducting student loan interest from federal income tax. In some instances, you can deduct up to $2,500 in interest even if you don’t itemize deductions. Know the score, credit-wise. Many people don’t realize the impact their credit score has on their financial future until after it’s been seriously damaged from making late payments, bouncing checks, opening too many accounts or exceeding credit limits. This can haunt you later when you try to borrow money for a house or car, rent an apartment or apply for a job (many landlords and employers now check credit records and reject applicants with poor credit). Find out where you stand by ordering credit reports from each major credit bureau – Equifax , Experian and TransUnion .You can order one free credit report per year from each bureau from AnnualCreditReport.com ; otherwise you’ll pay a small fee to each bureau directly. To learn more about the importance of understanding and improving your credit score, visit What’s My Score , a financial literacy program for young adults run by my employer, Visa Inc. It features a free, downloadable workbook called Money 101: A Crash Course in Better Money Management , a free tool to estimate your FICO credit score and Welcome to the Real World money guides on topics such as student loan repayment, finding a job, paperwork and taxes, and budgeting. Jumpstart your job search. You’ve probably already held a variety of jobs to help pay for college. Now it’s time to find a position in your field of study. Start with your school’s career counselors, who often provide services to alumni or will at least point you to other resources. While researching jobs and career paths, polish your resume. Make sure yours accurately reflects your accomplishments and shows potential employers you have the experience, drive and qualifications they seek. Use concise, strong language and an organized appearance. Don’t discount the importance of networking with family, friends, former school contacts, business and social organizations — basically anyone who might know of openings in your field. If you find a potential employer you admire, inquire about internships as a way to get your foot in the door. For more tips, see my previous blog, Online Job Search Tools . You’ve worked hard to earn your degree; now put it to work for you. Just make sure you don’t sabotage your efforts by starting out on the wrong financial footing. This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney

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Jason Alderman: Senior Year Sticker Shock

May 27, 2011

Are American families overspending on proms? A new survey released by my employer, Visa Inc., shows that the average family with a high school student attending the prom will spend $807 this year — a surprisingly large amount. Prom inflation has run amok. Ever-more extravagant proms create a cycle of teenagers continuously trying to outdo each other, making the evening more and more expensive. The survey also found large economic and regional disparities in prom spending: Southerners will spend an average of $542 Northeasterners will spend an average of $667 Midwesterners will spend an average of $943 Westerns will spend an average of $1,073 Parents who make less than $20,000 will spend $713 Parents who make $20,000-$29,999 will spend $812 Parents who make $30,000-$39,999 will spend $1,281 Parents who make $40,000-$49,999 will surprisingly spend even less, $426 Parents who make $50,000-$74,999 will spend $916 Parents who make over $75,000 will spend $864 Defying this trend, however, nearly a quarter of families said they will spend nothing on prom, which likely indicates their kids are not attending. Overall, 22 percent of families who have teenagers will not spend any money on the prom. In the Southern and Midwestern states, that number jumps to 29 percent and 27 percent respectively. Here’s a breakdown of where prom dollars typically are spent: New prom dresses often cost $100 to $500 or more. Plan on spending another couple hundred for shoes, accessories, flowers and professionally styled hair, nails and make-up. New tuxedos cost several hundred dollars, not to mention the formal shirt, tie, studs and shoes you’ll need. Even renting all this will likely run over $150. Figure at least $100 an hour plus tip to rent a limousine for a minimum of four hours. Prom tickets typically cost $50 to $150 per person, depending on venue, entertainment, meals, etc. And don’t forget about commemorative photos. The couple will probably need at least $40 for a nice pre-prom meal. After-parties can run anywhere from a few bucks at the bowling alley to hundreds for group hotel suites. If you’re looking for cost-saving ideas, try these: Shop for formal wear at consignment stores or online. As with tuxedos, many outlets rent formal dresses and accessories for one-time use. Have make-up done at a department store’s cosmetics department or find a talented friend to help out. Split the cost of a limo with other couples, or drive yourselves. Team up with other parents to host a pre-prom dinner buffet or after-party. Take pre-prom photos yourself and have the kids use cell phones or digital cameras for candid shots at various events. Work out a separate prom budget with your child well in advance to determine what you can afford. They may need to take a part-time job to help cover costs, or decide which items they can live without. Prom is only one component of the senior-year experience. If you’ve got a high school junior, you need to start planning and budgeting now for next year. Start by talking to recent graduates and their parents about expenses they faced and their lessons learned. Decide early on which expenses are essential and which ones you can do without. If your child is college bound, entrance exams, study guides and tutoring are important, but can quickly add up: The Scholastic Aptitude Test (SAT) costs $47 each time it’s taken, plus an additional $10 to $21 per individual subject test. Many students take the SATs at least twice. American College Testing (ACT) costs $33, plus another $15 for the writing test. A comprehensive online SAT review course from the Princeton Review will set you back $599. Personalized individual and small group tutoring sessions can cost thousands of dollars. Other common senior year expenses you might anticipate include: College application fees – often $40 to $80 per institution. Site visits. If you’re looking at schools outside the area, costs can vary widely. Don’t forget such variables as airfare, gas, lodging, meals, local transportation, etc. Professionally shot senior portraits and prints often cost hundreds of dollars. Graduation announcements, thank-you notes and postage — depending on your network of family and friends, this could be $100-plus. Senior class dues — check with your school. Yearbooks can run $35 to $85, plus additional fees if you take out a congratulatory ad. Class rings — different styles often run $100 to $500 or more. Cap and gown — usually $25 to $50. Graduation gift and party — it’s up to you to manage expectations. Senior trip – varies from school to school, but it could run hundreds of dollars for a ski weekend, for example. You want to ensure your child has a memorable senior year, but not at the expense of your overall budget. Before the school year begins, create a senior-year budget and get your kid involved in the tough decisions, prioritizing expenses from vital to non-essential. For example, an additional SAT practice session is probably more important than a top-of-the-line class ring. Learning the importance of setting and sticking to a budget is a valuable life lesson for your kids. If you need help making a budget, numerous online tools are available online at sites such as the U.S. Financial Literacy and Education Commission’s MyMoney.gov , the National Foundation for Credit Counseling and Practical Money Skills for Life , a free personal financial management program run by Visa Inc. Readers, I’m curious to know your experiences with senior prom expenses and if you’ve got any cost-cutting tips you’d like to share. This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation. Follow Jason Alderman on Twitter: http://twitter.com/PracticalMoney

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Peter Fox-Penner, PhD: Nuclear Trust

May 18, 2011

At the end of April, the New York Times reported that Toshiso Kosako, a senior adviser to the Japanese government, resigned in protest over the government’s handling of the Fukushima nuclear plant accident. This is the latest incident in an ongoing climate of accusations that Tokyo Electric Power has not been transparent about the condition of its damaged reactors or the dangers posed to citizens from radiation releases. This story is a reminder that nuclear energy is unique among energy technologies. No other energy source is capable of causing dangerous conditions over comparably large geographic areas. The Deepwater Horizon oil spill was an environmental calamity covering 2,900 square miles , but we did not have to evacuate every human from the oil spill area or limit their time within the area to a matter of a few hours. Relatedly, no other technology involves nuclear radiation — a danger whose psychological impacts are greatly amplified by the fact that it is both totally invisible to the senses and highly unfamiliar to nearly all ordinary citizens. When a nuclear incident occurs, the invisibility and unfamiliarity of radiation makes the general population extraordinarily reliant on the operators of nuclear facilities and their overseers for information critical to their very lives. Citizens’ willingness to live with the risks posed by nuclear power is understandably linked to their confidence that the nuclear industry and its government regulators will be honest about safety risks and take adequate steps to protect them. If they believe that plant operators or the government will act to protect itself by not protecting or informing them, citizens lose faith in both the nuclear industry and the government. Although there are some parallels to climate science, no other energy form is nearly so reliant on trust in a narrow cadre of engineers, scientists and regulators for its public acceptance. Had the Fukushima plants used any other prime mover (the technical term for energy forms used to generate power), there would have been no evacuation or ongoing safety fears, and the story would have faded from the world press in a day. Quite a lot has already been said about the impact of Fukushima on the hoped-for “nuclear renaissance.” Most of the commentary, including my own, has centered rather mechanically on how much more nuclear plants will now cost and which new reactor projects will continue to proceed. Yes, we will see a few projects on the drawing boards drop away. No, this will not change bipartisan congressional support for maintaining a commercial nuclear power industry. I now realize that this accident will have a deeper and more lasting impact. Sadly, we live in an era of deteriorating trust for most of the institutions of civil society, including representative government. The debate over climate science has politicized this venerated institution to a degree never before seen in modern times. These long-term developments, combined with the specific allegations leveled at Tepco and the government of Japan, suggest that nuclear power has a much bigger hurdle to surmount than its specific license approvals. More than any other energy form, its fate is tied to our very confidence in government’s ability to protect its citizens from harm, admit its own wrongdoing and criticize and control powerful corporate interests. This is a tall order, and it does not bode well for the hoped-for nuclear revival. It does, however, suggest a path forward for civilian nuclear power. Governments can gain the trust they need to revive this sector by demonstrating the ability to provide transparency and accountability in the regulation of nuclear plants and the handling of nuclear accidents. In and of itself, this is a goal that will advance all of civil society and repair the public’s trust in government. It could also be the key to preserving the future of this low-carbon resource. The views expressed in this article are strictly those of the author.

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Art Levine: GOP-Style Democrats Slash DC Budget: Homeless Moms Already Given Bus Tokens, Not Shelter

May 17, 2011

Except for white Republicans in Congress opposed to home rule, few people outside of Washington, D.C. — and even some white liberals who live in the District — bother to pay much attention to Washington’s local political battles. But that changed briefly last month, when Mayor Vincent Gray and six members of the city council were arrested in high-profile protests against a Republican-driven federal budget deal that prevents the city from spending its own funds on abortions for low-income women. Congress has traditionally had authority over the Democratic-run District’s budget, but rarely directly interferes in spending. “Why are we the sacrificial lamb?” Gray had asked. Progressive media outlets praised Mayor Gray for seeming to stand up to Republicans and their distorted budget priorities. Yet Mayor Gray and much of the rest of the city council are moving on their own to make the city’s disabled, youngest and neediest citizens the sacrificial lambs of the proposed new city budget, with two-thirds of the cuts targeting the poor. And those programs make up less than a quarter of all city spending . It’s yet another troubling sign of the rightward shift of state and national Democratic Party leaders. It’s a trend that can be seen everywhere from Democratic legislators in Massachusetts voting to strip public employee unions of the right to bargain collectively to national Democrats meekly accepting until it’s too late GOP messaging on deficit cuts and tax breaks for the rich. Here in Washington, city services are already so strained before the proposed cuts that even families with young children seeking emergency shelter are routinely turned away, and have often been given instead bus tokens to ride the buses all night with their toddlers and infants. As Eric Sheptock, a literally homeless homeless activist working with a donated laptop, described a recent hearing on the crisis: One mother cried as she explained how that she, with her 3 children — ages 5, 3 and less than a year-old — in tow, was told by an employee of the Virginia Williams Family Intake Center that there were no shelter spaces for them and that she was given bus tokens so she could ride the city bus all night with her children in order to stay warm. Other mothers testified that they also were given bus tokens so that they could use the bus as a de facto shelter. (DC Law states that, if there is no shelter space available for a homeless family with small children, then they must be put into a motel room) The Mayor’s proposed budget would essentially close down all shelters for everyone except when the weather falls below freezing. The mayor’s justification? ” In some quarters, we have created a culture of dependency that does not encourage residents to take control of their lives,” he declared in a speech nonetheless proclaiming a vision of a compassionate “One City” uniting all. Unlike the original welfare reform plans passed by President Clinton, though, these new meat-ax approaches to social services don’t provide any transitional assistance. As activist Kesh Ladduwahetty with the all-volunteer DC for Democrac y, a DFA affiliate, asks, “How does turning people out into the streets and eliminating child care programs help residents to take control of their lives, educate themselves, and become self-reliant?” Some councilmembers may seek to restore a portion of the $20 million to be cut in homeless services, but are doing relatively little to fight for $110 million in other vital services on the chopping blok, including mental health and other programs for the nearly one-third of District children who are poor. Prospects for protecting these programs are even worse than in the fights over social programs at the national level, because local safety-net advocacy groups are mostly under-funded, poorly organized and have no media savvy, making it even easier for the mainstream media to largely ignore the devastation these cuts would cause. Journalists here focus, at best, on councilmembers bickering over taxes . The Washington Post , for instance, doesn’t even have a reporter anymore covering the social services beat. The Mayor has asked for a slight rise in taxes for those earning over $200,000, but even that’s being resisted by a deadlocked City Council claiming it would discourage businesses and upscale residents. All told, his revenue-raising proposals could add about $127 million , but other ways to boost revenues as much as $104 million more, including increasing taxes for the very richest and closing tax exemptions for buying out-of-state bonds, are considered by council insiders to be off the table. This same city council spends more on itself — both per resident and per councilmember — than any other city in the entire country, according to the Pew Foundation . As the Washington City Paper reported: “The District came in first in costs in relation to both the number of city residents and the number of council seats. The council has a total budget of $19,434,000, including employee benefits–that averages out to $1,494,923 per seat, and $32.41 per resident.” But they don’t seem to mind kicking a few thousand people from shelters or cutting emergency assistance for the low-income disabled in order to preserve virtually all of their own perks — and keep costs down for the city’s richest citizens. Indeed, at a city council meeting on Monday, council members even opposed raising fees for wealthy Washingtonians who own three cars or to increase downtown parking fees. As the influential Greater Greater Washington blog pointed out: “At times, the discussion became quite heated, particularly when some members were defending the rights of people who own 3 cars and make over $200,000, yet wouldn’t consider driving downtown for dinner if it cost them $4 to park.” Analyst David Alpert added, “In a budget that makes very deep cuts, there was more passion for keeping parking cheap and for keeping taxes on the wealthy low than anything for keeping people off the street and from going hungry.” Yet as one progressive, Mary Beth Tinker, an SEIU pediatric nurse and a DC for Democracy member, pointed out in her testimony (full document here ) last week about the impact of raising taxes modestly on those earning over $100,000: For the price of a cup of coffee, you can save childrens’ lives. That is the increased cost in taxes per week, $1.80, that a DC resident making $125,000 would pay if their tax rate went from 8.5% to 9%. For the price of a latte, you can retain essential services to DC’s children. That is the cost in taxes per day, $3.60, that a DC resident making $350,000 would pay if their tax rate went from 8.5% to 9.5%. You can judge a society by how it treats children… The status of children in DC is a human rights shame by any indicator: infant mortality rates, graduation rates, soaring poverty rates. Amazingly, there are now proposals that would make things even worse: cuts of over $600,000 in programs to high-risk youth, cuts to summer school and grandparents struggling to raise their grandchildren, cuts in substance abuse programs for mothers. And, to put salt on the wound, there is even a proposal to cut $2.5 million in mental health services for traumatized children. But we do have alternatives. We can raise funds for children by reversing the tax break given to upper income earners in 1999. All for the price of a cup of coffee. On Wednesday, an alliance of progressive advocacy groups, including Save Our Safety Net and D.C. for Democracy, are planning a “Safety Net Reality Tour” to protest the cuts — and they’re going straight to the heart of the D.C. government, the Wilson building on Pennsylvania Avenue. The alert asks, ” Engage Councilmembers to remind them that we need additional revenue in order to restore funding to the programs that keep DC residents safe, housed, and healthy.” Yet that perspective gets little attention in the media or among Democratic politicians. Plus, business groups have also opposed plans that would close some loopholes allowing companies to pay lower taxes. And theater groups have opposed a modest 6% sales tax on tickets. Presumably, the extra cost of tickets would somehow deter upscale patrons from attending searing dramas about social injustice. Naturally, the $2.3 million in revenue it could generate would be wasted on sheltering homeless mothers who don’t have the good taste to appreciate Strindberg revivals. The clout of the theater crowd seems well on its way to overwhelming any lobbying by liberal advocacy groups, and council staffers say the proposal to tax theater tickets is all but dead. All these pressures make restoring vital services to the needy even less likely, especially because advocates have to overcome the myth that businesses and residents are over-taxed compared to other jurisdictions. In fact, surrounding affluent suburbanites pay higher total taxes than D.C. residents earning over $150,000 do, and the city’s tax burden is the 25th lowest of major cities. Right-wing leaning reports have also ranked the District as among the least competitive places because of high taxes. But as Natwar Gandhi, the chief financial officer of the city, has observed, ” In the District, almost two-thirds of businesses pay only the minimum of $100 a year. When actual business taxes paid are ranked, the District falls in the middle of the pack.” Amazingly enough, the city population is so liberal and Democratic that a new poll by the DC Fiscal Policy Institute found that 90 percent of taxpayers earning over $100,000 favor raising taxes on the wealthy to help pay for social services. That’s a level of affluent professionals’ supporting raised taxes you’d be hard pressed to find outside of an Upper West Side cocktail party hosted by The New York Review of Books in honor of Naomi Klein, author of The Shock Doctrine . Even so, D.C.’s African-American Mayor has proposed a draconian budget attacking the $330 million deficit that apparently borrows its underlying theme from Rep. Paul Ryan’s GOP budget plan: balance the budget on the backs of the poor. “The similarity of our Democratic politicians with Republicans is that they put a greater emphasis on budget cuts,with the poor bearing the biggest brunt of it — and the safety net is seen as something without value. It’s just seen as a cost with no value,” says Ladduwahetty, a leading organizer with DC for Democracy. This GOP-leaning tilt has been exacerbated by the vacuum of strong leadership coming from the White House and the Democratic Party in recent years defending the importance of government and safety-net programs; instead the ground has been ceded to Republicans on the issue of the deficit and tax cuts for the rich. A startling two-thirds of all the $187 million in D.C. cuts are aimed at programs serving the most vulnerable residents of the city: the homeless, poor kids needing mental health services, working adults who need subsidized child care, the disabled and the very poorest families needing emergency cash assistance. Even before these cuts that could throw nearly 2,400 homeless families and single adults into the street , basic services have already been so shriveled that the city’s primary intake center , the Virginia Williams Family Resource Center, is turning away families seeking emergency shelter — and just calling their relatives on their behalf or giving them bus tokens to ride the buses all night as a way to catch some sleep with their babies in tow. One of those young women is Denise Gibson, a 26-year-old woman who was holding her month-old newborn in her arms when she testified in March at a hearing before Councilman Jim Graham, chair of the human services committee. After surviving as a ward of the state in foster care and other arrangements until 21, she’s been homeless since 2006. “I’ve been a nomad,” she said about her search for housing. Sometimes, she’s able to stays inside her mother’s one-bedroom apartment, but that only allows her to sleep on the floor with her baby boy and she soon has to leave. Most of the time, she explained, “Some nights I stay in my storage place, some nights I stay at the Greyhound like I’m waiting for a bus. Since December, 2010 when I went to Virginia Williams, they told us we can’t stay anywhere [in shelters] unless it’s hypothermia; there’s no room at the shelter. They didn’t bother to find us [temporary] hotels, they just give us bus tokens and send us off.” Earlier, officials at the intake center turned her away when she was pregnant, claiming that they couldn’t help her until she was a single mother. After she gave birth,”They can’t help me now that my son is here.” In his first of month of life, he virtually never slept in a regular crib or bed. Under supportive questioning by Graham, more disturbing details emerged of life for the poor in a city where, as in the White House and Congress located a few blocks away, austerity instead of compassion and job creation is accepted as a political fact of life. But Graham, at least, wasn’t accepting that philosophy and asked, “Where have you been living?” Gibson responded, “I sometimes stay in my mother’s apartment building.” “Do you go to your mother’s apartment?” “No, there’s no security there [ in the building] and and it’s easy for us to stay there. I go to the stairwell, and I have my bags.” The day before the hearing, she stayed all night at the Greyhound station, even after begging a “Miss Croft” at the Virginia Williams center for help in finding an overnight spot for her and her baby. A stunned Graham recapped: “You went to Virginia Williams with a baby, and you’ve been sleeping in a stairwell and a bus station and you spoke to Miss Croft, and there’s nothing to do?” He furiously called in front of him the acting director of the Department of Human Services, the same agency that Mayor Gray once led, and berated her for the agency’s inaction. In typical bureaucratese, the interim director, Deborah Carroll ,explained, “During hypothermia season, any participant who meets the definition of homeless should get shelter. We’ll have to investigate each case.” Of course she left unspoken the reality that if the weather is below freezing the DHS officals feel free to ignore requests for shelter from families, let alone individuals Eventually, after pressure from Graham, a space was found in the city’s one family shelter — but it will be almost certainly closed down except in sub-freezing weather if the Mayor’s budget proposal becomes law. Her dramatic case has, so far,been ignored by all major broadcast and print media outlets in the city, except for the dedicated blogging of Eric Sheptock, the “homeless homeless” advocate working with a donated laptop and cell phone, building thousands of “friends” and “followers” on Facebook and Twitter . But his online advocacy doesn’t start until after he walks or takes a bus each morning to get a breakfast handout four miles away. Sheptock has a stark, up-close perspective on the DC government’s new War on the Poor (as opposed to LBJ’s War on Poverty): “To make a long story short, they want to push the poor out of the city,” he says. “They don’t want a place where the poor and homeless can come.” He adds, “They won’t want to wait to end the culture of dependence: they just want poor people to get out of town. They’re defunding affordable housing , they’re decreasing housing production, they’re shutting down shelters, breaking down encampments. You don’t prevent homelessness, you don’t cure it, you don’t want to shelter them.” As a list-ditch effort in the face of political indifference, he’s starting to try to organize the homeless themselves. He also wonders, “I don’t know why Mayor Gray is so callous.” Yet to today’s new pro-corporate state and national Democrats, reflecting the winner-take-all political trends that have accelerated during the Obama era, “These people are seen as sort of dispensable, and don’t deserve the social safety net. It’s part of an increasingly conservative trend in the Democratic Party,” says Kesh Ladduwahetty. Janelle Treibitz, the chief Campaign Organizer for Save Our Safety Net DC adds, “We’d like council members to take a stronger stance opposing cuts.” A few councilmembers, especially Jim Graham, have been very outspoken, but most of the efforts to restore some cuts are being done behind closed doors with little effort to rally the public behind them. Advocacy groups, including DC for Democracy and Save our Safety Net, have a total of a few thousand supporters, and while they’ve generated hundreds of emails, they haven’t been able so far to deluge the government with phone calls, reframe the debate or garner extensive media coverage. That could start to change next week, when S.O.S. is organizing with its allies next Wednesday, May 18th what it’s calling a “All-Hands-On-Deck-Action Day” inside the DC government main building, the Wilson building. But the harsh realities of the new Democratic politics remains, even in this most liberal of cities. At a hearing on the budget this week, led by by the scandal-plagued Chairman of the City Council, Kwame Brown, best known for demanding a “fully loaded” $1900- a- month leased SUV from city officials, activists challenged his opposition to raising taxes, the deadlocked council’s complacency, and the council leadership that has ignored public opinion favoring preserving social programs. “Some members of this Council have stated their opposition to any income tax increase. They owe the public an explanation as to why they would sooner ask a homeless person to live on the street rather than ask our wealthiest residents to pay taxes in line with their suburban counterparts,” Kesh Ladduwahetty argued. Even an otherwise liberal council member, Mary Cheh, a respected law professor who represents the 70%-plus white Ward 3 that’s the city’s richest, opposes raising taxes even to save social services. While declining to be interviewed for this article, she posts on her website for constituents her GOP Lite opposition to raising taxes, mixed with vague promises to find revenues elsewhere. “It is vital for our continued growth and prosperity that we shed our reputation as a high tax jurisdiction, and we have struggled very hard to do that over the past few years. Increasing the rate on incomes over $200,000 will send precisely the wrong message,” she says. “But, rather than support the income tax rate increase, I am looking at other ways to generate revenue or save money that will allow us to avoid the hike in income tax rates and restore some of the human services cuts.” Jeremy Koulish, who chairs DC for Democracy’s budget committee, directly challenged Council Chairman Kwame Brown and his allies on their allegiance to what used to be Democratic Party values. Noting the poll that showed 85% and above approval for raising taxes, he declared, “Certain politicians and a chunk of the city’s establishment are not listening. Who are you listening to? Grover Norquist? The Chamber of Commerce? The Wall Street Journal editorial page? They’re all powerful forces, but that goes against the concerns of the people who live here. What we’re hearing from you is the kind of rhetoric we hear from Republicans.” And, like the fate of the national budget fight, the ability of local progressive groups to effectively organize will not only determine the outcome of this one local budget, but become a symbol of what’s needed to get even Democratic cities and states to serve people in need, not just corporations. ********************************** This article is updated from a piece that originally appeared on the Truthout.org website.

