black

Republican Primary’s Next Stop: Foreclosureville

by Arthur Delaney on January 12, 2012

Huffington Post…

The battle for the Republican presidential nomination has so far been waged in states relatively untouched by the Great Recession. Now it heads to three states with some of the country’s highest rates of unemployment and foreclosures. In South Carolina, where primary voters hit the polls on Jan. 21, unemployment’s flying high at 9.9 percent. After that, elections will be in Florida, with a 10 percent unemployment rate, and Nevada, where it’s 13 percent. The jobless rates in Iowa and New Hampshire are 5.7 percent and 5.2 percent, respectively. Nevada leads the nation in both joblessness and foreclosures. One out of every 16 homes in the state was subject to some type of foreclosure filing in 2011, according to Irvine, Calif.-based RealtyTrac , an online marketplace and foreclosure data firm. It’s the fifth consecutive year the Silver State has topped RealtyTrac’s list. Florida’s seventh, with filings on more than 2 percent of homes. Frontrunner Mitt Romney hasn’t pandered to struggling Nevada homeowners. He told the Las Vegas Review-Journal in October he supports the government stepping aside: “Don’t try to stop the foreclosure process. Let it run its course and hit the bottom.” It’s not likely Romney will have much more to say on his next visit. The candidates didn’t talk foreclosure policy in Iowa, even though the state attorney general is leading national foreclosure settlement negotiations with the country’s biggest banks. Only Jon Huntsman, who didn’t bother to campaign in the Iowa, has taken a position on the settlement. While the candidates have spoken in broad terms about hard times and recovery, they’ve offered few specifics on unemployment policy. Could that change in South Carolina? For the past year lawmakers there have pushed controversial reforms to the unemployment insurance system. State Republican lawmakers succeeded last year in reducing the duration of state-funded jobless aid from 26 to 20 weeks. Now they’re pushing to require drug testing and to force the long-term jobless to perform part-time volunteer work. The South Carolina state senators leading the effort said they don’t expect the GOP primary to bring their cause extra national attention (though Newt Gingrich and Rick Perry have said in passing that they support drug testing the jobless, so maybe that proposal will get more scrutiny). “The unemployment issues and that sort of thing haven’t been anything anybody’s talked about with any of the candidates that I’m aware of,” state Sen. Kevin Bryant (R), a leading unemployment reformer, said in an interview. “I think for your average voter, that’s probably too specific to campaign on.” The economy was already a top concern in New Hampshire, despite the state’s relatively strong economy. Six out of 10 New Hampshire voters told exit pollsters the economy was their top concern, and 94 percent said they were worried about it.

More:
Republican Primary’s Next Stop: Foreclosureville

Find our Weekly Commercial Real Estate, Private Equity and Fund Newsletters at www.WeeklyBrief.net

Huffington Post…

Want to get to Washington? Try going through Wall Street. As a look at any recent presidential administration will show, people move between the two worlds all the time. Earlier this week, President Obama announced that budget director Jack Lew would be taking over as his chief of staff , assuming the title from the outgoing Bill Daley. Both men have previously worked at major financial firms — Lew at Citigroup , Daley at JPMorgan Chase — meaning that Lew’s promotion continues a long-running trend of business executives moving into positions of power in the nation’s capital. Obama’s decision to replace one with the other has left critics wondering if the administration can be trusted to regulate the business community when so many White House staffers have spent time on Wall Street. The question is especially pressing today, as Americans everywhere continue to grapple with the effects of a financial crisis that might not have unfolded in such disastrous fashion if the government had kept a closer eye on big banks. In spite of the potential for conflicts of interest, crossover between the world of finance and the world of politics is nothing new. Even before Obama teamed up with onetime investment banker Rahm Emanuel, George W. Bush entrusted Henry Paulson, a 22-year veteran of Goldman Sachs, with the keys to the Treasury. And as seen with Peter Orszag and Robert Rubin, the migrations happen in both directions, with almost as many D.C. insiders leaving for a position in finance as vice versa. Here are some of the most notable examples of Wall Street players who went to Washington, or the other way around:

Original post:
From Wall St. To Washington: Famous Moments In Revolving Door History

Find our Weekly Commercial Real Estate, Private Equity and Fund Newsletters at www.WeeklyBrief.net