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Andrew Winston: Consumers Never Liked to Pay More for Green to Begin With

May 16, 2011

A week ago, the New York Times breathlessly declared in a cover story that during the recession, ” As Consumers Cut Spending, ‘Green’ Products Lose Allure. ” It’s a nice headline and makes it sound like the green product and business movement is in trouble. But the story, while interesting, doesn’t really change the reality for business. First, consumers never liked to pay more for green and, second, consumer pressure is not the biggest force driving the greening of business. Here’s the story. The Times piece focuses on the rise and (sort of) fall of Clorox Green Works cleaning products. Launched with much fanfare in 2008, Green Works quickly became the biggest player in the niche green cleaning space, hitting $100 million in sales before falling to $60 million in the recession (which is still a very respectable number in this market space). The Times crows that “As recession gripped the country, the consumer’s love affair with green products, from recycled toilet paper to organic foods to hybrid cars, faded like a bad infatuation.” So green products are on their way out, right? Not quite. First, as the next sentence points out, “sales at farmers’ markets and Prius sales are humming along now” (fyi, Prius sales jumped 70% in February as oil prices rose). So two of the three categories the Times uses to make its point are actually growing, not fading. Second, at the end of the article, a fascinating chart shows the “green share” of household products holding steady at about 2 percent over the last few years. The conventional brands like Clorox have flattened out — even as Clorox sales dipped, the total number of entrants has continued to grow. The niche brands, such as Method and Seventh Generation, have continued to nibble away at market share and actually grew during the recession. To the extent that the premium-priced green products named by the Times have taken a hit, consumers’ disdain isn’t news: Recession or not, mass consumers never loved paying extra for green. Asking people to pay more for green is usually doomed. Green has always been most effective as the “3rd button” (as my co-author and I called it in our book Green to Gold ) to press in marketing pitches, after price and quality. The Prius is the premium-priced exception that does not disprove the rule. It’s is a special case, since the purchase confers a range of emotional and value-laden benefits that household products just don’t have (critics call the pride of ownership smugness — and, yes, I own one). Therefore, in the trenches of consumer product development, the real story is the pursuit of more sustainable products that, as P&G execs say, create “no tradeoffs” for customers. Why ask people to pay more? As more companies present green products at no additional cost, Wal-Mart and others will be happy to give them more shelf space, because what’s really happening with consumers is subtler than a supposedly fading infatuation with green. As the Times story indicates, there is no rise in the percentage of “true green” consumers who will pay more for sustainable products. But there is a serious rise in the number of so-called “conflicted” or “conscious” consumers , which has been building for years. These buyers, who are quickly becoming the majority of consumers, not a niche segment, want it all. They demand more sustainable products at the same or lower price. The last sentence of the Times article actually captures this phenomenon: “Sarah Pooler, 55, said she did not normally buy green products but would pick them up if they were on sale… ‘Bottom line, if it’s green and it’s a good deal, I’ll buy it’, said Ms. Pooler. And so the race is still on to provide green products at the same price and quality. But exactly because Ms. Pooler and millions of other buyers are still waiting for that price equality, I would argue that what is and has been driving the greening of business is not consumer pressure but a mix macro-level forces and operational sustainability success stories, the countless examples of reduced packaging, lowered toxicity, and condensed versions of products(in detergents for example) that save shelf space and tons of energy in shipping and storage. At the macro level, the greening of products and companies is accelerating because the sustainability drivers are only getting stronger . Rising resource prices, ever-increasing transparency demands about what’s in every product, and continuing pressure up the supply chain from business customers are just a few of the big forces. Does anyone in the consumer product space seriously think Wal-Mart (and other retailers) will stop demanding sustainability-driven operational and product changes just because of the recession? On the contrary, the need to lower costs in the face of rising commodity prices is making eco-efficiency even more economic. So even if consumers develop fickle infatuations with certain products, the business world is clearly developing a deep, abiding love of — or at least growing respect for — the power of sustainability. This post first appeared at Harvard Business Online .

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Ian Fletcher: Should America Stiff China?

May 16, 2011

I shall leave aside for now the strategic question of whether America should stiff China, i.e. repudiate our roughly $3 trillion in obligations to them. Strategically, repudiation of debt and other instruments on this scale is obviously something analogous to the atomic bomb in warfare: a very extreme option, with serious negative side effects, and not something to be taken lightly. My question in this article is, rather, the ethical question: does America have the right to stiff China? Frankly, we quite arguably do. Any serious ethical argument on this question turns upon the fact that China has not honored obligations it has assumed towards us, so therefore we are not obliged to honor our obligations towards it. This sounds like a technicality, but in fact, China’s failures to honor its obligations run into the trillions of dollars. Let’s start with currency manipulation. China engages in this practice to a massive degree, spending roughly a billion dollars a day to drive down the renminbi-dollar exchange rate. And yet China has agreed, by becoming a signatory to the Articles of Agreement of the IMF, not to do so. Article IV, section 1 of this document–which China voluntarily signed–reads: Each member undertakes to collaborate with the Fund and other members to assure orderly exchange arrangements and to promote a stable system of exchange rates. In particular, each member shall:… (iii) avoid manipulating exchange rates or the international monetary system in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other members. (See http://www.imf.org/external/pubs/ft/aa/aa.pdf ) The next big area of unethical Chinese behavior is the theft of American intellectual property. The most obvious and superficial case of this is rampant Chinese copying of American DVDs and other entertainment materiel, together with fake designer handbags, watches and the like. But the more serious kind of intellectual property theft concerns industrial know-how. Although China committed, when it joined the World Trade Organization in 2001, to crack down on such theft and start to uphold the standards on the issue that developed nations uphold, it has not done so. Instead, with government acquiescence and best and proactive help (sometimes with the aid of Chinese intelligence agencies) at worst, it has continued to steal. As reported by the Irish journalist Eamonn Fingleton in his book Jaws of the Dragon , The story began as long ago as 1980 when Beijing agreed to join the World Intellectual Property Organization. Various laws were duly promulgated that ostensibly provided Western owners of trademarks, patents, and copyrights with extensive protection against theft. After American corporations complained that these laws were mere window dressing, Beijing assured first Washington and then the World Trade Organization that it would tighten enforcement. Yet all the evidence is that the problem has just kept getting worse–so much so that China was recently reckoned to account for fully two-thirds of all the world’s output of pirated and counterfeit products. Moreover, China’s counterfeiting style has in recent years developed in a way that poses a qualitatively different, much more devastating, threat than previously. Whereas in the 1990s China confined itself largely to producing rather obvious knockoffs of luxury items such as Rolex watches and Louis Vuitton handbags, these days it is heavily involved in producing fake versions of everything from General Motors spare parts to Otis elevators. China also exports vast quantities of counterfeit pharmaceuticals, most notably drugs like Prozac Viagra, which sell particularly well on the Internet. Not only does such counterfeiting damage American corporate interests but it raises major questions of consumer safety. In recent years there have been many reports of deaths caused by Chinese counterfeiting activities. In Panama in 2006, more than 100 people died after taking cough medicine laced with a toxic Chinese-made ingredient. As documented by the author Tim Phillips in 2005, whole cities in China are devoted to various counterfeiting specialties. The city of Yiwu in eastern China even functions as a sort of “Wall Street” for the industry, providing a vast marketplace where, Phillips states, 100,000 counterfeit products are openly trade and 2,000 metric tons of fakes change hands daily. Meanwhile, as Edmund Andrews of the New York Times has reported, in big cities like Shanghai, vendors still openly sell pirated goods even along major thoroughfares. Not only has the Chinese government turned a blind eye to all of this, but large sections of the Chinese establishment, not least many sons and daughters of top leaders (know to China watchers as “princelings”), are heavily implicated in the racket. The value of this stolen property must be accounted for in any calculation of what America owes China on net. This is not a minor issue in a modern technology-based economy–which must, by definition, be a know-how based economy. (According to a 2006 study by the Federal Reserve Board, America’s investment in this and related intangible assets like research and development , computer software, workforce training, and spending to build brands exceeds its investment in tangible assets.) The cost to American industry is not only the licensing and other fees that should have been paid and were not. The cost includes also the long-term contracting of America’s industrial base due to counterfeit competition and the destruction of our capacity to innovate and invent due to depriving inventors of their just reward. Finally we come to the most fundamental Chinese violation of its obligations to the U.S. Despite having committed on paper to engage in free trade with us–a commitment that we have honored to a fault–China in reality closes its own markets to its trading partners. China’s protectionism doesn’t only mean obvious policies like tariffs and quotas; it also includes local content laws, import licensing requirements, and subtler measures (some of them covert, hard to detect, or infinitely disputable) such as deliberately quirky national technical standards and discriminatory tax practices. And it includes outright skullduggery such as deliberate port delays, inflated customs valuations, selective enforcement of safety standards, and systematic demands for bribes. The quantitative size of these Chinese repudiations of assumed obligations? Well, if we take seriously the claim by neoclassical free-trade economists that trade naturally tends towards balance, then we must conclude that their size is equal to China’s gigantic accumulated trade surpluses with the United States. Interestingly enough, the size of China’s accumulated American assets, because these derive from these accumulated trade surpluses, corresponds fairly closely to the size of China’s accumulated cheating. Which suggests–not proves, suggests–a certain poetic justice if America were to repudiate these obligations. Perhaps it’s not the prudent thing to do (at least at the present time), but we shouldn’t feel guilty about considering it, especially as it’s one of our strongest forms of leverage for negotiating a better solution.

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Noah Hultgren: Face of a Giant Agribusiness

May 13, 2011

According to some, I am a giant agribusiness — the worst kind of factory farmer. What qualifies me for this dubious distinction? Nothing except that, based on U.S. Department of Agriculture (USDA) figures, my farm falls in the biggest six percent of U.S. farms. And these farms account for the bulk of federal farm policy support. It sounds pretty damning, which is why it is the top talking point used by opponents of farm policy looking to dismantle a system, they say, is too tilted to agribusinesses and oppresses small, family farms. But there’s a lot more to this story than a 10-second sound bite would let on. For example, the USDA considers anyone with sales of more than $1,000 to be a farm, so that six percent figure is a little misleading. The weekend grower on the side of the road selling tomatoes from her garden would be a farmer in the government’s eyes. Ditto for the young retiree trying his hand at wine-making. Ironically, my business is probably more in line with what most of us consider a farm. It is family-run. It was passed down to me from my father and grandfather. It is a full-time effort to support my wife and kids. And, in order to make it my livelihood, it has sales exceeding $500,000. Again, that figure can be spun to sound really bad, since most people don’t know the difference between revenue and profit. But remember, the $500,000 represents gross sales, not how much money the farm or farmer is making. A farmer may produce half-a-million dollars worth of goods but might have to spend just as much to grow the crop, making it a break-even proposition and sometimes a losing one. Seems odd to call these farms corporate titans, especially when you consider that the Small Business Administration classifies most businesses as “small” if their gross sales are under $7 million a year. How much profit could a “giant corporate farm” like mine hope to generate? The USDA puts profit margins in agriculture at 10 to 15 percent. So under favorable circumstances — Mother Nature cooperates, market prices are fair, oil doesn’t spike and you don’t run into any problems like equipment breaking down and needing expensive repairs — that $500,000 in sales could generate between $50,000 and $75,000 in profit a year, according to the USDA’s estimates. No corporate executive in his or her right mind would get into such a risky business with such little profit upside. That’s why 97 percent of U.S. farms are still owned by families, not by corporations like Cargill, or ADM, or Kraft. I recognize that some may construe this article as a complaint about farm profits or an attack on smaller farm operations, but that is not my intent. Farm prices are way up right now and near an all-time high — and as a result, federal spending is way down. And I know that if America is going to meet tomorrow’s food and fiber needs it will take farms of all shapes and sizes. Smaller, organic growers are part of this puzzle, as are larger, conventional operations like mine, which supply more than three-quarters of our country’s food and fiber. As Secretary of State Clinton said this weekend, “We must redouble our commitment to sustainable agriculture and food security.” She’s right. If this nation is going to keep pace with an exploding global population, and if it’s going to do it in a sustainable way, then responsible farmers of all sizes have to come together in supporting and encouraging technology and best management practices. In addition, America needs to urge the next generation to to get involved in farming, despite the low profit margins and risk, to replace aging growers who are retiring. Our farmers and ranchers are a thin green line standing between a prosperous nation and a hungry world. It’s time to refocus on holding all parts of this thin green line instead of tearing it apart with manipulated numbers and disingenuous spin.

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Sandip Roy: The Unbearable Brown-ness of Raj Rajaratnam

May 13, 2011

Move over spelling bee champions, Raj Rajaratnam is here. Desis in North America are finally making news for something other than Pulitzers, spelling bees or plum positions in the White House. Hedge fund billionaire Raj Rajaratnam’s trial , the biggest insider trading trial in years, ended with a guilty verdict for the Galleon funds founder on 14 counts of securities fraud and conspiracy. It’s shaken up Wall Street not just because of the scale of trial but also because of its color. Gary Weiss in The Daily Beast has cottoned on to the fact that the trial is not just shining a light on the murky dealings in the world of high finance. It’s also a symbol of a changing Wall Street. “Wall Street is no longer a white man’s preserve,” he writes. So far so good. But then the article goes on to talk about the “insularity” of Indians, Pakistanis, Bengalis and Sri Lankans. Rajaratnam’s college buddy Anil Kumar, a former McKinsey executive pleaded guilty to getting $2 million from Rajaratnam for inside information. Rajiv Goel, Rengan Rajaratnam, Rajat Gupta are all desis involved in the scandal. (Even the prosecutor Preet Bharara is Indian-born!) Weiss says outsiders can’t help but note this “ethnic clubbiness” although he writes for South Asians “it’s merely an extension of a style of business — working a network of friends and acquaintances — that’s played out for centuries on the subcontinent, only applied, in this case, for allegedly criminal ends.” Hmmm. That sounds like exactly the way everyone does business. Presidents of the United States go back to their college buddies and early work days when they appoint staff members. When WASPs do it it’s just called networking, not a strange exotic ethnic-specific hawala style of business. In a recent New York Times piece about Rajaratnam’s friends it sounds like the newspaper just stumbled on some exotic hitherto unknown Amazon tribe: “Many of Mr. Rajaratnam’s tipsters came from the South Asian immigrant community, a relatively small group of Indians, Pakistanis and Sri Lankans who over the past several decades have made their mark in finance and technology.” Contrast that to Columbia University professor Arvind Panagariya’s comments of firstpost.com : “Call it the law of large numbers or probability. When there are so many South Asians on Wall Street some will inevitably get enmeshed in these incidents. There is embarrassment involved but why should every South Asian feel defensive?” Weiss admits that Wall Street for its first 200 years remained a WASP preserve. The old boys club shut everyone else out but no one talks about its “ethnic clubbiness.” White is always regarded as the absence of ethnicity. In fact while Rajaratnam was tried for his alleged financial shenanigans by the courts, he should be congratulated on one count. Desis can be insular but not in the way Weiss imagines. In the U.S., the proliferation of Telegu Associations and Bengali Associations suggests that Indians abroad cling to caste and clan with even greater fervor than they did in India. The grand gathering of Bengalis every year in the Banga Sammelan is all about the glory of the Bengali language. But even amidst the dulcet tones of Rabindrasangeet the Bangladeshis complain they are being sidelined by the West Bengalis and the West Bengalis complain about how demanding the Bangladeshis are. That Sri Lankan-born Rajaratnam spread his largesse among all his South Asian brothers is in itself noteworthy. He didn’t just benefit the Sri Lankan Tamils. Perhaps the organizers of South Asian Association for Regional Cooperation should give him an award. An earlier version of this blog first appeared on firstpost.com

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June Carbone: Opt-in Movement Great for Upper-Middle Class Moms. But the Rest Need Options, Too

May 9, 2011

Cross-posted from New Deal 2.0 . On Mother’s Day, the Washington Post published an article, ” Movement to keep moms working is remaking the workplace “. The article celebrates women who are part of the “opt-in movement,” in which “many mothers are willing to give up income if that means taking control of their schedules, and, perhaps most important, doing meaningful, challenging work in their chosen professions rather than what they see as the less interesting work of the often-stigmatized ‘mommy track.’” For many women, however, giving up income for flexible work hours is not an option. Instead, the real need to keep moms working is not simply for upper-middle class, well-educated moms, but for mothers with less education, fewer opportunities, and less supportive communities. Those with the most education are the most likely to be labor force participants and the least likely to be unemployed. They are also the least likely to quit work after having a child. Consider the following statistics from 2009: For women age 25 and over with less than a high school diploma, 34 percent were labor force participants; high school diploma, no college, 53 percent; some college, but no degree, 62 percent; associate degree, 72 percent; and bachelor’s degree or higher, 73 percent. The Washington Post article is representative of much of the work in this area: while the headline would lead one to believe the story would focus on all working mothers, the article is really about a select group of women who are highly educated professionals. The news media show a disproportionate interest in professional women who leave the workforce to become full-time mothers. This article adds a new twist on the old story; it focuses on women who leave, but then re-enter on terms that respect their goals for work-family balance. More generally, issues of work-family balance are often addressed only in terms of the interests of those same women. (Men are less likely to leave the workplace.) The most frequently mentioned proposals — creating more and better part-time work, shorter work hours, and greater workplace flexibility — are proposals that are most useful for those who are financially able to trade off money for family time. As is perhaps too obvious to mention, most women are not professionals; they are not lawyers, executives, professors, or others with advanced degrees. The median weekly wage for women in 2009 was $657 . The most common profession for women is as secretaries or administrative assistants, followed by registered nurses, elementary and middle school teachers, and cashiers. Of course all women and men, including high-paid professionals, benefit from improved recognition of the need to balance their work and family demands and from new strategies designed to facilitate this balance. Yet our focus, along with out policy proposals, should be on those who have fewer options and resources, not just those with the most. Indeed, what flexibility means for low-wage working women is profoundly different from that available to women in higher paying jobs. First, they can little afford to trade off income for family time. Second, they are subject to both “schedule rigidity and schedule instability,” according to a 2011 report from the Center on WorkLife Law at the University of California Hastings College of Law. They must be at work during their scheduled hours, but those hours may change on a weekly basis. Arranging for child or elder care thus becomes even more difficult with schedules subject to constant change. In fact, women with less than a high school diploma are the least likely to report having a flexible work arrangement. The economic case for flexibility and accommodation in work scheduling for hourly and low-wage employees is strong. Many employers, ranging from Kraft Foods to the US government, are already implementing some form of workplace flexibility for hourly workers. More employers should. Evidence about practices that include flexible work schedules and more employee control over formal scheduling as well as unscheduled absences for family reasons shows that both employers and employees benefit. Developing compressed work weeks, promoting job-sharing, requiring employees to be present only during core times of the day or week, and establishing clear policies on family leave time with adequate back-up support are all potential strategies that can provide any employee, ranging from receptionists to cashiers, with a more family-friendly workplace. Attention to the needs of lower wage women must also go beyond reforming the workplace to include policies such as paid family leave and restructured school days.

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Preeti Vissa: The Crisis of the Day

May 5, 2011

Is it just me, or does the news lately seem like an endless stream of crises that come and go in a flash? Japan! Libya! The deficit! Obama’s birth certificate! Bin Laden! I, too, believe that many of these are serious issues that deserve attention and sympathy, but the drumbeat of daily emergencies is enough to leave one breathless. And confused. Confused enough, in fact, not to notice that at least one old crisis hasn’t gone away. Indeed, Congress has been busy making it worse. In the recent budget deal, Congress and the administration did away with $88 million in funding for nonprofit agencies that counsel families struggling to keep their homes and avoid foreclosure. Maybe that doesn’t seem important, but as this article from Painesville, Ohio makes clear, it has real-world consequences. For one thing, it endangers many who are currently obtaining loan modifications, which may require the completion of credit and homeowner counseling as a condition for the modification to go through. If that counseling isn’t available because the agencies doing it lost their funding, what happens to these homeowners? The need for this sort of help and counseling for homeowners is only going up as the ongoing tsunami of foreclosures continues, but the future of such assistance is very much in doubt. Congress could and should restore this funding in the 2012 budget, but that’s by no means a done deal. And unlike ginned-up controversies about things like presidential birth certificates, this crisis is real, with consequences that literally include families and children being thrown out into the streets. If we must cut spending, does it always have to be from help for the poor and vulnerable? Even when what happens to the most economically vulnerable is going to affect us all? Consider: A Government Accountability Office review of Defense Department weapons procurement released in March found a “staggering” array of weapons programs soaring wildly over budget , amounting to tens of billions of dollars. Without wading into the debate about what weapons are needed, it’s a given that our military will buy tanks, planes, etc. Is it too much to ask that we get our money’s worth, that our money not be wasted due to mismanagment? It’s hard to stomach losing a comparatively tiny appropriation aimed at keeping families in their homes while simultaneously reading that contracting waste is burning through piles of money equal to the GDP of some small countries. While we’re at it, maybe it’s time to glance away from this morning’s crisis-of-the-day — whatever it is — and remember the ongoing foreclosure crisis that continues to decimate American communities, whether the media notice or not.

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Michael Martin: The Inconvenient Truth of Vermont’s Oil Speculation

May 3, 2011

Sen. Bernie Sanders wrote an open letter to the President about high oil prices, according to a Huffington Post article ” Bernie Sanders Demands Action From Obama on Wall St. Oil ‘Gambling’” written by Zach Carter. “Sen. Bernie Sanders (I-Vt.) demanded on Thursday that regulators impose limits on oil speculation to help lower the price of gas in a letter sent to President Obama. ‘There is mounting evidence that the skyrocketing price of gas and oil has nothing to do with the fundamentals of supply and demand, and has everything to do with Wall Street firms that are artificially jacking up the price of oil in the energy futures markets,’” Mr. Carter reported. In the current regulatory environment, the Green Mountain State is included in those who are defined a speculators. They provide the corpus — the money — as investments in hedge funds and commodity indices. In effect, Sen. Sanders is mad with the labor unions and civil service employee retirement plans — the largest investors in the asset class known as Managed Futures — what some like to call speculators. I said as much during a television interview on Good Friday: Watch the latest video at video.foxbusiness.com With a little digging (on Google), I found documents that show that the $2.5 billion Vermont Pension fund has a 2 percent allocation to commodities . Vermont’s Pension Investment Committee approved the allocation circa October 2009. Vermont’s initial allocation to commodities at 2 percent, top bar on the far right. Vermont’s positions as of Year-End 2010 hit 2.3 percent, middle bar, far right. Vermont’s commodity investment is through the DJ-UBS Commodity Index , which has a whopping 34 percent allocation to energy futures, with 24 percent of it in crude oil, heating oil, and gasoline. The crude oil allocation is 16 percent alone. The Index holds a 29 percent long allocation in agriculture futures. Vermont has ridden crude oil all the way up from about $66 to its current level of $112 per barrel … a 100 percent increase. A 2 percent allocation might not seem like a lot, but that means that Vermont’s pension controls upwards of 78,000 barrels of crude oil, just like the speculators that the Senator admonishes in his ranting letter to the President. When you add in the collective activity of other state pensions, the situation seems much more grave. Since Vermont’s investment is long-only, they do nothing but buy crude oil and, if you believe what you’ve read, drive up the prices on the citizens of Vermont where, in Sen. Sanders own words “It is not uncommon for people to commute 100 miles to work and back five days a week, the increased price of gas is taking a serious bite out of the paychecks of middle class families.” I don’t believe that buying commodity futures changes the price of the physical product. (Only OPEC can redirect America’s xenophobia and turn it into a backlash onto itself.) Furthermore, their investment index never sells. They keep buying and the more dollars that make their way into Vermont’s pension system, the more crude oil and energy futures they will buy. If Vermont’s pension grows, so will their allocation to crude oil and to commodity futures. The Role of the Commodity Markets The commodity markets are insurance markets where buyer and seller trade price risk. In order to get paid for taking the risk, there needs to be a premium paid — just like in life insurance. Risk transference and price discovery are the two functions of global auction process in the commodity markets. It goes without saying that the price of crude oil futures trade at a premium to what the forces of supply and demand would dictate solely. In the last week alone, the energy market have had to interpret: Protests in Saudi Arabia against the crackdown in Bahrain. A Unity Deal in Palestine. A horrible U.S. Energy Policy , where the new drilling permits are really the old permits that were put on hold by President Obama in light of the Gulf oil disaster. The effect of the Environmental/Green Movement in getting new oil drilling blocked. (Per the video, I’m for higher gas prices if it benefits the environment.) A Department of Energy (DOE) that will burn through 30 billion this year alone. A DOE that since 1977 has not discovered a single drop of oil, nor that has helped us stave off peak oil. The death of OBL . Responsibility The Senator continued: “We have a responsibility to do everything we can to lower gas prices so that they reflect the fundamentals of supply and demand and bring needed relief to the American people at the gas pump are driving.” I couldn’t agree more with Sen. Sanders. That’s why I’m calling on Vermont’s pension and all pensions across the country to divest of their entire commodity allocations and to stop driving up the prices of energy on the citizens of Vermont and the U.S. at large … and then blaming themselves. It’s not logical for sitting Senators to do that. I’d also encourage them to take a class on financial literacy. Their understanding of commodity markets and of their own investments is lacking. I hope you all understand that I’m being entirely facetious, and that Vermont is no more a speculator than the little old lady from Pasadena who wants protection from the bumper crop of dollars the Federal Government has printed. The “hedge funds” as they’re referred to, cater to labor unions, civil service pensions, municipalities, and university endowments, primarily because they can meet the $10 – $25 million account minimum investment that go along with these large hedge funds (they are called Commodity Pools specifically). It’s safe to say that the majority of the beneficiaries of these entities are not known for being Republican… The Managed Futures asset class is invaluable to these institutional investors as it lowers the overall risk to their combined portfolios and enhances their returns. This is before the pensions and civil service benefit plans address what is known as Longevity Risk — the risk that comes with beneficiaries living much longer than the actuarial tables calculated for. Although it’s not the thrust of this article, it’s a giant risk to them and to the beneficiaries who are counting on those monthly checks. Where the Real Risks Are Besides terrorism, one of the real risks to the overall markets are the high-frequency traders who caused the Flash Crash. Based on Barron’s columnist Jim McTague’s new book Crapshoot Investing , neither Chairman Mary Shapiro and the SEC, nor Chairman Gary Gensler and the CFTC have any literal understanding of what is going on in the markets each day. The SEC and the CFTC rely on the exchanges for direction, but the exchanges are in bed with the HFT traders who pay enormous fees (sometimes as much as $50,000/month) for privileged data and speed. I think this issue is much more an immediate concern than trying to decide if we should limit Vermont or other municipalities individual or collective positions sizes in crude oil. But then again, we are into election season … Trade-offs Under the current understanding of asset allocation and investment finance, it is possible that we will pay more at the pump for gasoline and more at the grocery store for food due to global risks as perceived by commodity indexers and other commodity investors. I do not begrudge a labor union, a civil service/state retirement plan, nor a college/university endowment the opportunity to get better returns and lower risk for their beneficiaries by having investments in managed futures (even if it means I have to pay higher prices). I commend Vermont’s Investment Committee for making such an investment. They are forward thinkers. I’ll be Tweeting from the Milken Global Conference this week with the hashtag #GC2011. Michael Martin’s book The Inner Voice of Trading will be out in October.

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Peter Dreier: Banks Should Pay for the Foreclosure Crisis

May 2, 2011

The epidemic of foreclosures that began in 2008 has been devastating America’s families, communities and economy. Nowhere is this more true than in California, where one in five U.S. foreclosures has taken place. Since 2008, more than 1.2 million Californians have lost their homes, and the number is expected to exceed 2 million by the end of next year. More than a third of California homeowners with a mortgage already owe more on their mortgages than their homes are worth. As a result, home values in the state are estimated to plummet by $632 billion. That translates into a loss of more than $3.8 billion in property taxes. One foreclosed home in a neighborhood can reduce property values for the rest of the houses in the neighborhood, and a cluster of foreclosed houses compounds the physical, economic, and social devastation. And just as local governments are starving for revenues, they are asked to deal with the increased costs — estimated at $17.4 billion over four years — caused by the foreclosure mess. These include public safety, maintenance of abandoned and blighted properties, inspections, trash removal, sheriff evictions, unpaid water and sewer charges, and the provision of emergency shelter. We can’t solve California’s fiscal disaster without addressing the foreclosure crisis. It doesn’t make sense to make severe cuts to state and local budgets only to allow Wall Street banks and their overpaid CEOs to drain billions more from our states. The banks created the housing crisis with toxic lending practices and they need to be part of this solution. A bill sponsored by Assemblyman Bob Blumenfield (Democrat, Los Angeles) — the Foreclosure Mitigation Fee (AB 935), which is currently going through legislative hearings — would require banks to pay their share of foreclosure costs. Backed by a broad coalition of consumer, community and labor groups, the bill would impose a $20,000 fine on banks for each foreclosure. If the bill passes in California, it could encourage other states to support comparable legislation and help energize a movement to reign in Wall Street abuses. The fee would generate about $12 billion in revenue over next two years. This would go entirely to local communities in order offset the multiple costs borne by our neighborhoods because of foreclosures and shared between public safety, public education, local governments, redevelopment activities and small businesses. Los Angeles County alone will face an estimated 381,461 foreclosures through 2012, costing local governments $918 million in lost property taxes and $2.8 billion to pay for the problems. Riverside and San Bernardino counties have been particularly hard hit by the foreclosure earthquake. But no county, city, or small town in California has been spared the devastation. Indeed, the foreclosure tsunami and the housing market crash are the primary causes of the severe budget crisis facing California’s municipalities and counties, forcing local officials to slash services and lay off tens of thousands of employees. But many Californians are asking, why should taxpayers and communities have to pick up the tab, and face such hard times, for a crisis they didn’t cause? They — and the families caught in the maelstrom — are the victims of this human-made disaster. And let’s be frank. Wall Street’s reckless and predatory lending practices were responsible for the mess we’re now in. Bankers pushed homeowners into high-cost loans they couldn’t afford. They engaged in deceptive and often illegal activities, like not informing consumers that they qualified for conventional loans, tricking them into more costly and risky subprime mortgages. Wall Street banks bundled these risky loans into “mortgage backed securities” that were given the seal-of-approval of ratings agencies (Moody’s and Standard & Poor’s), and then sold them to foreign governments, pension funds and other unwitting investors. When the scam imploded and Wall Street’s bets went sour, the bankers were bailed out by the taxpayers. Goldman Sachs got $53 billion in bailout funds; Bank of America received $230 billion; Wells Fargo pocketed $43 billion. Meanwhile, the top executives got outrageous compensation packages. Last year, for example, Wells Fargo CEO John Stumpf received $17.1 million in salary and bonuses. But California residents lost billions in savings in their homes, neighborhoods were devastated, businesses crashed and laid off employees, and local governments spiraled downward into fiscal hell. The largest banks — Bank of America, JP Morgan Chase, Wells Fargo, and Citigroup — are among the top lenders foreclosing on California families. Not surprisingly, these are among the banks that have been flooding Sacramento with political cash in order to thwart legislation designed to make them — the real culprits of the foreclosure massacre — pay for the suffering they’ve caused. Since 2007, the financial industry has spent $70 million to buy political influence in the state Capitol — that’s nearly $50,000 per day. Almost $46 million went for campaign contributions to candidates and elected officials, while more than $23 million went for lobbying expenses. Six banks alone – B of A, JP Morgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley — have invested more than $9 million in political cash. Lobbyists and industry associations, like the California Bankers Association, the California Independent Bankers Association, and the California Mortgage Bankers Association, have doled out $4.5 million in what some call our system of legalized bribery. The key organizations behind this pro-consumer bill include the Alliance of Californians for Community Empowerment , the Service Employees International Union, the California Reinvestment Coalition , the community organizing group PICO California as well as the California Council of Churches, California Association of Retired Americans, California Labor Federation, California Nurses Association, the Center for Responsible Lending, and the State Building and Construction Trades Council. They correctly believe that California’s economy can’t recover without addressing the cost of the foreclosure crisis. AB 935 doesn’t solve the entire foreclosure calamity. But it does have several very positive aspects. First, it may create an added incentive for banks to modify more loans so that families can remain in their houses. So far, most banks have pushed the pause button when it comes to renegotiating troubled mortgages with owners who could lose their homes through no fault of their own. Second, the revenues collected from the foreclosure fee will reimburse local governments for some (though certainly not all) of the costs our communities are now facing from foreclosures. Until we make the banks pony up for the devastation they’ve caused, the taxpayers are left holding the bag, subsidizing the reckless behavior of excessively paid top bank officers, who threw a huge party for themselves and are making the rest of us clean up their mess. That’s not shared sacrifice. Right now, Californians are bearing the full expense of the foreclosure mess. Shouldn’t the big banks be part of solution to the problem they helped create? Peter Dreier is E.P. Clapp Distinguished Professor of Politics and chair of the Urban & Environmental Policy Department at Occidental College. A version of this article appeared in the Los Angeles Daily News.

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Michael Tasner: Seven Free Marketing Tactics to Grow Your Small Business

April 27, 2011

Most people think that marketing “has to cost money” in order to be effective. This article proves otherwise. These seven tactics have all been time tested and proven to work time and time again. #1 Your Business Card What does your business card say about you or your company? Is it on cheap card stock? Is there a message on the back? Is there a clear call to action? 95% of the business cards I have seen are ineffective. Did you know that business cards are among the few things that people actually hold on to when given? In Japan, for example, they are coveted. Make your card stand out and load it up with information. If this one item was the only thing a potential customer had, would it move the needle forward towards a sale or farther away? #2 Free Public Talks Speaking, in general, is a great way to build your status, but is also a great way to attract clients. Simply go to Google, type in your industry and then the phrase: “event”, or “conference”, or “expo,” and you will start to find lists of all of the different events. Browse the pages and look for the page that allows you to apply to be a speaker at that event. Another great way to find events is to join a few of the Chamber of Commerce’s and find out where the different local events that are coming up are being held. If there is nothing coming up in your industry, start something locally and pave the way. #3 Mining Your Email List Believe it or not, email marketing is still going strong (and actually increasing) as people continue to read their emails on their smart phones. In the next 24 hours, mine your list. Remove the bounces and the bad emails. Send out an email asking people to “re-opt-in” if they are truly interested in what you have to say; if not, goodbye. The only people you should keep on your email list are people that really want to hear what you have to say. Mine your list one to two times a year like clockwork. Don’t be afraid if the number goes down. #4 The Way You Answer the Phone I understand that this sounds simple, but the way you answer the phone can make or break a sale. A simple hello just isn’t going to cut it. Answering after six rings and then putting someone on hold will also not cut it. Why not answer on the first ring with something like: “Hey there, I hope you’re having a great day, this is Michael, how can I help you accomplish your dreams today?” #5 Your Follow Up How do you follow up with a potential customer? An even better question is, how quickly do you follow up? You should respond to all requests within 24 business hours (if not sooner). If there is someone who wants a quote, or to chat, make sure to get back to them ASAP. After you have spoken, follow up at least four times, in four different fashions: an email, a physical letter, a phone call, and some type of lumpy mail. One of my favorite lumpy mail techniques is using SendaBall.com . I send a ball after I talk with every prospect saying “I had a ball chatting with them.” #6 Blogging Blogging is back baby. Well, blogging really never went away. Now more than ever, consumers are looking to put a face to the companies they frequent, or are thinking of frequenting. Blogging is a great way to build rapport with your customers and your potential customers. Blog often and blog about topics that would be deemed useful to your audience. Yes, some personal blogs here and there are great as well, but keep it more informational than anything. Check out the blog at Keg Works for a great benchmark. #7 Writing a Book A book is among the best business cards you’ve ever had. A book helps take your brand or your companies brand up 10 notches the minute it comes out. Don’t think you could write a book? Hire a ghost writer. Don’t think there’s a potential topic for the space you’re in? Try me, and check out these examples: ● Lingerie store: How looking sexy can make you feel better and improve your marriage. ● Video Rentals: The top videos that improve mankind. ● Garage sales: How to spot a bargain at a garage sale and re-sell it for a hefty profit. ● Tree Climber: Crazy stories from a tree climber who has seen it all. While eBooks are great, I still recommend having at least a hundred or so copies printed (check out print on demand by companies like amazon or lulu.com ) Physical books command more attention and respect. There you have it, seven tactics that cost you nothing more than your time. Pick one and implement it in the next 30 days.