The Law Moms All Over Have Been Waiting For

January 6, 2012

As part of Obama’s health care reform legislation, employers are now, for the first time, federally mandated to provide nursing mothers with breaks and a place to pump. If you’re thinking, “Huh? This didn’t exist yet?” you’re not alone. The Affordable Care Act was signed into law in March 2010 (which also seems late in the game, no?), but the government is now cracking down on employers who don’t comply. McDonald’s and Starbucks are among the 23 companies that have been cited by the Department of Labor, Sonia Melendez, a spokeswoman told MSNBC . Hard and fast rules haven’t been finalized yet, but the Wage and Hour Division fact-sheet gives us a sneak preview. According to the document: “[Employers are required to provide] reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth … [as well as] a place, other than a bathroom , that is shielded from view and free from intrusion from coworkers and the public.” The bold is ours because it bears emphasizing that bathrooms — even private ones — are not considered acceptable locations in which to feed a person. As mothers are fighting to nurse in public without being ridiculed (or worse), these guidelines may be the next step to align directives from doctors about breastfeeding (breast is best!) with the messages they get from employers.

Read the full article →

Kanye’s Epic Twitter Rant: Wants To Be New Steve Jobs, Change The World

January 5, 2012

Forget album sales and glitzy awards. Kanye West’s new goal is nothing short of changing the entire world. The mad scientist tastemaker of hip hop went on an epic Twitter rant on Wednesday night, discussing his new clothing line, his musical plans and, most significantly, his new company, which he says will “pick up where Steve Jobs left off.” Called Donda, after his late mother, West revealed that its goal will be to “make products and experiences that people want and can afford,” “to help simplify and aesthetically improve everything we see hear, touch, taste and feel,” and ” dream of, create , advertise and produce products driven equally by emotional want and utilitarian need.. To marry our wants and needs.” It will be comprised, West tweeted, of over 22 divisions staffed by “architects, graphic designers, directors musicians, producers, AnRs, writers, publicist, social media experts, app guys, managers, car designers, clothing designers, DJs, video game designers, publishers, tech guys, lawyers, bankers, nutritionists, doctors, scientists and teachers.” Specifically, West wrote that one of Donda’s “projects to be released this year [is] called 2016 OLYMPIC’s … It’s a semi sic-fi since 2016 is only 4 years away,” which presumably means that it will be a movie. West also disclosed that he was in talks to become the creative director of the “Jetsons” movie, and wants to design the MTV Awards, which probably means the VMAs. In addition, West wrote that he wants to help reshape the American school system, which he says was “designed to turn people into factory workers.” That includes starting a summer school with director Spike Jonze. “There are so many broken systems from the economy to school systems jail systems… we need experts for this,” he later said , promising that his creativity and ability to bring experts together would be of service in the effort to solve intractable problems.

Read the full article →

U.S. Offers 11 Swiss Banks Deal To Avoid Criminal Prosecution On Tax Evasion

December 18, 2011

ZURICH (Reuters) – U.S. officials are offering 11 Swiss banks, among them Credit Suisse , a deal that allows them to avoid criminal prosecution in exchange for revealing full details of their U.S. offshore business to Washington, a paper reported on Sunday. Famed for the care with which it protects account holders’ anonymity, the Alpine state has been forced to act by a series of U.S. probes into alleged tax evasion by Americans concealing their assets in Swiss banks. In 2009, the Swiss parliament approved a deal to allow UBS to reveal details of around 4,450 U.S. clients and pay a $780 million fine to end lengthy tax proceedings that had threatened the future of the country’s biggest bank. The Swiss government has been in talks with U.S. authorities for months to try to get an investigation into 11 banks dropped, in return for expected hefty fines on the banks and the handing over of the names. Credit Suisse , Julius Baer and Basler Kantonalbank are among the banks under investigation. Citing an unnamed source, the newspaper SonntagsZeitung reported that 11 banks would each be offered a deal like the one to which UBS agreed. In exchange, the banks would have to accept U.S. requests for administrative assistance in tax evasion cases that would mean delivering all information on their U.S. offshore business via Bern to the United States, the paper reported. The paper described a meeting between Swiss officials and representatives on Friday in Berne. The paper also said the banks would likely accept the deal. Yet a spokesman for the State Secretariat for International Financial Matters (SIF), which has represented the Swiss government in negotiations with the United States, said talks between the United States and Switzerland were still ongoing and that the meeting on Friday was part of a regularly scheduled series of talks. SIF Spokesman Mario Tuor declined further comment. FURTHER DETAILS As part of an agreement the names of the U.S. clients would be blacked out and the banks would also be fined, the paper said, adding that the banks had until Tuesday to agree to the terms in writing. According to the paper, the information the banks would have to hand over included: – Correspondence between a bank and its U.S. clients, including notes from telephone conversations and meetings. – Internal notes about U.S. client business from the relevant business units and management – Correspondence between banks and third parties, such as independent wealth managers concerning U.S. clients – All documents about the U.S. business model and about U.S. funds that were transferred to third parties. The paper said the 11 institutions would have to reveal the names of the bankers who conducted the offshore business, though criminal cases against individuals would not be taken up. Credit Suisse, Basler Kantonalbank and HSBC Switzerland would have to deliver material by December 31, the paper said. A spokesman for Credit Suisse declined to comment. The Swiss Bankers Association was not immediately available for comment. Neither was a spokesman for Julius Baer. A spokesman for the State Secretariat for International Financial Matters, which has represented the Swiss government in negotiations with the United States, was also not immediately available. (Reporting by Catherine Bosley; Editing by Jon Loades-Carter) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