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

April 26, 2011

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

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Gold Hits Records High, Americans Sell Their Treasures

April 22, 2011

This story was reported in collaboration with our partners at Patch.com. It was a rainy afternoon in January of 1848 when a builder named James Marshall arrived at the office of his employer, John Sutter, a tannery owner, farmer and merchant, in a rural trading post in what is now Sacramento. “He told me then that he had some important and interesting news which he wished to communicate secretly to me,” Sutter later wrote in a letter to Hutchings’ California Magazine . “… Marshall took a rag from his pocket, showing me the yellow metal: he had about two ounces of it; but how quick Mr. M. put the yellow metal in his pocket again can hardly be described.” The yellow metal was gold, of course, and the secret wasn’t secret for long. “Gold fever” struck, and by the next year people were flocking to California from as far away as Chile, Australia and China. Fast-forward to April 2011. The price of gold has just hit $1,500 an ounce, a record high, and in a shop not so far from where that fateful meeting occurred, a different sort of gold rush is taking place. Well, maybe not a rush, exactly. More like a “bump” — that’s how John Paul Liscandro, an employee of The Pawn Advantage Store in Santa Rosa, described it. A lot of people have been coming into the store to sell gold, he said. “It’s kind of rough,” he added . Asked whether he meant that people were desperate, he replied, “I mean, it’s a pawn shop.” Across the United States, people are heading to pawn shops and jewelry stores with gold necklaces their ex-boyfriends gave them, gold coins that they inherited from their grandfathers, and in at least one case, ” 10 half pairs of earrings and a bracelet they got in the ’80s and monstrous hoops. ” Also : “gold teeth — yes, teeth” and “ancient computers that were once soldered with gold.” “The middle class is growing very rapidly ,” said Sam Dolabany, owner of Dolabany Jewelers in Westwood, Mass. Unfortunately for people who live in the United States, he was talking about the middle class in India and China, where the demand for gold, high to begin with, is getting higher. As Cathryn J. Prince pointed out in her article for the Patch site in Weston, Conn., ” Investors consider gold a safe haven for their money during fiscal and political upheaval.” Think of gold as fear in mineral form. As economic anxieties increase, so does the price of gold, as does the financial desperation that drives a person to cash in on the solid gold Elvis pendant their husband bought them in Memphis on that cross-country trip in 1982. For this reason, store owners are generally wary of sharing their customers’ information with reporters. “Some people — I don’t want to use ‘ashamed,’ but it’s not a happy situation,” said Brian Weinberg, the owner of Parkway Gold in Alpharetta, Ga. He added, more bluntly: “The economy’s bad. People need money.” The shame of having to sell jewelery is why Irma Evearts and her husband, George, the owners of Evearts Gallery in Haddonfield, N.J., will often bring customers to a private room in the back of the store. Sometime they’ll even shut the whole store down. “” People come in for all reasons ,” she said. Meaning, hey-I-never-really-liked-this-bracelet-anyway-and-now’s-the-time-to-get-some-money-for-it reasons, and sadder reasons. “A lot of people don’t want to sell their jewelry, but they have to,” said Steven Bumb, part owner of Santa Cruz Pawn. “It’s their monthly mortgage payment or whatever the case is … We hear a lot of sad stories.” Also in the bad news department was this report from Barnstable, Mass.: “In a town where break-ins are commonplace — this past weekend there were three break-ins and two attempts — drugs are a key driver of jewelry thefts, not the price of gold. ” Meaning the rash of burglaries is completely unrelated to soaring gold prices? “The nitwits stealing the gold don’t really follow the commodities market,” noted Sean Sweeney of the Barnstable police department. As sad stories go, there may be none sadder than this dispatch from Connecticut’s “gold coast”, the ribbon of super-wealthy suburbia stretching from the Westchester border to Westport. There, people in the habit of buying $10,000 Swiss-made watches must now steel themselves for the possibility of paying, oh, slightly more. As Terry Betteridge, of Betteridge Jewelers in Greenwich, reported, “Customers of ours are very concerned.” However, gold’s soaring price has had brighter consequences for some: Across the country, women have been holding “gold parties” at their homes, inviting friends to dig into their jewelry chests for whatever pieces they can stand to part with. Licensed dealers arrive with scales, and the guests leave with cash. “Gold parties are actually pretty fun,” said Brian Weinberg, the owner of the Alpharetta shop. “People have sold things that you know they had no intention of selling. A girl might be wearing something an ex-boyfriend gave her and when she sees it’s worth 500 bucks she cares even less about him than she did before.” For most Americans, though, this latest gold rush appears to be no more a cause for celebration than the last one was for old John Sutter. “So soon as the secret was out my laborers began to leave me,” Sutter wrote. Sutter eventually left the trading post himself and tried to make a go of gold-digging, but the expedition was doomed by his reliance on a drunken, duplicitous workforce. “Instead of being rich,” he wrote, “I am ruined.”

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The Miami Heat Is The New Corporate Model Of Teamwork, Apparently

April 20, 2011

I don’t even know how to begin with this Fast Company cover story on LeBron James, the Miami Heat and what they teach “us about teamwork.” Basically, the article teaches me that the people at Fast Company are capable of teaming up to shoehorn LeBron James onto the cover under the guise of teaching us something about business practices. And it’s not just that James can teach us all something about teamwork, it’s that the Miami Heat are “the World’s Greatest Chemistry Experiment.” So, snack on that Richard F. Heck, Ei-ichi Negishi and Akira Suzuki — and your Nobel Prize winning work in ” palladium-catalyzed cross couplings in organic synthesis .” Fast Company advises us: Forget for a moment that this has anything to do with basketball. Okay! That’s going to be hard, seeing as you’ve got four NBA-themed pieces for us to work through , but I’ll try. Forget about sports altogether. Almost as if I picked up a magazine that isn’t supposed to cover sports. Right. What LeBron and company are attempting to do applies to any organization that’s serious about winning. Well, who among the Fortune 500 hasn’t beaten the Philadelphia 76ers? A year ago, James, Wade, and Bosh were the top dogs — the leading scorers — on their respective teams. Today, they’re divvying up the sirloin scraps, at far less pay, in search of one prize: a championship. Yes, they’ve been derided for conspiring to give Miami a huge leg up at the expense of small-market teams (namely James’s former employer in Cleveland and Bosh’s in Toronto), but their mutual sacrifice is a resounding vote for teamwork. Teamwork among superstars. It’s a huge bet that, in the end, talent will prevail. If only the San Antonio Spurs had thought about combining superstars — like, say, Tony Parker, Manu Ginobili, and Tim Duncan — in their pursuit of NBA glory. (Instead, they wagered that playing great team defense was something that would “prevail.”) Finally, we start getting around to the “forgetting about sports altogether” part: This is a strategy that’s on the rise these days. Look at Silicon Valley. Which tech company, when given the chance, doesn’t raid the talent pool, stocking up on the world’s best execs and engineers in the hopes of racing past the competition? Late last year, Mark Zuckerberg personally persuaded Lars Rasmussen, the cocreator of Google Maps, to join a host of elite ex-colleagues at Facebook. If ESPN anchor Stuart Scott were to cover the business universe, he would have summed up the acquisition in a word: Boo-yah! Oh, okay, so here’s a new “strategy” that’s “on the rise” — hiring talented people in the hopes that a bunch of talented people will add value to your company. Glad to see people are trying this at last! Of course, this lesson was so well taught to the world by the Miami Heat, that Facebook was employing it just three days after the 2010-2011 NBA season began . In short, it’s a pretty awkward construct, ancient corporate-sounding bromides about “trust” and “teamwork” forced through this “the NBA playoffs are happening” perspective. At times, the piece has to contort in order to keep track of its thesis. “High-priced talent doesn’t ensure success,” says the magazine, you have to be “buddies,” too. And buddies have to leave room for Udonis Haslem and Zydrunas Ilgauskas. Larry Page and Sergey Brin are a formidable pairing — much like Hewlett and Packard, Ben and Jerry, the brothers Coen (Joel and Ethan) — but the truth is none of those guys could have achieved what they did if it weren’t for the help of supremely gifted employees. The Heat is no different. That would have been a really good place to inform readers who the “Zydrunas Ilgauskas of Google” is. (It still would be, if anyone would care to provide that information.) By the way, that marks the last time in the article that an attempt is made to connect this Miami Heat metaphor with an example in the corporate world, save for one stray mention of Carl Icahn. The piece goes on to really gloss over the ugliness that’s gone down between the team and their coach, Eric Spoelstra, who is nominally in charge of the “strategic vision.” I’m not entirely sure what to make of how this season’s brief Spoelstra-drama fits within this idea that stocking up on superstars is a winning strategy. The message seems to be: star talent is important, as long as Zydrunas Ilgauskas is around to do the thankless work, and your CEO is okay accepting abuse from the talent pool while never retaliating by telling the media that your star players cried in the locker room. And, in the end, it really helps to have Pat Riley to talk to about your feelings. It’s kind of a mess. But there’s one success strategy that seemed to work for the Heat: After the game, Wade and his teammates held a players-only meeting. “They kicked the coaches out,” says Windhorst. “It was literally in the shower. Guys were telling each other to stop playing afraid.” Not sure you should try to replicate that in the workplace! At any rate, every tech company should definitely try to hire Mike Miller , the end. [Would you like to follow me on Twitter ? Because why not? Also, please send tips to tv@huffingtonpost.com -- learn more about our media monitoring project here .]

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Lynn-Ann Gries: Websites Connect Startups With Investors, But Won’t Replace The Real Thing

April 15, 2011

The financial crisis caused a great deal of damage to the capacity of entrepreneurs to access traditional sources of funding, such as bank credit, credit card debt and home equity loans. And “friends and family,” another common source of startup capital, are as financially stressed as the founders themselves. To help fill the gap in funding, online platforms have emerged in recent years to connect entrepreneurs with investors. These Internet-age “yentas” extend entrepreneurs’ reach and enable them to access resources well beyond their geography. As a result, startups in more rural communities or in places with a dearth of venture investors will benefit from the geographic neutrality of the Internet. Indeed, they also benefit investors. A recent piece by Michael Arrington on TechCrunch , ” Venture Capitalists May Hate AngelList, But They’re Still Using It ,” asserts that despite some public backlash, well-known venture firms are requesting introductions to companies via AngelList. In the article, Josh Stein, Managing Director at Draper Fisher Jurvetson , praises AngelList’s efficiency, saying, “I’m presented with a clear, crisp ‘elevator pitch’ in the introductory email and further have access to a detailed summary with a single click.” But while these online investment matchmaking tools enhance traditional venture investing — they won’t replace it. Before explaining why, here’s a rundown of some popular online “yentas” available to the startup world: • IdeaCrossing , my own venture development organization’s online community, features a proprietary matching algorithm that automatically connects entrepreneurs and investors based on their profiles. Matches are communicated to the parties in real-time and investors can privately view their matches and reach out to entrepreneurs with whom they want to engage. • AngelList lets entrepreneurs upload their business summary, search for angels registered on the site, and push their plans out to them. In addition to receiving pitches from entrepreneurs, investors can browse entrepreneurs on the site and get matched to startups based on location. • CapLinked doesn’t seem to have made investment connections its primary offering, although that functionality is there through some partnerships. The bigger focus seems to be helping entrepreneurs communicate with their existing investors by combining the social community aspects of a site like LinkedIn with the customer-management offerings of Salesforce. The next few sites all use crowd-funding as the basis for their offering. Crowd-funding allows entrepreneurs to post a business idea or project, share it through social networking sites, and have investors pledge money. On some sites, investors receive nothing in return, investing because they want to help out a friend, family member, or cause. On other sites, investors pledge money in exchange for some pre-determined equity stake, a return or free products. Most sites have some sort of success fee to help sustain them. • On ProFounder , entrepreneurs create their pitches and draft investment terms before they start sharing their investment opportunity online. Entrepreneurs have 30 days to reach their investment goals. • Peerbackers considers all pledges goodwill donations and allows pledges as small as $5. Entrepreneurs have to reach 80% of their funding goal before they get the money. • Kickstarter doesn’t fund businesses, just creative arts projects. Every project has a funding goal, which can be any dollar amount, and must be raised in full before the set time limit. A recent article in VentureBeat talked about whether or not the SEC will let this kind of community funding to continue, saying that, while crowd-funding “could be a cheap source of cash, competing with angel investors who specialize in giving seed rounds to start-ups… the trick will be in protecting the public from scammers who have no intention of following through on promises.” But even with the growing popularity of online investment matchmaking, I still believe that most significant angel investing will remain offline. Why? First, entrepreneurs tend to have the most success accessing angel investors through personal connections or referrals. And for many angels, an in-person meeting with an entrepreneur is critical, as it allows them to fully assess the team they’re betting on. Second, the investment is only the start of a relationship, not the finish. After all, angels are often investing in startups at a point when the risks are large and the changes are frequent and micro-managing a portfolio company is much easier when an entrepreneur is near-by. In the crop of emerging social networks connecting startups to angels and venture capitalists, I think we’re all eager to find out who will peel away from the pack to become the Match.com or the eHarmony of investing. I hope that the sites that win big emerge as clear, trusted leaders in this space by having robust functionality and the largest, most diverse user base of both investors and entrepreneurs.

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Howard Steven Friedman: 10 Largest Economies in the World

April 15, 2011

The ten largest national economies in the world comprise nearly 70% of the entire world’s economy. Of these ten countries, four are in Europe, three are in the Americas and three are in Asia. The GDP per capita is greater than $30,000 for seven of the top ten countries with Brazil, China and India having significantly lower GDP per capita. The United States has the largest economy — about the same size as the second (China), third (Japan) and fourth (Germany) largest economies combined. Many economists project that China will supplant the United States as the largest economy in the world within the next few decades. Because China’s population is about 4 times larger than that of the United States, equal size economies would mean that China’s GDP per capita would reach about one-fourth that of the United States. China’s GDP per capita is currently about one-tenth that of the United States. Note: GDP has a number of limitations as a measure of economic strength but is still the most commonly cited measure of economic size. This article uses nominal GDP as reported by the IMF (2010). Nominal GDP refers to the GDP evaluated at current market exchange rates. An alternative is the Purchase Price Parity (PPP) which is a theoretical construct that seeks to represent the exchange rate that would allow for a basket of goods to cost the same in different countries. PPP can vary based on the basket of goods sold and have sometimes undergone major adjustments such as in 2005 when China’s PPP was adjusted by 40%.

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George Clooney Tackling Washington, Wall Street In New Film

April 14, 2011

George Clooney is set to produce — and perhaps direct — “700 Billion Man,” a new film about the 2008 financial crisis and the subsequent government bailout of troubled financial institutions, Variety reports . Clooney’s film will be based on a 2009 Washington Post feature on Neel Kashkari , the former Goldman Sachs executive who put together and helped administer the Troubled Asset Relief Program. A gloomy portrait of a man under pressure from the government, Wall Street, the media and the public at large, the article finds Kashkari in a cabin in Northern California, having resigned after putting the maligned package together. “We didn’t know if it would work. We had to project confidence, hold up the world. We couldn’t admit how scared we were, or how uncertain,” Kashkari says in the article. Clooney, a noted political activist, has taken on the financial crisis in film before. In 2009 he starred in “Up In The Air,” playing an executive charged with flying around the country and helping corporations downsize employees. He directed and starred in “Good Night, and Good Luck,” a feature about Edward R. Murrow’s takedown of Senator Joseph McCarthy, and won an Oscar for his role in Middle Eastern-focused “Syriana.” He’s now directing and starring in “The Ides of March,” playing a presidential candidate whose posters look exactly like those of then-candidate Obama’s in 2008. For more, click over to Variety .

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Ellen Brown: Why the Japanese Government Can Afford to Rebuild: It Owns the Largest Depository Bank in the World

April 1, 2011

The Japanese government can afford its enormous debt because it owns the bank that is its principal creditor. But competitors are attempting to force the bank’s privatization. If they succeed, they could propel the country into debt servitude along with other credit-strapped nations. When an IMF spokeswoman said at a news conference on March 17 that Japan has the financial means to recover from its devastating tsunami, skeptical bloggers wondered what she meant. Was it a polite way of saying, “You’re on your own?” Spokeswoman Caroline Atkinson said , “The most important policy priority is to address the humanitarian needs, the infrastructure needs and reconstruction and addressing the nuclear situation. We believe that the Japanese economy is a strong and wealthy society and the government has the full financial resources to address those needs.” Asked whether Japan had asked for IMF assistance, she said, “Japan has not requested any financial assistance from the IMF.” Skeptics asked how a country with a national debt that was over 200% of GDP could be “strong and wealthy.” In a CIA Factbook list of debt to GDP ratios of 132 countries in 2010, Japan was at the top of the list at 226%, passing up even Zimbabwe, ringing in at 149%. Greece and Iceland were fifth and sixth, at 144% and 124%. Yet Japan’s credit rating was still AA, while Greece and Iceland were in the BBB category. How has Japan managed to retain not only its credit rating but its status as the second or third largest economy in the world, while carrying that whopping debt load? The answer may be that the Japanese government has a captive funding source: it owns the world’s largest depository bank. As U.S. Vice President Dick Cheney said, “Deficits don’t matter.” They don’t matter, at least, when you own the bank that is your principal creditor. Japan has remained impervious to the speculative attacks that have crippled countries such as Greece and Iceland because it has not fallen into the trap of dependency on foreign financing. Japan Post Bank is now the largest holder of personal savings in the world, making it the world’s largest credit engine. Most money today originates as bank loans, and deposits are the magic pool from which this credit-money is generated. Japan Post is not only the world’s largest depository bank but its largest publicly-owned bank. By 2007, it was also the largest employer in Japan, and the holder of one-fifth of the national debt in the form of government bonds. As noted by Joe Weisenthal, writing in Business Insider in February 2010: Because Japan’s enormous public debt is largely held by its own citizens, the country doesn’t have to worry about foreign investors losing confidence. If there’s going to be a run on government debt, it will have to be the result of its own citizens not wanting to fund it anymore. And since many Japanese fund the government via accounts held at the Japan Post Bank — which in turn buys government debt — that institution would be the conduit for a shift to occur. That could explain why Japan Post has been the battleground of warring political factions for over a decade. The Japanese Postal Savings System dates back to 1875; but in 2001, Japan Post was formed as an independent public corporation, the first step in privatizing it and selling it off to investors. When newly-elected Prime Minister Junichiro Koizumi tried to push through the restructuring, however, he met with fierce resistance. In 2004, Koizumi shuffled his Cabinet, appointed reform-minded people as new ministers, and created a new position for Postal Privatization Minister, appointing Heizo Takenaka to the post. In March 2006, Anthony Rowley wrote for Bloomberg: By privatizing Japan Post, [Koizumi] aims to break the stranglehold that politicians and bureaucrats have long exercised over the allocation of financial resources in Japan and to inject fresh competition into the country’s financial services industry. His plan also will create a potentially mouthwatering target for domestic and international investors: Japan Post’s savings bank and insurance arms boast combined assets of more than Â¥380 trillion ($3.2 trillion) . . . A $3 trillion asset pool is mouthwatering indeed. In a 2007 reorganization, the postal savings division was separated from the post office’s other arms, turning Japan Post into a proper bank. According to an October 2007 article in the Economist : The newly created Japan Post Bank will be free to concentrate on banking, and its new status will enable it to diversify into fresh areas of business such as mortgage lending and credit cards. To some degree, this diversification will also be forced upon the new bank. Some of the special treatment afforded to its predecessor will be revoked, obliging Japan Post Bank to invest more adventurously in order to retain depositors–and, ultimately, to attract investors once it lists on the stock market. That was the plan, and Japan Post has been investing more adventurously; but it hasn’t yet given up its government privileges. New Financial Services Minister Shizuka Kamei has put a brake on the privatization process, and the bank’s shares have not been sold. Meanwhile, the consolidated Post Bank has grown to enormous size, passing up Citigroup as the world’s largest financial institution; and it has been branching into new areas , alarming competitors. A March 2007 article in USA Today warned, “The government-nurtured colossus could leverage its size to crush rivals, foreign and domestic.” Before the March 2011 tsunami, that is what it appeared to be doing. But now there is talk of reverting to the neoliberal model, selling off public assets to find the funds to rebuild. Christian Caryl commented in a March 19 article in Foreign Affairs , published by the Council on Foreign Relations: As horrible as it is, the devastation of the earthquake presents Japan and its political class with the chance to push through the many reforms that the DPJ [Democratic Party of Japan] has long promised and the country so desperately needs. In other words, a chance for investors to finally get their hands on Japan’s prized publicly-owned bank, and the massive deposit base that has so far protected the economy from the attacks of foreign financial predators. The Japanese government can afford its enormous debt because the interest it pays is extremely low . For the private economy, public debt is money. A large public debt owed to the Japanese people means Japanese industries have the money to rebuild. But if Japan Post is sold off to private investors, interest rates are liable to rise, plunging the government into the debt trap it has so far largely escaped. The Japanese people are intensely patriotic, however, and they are not likely to submit quietly to domination by foreigners. They generally like their government, because they feel it is serving their interests. Hopefully the Japanese government will have the foresight and the fortitude to hang onto its colossal publicly-owned bank and use it to leverage its people’s savings into the credit needed to rebuild its ravaged infrastructure, avoiding a crippling debt to foreign interests. A longer version of this article was published by Asia Times on March 31, 2011.

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GOP Congressman vs. Elizabeth Warren

March 31, 2011

By Simon Johnson The Baseline Scenario Representative Spencer Bachus, Republican chair of the House Financial Services Committee, famously remarked in December, “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.” With regard to the Consumer Financial Protection Bureau (CFPB), this apparently now implies that Mr. Bachus will use any means possible to change the topic away from substance – how banks treat their customers – to imagined procedural issues. Specifically, Mr. Bachus is wrongly accusing Elizabeth Warren of misleading Congress with regard to the role of the CFPB in the negotiations over how to settle allegations that mortgage foreclosure practices have been abusive (see also this news coverage ). On March 16, 2011, Ms. Warren told the House subcommittee on Financial Institutions and Consumer Credit that the CFPB provided advice in these negotiations. Mr. Bachus and his colleagues have just discovered some specific slides that were apparently used as part of this advice. Impressed by the lucidity of these seven (7) slides, Mr. Bachus and Ms. Shelley Moore Capito (chair of that subcommittee) have jumped to the conclusion that the CFPB must be the primary architect of the government’s position. This is patently ludicrous. First, there is no settlement agreement yet firmly on the table . Second, there is obviously no unified federal government position on this issue – in fact, the Office of the Comptroller of the Currency (OCC) is most definitely not taking advice from Ms. Warren or anyone sensible. Third, the CFPB is very far from being any kind of decision maker in this process; that power rests with Attorney Generals, the Department of Justice, the OCC, and other federal agencies. Either you have the legal power to offer a settlement or you don’t. The CFPB does not. Fourth, a close look at Ms. Warren’s calendar ( by Ben Protess of the NYT ) suggests she is not the prime architect of the settlement agreement – not unless she can mastermind a complex legal document while spending very little time on it. Fifth, although the Bachus-Moore letter cites the Protess NYT article, it does so in a way that is selective and misleading. Specifically, Representatives Bachus and Moore quote Iowa Attorney General Tom Miller – to whom the CFPB slides are apparently addressed – as saying that Ms. Warren has been a “very active participant’. But here is the full quote from the article in context ( see the final paragraphs ): “In a recent interview, Mr. Miller said Ms. Warren’s involvement was “appropriate” given the consumer bureau’s “expertise” in mortgage servicing. “It would be strange to say, ‘We’re going to quarantine you.’” “He acknowledged that Ms. Warren has been a “very active participant” in talks about the servicing settlement, but he said the proposal ultimately was the creation of the state attorneys general – not Ms. Warren.” “We form our own opinions and make our own decisions about the foreclosure and servicing case,” he said.” Sixth, read the transcript of the March 16 hearing (which follows the Bachus-Capito letter in the same pdf, as posted on the committee’s website ) and determine for yourself who is misrepresenting what. This is how the exchange between Representative Bachus and Ms. Warren actually reads (pp.34-35): “Chairman BACHUS. You have engaged in – you have given input and advice into these [mortgage servicing standards]. Is that correct?” “Ms. WARREN: When we have been asked by the Secretary, by the Department of Justice and others, we have given advice about mortgage servicing. Yes, sir.” And here is her exchange with Representative McHenry directly on the question at hand (pp.53-54). “Mr. MCHENRY: I am reclaiming my time. Are you engaged in these discussions on the settlement?” “Ms. WARREN: The negotiations with private parties are entirely directed by the Department of Justice, by the State Attorneys General, by other Federal agencies.” “Mr. MCHENRY: So you are not engaged in these discussions?” “Ms. WARREN: We do not negotiate with private parties. We have been asked for advice, Congressman. And wherever we can be helpful, we are not only glad to be helpful, we are proud to be helpful.” On top of all this, the first paragraph of the Bachus-Capito letter is beyond bizarre. The Representatives argue that “political appointees” should not be involved in the “regulatory enforcement process.” But surely all the people responsible for the financial sector, inside and outside Treasury – e.g., heads of the OCC, FDIC, SEC, Chair of the Federal Reserve Board and of course the Treasury Secretary – are political appointees and therefore subject to congressional confirmation and scrutiny (which is, generally speaking, a good thing). Representatives Bachus and Capito claim to be concerned that “When political appointees involve themselves in enforcement matters, they may pressure regulatory officials to take actions benefitting a particular political constituency or advancing a particular agenda at the expense of sound policy.” But the real issue here is how a powerful politician – proudly holding the explicit view that “Washington and the regulators are there to serve the banks” – is pressuring regulatory officials of all kinds to take actions that benefit his particular political constituency.

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Jason Alderman: Read Contracts Carefully

March 30, 2011

How often are you asked to sign something? I don’t mean autographs or birthday cards, but documents that are legally and financially binding. It could be something as simple as signing a sales receipt or endorsing a check, or a life-altering action like buying a house. Either way, they are all contracts. You’ve heard this advice many times but it still rings true: always read the fine print and consider the consequences before signing anything. After all, you wouldn’t be asked to sign a document or form — or click “yes” on a website — unless somebody thought it was important, so shouldn’t you think so as well? In broad terms, contracts are mutually binding agreements between two or more parties to do — or not do — something. Once a contract is in force (i.e., signed) it generally cannot be altered unless all parties agree. And, with very few exceptions — like in transactions where deception or fraud took place — they cannot easily be broken. Sometimes contracts are formal, signed documents that outline specific conditions and penalties if those conditions are not met: for example, if you don’t make your mortgage payments, the lender can foreclose on your house. Other times they are verbal or implied agreements: if you buy spoiled milk, you can ask for a refund. Before you enter into a contractual agreement, try to anticipate what might possibly go wrong. For example: You sign a lease but later decide you can’t afford the rent or don’t like the neighborhood. You buy a car you can’t afford, but when you try to sell it, the car is worth less than your outstanding loan balance. You buy something on sale and don’t notice the store’s “No returns on sale items” policy. Your gym locker is broken into and you learn that your membership agreement denies gym responsibility for such thefts. You co-sign an apartment lease with a roommate who later backs out, leaving you responsible for the rent. You rent a car and later learn you accidentally agreed to optional insurance coverage or other features you didn’t want or need. (Many standard rental contracts default to “yes” for each type of insurance, so you must specifically write or initial “no” to any coverage you don’t want.) You agree to cosign a loan and the other person stops making payments, leaving you responsible for the full amount — otherwise your credit will suffer. You click “I agree” to a website’s privacy policy and later realize you’ve given permission to share your contact information. You enroll in a course you think is pass/fail but later learn it assigns letter grades. You buy a car and later notice that the sales agreement includes an extended warranty or other features you didn’t verbally authorize. You buy a two-year cell phone plan but, after the grace period ends, discover that you have spotty reception. Financially inexperienced teenagers and young adults often get into this type of trouble, so make sure you discuss the implications of signing contracts with your kids well before they turn 18. Here are a few additional tips: Make sure anything you sign contains no unfilled blank spaces, even if the other party promises to fill them in a certain way. (To prevent misunderstandings, many contracts specify you must sign your initials by key provisions to acknowledge your full understanding.) Don’t be afraid to ask to take a contract aside or bring it home for more careful analysis or to get a second opinion. A lawyer or financial advisor can help. Don’t be pressured into signing anything: if salespeople try that tactic, walk away. Make sure everything you were promised verbally appears in writing. This is particularly important for terms and conditions such as interest rates, down payments, discounts and penalties. Keep a copy of every document you sign. This will be especially important in cases of contested rental deposits, damaged merchandise, insurance claims, extended warranties, etc. Take along a “wingman” if you’re making an important decision like renting an apartment or buying a car. It’s wise to have someone there to help ask questions and protect your interests. Be wary of “free trial” offers. Take time to read and understand all terms and conditions. Pay particular attention to any pre-checked boxes in online offers before submitting payment card information for an order. Failing to un-check the boxes may bind you to terms and conditions you don’t want. Remember, contracts are designed to protect both parties. Just make sure you fully understand all details before signing on the dotted line. This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation. To participate in a free, online Financial Literacy and Education Summit on April 4, 2011, go to Practical Money Skills .

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Michaël Bikard: Entrepreneurs: Your Friends Could Be Bad For Business

March 30, 2011

Could having friends be bad for business? In the first installment of this two-part series, we explored social dynamics that could “turn friends into chains.” In this second article, we focus on a more subtle and perhaps more harmful aspect of social connections: their blinding potential. In social network research, the idea that social connections have a cognitive effect is an established fact: they are a prism through which one sees the world. It may be worth keeping in mind that prisms do not only reveal new aspects of the world, but that they can also distort perception. So think differently: Have no friends. Researchers are far from being in agreement over the idea that social relationships have a positive affect on creativity. (For full list of research sources, see here .) For instance, consider network structure. While many researchers have argued that being connected is great for creativity because it allows exposure to more information and perspectives, a growing number of studies note that many of the most original and disruptive ideas in industries as well as in science came from outsiders. The latter idea is old but still very relevant for entrepreneurs today: individuals who are too embedded inside a particular set of relationships (especially if they are homogenous) tend to find it harder to have original ideas. New research from HBS Professor and MIT alumn Karim Lakhani finds that the best ideas in InnoCentive’s competitions typically come from isolated individuals, especially women scientists. What about collaboration? Again, no real consensus exists. A stream of research that is particularly developed among organization scholars has argued that collective work is more creative because it can involve individuals from different backgrounds and these divergent origins may inspire the collaborators and push them to make better decisions. In contrast, a long-standing research stream in brainstorming (psychology) literature has repeatedly found that people working in groups are actually less creative than the same number of individuals working separately. Groups tend to be unproductive for several reasons: the flow of conversation is often chaotic, some people do not dare speak out of fear of being judged, and group members tend to focus on consensual ideas. Current research by one of this article’s authors with MIT Sloan Professor Fiona Murray, finds that the cost of collaboration seems to outweigh the benefits. Do you really know what is best for you? Beyond the issue of following the consensus, connections can also blind an individual by leading him or her to be over-confident about the abilities of their friends. Familiarity tends to produce a bias in people’s evaluations of products and other people. For this reason, potential investors are likely to consider entrepreneurs that they have prior experience with to be more capable and more honest — thereby increasing their willingness to invest in them. A 2006 study by Sorenson and Waguespack of the feature film industry is particularly revealing. Firm distributors exhibit a strong tendency to allocate more resources to films produced by those with whom they have had prior interactions, “approving larger production budgets, marketing these films more heavily and scheduling them on more attractive release dates.” On the surface, films by producers with a prior relationship to the distributors appear to outsell others. But in reality, once the resource allocation process is controlled, these films actually perform worse at the box office. It is natural for one to perceive his best friends positively and to want to choose him as a business partner. After all, friendship brews not only familiarity, but also trust and emotional attachment. But such trust and confidence often create blind spots in one’s vision and leads a person to search locally rather than globally for business partners and economic resources. Studies have found that most entrepreneurial teams are composed of groups with strong personal ties, such as family members and workplace friends. These strong-tie teams often underperform weak-tie teams, particularly in sectors of technological innovation. This result is fairly understandable, since people with strong ties usually share the same work experience and social circles and consequently possess redundant information that is no good for “creative recombination.” Further, the research finds that while entrepreneurs benefit from moderately strong relationships with bankers, they are disadvantaged when these ties are too strong because they stop considering external options. In other words, when relations determine the choice of business partners, society as a whole, in addition to the actors selecting partners, suffer as they pass over more able parties. Beware of the blinding effect of social connections. It has become a cliché to think of the business school student as a smartly-dressed young go-getter handing out his or her business card. The purpose of this article (and the previous one) is to highlight the potential (hidden) downsides of social connections in entrepreneurship. We believe that the “social capital” metaphor could, in fact, be deceiving, since social relationships cannot — and should not — be accumulated like money. Let’s be clear. We do not believe that entrepreneurs need to be loners, totally isolating themselves from the world in order to be successful. However, we do take issue with the excessive glorifications of social relationships and collaboration. With social connections, as with many other aspects of life, more is not necessarily better. This post originally appeared on the MIT Entrepreneurship Review .

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Sen. Fritz Hollings: Solutions Avoided

March 28, 2011

The CBS program “60 Minutes” last night related how business was avoiding “the highest business tax in the world” by moving to Zug, Switzerland. General Electric has just found another way to avoid paying the corporate tax — hire a stable of Certified Public Accountants to prepare its return. GE just filed a 46,000 page return, paying no taxes, and claiming a tax benefit of $3.2 billion. This leaves the Main Street merchant paying the corporate tax, and they need relief. Everyone agrees that the nation’s number one problem is jobs, while Congress is in gridlock trying to lower the deficit. Congress can solve all three problems by canceling the corporate income tax and replacing it with a 5% value added tax. One hundred thirty-five nations in world trade have a VAT, which is rebated on export. The U. S. corporate tax is not rebated, which penalizes U. S. production in world trade. Offshore profits by Corporate America are tax free unless repatriated, so this encourages more offshore production. Corporate America avoids the corporate tax by offshoring production and parking or reinvesting the profits offshore. Last year’s corporate tax is estimated to bring in $156.7 billion, whereas a 5% VAT reaps $600 billion. The regressive nature of a VAT is eliminated by exempting food, health and housing for the low income which would not exceed an exemption of $100 billion. This leaves $350 billion to pay down the debt. At present, the Republicans in the House of Representatives are aiming for a $60 billion cut in the budget, and the Democrats are holding up at $20 billion. So the $350 billion ought please everyone. But surprisingly, Corporate America won’t be pleased. It depends on the big banks and Wall Street, and beginning in 1973, the big banks made a majority of their profits offshore. And Corporate America for the moment loves offshore production. It has no labor worries, health costs, safety or environmental concerns. The profit is from year-to-year, and if it doesn’t work out, Corporate America walks away with no legacy cost. But this system will soon run out. In four or five years, China will need not just 51% of the offshored profit, but 100% to take care of the remaining millions brought from poverty into the middle class. China has already brought 300 million from poverty to the middle class. It is on-course to bring in another 400 to 500 million in about five years, and then it will need 100% for the remaining 500 million. In the meantime, China slightly alters the obtained technology, patents it, and it becomes the article of trade. When China kisses Corporate America “goodbye,” it will return home with nothing to produce. Globalization is nothing more than a trade war with production looking for a cheaper country to produce. If the president stayed in Washington and enforced the trade laws, far more jobs would be created than those coming from Brazil, and the economy would recover. General Electric has just announced a $550 million research center for Brazil, while the President of GE heads up President Obama’s program for jobs. Our defenses are down. The Pentagon has been offshoring its needs for defense materiel so that we are begging Russia for helicopters for the war in Afghanistan. If President Obama would enforce the War Production Act of 1950, as President John F. Kennedy did for the textile industry, millions of jobs would be created. If President Obama would impose a 10% surcharge on imports as President Richard Nixon did in 1971 when our trade deficit was a miniscule of what it is today, it would create millions of jobs. If President Obama would impose import tariffs or quotas on endangered production as President Reagan did for Harley-Davidson motorcycles, it would create millions of jobs. If President Obama would obtain voluntary restraint agreements on autos, steel, computers, and machine tools, as President Reagan did, it would create millions of jobs. We developed Sematech in the ’80s, saving Intel and Hewlett-Packard. I launched the Advanced Technology Program in the State, Justice, Commerce, Appropriation Bill to support innovation. The National Academy of Engineering had to certify the technology as innovative and it had to be approved by a committee in the Department of Commerce — no earmarks. The industry had to provide 50% of the funding. The Advanced Technology Program was highly successful, but President George W. Bush defunded it as “corporate welfare.” Instead of crying for innovation, if President Obama would reinstitute the Advanced Technology Program, it would create millions of jobs. But it doesn’t pay to develop innovation in the United States. Intel has long since closed up in Silicon Valley, moved to Dublin, Ireland, then to China, and now in Vietnam. Steve Jobs has 700,000 workers developing innovation in China with more in South Korea and Taiwan. If President Obama had enforced Section 201 of the Trade Act to save General Motors when it was endangered, GM would not have gone bankrupt, needing a bailout. Enforcing Section 201 would create millions of jobs. In the trade war which ensues, President Obama cries for education but refuses to protect the economy. We need a lot more education in South Carolina, and we never have produced an airplane. But Republican leaders in the legislature packaged a $900 million benefit for Boeing, and we are now producing Boeing’s Dreamliner. Governors and state legislators know how to solve problems. But the president and Congress are so intent on getting the money for re-election that solutions to problems are avoided.

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James Sample: General Electric’s $0 Tax Bill: A Citizens United Perspective

March 25, 2011

Good news! If you’re looking to avoid federal taxes on $14 billion in profits, the financial strategists at General Electric have a few tips. Bad news! Unfortunately, and setting aside the small detail that you likely didn’t earn $14 billion in 2010, if you’re reading this, you’re a real person, which means you’re almost certainly ineligible. Ditto, incidentally, for most small businesses. An excellent article in today’s New York Times serves up an eye-popping reminder of the myriad ways in which, selective corporate personhood conveniently involves the sweet without the bitter. To paraphrase F. Scott Fitzgerald, “Let me tell you about the very rich [corporations]. They are different from you and me.” Today’s Times vividly demonstrates just how different they are when it comes to the modern political process. According to the article, in 2010, General Electric had “worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.” Their 2010 American tax bill? Zero . And actually, the Times notes, GE’s tax bill was much better than zero when factoring in a tax benefit of $3.2 billion. To put a political influence gloss on this, GE’s worldwide profits in 2010 amounted to 14 times the aggregate (and record-breaking) amount that Barack Obama and John McCain raised in contributions from actual, living and breathing, American human persons combined in 2008. Yet, to carry the comparison a bit further, it doesn’t exactly involve going out on a limb to surmise that the combined tax burden of all of those actual, living, breathing American human people amounted to a whole lot more than zero. Or, if you prefer, more than negative $3.2 billion Previously on this site, others, including Jason Linkins have explored the pragmatic consequences of the Supreme Court’s 2010 decision in Citizens United v. FEC . This site has also featured some innovative ideas, including Dan Greenwood’s , as to how to address Citizens United prospectively. There are critical differences between corporations and real people, particularly when it comes to finding a balance as between the legal bitter and the legal sweet. As I wrote here a year ago, for starters, corporations don’t go to jail; don’t face execution; don’t vote; do have eternal life; and are different from regular citizens in all sorts of meaningful ways, particularly when it comes to matters of political process. Today’s stunning revelations about General Electric, combined with the dramatic waxing of corporate political power post- Citizens United , turns taxation without representation on its head — not once, but twice. Which is to say, we’re heading for a democracy that is actually based neither on taxation without representation, nor on taxation with representation, but rather, on representation… without taxation. It is the theory of pre-Revolutionary France: the first privilege of aristocracy is exemption from taxation. There are many factors at play, of course, but at a minimum, left unaddressed, Citizens United will exacerbate those factors, resulting in a trend in which actual, living citizens of the world’s greatest republic, will increasingly find themselves politically marginalized.

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Nicholas Carroll: Shifting the Focus From "Strategic Default" to "Prudent Walkaway"

March 25, 2011

A “strategic default” currently means walking away from an underwater home even though the owner could afford to pay the mortgage. However, this represents far less than half of walkaways. The vast majority of foreclosures happen to people who cannot afford to pay the mortgage. Portrayals of strategic default in 2009 were typically of homeowners who “used their home as an ATM,” or “deadbeats.” Even news stories describing the positive side of default didn’t entirely shake those images. One of the earliest semi-positive stories was in the Wall St. Journal , titled ” American Dream 2: Default, Then Rent .” This article described a couple who had defaulted, cut their housing costs from nearly $4,000/month to just over $2,000/month, and were living in a bigger house with “a swimming pool with three waterfalls.” Another strategic defaulter in the same article found the benefits of default-and-rent included the discretionary income to go out to dinner more often, and hang on to his series-6 BMW. These are not the people I meet in the course of interviewing and writing about surviving tough times. The people I meet are laid off, or from two incomes down to one, or on their way to medical bankruptcy. They cannot imagine a swimming pool, much less a waterfall — they just have bills they can’t pay, one of which is the mortgage. Some are slow in adjusting to the “new normal,” and still eat out regularly, but others have already cut back to eating out four times a year. Their home may be underwater — or they may have equity. Often it doesn’t matter, when the bottom line is that they have to choose between the mortgage and medical insurance — because losing medical insurance in America is potentially lethal. For this group, it is not a matter of cunningly defaulting to maintain a latte-sipping lifestyle. It is a matter of prudently walking away from the mortgage that is dragging their family and future under the waves. The benefit for people who act both prudently and decisively can be startling. Taking a fairly typical example from people I’ve interviewed, this is the family’s financial situation: Primary income of $3,000 net per month is gone, with one laid off. Secondary income of $2,000 net is still coming in. $40,000 in cash and savings, including the 401K. $20,000 in credit card debt. One car fully paid for. Second car — $10,000 owed. They have done a careful financial projection. The total monthly expenses are $5,000, right down to the last dime — which includes $2,500/month on mortgage and credit card bills. That says that if the main breadwinner is not fully employed in 14 months, they will lose the home — and of course take a dip in their credit rating. And if the job doesn’t come until the 13th month, it had better be at the same salary as the previous job, or they’ll lose the home anyway. Scenario A: Betting on a job, and continuing to pay the mortgage (a.k.a. “doing the right thing,” according to the moralists). They guess that they will be fully employed again in time to save the home. They continue paying mortgage, car payments, and minimum monthly credit card payments. If their bet is wrong, their trajectory is shown by the red line below. Scenario B: Prudently walking away . They decide that getting a job might require a career shift or relocation, with some time and money invested in re-education. They immediately stop paying the mortgage and credit card payments. In this scenario, they cut their expenses by $2,500/month (which rises to $3,500/month when they move out and start paying rent). If there is real equity in their financed car, they sell it and buy a used car to replace it. Worksheet online in MS Excel format or PDF The difference between A and B is incredible. If the family bets the primary bread-winner will be working within the year and is wrong, they could be leaving their home without enough money to rent a decent apartment in 14 months — exhausted, frightened, and possibly running on bald tires. (People who “do the right thing” tend to leave long before they actually get legal notice to move.) The family that bets the primary bread-winner will not find a job in 13 months and stops paying the debts will be leaving their home with $33,000 cash in hand, move to a rental (usually in the same school district, if need be), and will have three years for the primary bread-winner to find a job . And that’s their worst scenario — it’s quite likely they’ll be in the house for 18-24 months without making any mortgage payments. Conclusion: when the writing is on the wall, the best plan is often a prudent walkaway — an escape to the future, equipped with enough cash to get there.