Europe’s Crisis Takes Shine Off IPO’s Comeback Year

December 17, 2011

NEW YORK — This was supposed to be the year of the IPO comeback. Six months into 2011, the market for initial public offerings was stronger than before the recession. The number of companies looking to raise money through new stock offerings was on pace for a decade high. Shares of companies that had gone public earlier in the year, on average, had posted gains. But after that strong start, the market for new stock offerings fizzled in 2011 as the prospect of a global slowdown and a prolonged European debt crisis battered financial markets. High-profile Internet companies like Groupon, LinkedIn and Zynga – which went public Friday – attracted attention. But overall, companies didn’t raise as much as they hoped for through IPOs. Main Street investors, who generally don’t have access to IPO shares until after they start trading, were likely the biggest losers. Daniel Graeber, a journalist and professor from Grand Rapids, Mich., bought 15 shares of Groupon for $30 each the day it went public, hoping the deals company would be the next Google Inc. or Amazon.com Inc. He’s lost money so far, but the 38-year-old said he’s modestly optimistic that shares will recover. “The only way to have played the game this year – the way I always play it – is to have flipped on day one. Take your profit and move on. People who haven’t have been decimated,” said long-time IPO investor Scott Sweet, who owns IPO Boutique. Sweet bought IPO shares of many big companies like daily deals site Groupon and career networking site LinkedIn and sold them on their first trading day. It wasn’t a bad strategy. Groupon, which debuted in November, rose 31 percent on its first trading day, but has dropped 12 percent since. LinkedIn more than doubled in its debut. While it’s still up about 50 percent from its offering price, the stock has lost 30 percent from its first trading day. In June, Internet radio company Pandora Media Inc. rose 9 percent. On Friday it closed at $10.55, a 34 percent slide from its IPO price. Stock in technology companies that went public in the past 12 months have fallen 15 percent, according to Renaissance Capital. Some of that stems from broader market declines. The Standard & Poor’s 500 index is down about 8 percent from the end of June. Many companies hedged their bets. Sixty-six companies withdrew plans to raise money through new stock offerings in 2011, a 27 percent rise from the previous year, and the biggest number since the depths of the recession in 2008, according to IPO Investment firm Renaissance Capital. Stocks of many of the companies that took the plunge haven’t fared well. About two-thirds of companies that went public this year are trading below their offering price, according to advisory firm IPO Boutique. As a group, IPOs that went public this year lost 13 percent of their value – the first negative return since 2008. Some of those themes were apparent this week, the last before the IPO market shuts down for the year in the U.S. Twelve companies had lined up IPOs. If all of them had begun trading, it would have marked the busiest week for IPOs since November 2007. That didn’t happen. Three of the companies, information technology services provider FusionStorm Global Inc., industrial materials maker GSE Holding Inc. and chemicals and metals maker Luxfer Holdings PLC, postponed their offerings. There were some successes. Jive Software Inc., a company that is trying to become a corporate networking version of Facebook, and luxury clothing and accessories company Michael Kors Holdings Ltd. priced higher and sold more shares than expected. Both soared on their first trading day. And then there were the mixed successes. Zynga Inc., which specializes in making games for social networking website Facebook, raised $1 billion, in the biggest Internet IPO since Google’s 2004 launch. The offering price of $10 per share values the company at about $7 billion – at least $13 billion less than some market watchers predicted back in July when the company filed to go public. The shares fell 50 cents, or 5 percent, to close Friday at $9.50. Six other companies that debuted this week raised less money than they expected. Stock in two of those companies, oil and gas companies Bonanza Creek Energy Inc. and Sanchez Energy Corp., are already 20 percent and 16 percent below their IPO prices, respectively. Market watchers expect more big technology deals next year including Facebook, reviews site Yelp and online retailer Gilt Groupe. Of the three, only Yelp has filed to go public. But the global economic uncertainty may force the 200 companies hoping to go public in 2012 to temper their expectations. LinkedIn and Groupon, for example, sold less than 10 percent of their outstanding stock in their IPOs, which is considered a small percentage of overall shares to sale in an offering. The small supply helps create demand. “If they want to get the company public, they’ll do a smaller deal,” said Frank Maturo, head of cash equity capital markets at Bank of America Merrill Lynch. The IPO declines and weak stock markets may create an opportunity for investors to buy shares more cheaply as companies and bankers rethink prices for shares. “People haven’t made money in the IPO market, people are skeptical. But deals can get done if they get priced right,” said Francis Gaskins, an analyst at IPOdesktop.