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Anne Hill: 5 Great New Social Media Strategies

March 23, 2011

Most business owners understand the basic premise of social media marketing today, which is that linking your website to your company presence on other social networking hubs (such as LinkedIn , Facebook , and Twitter ) is more effective than just getting a lot of SEO for your site. Consequently, I spend a lot of time advising small businesses on how to create and maintain their Facebook Pages, and how best to improve their LinkedIn presence. However, there are some golden opportunities for creative marketing that haven’t been widely adopted yet, that would be even more effective for many professionals. While all your competitors are concentrating on updating Facebook and LinkedIn, wouldn’t it be fun to outshine them all by doing something completely different? Here are five new strategies for business marketing — things that have only become possible quite recently, that will make your service or storefront even more relevant in a crowded field. 1. Claim your business profile on Yelp. If you have a storefront or office, you absolutely must list it on Yelp . Why? Because Yelp has a great mobile app that is very popular for finding products and services when you are on the road. It is quicker and easier to use than Google’s iPhone search app, making your store hours, phone, and location instantly accessible to the large group of Yelp users. When you sign up for Yelp and claim your business, you can interact with all of those users — and Yelp gives you free swag you can display in your window, or add to your website to cross-link your site to its Yelp listing. Non-storefront businesses can also have profiles on Yelp, and can list up to 5 different cities they serve. Finally, consider writing reviews yourself. Leverage your deep knowledge of a locale or industry by writing helpful comments on relevant businesses, then create a widget on Yelp that you can place on your website, that will share your reviews with a wider audience. 2. Improve your business search results with a listing on Google Places. In its recent efforts to improve search results, Google now gives greater weight to local data, most notably from its own Google Places . The first step is to simply Google your company name, then locate it on the Google map for your area. Like Yelp, you then claim your business identity (creating a Google account if you don’t already have one) and are able to add lots of information about your business. Having a listing on Google Places will automatically bump up your business in a Google search, and filling it out is pretty straightforward. You can also correct any misplacement of your store location on GoogleMaps, which happens fairly frequently in rural areas. Being easily found on GoogleMaps is important, but you can also use Google Places to do the opposite and hide your company from view (by substituting a P.O. Box for a street address), if you work from your home and do not wish to divulge your residence to the world. 3. Engage with other experts in your field on Quora. One stand-out social media tool is Quora.com , which operates on a simple premise: there should be a place to go on the web for clear, concise answers to specific questions. With a minimum of hype and noise, Quora does just that. It is an excellent way to increase your visibility and connect with others interested in similar topics. Its interface is also clean and relatively easy to master, unlike Facebook with its endless settings and options. As with all social networking sites, you need to put some work into understanding its interface, finding people and topics to follow, and responding to questions from others. Once you get the hang of it though, Quora makes it easy to share what you know on Facebook (only to profiles however, not pages) and Twitter. In fact, a clever way to stream your Quora activity to your website would be to create a Twitter account, link it up to Quora, and then put a Twitter widget in a sidebar on your website. Visitors to your website will then see every time you ask or answer a question on Quora — and you won’t have to engage with Twitter in any other way, so long as you are consistent about using Quora. 4. Create big value with a very small camera. If there is one gadget that will do more to boost your online presence than anything other than your phone, it is a video camera. Whether you use your iPhone 4 , a Flip camera , or something else, the technology is well within your grasp to create short, fun videos on topics of interest to your customers, and upload them to your website, blog, Facebook page, or YouTube channel in minutes. Camera shy? Keep in mind that the optimal length for online video is from 2 to 5 minutes. That’s just enough time to place the camera in front of you and say something relevant about where you are and what is taking place, then end it with a friendly sign-off. You can have short conversations with colleagues about industry-related issues; promote local festivals and events; advertise new products and services when they are available. Above all, you add personality to your business, which is a huge advantage in a market stuffed with words but starved for a human voice. 5. Join or create a group for local events on Meetup. If you regularly hold informational meetings about your business, consider expanding your reach by listing them on Meetup.com . And if you want to network with others in your area with similar interests, you are most likely to find them on Meetup. Unlike most tools mentioned so far, Meetup results in actual face-to-face meetings with like-minded people from your own area. It gives event planners the tools to set maximum attendance levels, send out reminders before the meeting, and easily keep in touch with group members. More than any other social networking site, Meetup has also made it extremely easy to link information from its site to your business site, with a slew of customizable widgets and several handy RSS feeds . With them, you can promote your group, your area, your calendar of events, even specific topics right onto your blog or website. For the past several years, conventional wisdom has been that having a blog was the most important tool for your business. But blogs are not for everyone, nor are Facebook Pages, and now they don’t have to be. These new tools are less daunting and more flexible than anything that has come before, and their reach and popularity is only beginning. If you have been hesitant so far to try social media marketing for your business or website, you have officially run out of excuses. A version of this article was published at Creative Content Coaching . Subscribe to the CCC blog on Kindle .

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Jonathan Littman: Chinese Brand Knockoffs: Hooking Women on the Real Thing?

March 21, 2011

Her eyes dart back and forth as she leans forward on a stool and gracefully unties the leather roll. Half a dozen gleaming women’s luxury watches on the glass counter, each worth thousands of dollars — if they were real. We can see and touch them, but she’s poised to snatch them up in a second. “You want Rolex? Omega?” she asks me, noting my hesitation. “I give you best price!” Just then my friend whispers to her: “They’re coming.” With the deft hands of a Vegas card dealer, she sweeps up the loot and slips it under the counter. Seconds later, two police sporting the red armbands stroll by the empty counter. It’s just another Sunday afternoon in Shenzhen China’s Luohu Commercial City, a gargantuan shopping mall a stone’s throw from the Hong Kong border. A well known Hong Kong joke goes like this: Locals hop the train to Shenzhen to buy fake luxury brands, while mainland Chinese flood Hong Kong to buy authentic goods. There’s ample truth behind the saying. Hong Kong rivals Milan, New York or Paris as a destination for the world’s most expensive luxury brands, and local authorities have made extensive efforts to drive cheap counterfeits farther underground. But in reality they are not far away. After a week in Hong Kong on business, I’m concluding my visit with a brief trip to Mainland China. Fortunately, I’m making the trip with two veterans: Friends from San Francisco working here for a year in Hong Kong. “Mrs. Jones” is not only a successful professional woman, but a talented international shopper, accompanied today by her bemused husband. My goals are three-fold. I’ve always wanted to visit a communist country, hope to score gifts for my wife and daughters, and want to see and understand the counterfeit trade first-hand. Counterfeiting top brands is a hotly contested issue, especially if it’s your brand. When it comes to software, movies, and other intellectual property it’s hard to view it as anything but theft. But interestingly, when it comes to fashion, anecdotal evidence is emerging that Chinese counterfeits of international brands may be having an unexpected effect. Some market experts are arguing that Chinese women who first buy fake Prada or Louis Vuitton bags, for instance, later upgrade to the real thing. Can counterfeits act like gateway drugs? You buy your first knock-off handbag for $60 and then a year later find yourself driven to drop $2,000 on the real thing? At first glance, the idea sounds sacrilegious, but evidence is emerging that this phenomenon seems to be happening to middle class Hong Kong and Chinese women. What about American women? What about this American man? It may sound far fetched, but is it really that crazy an idea? What if a little up-front loss on counterfeiting is returned by a steady percentage of shoppers who get hooked on high-priced fashion? George Orwell is one of my favorite authors, and having read 1984 multiple times, I approach the border with a curious mixture of anticipation and fear. The train from Shatin, New Territories to Shenzhen is just a half hour, and we disembark and begin the process of entering China. I need to complete a Hong Kong departure card and China arrival card, and pass the scrutiny of two security checkpoints. Once through, I pull out my trusty iPhone and am about to snap some photos, when Mr. Jones advises restraint. “The security officers might detain you and confiscate your phone,” he says. “Especially if you accidentally take their picture.” I put away my phone, and then Mr. Jones reveals another little known border secret. “Do you see what the guards are holding in their hands?” he asks. Small black devices are cradled in their palms. “Those are temperature guns,” he explains. “If you’re more than one degree above normal they can quarantine you indefinitely in China.” Being quarantined in China does not sound like a good idea. I’ve entered another world, and am a long way from home. Without noticing it, my friends have slipped ahead in the surging crowd. We’re walking over a broad enclosed bridge that crosses the muddy green Shenzhen River to communist China. The high stone wall and barbed wire is on the Hong Kong side of the river, summing up all you need to know about communism. Something deep within me clicks, and it’s as if I’m Winston Smith, the doomed protagonist of Orwell’s 1984 . Panic grabs me. Where is my passport? I stop and furtively search my pockets. Did I drop it? Was it stolen? My friends, blissfully ignorant of my dilemma, walk on into China. A frantic minute passes, then two. I’m alone in China without a passport, and then I find it right where it should be — next to my wallet. Suddenly we are outdoors facing the eclectic skyscrapers of nearby downtown Shenzhen. Ahead lies the aptly named Luohu Commercial City. This is not a shopping mall or center. It’s a full-on indoor shopping city, a frenetic maze of escalators, elevators and tiny glass enclosed shops and booths. Festooned with banners and lights this seven-story shopper’s beehive boasts 32 escalators, 16 elevators, and a phenomenal 1,280 shops. Once inside, the shopkeepers start clutching my arm, and selling hard. “Mister, you want iPad?” “Mister, you like watch?” “Mister, good deal for you.” Sales pitches come from every direction, but nothing is quite what it seems. I had foolishly imagined all the counterfeit brands would be on display. But that’s not how it works at all. Mrs. Jones, who has been living in Hong Kong for more than six months, has a system. On her first trip, she started with one vendor, built a relationship, and then created a friends and family plan. A bright sparrow of a woman named Lily dressed in black holds court at a small counter stuffed with strands of pearls and Chinese watches. A few weeks before she met all the phony branding needs of Mrs. Jones’ mom. An assistant pulls up three stools for us. None of the watches in the glass case appeals. Omega is what we want, and after Lily scans the area for cops, she pulls out a leather satchel and lays out several, including the elegant women’s Aqua Terra. She tempts me with a Rolex, but I too prefer Omega, and so, after a little rummaging around behind the counter, out comes the Omega Speedmaster, which retails for $3,500. Five minutes later, a hundred feet away, three cops in full uniform begin marching down the aisle. Lily’s lookout casually walks toward her, ahead of the troops. She sweeps the watches off the counter. A couple of minutes later the cops are gone, and the watches return. Mrs. Jones understands the game. The woman’s timepieces would retail for more than a grand each. Lily wants $30 apiece for them, and Mrs. Jones returns with her best opening line. “Lily, I live here,” she laughs good-naturedly. “That’s much too expensive.” Mrs. Jones takes the clunky, oversized calculator from Lily — every shopkeeper has one — and divides the price by three to $10 U.S., and hands the calculator back to Lily. “I no make money on this,” Lily responds, looking at the calculator and shaking her head. So begins a friendly calculator tug of war, which ultimately results in a price of $12 a watch. The Omega Speedmaster starts at $80, and Mrs. Jones quickly cuts it down to $37, which she advises me to walk away from. But what can I say. I’ve always wanted an Omega. The handbags are another matter. Fortunately my sixteen-year-old e-mailed me images of her favorite brands. I hand Lily the printout, and out comes a massive catalog from beneath the counter. Lily flips through and finds the Louis Vuitton women’s purses, picks up a landline phone and makes a call. Ten minutes later, a young man in a black sports coat strolls up, glances around and hands her another leather satchel, this time containing four wallets. Retail ranges from nearly $400 to $1,500 — if they were real. Mrs. Jones quickly halves the price on the $400 wallets from $30 to $15. Lily is stubborn on the $1,500 patent leather one, (wrapped in felt in a nice box). Mrs. Jones haggles it down to $30. After Mr. Jones picks up his three elegant custom sport jackets, (each about a fifth of what they’d cost in New York), we enjoy a pleasant Chinese lunch, and then cross back to Hong Kong. I’m carrying Omega, Louis Vuitton, Longchamps, silver bracelets and silk scarves. Chinese customs is friendly as can be. Half the people are returning with large suitcases and oversized bags — and yet no one is stopped. We walk the bridge back to Hong Kong and I drift as far as possible from the temperature guns. But I’m not quite home free. That night I take the Singapore Airlines red-eye back to San Francisco, and get stuck in the line with the chatty customs officer. I mention I’m a Contributor Editor at Playboy and that amuses him and he inquires about Hugh Hefner’s sex life. It’s going swimmingly well until he stares tellingly at my wrist, “Where’d you get the Omega?” What should I say? If I say it’s real, he may assume I just bought it and owe import duty. And if say it’s a Chinese phony? Like most Americans, I don’t really know the rules. Later, I’m surprised to discover that my fears were unfounded. Our government is largely ambivalent about tourist purchases of minor counterfeit fashion items overseas. As long as you don’t go hog wild it’s perfectly legal to bring counterfeit fashion brands into the U.S. According to Customs Directive No. 2310-011A dated January 24, 2000, “Customs officers shall permit any person arriving in the United States to import one article, which must accompany the person, bearing a counterfeit, confusingly similar, or restricted gray market trademark, provided that the article is for personal use and not for sale.” The only limitation appears to be that you can only import one of each counterfeit good: one Rolex, one Mont Blanc pen, and so on. If only I’d know this in advance I wouldn’t have had to make up such a silly story. Now, if I can only figure out how to switch my Omega from Hong Kong time!

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Dan Mirvish: Is Warren Buffett the Next Harry Winston? Ask Anne Hathaway

March 10, 2011

Last week I wrote about the curious phenomenon known as ” The Hathaway Effect ” — when Anne Hathaway is in the news, the share prices for Warren Buffett’s Berkshire-Hathaway go up (most likely because of robo-traders reacting to the Hathaway name in the news). There was an international reaction to the story (including BoingBoing , Time magazine and the evening news in Canada ). But one of the more curious responses was from one of Berkshire-Hathaway’s official blogs in Buffett’s homebase of Omaha. In the ” Berkshire-Hathaway Annual Shareholder Meeting” blog run by Omaha-based Borsheims jewelry store (which is owned by Berkshire-Hathaway), it reads: The Omaha World Herald had a really fun and interesting article today about the connection between actress Anne Hathaway and Warren Buffett… Here’s a link to the article: Wait Till She Names a Child Berkshire I can think of another connection, too! Anne Hathaway likes to wear jewelry, and Berkshire Hathaway’s Borsheims loves to sell jewelry! Shop our looks fit for an actress. So come next Oscar season, will Warren Buffet be the next Harry Winston, decking out Hathaway and other Hollywood starlets in million-dollar jewels? If so, will they have to go to Omaha for a fitting at Borsheims or will Warren set up shop on Rodeo Drive? (I asked Anne Hathaway’s publicist, Steven Huvane at Slate PR, for a response but he demurred.) Among the other unintended consequence of “The Hathaway Effect” is that since writing about it, it appears to have become a self-fulfilling prophecy that proves my original point: On March 3, the first full trading day after the story got wide circulation last week, Berkshire-Hathaway’s stock rose by 2.05% . I know some have commented that Berskire Hathaway stock goes up everyday anyway, but on the contrary: The day before, it was down .51%, and the day after it was down 1.40%. Meanwhile, Anne Hathaway’s IMDb STARMeter number shot up 85% in the last week (she’s now #7 on the list). And out of full disclosure, perhaps it is worth noting that my own IMDb STARmeter rating rose by 39% in the last week, too. Now that’s some Hathaway Effect!

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Sean Black: Diary of a Silicon Valley CEO

March 9, 2011

It’s a well kept secret that startup CEO’s spend an inordinate percentage of their time selling. From raising money to recruiting talent to landing new customers and even negotiating an office lease, CEOs sell something to someone every day. To prove my point, I started keeping a diary of my day-to-day as an Internet startup CEO. Here’s a sampling of my week: Monday: Murphy’s Law I have a meeting with one of the largest banks in the world. It’s only a 7-minute cab ride from our edgy downtown office in Union Square to their imposing glass tower on Park Avenue, but it feels like I went through a time space continuum under the Helmsley Hotel. As the cab lets me out I see suits pouring in and out of the building and become painfully aware that I am wearing the standard issue startup uniform of dark blue jeans, a button up shirt and a sports jacket. I just broke a basic sales 101 rule — dress to mirror your audience. Feeling underdressed and a little self-conscious, I shoot up to the 50th floor in one of a maze of elevators. To appreciate this story it’s important to know that we are in the business of selling web-based applications that help companies socialize sales across their company and customers, so having Internet access to demo our apps is kind of critical. We sit down in a meeting room with a window that peers freakishly into the next building where dozens of meetings are on display seemingly for our entertainment. I fire up my Mac to start a demo, only to discover there is no WiFi in the building. I spot an Ethernet cord on the wall and plug it in, but its dead. I whip out my Verizon wireless card, but the buildings’ thick walls render it useless. As we turn the corner my host’s office to try her computer I see what looks like a government issued mainframe sitting on her desk and can’t help but think of that scene from the movie A Christmas Story where the kid drops the lug nuts and blurts out “Ohh Fuuuuddge”. She turns on the big white box and I half expect a few clunks and some smoke to pour out. Instead, something far worse — a five-year-old version of the Internet Explorer browser struggles to come to life. The Internet connection is so slow the page slowly paints from left to right across the screen. I type our URL into the browser to see what looks like a war-torn version of our slick new website that clearly isn’t built to backward support a five year old browser. That’s it; I shut her computer off, open PowerPoint on my Mac and give her an old school presentation. As I leave her office I take comfort knowing I am headed back to my George Jetson high-tech world downtown alive to sell another day. Tuesday: Dirty Sexy Money I spend the morning working on my book Dirty Sexy Money — How to Build Sales at a Startup . In addition to being provocative, the title pokes fun at the fact that the Internet startup world is full of entrepreneurs who dream of making lots of money, but who naively think they don’t need to sell their wares because if they build it customers will come. Anyway, I get on a call with our public relations consultant to sell her on my idea of throwing an underwear-only book launch party for the New York tech community at the Penthouse Mansion, now owned by someone from my business school alma-mater. After picking her jaw up off the floor she spends the next 15 minutes telling me why that is not such a great idea. We’ll see who wins that sale in a month or two. Meanwhile, I’m shocked to get an email from the woman at the bank asking for a copy of the presentation to send to her team — redemption is at hand, or so it seemed. I send her a link to the presentation using our own application that tracks when someone opens it and the number of minutes and seconds they send on each slide, like Google Analytics for presentations. But she can’t open it on the “oh fudge” computer. So I send her a link to our super fun animated demo video on YouTube, but the bank bans employee access to social media. It’s a scary reminder that social media marketing isn’t as mainstream as the propaganda machine would have us believe. Alas, I am forced to email a PowerPoint and miss another opportunity to demonstrate our own product. Wednesday: Sky’s The Limit Our law firm Cooley gave me a conference room on the 48th floor of the Grace building across from Bryant Park. I walk into the room to see New York City sprawled out in front of me; the Empire State Building reaching for the sky, the sun glimmering off the Hudson River and the Statue of Liberty is off on the horizon dwarfed by the distance. I am thankful I can do my job from anywhere in the world (except a bank) and that I don’t have a “real job” where I have to show up at a cubicle at 9am everyday. The sweeping view of New York is the perfect inspiration to work on my book totally undistracted. Of course, I’m distracted an hour later by my attorney Bo, but it’s a welcome distraction as I asked him to stop by to talk about SiliconCEOs, a peer group I am putting together and want Cooley to sponsor. The idea is to get CEO’s of fast growing venture backed Internet companies in New York (Silicon Alley) and the Bay area (Silicon Valley) together each month so we can candidly and confidentially help each other build amazing companies. My company has the good fortune of being backed by top tier investors like First Round Capital and Accel Partners, so we have access to plenty of great CEO’s. We just need a sponsor so we can pay for gatherings. Before I leave Bo agrees to allocate a good chunk of his marketing budget for the cause — score one for the team! Thursday: A Window Closes I wake up to an email from Jeremy Stopplemen, founder & CEO of Yelp. I asked him to come speak at our next SalesSchool event and talk about how he built Yelp’s inside sales team to over 300 salespeople that now drive most of Yelp’s reportedly $100M a year in revenue. Not surprisingly, the Yelp sales machine never came up in any of the press a few months ago around Yelp refusing Google’s $500M buyout offer. I tried to sell Jeremy on the idea that this was the perfect venue to give back as well as give the Yelp sales team the credit it deserves. We did a similar event at NYU in December that was a huge success with almost 400 RSVPs from the New York tech community. Unfortunately, Jeremy’s response was “I don’t think this is a fit for us, but appreciate you reaching out”. Oh well, you win some and you lose some. Friday: A Few Doors Open I wake up to two great emails. One is from MIT offering to host the next SalesSchool on campus next month. The second is from the VP, Sales at Boston based Hubspot Mark Roberge accepting my invitation to build the event around Hubspot’s amazing sales team. We agree the event will likely sell out in an hour of releasing tickets. High off that bit of good news and a little too much Starbucks I grab a cab to met one of our advisory board members for breakfast at the Pain Quotidian on 5th Avenue and 8th Street. It’s one of my favorite blocks of Greenwich Village lined with beautiful pre-war buildings and anchored at one end by the Washington Square Park Arch. The fact that the arch, modeled after the Arc de Triomphe in Paris, has been standing in that spot since 1892 acts as a sort of pinch reminder that I live in this amazing city. Our advisor is the president of popular and fast-growing online media company and I am meeting with him to ask him to speak at the first SiliconCEO event about how his company socialized selling throughout the company. They literally made sales everyone’s job from founder down through the ranks, culminating with the announced sale of the company for several hundred million dollars. He agrees to do it — score! I am off to my next meeting with a serial entrepreneur friend that writes a popular blog to get his advice on writing a regular post about what its like to sell the dream every day as founder & CEO of an Internet startup. He proceeds to warn me that to do so successfully would require writing in the first person, exposing intimate details about myself and being on the opposite side of safe. Saturday: Exposure or Exposed? Inspired by friend’s advice and story I start writing this diary. I try to reveal as much as possible about just a few of the best and worst things that happened to me this week. I am taking a lot of risk by sharing these intimate details. I have to admit that I am a bit worried that I might tip my hat to our competition, piss off the people I mention (sorry Jeremy) or that my investors will think I’m an idiot for showing my cards. This is why there aren’t any other CEO’s writing this type of stuff for public consumption while they are still in office. But I am equally excited not only by the idea that exposing my day-to-day can help other current or aspiring entrepreneurs realize they are not alone on the startup roller coaster, but also we might gain far more than we have to lose by tapping into the wisdom of the crowds, open sourcing solutions to some of our initiatives and challenges and race past our competition. At least, that’s the story I’m going to sell to my board if all hell breaks lose after this article is live for all to see. Wish me luck!