Read the full article →

New BlackBerry Phones Hit Big Bump

December 16, 2011

TORONTO — BlackBerry maker Research In Motion Ltd. said Thursday that new phones deemed critical to the company’s future will be delayed until late 2012. Mike Lazaridis, one of the company’s co-CEOs, said the BlackBerry 10 phones will need a highly integrated chipset that will not be available until mid-2012, so the company can now expect them to ship late in the year. He disclosed the delay on a conference call with analysts. Analysts say RIM’s future depends on the new software platform. RIM needs to come up with a compelling BlackBerry as U.S. users have moved on to flashier touch-screen phones such as Apple’s iPhone and various competing models that run Google’s Android software. Earlier Thursday, RIM said BlackBerry sales will fall sharply in the holiday quarter, providing further evidence that it is struggling to compete. It also has been having a hard time finding a niche in the tablet-computer market, which is dominated by Apple’s iPad. RIM continues to enjoy success overseas, but market researcher NPD Group says RIM’s market share of smartphones in the U.S. has declined from 44 percent in 2009 to 10 percent this year. The company’s stock fell 7 percent in extended trading Thursday. The delay in BlackBerry 10 phones is the latest in a series of setbacks for the once-iconic Canadian company. Its PlayBook tablet computer hasn’t been selling well, forcing the company to sell them at a deep discount. A widespread outage frustrated tens of millions of BlackBerry users in October. RIM fired two executives after their drunken rowdiness forced the diversion of an Air Canada flight. The head of its operations in Indonesia faces charges related to a stampede at a recent promotional sale where dozens of consumers were injured. RIM said its net income sank 71 percent as revenue fell and the company took a large accounting charge on the PlayBook, which uses the same operating software that RIM’s new phones will use. “We ask for your patience and confidence,” Lazaridis said. RIM earned $265 million, or 51 cents per share, for its fiscal third quarter that ended Nov. 26. That compares with $911 million, or $1.74 per share, a year ago. The company said revenue fell 6 percent to $5.2 billion. The PlayBook charge was $485 million before taxes. The company shipped 14.1 million BlackBerry smartphones during the third quarter and 150,000 PlayBook tablets, but its fourth-quarter guidance was what investors focused on because it had warned about the third-quarter results earlier. Although RIM has said it would sell fewer BlackBerrys in the current quarter, the forecast given Thursday appeared worse than expected. RIM said it would only ship between 11 million and 12 million BlackBerrys in the fourth quarter compared to 14.8 million in the previous fourth quarter. RIM also said its fourth-quarter earnings would be in the range of 80 to 95 cents per share on revenue in the range of $4.6 billion to $4.9 billion. Analysts had been expecting earnings of $1.15 a share on revenue of $5.04 billion, according to FactSet. Peter Misek, an analyst at Jefferies & Co. in New York, said earlier that if RIM reveals that it will ship no more than 12 million BlackBerrys in the current quarter, then the company needs to get its new phones out fast. Otherwise, RIM could lose money in future quarters as it continues to struggle to sell the current, stopgap models. Misek said late Thursday the BlackBerry 10 phones will now be released three to nine months later than people believed. BGC Financial analyst Colin Gillis said the guidance was terrible and wondered if it was the start of a collapse. “If consumers abandon this platform it can happen pretty quickly,” Gillis said. “Don’t think this is the bottom.” Jim Balsillie, the other co-CEO, said the last few quarters have been among the most challenging times in the company’s most recent history. He said executives are working to turn it around, but said it may take time. “We are not satisfied with the performance of the business in the United States,” Balsillie said. Balsillie said he and Lazaridis have reduced their cash salary to $1 per year, though they will continue to earn stock options and other compensation. RIM’s stock fell $1.15 to a new seven-year low of $13.98 in extended trading Thursday after the results were released. The stock has lost about 75 percent of its value this year. A company that was worth more than $70 billion a few years ago now has a market value of around $8 billion. “We recognize our shareholders may feel we’ve fallen short,” Balsillie said