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Kiwi Benefits From Local Newspaper Article Dismissing Rate Cut Prospects

March 8, 2011

Kiwi Benefits From Local Newspaper Article Dismissing Rate Cut Prospects

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Flattr: Think Facebook "Likes" With Cash On Top

March 4, 2011

This post is part of a new series from HuffPostTech, Socialized , that will profile a different social startup–from apps to services to websites–every day. Want to be featured on the site? Email us about your startup, which should have a social media component and be less than two years old, at bianca@huffingtonpost.com. Facebook “Likes” are sweet. If you “Like” this article, it will make me feel warm and fuzzy inside. But it won’t pay my bills. To truly show your love for something you like online, give small cash donations to its creator using Flattr . What it is: Flattr allows you to donate tiny amounts of money to a blogger, filmmaker, photographer or any other content creator without having to type in your credit card information each time. The service also enables users to give mobile micro-donations to things in the real world. How it works: Once you sign up for Flattr, you must deposit a minimum of $3 each month into your Flattr account. Over the next month, you can “flattr” certain web pages (blog posts, videos, images, etc.) that use the service simply by clicking the page’s Flattr widget. Each time you flattr something, your monthly budget is divvied up between the sites you’ve flattr’d. The more sites you flattr, the smaller each donation becomes. And if you don’t flattr at all in a given month, your monthly budget is donated to charity. Creators can also print out their Flattr codes and stick them on real world things, like artwork or a street-performer’s tip-jar, so that people with the smartphone app can Flattr in the physical world too. The number of Flattr clicks on a certain web page is visible to everyone, but the amount of money the clicks represent is private to the page’s creator. And much like a Digg or Facebook “Like,” content distributors can use Flattr clicks as a metric to rank the popularity of their site’s content. The catch: Flattr is only as game-changing as the size of its user base, which is still small. Launched in August 2010, Flattr’s 70,000 registered are mostly based in Europe. In Germany, which has the most users, the country’s two largest newspapers embed Flattr buttons on each piece of online content they produce. In Sweden, where the company is based, Wikileaks used Flattr to collect donations even after Mastercard and Visa bailed . Why you’d use it: Essentially, Flattr eliminates the need to type in your credit card information each time you want to donate money to someone or something online. In addition, few if any banks allow you to make the tiny payments Flattr enables its users to dole out. For content creators who use Flattr, the micro-donations can add up. According to Flattr founder Peter Sunde, some of the most influential bloggers in Europe net over 2,000 euros ($2,789) a month from Flattr clicks. But, at least in its early stages, users shouldn’t expect Flattr buttons to pay the bills . How to get it: Register here , fill in your credit card information, and get to flattr’ing. Or, if you ever see a Flattr button on a web page, simply click it and you’ll be taken to the registration page.

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Nicholas Carroll: Making the Case Against Mortgage Banksters: Legalities

March 3, 2011

Federal prosecutors have trotted out three reasons why they aren’t prosecuting mortgage banksters: difficulty gathering evidence, the cases are too complex for a jury, and it’s too hard to prove intent. No lawyer I’ve spoken to agrees. Nor do I. This is an analysis of why the criminal cases can be made. The first two excuses are summed up in Shahien Nasiripour’s article of 2/4/2011 , which quotes former SEC enforcer Stanley Sporkin: They’re handicapped by the fact that they’re looking at potential violations not while they’re in the act, but long after they were committed. And they deal with complicated transactions that could be difficult to explain to juries, rendering their efforts to take cases to trial more challenging. “These are tremendously difficult cases to make,” said retired federal judge Stanley Sporkin, who worked at the SEC for 20 years, seven of them as head of the commission’s enforcement division. Momentarily shelving the fact that Sporkin himself successfully made many prosecutions during his SEC years, let’s look at the issue of complexity first. In the 1980-90s savings and loan failures over 1,000 executives were convicted of felonies , all based on jury presentations assembled by prosecutors. Today the groundwork is done, because the WWW provides a ready source of explanations that a jury can readily understand – there are numerous videos on YouTube explaining mortgage fraud at an 8th-grade level, easily found by searching “CDOs explained” or “CDSs explained.” For juries that prefer print, this excerpt from The Looting of America by Les Leopold clearly and simply explains that “tranche” is a French word meaning “a slice [of a pie, cake, quiche – or mortgage].” With the French translated, the web page quickly makes the mortgage-slicing shell game transparent with a three-tier graphic of wine glasses, showing the banksters’ glasses brimming over in the top tranche, while the suckers wait in vain for the spillover at the bottom tranche. As to the second difficulty in prosecuting, gathering evidence on stale crimes: this is part of policing. That’s why police departments have detectives – because not everyone conveniently robs the 7-11 just as the beat cop stops for a cup of coffee. It’s called “legwork.” In this the WWW helps again, since many white-collar criminals don’t seem to fully understand that an email is like a postcard, readable by anyone who lays hands on it – and erase it though they may from their hard drives, copies are lurking in Internet mail servers all over the U.S. – including “anonymous” Hotmail accounts. The careless ones certainly don’t follow former Louisiana Governor Earl Long’s rules, “Don’t write anything you can phone. Don’t phone anything you can talk. Don’t talk anything you can whisper. Don’t whisper anything you can smile. Don’t smile anything you can nod. Don’t nod anything you can wink.” Earl Long would not have used email much, and anyone who sends email that does more than wink is riding for a fall. (Other banksters are careful in email, and criminal cases against them may fail on either facts or intent.) On the third difficulty, intent, both prosecutors and media have been wringing their hands about the failed DOJ case against Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin, with a sort of vague prophecy that this hamstrings prosecuting financial cases. However, if the prosecution had gotten a conviction, the case still would not have been on point (a good legal precedent) for the mortgage meltdown fraud. This was two hedge fund managers acting like excitable day traders – or typical hedge fund managers – alternately gloating and panicking about market fluctuations that were largely beyond their influence. That they may have concealed all their misgivings from their clients would simply make them stock hypesters on a grand scale. By contrast the mortgage meltdown involved planned, controlled, systemic fraud by a huge number of perpetrators at many levels in the chain of fraud, some actively making bad loans under fraudulent circumstances, others packaging and selling those toxic loans as prime investments. This constitutes a pattern of abuses on the part of both individual participants and companies. (The felony of conspiracy to commit fraud may be harder to prove, because in an industry like real estate, loosening lending standards to the point of insanity was message enough. Wall Street and Fannie Mae didn’t have to tell the brokers and other local lenders in the fraud chain to run amok – they would have done that on their own just to get the mortgage commissions.) This brings us back to Sporkin, who in Nasiripour’s article was cited again, Sporkin’s team, he said, looked for laws that enabled them to go after what they viewed as fraudulent activity. This sounds like what was described as “creative prosecution” in the Department of Justice by the 1980s, but by any name has been going on a long time. Long before RICO racketeering laws allowed prosecutors to cast a broad net for patterns of behavior, in a pinch they would call on good old crimes like tax evasion, which was used to put away gangster Al Capone when he couldn’t be nailed for his main businesses of bootlegging and prostitution. Is creative prosecution ethical? Often it’s not, particularly when used to destroy political enemies by the spaghetti theory, throwing a lot of charges at the defendant and hoping something sticks. In this case, however, there is not much doubt about the massive criminality of the mortgage banksters. That said, it appears that Federal prosecutors intend to do little, simply cutting deals with the banksters for fines. A plea requiring no admission of guilt, a few million dollars in easily-affordable in fines, and the banksters walk – not the perp walk, but on to their next crime. Part 2 will look at how state Attorneys General offices can deliver some genuine punishment to the criminals. Legal annotations to this article.

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World’s Most Admired Companies for 2011: Fortune

March 3, 2011

NOTE: this article was republished with permission from Fortune.com By Geoff Colvin, Shelley DuBois and Daniel Roberts, Fortune Now that the skies are clearing after the worst economic storm in modern history — far more violent than the experts had predicted — we face a surprising new roster of winners and losers, as our 2011 ranking of the World’s Most Admired Companies makes clear. Stress in the recession and financial crisis brought out traits that may not have been noticed when the sailing was smooth. Upstarts became champions. Famed competitors fell behind; some didn’t make it through the storm. The findings of our latest survey show a new competitive order in many industries and in business generally, one that will probably last years. How the winners won and the losers lost holds lessons of value for everyone. The tumult is the greatest we’ve seen in 13 years of ranking the World’s Most Admired. Of the 57 industries studied, 22 are led by new companies this year, the largest proportion ever. The changed order of the business world is particularly evident from another perspective — our respondents’ views about who are the best at critical business abilities. The recession changed global opinion thoroughly. Here are the top 8 companies — and visit Fortune for more information :

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Susan Buchanan: New Orleans Tap Water Beats Odds, Meets All Regulatory Standards

February 17, 2011

The Crescent City draws its water from the Mississippi — a river lined with petrochemical plants and storage tanks and full of waste from northern neighbors. Residents worry about spills in the river, and wonder if oil lapping at the coast has affected their faucet water. In a weekend last November, city dwellers endured a boiled-water advisory after a plant problem. And life on some blocks has been disrupted by water main breaks in recent years. Local, state and federal authorities, however, say the city’s tap water meets and, under some criteria, exceeds their standards because of controls on discharges in the river, constant water sampling and cleansing at plants. Last week, the purification superintendent at the Sewerage & Water Board of New Orleans rated the quality of the city’s tap water as “excellent.” The 106-year-old Carrollton plant, outfitted with pumps, pipes and generators to pull water from the river, uses conventional purification processes, filters the water and provides 135 million gallons daily to nearly 300,000 people over hundreds of square miles. The facility’s tile-roofed buildings employ 200 workers, and contain a water-quality laboratory. Vincent Fouchi, Superintendent of Water Purification at the S&WB, said “we have the same plants, the same chemicals and procedures as before Katrina.” Across the river, the Algiers plant supplies the West Bank with 10 million gallons of drinking water each day. “We monitor the two plants daily and monthly to comply with U.S. Environmental Protection Agency and state Dept. of Health & Hospitals water-quality guidelines,” Fouchi said. “We’re in compliance with current regulatory levels. The state’s Dept. of Environmental Quality has done a good job of controlling the flow of industrial waste in the river by strict permitting of plant emissions.” The U.S. Coast Guard has helped enforce those permits. Fouchi said, in his opinion, “the S&WB provides excellent-quality, potable water to our customers.” He continued, saying “DHH tests for agricultural runoff and pesticides in the river.” And while the BP spill was too far away to hurt the city’s water supply, “we remain vigilant for upriver oil spills between Baton Rouge and New Orleans.” The DEQ has an Early Warning Organic Compound Detection System or EWOCDS for spills. The S&WB lab analyzes river water daily and reports any contaminants to the DEQ. Fouchi said river pumping operations are halted “when we choose to stop taking water from the river.” Decisions to stop drawing are based on types and concentrations of contaminants. “We have more than one river pumping station and sometimes a spill may affect one, but not two stations,” he said. In a long-ago study, released in 2003, the Natural Resources Defense Council said the city’s water quality was good, but source protection was poor. Fouchi said “for source-water protection, EWOCDS is our best tool. The Mississippi River is leveed between Baton Rouge and the mouth of the river, so the only sources of possible contamination along this stretch are permitted industrial discharges and marine traffic accidents.” He noted that other large cities on the Mississippi like St. Louis draw their water from the river, though Baton Rouge gets its supply from deep wells. New Orleans, meanwhile, is strapped for cash for upgrading the water system. “Our infrastructure needs are still significant, and greatly outreach our current, capital-improvement funding levels,” Fouchi said. “We’re doing our best to repair infrastructure and equipment, as needed, within our current, budgetary constraints.” The U.S. Army Corps of Engineers is installing a new generator at the Carrollton plant in an estimated $48 million project. Nancy Allen, Army Corps spokeswoman, said a contractor is building a structure to house the generator, which should be in place this September. At the Algiers plant, “we switched from elemental chlorine to sodium hypochlorite about two years ago,” Fouchi said. Sodium hypochlorite is a chemical compound used to disinfect water. “We’re currently constructing a sodium hypochlorite storage and feed facility at Carrollton, where sodium hypochlorite will replace elemental chlorine as our disinfectant.” Those change are intended to eliminate risks from chlorine gas releases. Clyde Carlson, New Orleans-based, district engineer in the Office of Public Health of the La. Dept of Health and Hospitals, said “the city is in compliance with safe-drinking water regulations. Customers can look at the S&WB’s website and read its consumer confidence report released last summer, along with updates on that report.” In terms of water quality, the city’s purification plants meet all state and federal, including EPA, standards. Under EPA requirements, a consumer confidence report must be mailed to customers once a year. The S&WB plans to send out its next report this summer. New Orleans drinking water escaped any affects from the Gulf spill. “We’re 100 miles upstream from the mouth of the Mississippi River, and the BP spill occurred 50 miles out in the Gulf and in no way impacted water quality in New Orleans,” Carlson said. “We’re vigilant about any spills that might occur on the river upstream from us, however.” A network of monitors, involving the DEQ, DHH’s Office of Public Health and the U.S. Coast Guard, alerts stakeholders and water authorities about any detected spills in the river. The last, big river spill in New Orleans occurred in July 2008 and left residents concerned about tap water. “In the 2008 incident, in which a barge overrun by a tanker spilled oil in the river, we saw a quick response from the Coast Guard, DEQ, EPA and Louisiana’s Office of the Oil Spill Coordinator,” Carlson said. “The S&WB Algiers’ plant closely monitored or closed down water intakes from the river in an appropriate response.” A water advisory was issued for Algiers, however. As for leaky water mains and pipes in New Orleans, Carlson said “mains that have exceeded their design life are a challenge for aging infrastructure across the country. However, with enough positive pressure from electrical and steam power in the distribution system, contaminants are unlikely to get into tap water from broken mains.” Last November’s boil-water advisory in New Orleans, Carlson said, “was based on an abundance of caution after a brief power outage at the Carrollton plant affected delivery of water to the distribution system, but didn’t alter treatment.” Carlson continued, saying that joint, water-quality testing is performed by S&WB and the DHH. “Daily, monthly, and yearly reports are sent to us at the Safe Drinking Water Program of the Office of Public Health.” Bacteriological sampling is conducted monthly at the East and West Bank distribution systems, and all EPA protocols for monitoring pollutants are followed. “Sampling is routinely done under lead and copper rules and disinfection byproduct regulations,” he said. The S&WB water lab is state-certified every three years. Carlson said “the Carrollton power plant was flooded by Katrina, but in a staged recovery, potable tap water in areas closest to the plant was back on in about three weeks.” Other city neighborhoods were gradually brought back. “However, it took almost a year for the Lower Ninth Ward to have potable, tap water because of water quality and pressure issues,” he said. Fouchi at S&WB said the Carrollton plant was shut down for several days after Katrina, but it was several months before normal operations resumed because it hard to procure water-treatment chemicals. Meanwhile, the Algiers plant was not flooded by Katrina. As for other water sources, Carlson said Baton Rouge relies on wells because of high-quality ground water in that area. New Orleans has some wells that aren’t for drinking. Audubon Park, for example, contains a well for irrigation purposes. Ground water in the New Orleans area can be highly colored or highly saline, and would require different treatment than river water, Carlson said. “And there are some instances across the country where ground water withdrawals have caused subsidence” or ground sinking, he noted. Jesse Means, geologist with the Drinking Water Protection Program at the La. Dept of Environmental Quality, said “our program focuses on public awareness, and we did surveys across the state from 2000 to 2003 to locate water wells and surface water intakes, including intakes in the Mississippi River, for every public water system.” The DWPP is an outreach program to help communities protect aquifers, rivers and lakes used for drinking water. The surveys have been updated in recent program work. “We’ve identified facilities and activities such as chemical plants, gas stations, and cemeteries near public wells and water intakes that have chemicals associated with them,” Means said. Barge-cleaning operations, anchorages and wharves have been recorded. “We’ve surveyed everything from St. Francisville down to Boothville on both sides of the river, and tried to identify all plants and other activities discharging into the river,” he said. A third of Louisiana’s residents get their water from surface water–lakes, rivers and bayous–while two-thirds drink water that comes from wells and is pumped out of aquifers. Means said “the DEQ looks at drinking water use and what the quality of the river water needs to be, and has a strict, discharge-permitting system. Plants are allowed to discharge a specified amount of treated waste water into the Mississippi River under their permits.” He continued “if plants treat their water and follow what’s authorized in their permits, they are not unduly polluting the water supply. The DEQ has routinely worked to locate unpermitted discharges for years in the New Orleans area and elsewhere.” The U.S. Coast Guard permits and inspects sewage-treatment systems for vessels in navigable waterways. Means said “the DWPP tries to get as many people and businesses involved in pollution prevention as possible. We’ve set up volunteer committees–made up of citizens, officials, water-system operators, business owners and anyone that’s interested in participating–to visit businesses near water-supply intakes and wells, and we try to educate them on best management practices to prevent pollution.” Meanwhile, in an issue that has resurfaced, Carlson said “OPH is aware of the recent, EPA draft guidance on perchlorate, and will continue to work with EPA on related rules and regulations in the future.” In early February, the EPA said it will regulate perchlorate, a component of rocket fuel, along with sixteen other volatile organic compounds that can cause cancer. Carlson also said “the Office of Public Health does not advocate point-of-use treatment devices for water, particularly when water meets regulations. However, if a resident chooses to use a filter, they should use an NSF-certified device.” NSF International, an independent, public-health group, tests and certifies products. Carlson advised “run tap water until the temperature changes, especially in older buildings in the morning, to flush out plumbing contaminants and metals from old pipes. And always use water from the cold tap for consumption.” Also, make sure prescription drugs are not disposed of in sinks, toilets, drains or through any conduit to the watershed, he said. This article was published in the Feb. 14, 2011 edition of “The Louisiana Weekly.”