Read the full article →

Joah Spearman: Black Friday or Green Monday… Holiday Shoppers Ride the Rainbow

December 12, 2011

It’s not just Santa coming to town, but an epic transformation in commerce. The holiday season gives us a glimpse into the future of shopping behavior, and we’re not too far from online shopping becoming the modus operandi of American consumers. Strip malls may never be the same. According to comScore, e-commerce spending is up 15 percent for the first 39 days of the 2011 holiday season. The nearly $25 billion spent online in that period should not be viewed simply as an indication of lots of holiday cheer. With more online shopping taking place throughout the year, and online consumer confidence tracking with it, the notion of having to go to the store is leaving our collective memories. Meanwhile, online shopping strategies improve with the proliferation of customer ratings and reviews on brand and retail sites, Facebook fan pages with dynamic shopping apps and mobile device technology aimed at streamlining on-the-go customers. Etsy, the online destination for all things handmade and vintage, is one of the companies best positioned to benefit from this shift in shopping behavior. The company’s remarkable growth under CTO-turned-CEO Chad Dickerson may seem technology-driven, but it’s also about consumer buying patterns. “On Etsy, peak holiday shopping begins with Black Friday and continues through the following weeks. This year our community sold a record amount of goods on Cyber Monday,” said Emily Bidwell from Etsy’s merchandising team. “Tuesday’s sales surpassed that amount, and continue to be strong. In our view it’s not about one date on the calendar; it’s a time of year when people take advantage of the opportunity to find all their gifts at a value.” And that last word, value, is where it really starts to get interesting. With online retailers being challenged by flash sale sites like Park & Bond, the GQ-Gilt Groupe menswear site, and One Kings Lane, which specializes in housewares, both perceived and real value is on a premium. Speaking at the Wharton Business School’s BizTech event after Black Friday, Edison Ventures’ Mike Kopelman said, “the barrier to enter the flash deals business is not high, but the barrier to endure is. ” This may be true, but even if sites like Jack Threads and Fab.com don’t have long life spans as businesses, the short-term impact on major retailers and consumer behavior is huge. They are re-writing what value means to consumers, along with companies like Groupon and LivingSocial, which raised another $176 million from private investors recently. It used to be that Black Friday was a day that consumers knew they’d get the absolute best deal and the most value. That’s why the alarms were set and the cars packed with gifts shortly thereafter. Now there’s Green Monday the following week, which happens be called Cyber Week. And Free Shipping Day — the last day to get a gift delivered before Christmas Eve — which falls on Dec. 16th this year — so more price-conscious deals are to be expected. All that said, why worry about being trampled at the entryway to some big box retailer and missing time with the family (or sleep) if that same deal — if not a better one — is available the following week or month online? Perhaps this is a thought one will soon have. But… “It’s not about shopping in person one day, then online another. People are shopping in different channels and expecting the same experience no matter where they are,” said Etsy’s Bidwell. Well, OK. So if the Black Friday experience — at least the fun, shopping-spree experience — is still desired online, where will consumers go? The main thing that online shopping sites don’t provide compared to their brick-and-mortar brethren is a feeling of shared experience and interest. We may all be fighting for that Tickle-Me Elmo or Banana Republic sweater, but at least we’re fighting for the same reason. Lyst.com, a social curation startup that combines features of Twitter with elements of music discovery sites like Last.fm, provides a look at a possible answer. Its members sign up and receive a personalized feed of fashion items relevant to their own tastes. So there you go, reaching for that sweater knowing someone else shares your interest. “Socially-curated shopping was designed principally to help people discover items for themselves, however, it’s now changing the way gifts are bought online as well,” said Lyst.com CEO Chris Morton. “Users can now share detailed lists of items they love with friends and family to make sure they get the perfect present as the holiday season approaches.” As the reliance on Black Friday, and brick-and-mortar shopping trips, decreases and the focus on online increases, companies like Etsy, Gilt and Lyst.com stand ready to support your search for unique gifts that come with the backing of a community. But even if it’s not them on the front lines, major e-retailers like Walmart and Macy’s are certain to adjust to the changing landscape, as well. Many of these Fortune companies and fashion retailers are already populating their sites with customer conversations in the forms of ratings, reviews, questions, answers and customer stories. The next layer will involve bringing your social networks onto these sites, or vice versa. Ultimately, you may have to give up that feeling of finding some amazing deal hidden away from the view of others on a Black Friday morning in some back aisle or discounted clothing bin of a big box retailer. In exchange, you’ll end up with a lot more time to make your gift purchases backed with the kind of buying confidence that only your friends and family — Facebook friends and Twitter followers included — can give you. Regardless of how it all transpires and what’s gained or lost, we should all be pretty excited about the things to come both with the holidays and in the world of commerce.