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Dean Baker: Debts Should be Honored, Except When the Money is Owed to Working People

January 31, 2011

This seems to be the lesson that our nation’s leaders are trying to pound home to us. According to the New York Times , members of Congress are secretly running around in closets and back alleys working up a law allowing states to declare bankruptcy. According to the article, a main goal of state bankruptcy is to allow states to default on their pension obligations. This means that states will be able to tell workers, including those already retired, that they are out of luck. Teachers, highway patrol officers and other government employees, some of whom worked decades for the government, will be told that their contracts no longer mean anything. They will not get the pensions that they were expecting. Depending on the specific circumstances, they may find their pensions cut back 20 percent, 30 percent, perhaps even 50 percent. There would be no guarantees if a state goes into bankruptcy. There has been a concerted effort to bash public sector employees by either highlighting the few instances where pensions actually are exorbitant or just making things up. Untruths about Goldman Sachs, General Electric or any other major company rarely appear in the media, and are usually quickly corrected when they do. However, exaggerations or outright fabrication are a standard practice for those who report on state and local budgets when it comes to public employees. The public has been bombarded with stories of public employees retiring with six-figure pensions while still in their early 50s. There may be some instances of such inflated pensions, but that is far from the typical story. If we look to New York State, the hotbed of bloated public budgets, we find that the state’s main retirement system pays an average pension of $18,300 a year . For many workers this is their whole retirement income since they were not covered by Social Security. This is the general story of public pensions. Public sector workers are often better situated than their private sector counterparts, in that they even have pensions. But study after study shows that these workers paid for their pensions with lower wages than their private sector counterparts. It is tragic that so many private sector workers cannot count on a secure retirement, but it won’t help them to make workers in the public sector equally insecure. And, there is the matter of paying debts. State governments are legally obligated to pay retirees the pensions they worked for just like any other debt. It is fascinating to see the interest by many pro-business conservative types in defaulting on this debt. Many of these same people have been determined to argue that homeowners who are underwater in their mortgages should pay their debts. They certainly have not been offering them any assistance in staying in their homes. In fact, back in 2005, some of the same crew were busy re-writing the bankruptcy law. They wanted to make it harder for individuals to get out of their debt through bankruptcy. They felt it was so important the people paid their debts to credit card companies and other lenders that they actually applied the law retroactively. People who took out debt under one set of bankruptcy rules suddenly found that Congress had changed the rules after the fact and they would now be subjected to a much harsher set of bankruptcy rules. Let’s see if we can find a pattern here. When families take out a mortgage in the middle of a housing bubble, which may have been misrepresented at the time of sale, the homeowner has an obligation to repay the money to the bank. When people take on credit card debt, they absolutely have an obligation to repay the bank – even if it means changing the rules after the fact. However, when the government signs a contract with workers, it doesn’t have to pay the workers’ pensions if it proves to be inconvenient. Of course, we may also throw in the fact that when the flood of bad mortgage loans issued by the banks threatened to push them into bankruptcy, the Treasury and the Fed give them trillions of dollars of loans at below market interest rates. There certainly seems to be a pattern here. The story has nothing to do with preferences for the market or government intervention. The picture here is very simple: The rules get changed whenever it is necessary to make sure that money flows upward from ordinary workers to the rich. In 21st century America, upward redistribution seems to be the guiding principle.

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Andrew Reinbach: Davos 2011: The World’s Future Is Either a Boom or a Disaster

January 31, 2011

During the run-up to the recent meeting in Davos, Bloomberg ran a story called ” Super-Cycle Leaves No Economy Behind as Davos Shifts to Growth ” predicting global economic growth is about to explode, lifting all economic boats and propelling the world to a golden age. Quoting Stephen King, HSBC Holdings Plc’s chief global economist, reporter Simon Kennedy says, “…by 2050, global output will have trebled and average annual growth will accelerate toward 3 percent from 2 percent in the last decade, with emerging markets contributing twice as much to the expansion as the developed world.” Read that again, and you’ll realize this piece was filed by our old friend, Rosy Scenario. What it really says is that in the future emerging economies will be okay; but an economy like the United States? You ain’t goin’ nowhere. And in fact, later in the same piece, Standard Chartered Bank’s chief economist, Gerard Lyons, predicts average growth in the US of about 2.5 percent through 2030 — about what it is today. Since the US economy needs to grow by 5 percent for years to soak up the millions of Americans out of work today and over 2 percent a year just to absorb population growth, what that prediction says is that we can expect another 20 years of high unemployment in this country, with no practical policies in place — or even on the table — to deal with the sort of structural unemployment that’s led to the recent turmoil in Egypt and Tunisia. So it doesn’t take much to see that most people in this country will be displeased if these predictions are anywhere close to the mark — that what those of us not living in Kuala Lumpur or Shanghai are looking at is something close to long-term, slow-moving misery. That sounds a little alarming, but what it really means is that we may be able to dodge a worst-case scenario if we face up to reality and produce practical public policies that jettison ideology and, at a minimum, find work for the armies of the unemployed that politicians are so studiously ignoring. This will probably not be a “market-based solution”: After all; if the market could solve this problem, it would have already been solved. A new WPA comes to mind . But whether America’s politicians can come out of their trenches and serve the people’s interests is another matter: Frankly, they display no appetite for anything that gets in the way of posturing for the 2012 elections. If you’ll bear with me, here’s a translation of what that global growth scenario really means. The reality is pretty close to the surface, if you apply a little common sense to the fairy dust usually found in your average investment bank scenario. 1. If emerging market growth will really be a strong as it’s predicted — and, by the way, that outlook is widely accepted — then investment capital won’t go to US markets, because emerging markets will offer superior yields; 2. As a result, US jobs growth will remain anemic, because investors will be putting their money into new plants, equipment, and businesses in Manila, not Indianapolis; 3. What business and jobs growth in the the US that does occur will be in consumer-based businesses; 70% of the US economy is still consumer-driven. 4. But if unemployment and under-employment remain high, profits won’t be much to brag about in the consumer sector; people hanging on by their teeth don’t go on shopping sprees; 5 And the number of people who are unemployed or under-employed is higher in the US than most people think. According to the Bureau of Labor Statistics, real unemployment is 16.7 percent , not the 10.9 percent most recently published in the national press. The American workforce totals about 150 million people; so that means about 25 million people are, at best, marginally employed. That’s about the same number of people who were out of work in 1933. 6. Employers hire people to meet demand. So if consumer sales stay low, unemployment will stay high. Meanwhile: 1. Starting with incomes, life will improve in the emerging markets. This includes life expectancy, population, and consumer consumption; 2. More people, living longer, better lives, means demand for commodities will rise, driving up commodity prices, including prices for food and water; 3. So the cost of living will rise — globally; 4. But since investment capital is flowing out of the US and keeping a lid on jobs growth, income growth will be slow-to-flat, while prices will rise — creating de facto income cuts; 5. What income and business growth will occur, will occur in FIRE businesses (finance, insurance, and real estate), advertising, marketing etc., and mainly at the upper management levels. Everybody else will stay on the treadmill; Also: 1. Globally, the increased population nurtured by improving conditions in emerging economies will likely accelerate global warming and other environmental problems, because people will buy cars, farmers will use more phosphate-based fertilizers and pesticides, etc ., and, over all, people will use more plastics and fossil fuels; 2. Said shortages will probably lead to contested resources. This is why China and India are locking up so many of them right now. So: 1. The stagnant US economy will suffer from high and persistent unemployment that will probably minimize recovery and challenge political stability; 2. Since more people will have to adjust their lives to living on less, there’ll be an even more pronounced shift of household wealth away from the middle class; 3. If people are making less, they pay less in taxes, so tax revenues decline, worsened by deficit-related pressures; the alternative will be borrowing. 4. The poor will be left to their own devices, if only because the tax revenues just won’t be there to help them; 5. Government will shrink the menu of services it delivers, and new businesses will appear to provide them — to people can afford to pay. This will provide some jobs stimulus; but many of these jobs will be low-paying call center-type jobs; aside from everything else, employee turnover in call center jobs is typically high — above 90 percent. 6. That last does little to stimulate wide-spread personal wealth, so that most people will have little or nothing to retire on in a world with little-to-no Social Security/Medicare benefits. 7. Completing the circle, consumer demand is anemic, at best, so you’ve got long-term economic stagnation. So the cycle becomes semi-permanent. If you think that’s a cheery outlook, consider the fact that you’re probably going to help make it happen. That’s right — I mean you. Not because you’re evil: Because you’re a responsible adult who can act in your own interests. People can’t retire on Social Security and have to do what they can to support themselves for the 20 or more years they can look forward to after they’ve left the workforce. So the last thing they’ll be doing is putting any money in low-yielding investments. That means you’ll have to make the emerging economies play or lose money. It’s not your job to solve the long-term, structural economic crisis on the home field — your job is to survive. And those choices are limited now, even if matters are veering disturbingly close to what Lenin used to say — that when the time came, capitalists would sell him the rope to hang them. The good news: Americans can still vote. We have the power to elect people who can actually try to solve these problems without communicating first with the Mothership. You can read this article and more at www.reinbachsobserver.com .

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William Meers: Is Swiss Banking Still the Way to Go for Private Banking?

January 23, 2011

The complex financial world of Swiss Banking is far too extensive to examine in a brief article such as this one, however it is possible to introduce a few ideas, and render a few misconceptions regarding this misunderstood world redundant. The mere mention of the words ‘Swiss Banking’ often conjures images of James Bond, and Bond Villains, luxurious lifestyles and mafia bosses stepping off private yachts with suitcases full of pristine condition 100 bills ready to be left in an anonymous account with a lengthy number. If this is what springs to mind your vision of Swiss Banking is far removed and detached entirely from reality as, contrary to what Hollywood may tell you, Swiss Banking and the entire world of offshore banking is not a haven for the rich and it is not a place to take your criminal activity. To fully explain what the world of Swiss Banking entails it is necessary to understand certain concepts such as ‘offshore banking’, ‘offshore bank account’, ‘tax haven’ and more relevant terms such as OFC and IFC. I will begin this brief overview by explaining these concepts in the simplest possible way before offering a brief, but balanced, view as to what Swiss Banking actually is, and how it works. Concepts such as offshore bank accounts are often, unreasonably, associated with criminal activity and tax evasion — and tax havens as being the location where this activity takes place and is facilitated. This is an oversimplified gross misrepresentation of the truth in which the offshore banking world actually takes its place as fully integrated in the global economy. An offshore bank account is simply a bank account which is based in a different jurisdiction to where you, as an individual or entity, legally reside. No more — no less. A tax haven is simply a location which has lower tax rates for foreign investors than would be available in their domestic jurisdiction — and entices investment overseas. These definitions are oversimplified for the purpose of facilitating understanding, but to illustrate how complex the issue is, the OECD (Organization for Economic Cooperation and Development) has not been able to produce a definition as to what a tax haven actually is. The idea behind them is that by offering zero or low tax to foreign investors, they can encourage investment from a foreign jurisdiction, which obviously has implications for another country. It may surprise you to learn that every country does this — the USA for example offers several capital gains and investment tax relief benefits that, by traditional definitions, makes it the world’s largest tax haven. The entire concept of a tax haven is, however, over-simplistic and implies that tax evasion or avoidance is the only reason to move investment money to an alternative jurisdiction. Again this is a gross misrepresentation of the reality where there are a number of benefits and investment specialists who work to make an individual or corporation’s investment work for them. The terms OFC (Offshore Financial Center) and IFC (International Financial Center) are becoming more popular and are, perhaps, a more appropriate label for a complex and diverse series of financial services. Why then, would one open an account with a Swiss Bank? The answer depends on one’s individual or corporate circumstances. Swiss Banking offers a wide range of services, but as a rule those who benefit will be on the wealthier side of society, but this is not limited to individuals. Nearly all multinational companies have offices, and are often focused in areas generally considered ‘tax havens’. There is no minimum limit, but as services are often fee and commission based and structures such as trusts require set up and maintenance fees, an individual being required to be worth over U$1 million is common. Businesses are usually only worth moving offshore if profits of U$100,000 are being made annually, while opening an offshore bank account is usually not worthwhile for less than U$100,000. However, for these, not inconsiderable, sums of money there are certain benefits such as tax benefits due to PTRs (Preferential Tax Regimes) in certain cases and in the case of Switzerland if you become a legalized resident. However Ta x Benefits are not the only benefit, and entering the world of Swiss Banking opens you to a world of specialist advisors in the world of asset protection and investment advice. Such advisors dedicate themselves to protecting and helping you to take full advantage of your money — and is generally a fee or commission based service. Swiss financial institutions are famous for their professionalism and loyalty and uphold one of the most unique financial characteristics of Swiss Banking — ‘Banking Secrecy’. The concept of Banking Secrecy originally developed from the 1934 Swiss Bank act and offers a legal support for your financial data and offers you a certain degree of discretion and peace of mind. This leads us to the first paragraph of this article — the image of Swiss Banking. If there is intent of criminal activity, this anonymity is NOT designed to protect those interests. Swiss institutions follow a strict KYC (Know Your Customer) protocol which is used to determine legitimate sources of all funds being invested. If one’s interests are motivated by illegal tax evasion, Swiss banking is not the place for you — you are far more likely to be reported by the Swiss institution involved than be found by your own jurisdiction.

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Anna Lappe: Taking Walmart’s PR Blitz With A Grain Of Salt

January 21, 2011

Walmart made big news yesterday with a press conference alongside the First Lady to announce new company commitments. Most of the mainstream media coverage of the Walmart announcement seemed to buy the company PR that it was taking valiant steps to improve the affordability and health qualities of the food it sells. Among these commitments, Walmart said it will be working with food suppliers to reduce sodium, sugars, and trans fat in certain products by 2015; developing its own seal to help consumers identify healthier products; and addressing hunger by opening Walmart stores in the nation’s “food deserts.” Do these Walmart promises really hold big upsides for health and food insecurity?The Times seemed to think so, running with this headline: “Wal-Mart Shifts Strategy to Promote Healthy Foods.” (Am I crazy or does that read remarkably like the Walmart press release: “Walmart Launches Major Initiative to Make Food Healthier and Healthier Food More Affordable”?) Had The Times been aiming for accuracy it might better have titled the article: “Walmart Launches PR Campaign Promoting Promises to Win the Hearts and Minds of Urban Consumers.” With little critical coverage in the mainstream media, we are left to ponder the impact of these Walmart commitments ourselves. Thankfully, we have the wisdom of experts like Marion Nestle, author of Food Politics and What to Eat, to shed light on these claims. (Check out her take here ). One of Nestle’s most important points is that Walmart’s promise to develop its own front-of-package seal is a clever preemption of work underway at the Institutes of Medicine and FDA to “establish research-based criteria” for such packaging and create regulations for the entire industry, with real oversight. Let’s dig deeper and look carefully at what the company is saying it is committing to doing. Specifically, Wal-Mart is pledging to “reduce sodium by 25 percent, eliminate industrially added trans fats, and reduce added sugars by 10 percent by 2015″ in some of the processed foods that it carries. Impressive? Not so fast. First, consider that it’s not unusual for a can of soup to contain as much as 2,291 mg, or more, of sodium. (For perspective, the Centers for Disease Control and Prevention recommend we consume just 1,500 mg a day). We need to reduce that sodium figure significantly more than 25 percent on many of Walmart products before we dare call them “healthy.” As for trans fats, public health advocates have long been advocating for all food producers to eliminate trans fats across the entire food supply. Finally, a 12 oz. can of Coke, for instance, bought at Walmart–and which the company notoriously pushes at steep discounts –will already contain 39 grams of sugars, the upper limit of what is often suggested as the total daily consumption for non-diabetics. In other words, Walmart’s nutritional commitments are really about making the unhealthy processed food it sells marginally better, at best; at worse, it’s offering the veneer of healthfulness to foods that should be considered bad for us. These nutritional promises are not only weak in their aspirational goals; they’re also non-binding, which means we’ve got to take the company on its word. These nutritional promises are not only weak in their aspirational goals; they’re also non-binding, which means we’ve got to take the company on its word. (The White House’s Sam Kass has stressed that all these proposals can be verified in an “open, transparent” manner. But with Walmart’s history of backroom deals–like its lobbying with other retailers against strict meth laws –I’m dubious). Corporate driven, non-binding promises like these are also the oldest trick in the food industry PR playbook. Just ask Michele Simon author of Appetite for Profit, who details how Pepsi, Kraft, and numerous other food companies have made similar promises and gotten big payback with good press even though they’ve done very little to actually improve the health qualities of their products. These commitments also receive great press at first–note the windfall for Walmart–but there is little accountability over time when the changes are supposed to be made. Now, let’s turn to the Walmart claim that the company wants to move into urban markets, and reduce the costs of some of its food items, to help low-income people access more affordable food. The New York Times writes that “that low-income people, especially those who receive food stamps, face special dietary challenges because eating healthy costs more and healthier food is harder to get in their neighborhoods.” Yet, the Times fails to mention the studies that have found that because of Walmart’s low wages and benefits, its employees rely on food stamps and other social services far more than the typical retail employee. While Walmart is spending a lot of time and money saying they plan to address food insecurity, the company is actually exacerbating its underlying root causes. The Times also mentions that Walmart will help address food deserts, defined as “a dearth of grocery stores selling fresh produce in rural and underserved urban areas,” by building more stores, the paper didn’t quote any community-based activists addressing these so-called food deserts on the ground. Do these community advocates think Walmart is the solution? Are they happy Walmart has set its eyes on Washington DC, New York City, Chicago, and other urban markets? Of those I’ve talked to, all are skeptical of the company’s promises and highly critical of the Walmart model: the anti-worker rights , low-wage, low-benefit way of doing business. We also have plenty of evidence now that when Walmart moves into town, the company puts small businesses out of business and sucks capital out of the community. For every dollar spent at a Walmart, only a small fraction stays to benefit the local economy. We’ve seen enough evidence, too, that the company has a long, dark track record of sex discrimination and workers rights abuses. Let’s be clear, expanding into so-called food deserts is an expansion strategy for Walmart. It’s not a charitable move. Making a big PR splash about improving the health qualities of its food is a smart tactic to deflect attention from the real impact of Walmart on the quality of life for Americans. (Is it a coincidence that this press conference occurred the same week a new study was gaining attention that tracked health and population data and found links between Walmart expansion from 1996 to 2005 and increased rates of obesity?) As far as I’m concerned, as long as the company depresses wages, exploits workers, violates workers rights, and pushes highly processed foods and sodas, Walmart is not only failing to address the problem of food deserts and food insecurity, the company is exacerbating their root causes. Originally published on CivilEats.org Anna Lappé is the author most recently of Diet for a Hot Planet (Bloomsbury USA 2010) and is a fellow of the Glynwood Institute for Sustainable Food and Farming and a former Food and Society Fellow, a program of the Institute for Agriculture and Trade Policy.

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Odysseas Papadimitriou: The Legislative Impetus for Using a Personal Credit Card to Fund Business Spending

January 21, 2011

Ok, the holidays are over, and it’s time to get back to business. A new year has arrived, and with it have come the promise of a fresh start and the desire to make this year better than the last. Perhaps you want to expand your business, go after another client segment or launch a new product. Maybe, considering the tough times we’ve all been enduring, you just want to increase profits in 2011. Whatever the case may be, handling your expenses wisely is a necessity. While what you spend money on is the most critical decision you must make, your chosen method of payment is important as well. Many small business owners assume they should fund their companies with business credit cards simply because the word “business” is in the name of the genre. However, contrary to naming conventions, personal credit cards are actually often the best spending vehicles for small business owners. With the passage of the new credit card law (CARD Act) came the institution of a number of credit card regulations designed to protect consumers from the predatory issuer practices that persisted prior to the Great Recession. Such regulations restrict issuers from increasing the interest rate on an existing balance unless a customer becomes severely delinquent. While these changes are undoubtedly a boon for consumers in general, they only apply to personal credit cards . This means that balances held on business credit cards are vulnerable to becoming suddenly more costly because of interest rate changes. Considering that it’s common practice for credit card company executives to raise interest rates in order to quickly increase profits, this lack of protection is troubling for small business credit card users. However, this danger can easily be negated by simply opening a personal credit card and using it for all business purchases that will not be paid for in full by the end of each month. There is ultimately no good reason not to, especially since the common belief that business credit cards provide greater liability protection than do personal credit cards is, in fact, a misconception. Many people assume that the liability for any payment problems encountered with business credit cards will be at least partially assumed by their companies. However, small businesses are simply not large enough to warrant shared liability, and individuals are wholly responsible for delinquency and default with both small business and personal credit cards. There is no difference between the two in terms of individual liability protection. However, business credit cards do prove useful in other facets of business spending. They offer additional tools for tracking and reporting business expenses and allow owners to disperse individual cards with customizable limits amongst their employees and then earn rewards on their spending. For these reasons, business credit cards should still be used, yet only for purchases that will be paid for in full on a monthly basis. Establishing such a strategic method for funding your business will ultimately provide you with the cash flow stability and debt consistency that is integral to small business survival, especially in the current economic climate. So start the New Year off right by opening a personal credit card for your business expenses that will lead to a monthly balance. After all, not doing so is like gambling your company’s debt, and no one wants their livelihood to be a gamble. This article was written by Odysseas Papadimitriou, CEO and Founder of CardHub.com, an online marketplace for credit card offers and gift card exchange .

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