Read the full article →

U.S. Worried About IMF Loans To Europe

December 10, 2011

WASHINGTON (Lesley Wroughton) – The prospect of European heavyweights like Italy or Spain turning to the IMF for rescue loans is worrying the United States and other nations that fear they could suffer losses on funds they have extended to the IMF. The International Monetary Fund cannot be expected to step in as a substitute for a stronger commitment by Europe which needs to assume the brunt of any losses on emergency loans, a senior US official said on Friday. Despite the International Monetary Fund’s stable record – no borrower has ever defaulted on an IMF loan and no country has ever lost money lending to the IMF – there are concerns about the IMF’s growing exposure to the euro zone. That exposure could take a quantum leap if Italy and Spain need bailouts, a level of assistance that would almost certainly dwarf the loans already approved for Greece, Ireland and Portugal in deals engineered with the European Union. Emerging markets, which are contemplating lending more money to the IMF — which couples monetary assistance with tough conditions that seek to ensure a country does not default — have also raised concerns in the IMF about the risks to the fund’s capital, officials from emerging nations told Reuters. A crucial European Union summit ended on Friday with a historic agreement to draft a new treaty for deeper integration in the euro zone in an effort to rein in a debt crisis that started in Greece two years ago and has continued to spread. Worries about the IMF’s risk are also brewing among congressional lawmakers. Four U.S. lawmakers who met with IMF chief Christine Lagarde this week expressed unease over the risk the fund would take on with a bigger role in Europe. A request for a big IMF loan for Italy or Spain would put the United States, which holds veto power over most IMF lending decisions, in an uncomfortable spot. The American public is still stung by the U.S. government’s big bailouts for banks during the 2007-09 financial crisis and fears that mounting U.S. debts imperil the nation’s future. With President Barack Obama facing a tough battle for re-election in November, the White House is not keen to appear as Europe’s savior, and the administration’s message to Europe has consistently been: Put more of your own money on the line. Indeed, Republican lawmakers are seeking to yank a $108 billion loan the United States approved for the IMF in 2009, a move that would undercut Washington’s ability to influence the conditions attached to IMF loans. “If the United States wants to help Europe find a way out of its current debt crisis, we must be a strong, world economic leader, not merely the lender of last resort,” Republican Senator Jim DeMint wrote in The Wall Street Journal on Friday. “Members of the Obama administration must focus all of their efforts on strengthening the U.S. economy and balancing our budget, rather than on continuing to borrow from China to pay for Europe’s out-of-control debts,” he added. DeMint said he would seek to force another vote to stop U.S. Treasury Secretary Timothy Geithner from supporting more European bailouts. The Senate voted 55-44 in June against a proposal by DeMint to repeal IMF loan authority. Domenico Lombardi, a former IMF board official now at the Brookings Institution in Washington, said even if the U.S. Congress rescinded the loan, it would not prevent the IMF from lending to Europe. He said the international community has a stake in ensuring the euro zone crisis does not spread further. PREFERRED CREDITOR The IMF enjoys an understanding among its members that borrowing nations will always pay the IMF back ahead of private creditors. However, the scale of borrowing troubled euro zone countries might need raises the specter that one of the nation’s could default on an IMF loan. The IMF has about $380 billion available for lending, a figure outstripped by Italy and Spain’s debt refinancing needs. Italy needs to roll over 340 billion euros (290.5 billion pounds) in debt next year, while Spain needs to refinance 120 billion euros. “The problem with some of these countries now is you’re getting to a point where (debt) is large enough that defaulting on the IMF is attractive enough if you want to reduce your debt,” said Raghuram Rajan, a former IMF chief economist now at the University of Chicago’s Booth School. “I’m not saying the euro area will act at cross purposes with the fund. But when it comes to writing down the debt, will the euro area respect the (preferred) status of the IMF?” European leaders agreed at a summit on Friday to provide 150 billion euros in bilateral loans to the IMF to tackle the crisis, with another 50 billion euros coming from non-European countries. National central banks in the euro zone would pump the capital into the IMF. The funds would not count as a contribution toward Europe’s IMF quotas, which determine its voting power in the fund. WHOSE MONEY IS THIS ANYWAY? There are two ways of channeling the money to the IMF, either through the fund’s general resources or a so-called IMF-administered account. Any lending from the IMF’s general resources would spread the risk across the entire IMF membership. In an administered account, the countries contributing would take the losses in the case of default. Thus far, Europe has indicated it is legally easier for its funds to be part of general resources. When it comes to additional resources to battle the euro zone debt crisis, the United States prefers the second option, which would put most of the risk on Europe and none on the United States. The Obama administration has argued for months that Europe needs to put more capital on the line. “The key point is that official funding must also bear losses if necessary,” Rajan wrote in a recent column. “Consequently, if support is channeled through the IMF, the fund will need a guarantee from the euro zone that it will be indemnified in case of a (debt) restructuring.” Mario Blejer, a former Argentine central bank governor, argues that Europe should take care of its own and bear the full risk of any default. “The IMF’s seniority is an unwritten principle, sustained in a delicate equilibrium, and high-volume lending is testing the limit,” Blejer and Eduardo Levy Yeyati, a senior fellow at the Brookings Institution, wrote recently. “From this perspective, the proposal to use the IMF as a conduit for ECB resources — thereby circumventing restrictions imposed by European Union’s treaties — while providing the ECB with preferred-creditor status, would exacerbate the Fund’s exposure to risky borrowers,” Blejer and Yeyati said. “This arrangement could be seen as an unwarranted abuse of Fund seniority that, in addition, unfairly frees the ECB from the need to impose its own conditionality on one of its members.” ($1 = 0.7482 euros) (Editing by Tim Ahmann, Leslie Adler and Andrew Hay) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

Occupy Wall Street Floods ‘Law & Order: SVU’ Set At Foley Square

December 9, 2011

Members of the Occupy Wall Street movement raided a fictional recreation of their former Zuccotti Park camp late Thursday night into Friday morning, interrupting the filming of a new episode of NBC crime drama “Law & Order: SVU” that was taking place in lower Manhattan’s Foley Square. The show, a long running ripped-from-the-headlines police procedural, was in the midst of producing an episode that seemed to involve the economic protests that began in Zuccotti Park in September and have spread throughout the world. Word traveled online through Occupy’s various social channels and a crowd of people quickly showed up to “mockupy” the square. “Basically, obviously, ‘Law & Order’ was using this as a backdrop for some salacious story,” Han Shan, a member of the OWS press team, told The Huffington Post. “People did it in the spirit of absurdity and fun, and we like to come together in public space and share ideas and show our vision through our action and we’re doing that tonight with a good bit of jest and big fat smiles on our faces.” Although it was unclear if the filming permits had been revoked, the protestors were asked to leave the square when the park closed at 1 a.m. Various reports on Twitter stated that police forced out protestors , as well. When reached for comment, the NYPD was unable to provide any information. “There’s a pretty significant NYPD presence at this point,” Shan said as 1 a.m. approached. “They did push us out, I don’t think anyone wanted to take an arrest for this. It’s fun and we were successful in kind of taking back our history, our very young history but taking it back from this TV show that wanted to use it. I don’t know if it was our presence here that caused them to rescind [the permit] but they wouldn’t be able to film, unless the jokes on us and they’ve been filming the whole time.” The “SVU” recreation of Liberty Square, the nickname given to the OWS encampment that was raided and cleared by the NYPD on November 15 , had its own library and kitchen, which was stocked with real food, including animal crackers. “I have to admit, it really felt like a very strange dream, that moment,” Shan said of their initial raid of the recreated square. “There are certainly some folks who feel really offended by the attempt to kind of use this very real, very living movement, this economic justice movement that’s making real change for working families in this country, to use it in some kind of story line in this dramatic cop show,” Shan said. “There are probably other folks among us who think it’s just a fun excuse to get together and share in public.”

Read the full article →

UAW Says No Foreign Target This Year

December 7, 2011

The UAW shifted gears on its organizing strategy, today, announcing it would not target a foreign auto manufacturer with plants in the United States for a unionizing effort. UAW President Bob King had previously claimed the union would wage an informational campaign at a non-U.S. auto company by the end of the year. In fact, he had announced a $60 million campaign to organize foreign-owned plants in the Midwest and South. “From day one, we used the wrong term — ‘target,’” UAW Secretary-Treasurer Dennis Williams told the Detroit Free Press Wednesday. The union has said it still plans to carry on with its overall organizing strategy, but rather than focusing on one particular manufacturer, the UAW will continue to reach out to all companies with U.S. plants , the Free Press reports. According to the Associated Press, King had been trying to push the UAW as a business partner to help drive sales , but no foreign manufacturer had agreed to let their workers vote on membership in the union. The UAW’s executive board would wait to see manufacturers’ responses to union demands on respecting worker’s rights before any new decision would be made on the topic, King told the Associated Press. During the last decade, the UAW had conducted campaigns at the foreign-owned Nissan Motor Co. and auto-parts supplier Denso Corp. , but had failed in those efforts, according to the Wall Street Journal . The UAW has seen dwindling numbers in recent years. Membership has fallen from the union’s peak of 1.5 million members in 1979 to about 377,000 at the end of last year, according to Reuters.

Read the full article →

IMF Denies Report On $600 Billion Lending Facility

December 7, 2011

The International Monetary Fund on Wednesday denied a report in Japan’s Nikkei newspaper that the Group of 20 nations were planning to assemble a $600 billion IMF lending facility that could be used to bolster euro zone countries. “There has been no such discussion with the IMF,” an IMF spokesman said in response to the Nikkei report. Separately, a G20 official also said the report was untrue. (Reporting by Leslie Wroughton in Washington and David Lawder in Milan, Editing by Chizu Nomiyama) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

‘We Became A Bank Of America Symbol’

December 7, 2011

SAN FRANCISCO — To hear Netflix CEO Reed Hastings tell it, the bone-headed decisions that have dragged down the Internet’s leading video subscription service during the past five months eventually will be forgotten like a bad movie made by a great film director. Shaking off the stigma of a massive flop won’t be easy, a challenge Hastings acknowledged late Tuesday when he spoke at a UBS investor conference in New York. After his host mentioned the mystique surrounding Hastings as Netflix’s fortunes soared a year ago, Hastings quipped: “Now, it’s just pity.” The self-deprecating humor prefaced a 45-minute treatise on why Hastings believes Netflix will overcome its recent adversity and remain at the forefront of a shift that increasingly will turn watching Internet-distributed video into one of the world’s most popular pastimes. This coming as high-speed connections, mobile devices and more sophisticated televisions become commonplace. His long-term vision calls for Netflix to be selling Internet video subscriptions at prices starting at $8 per month in most markets outside of China. “If you fundamentally believe Internet video will change the world in 20 years, we are the leading play on that basis,” Hastings boasted. He quickly added a caveat: “As long as we don’t shoot ourselves in the foot anymore.” Hastings sounded like he intends to stick around to lead the way, despite questions about recent moves that triggered a customer backlash and a staggering decline in Netflix’s stock price that has wiped out three-fourths, or about $12.5 billion, of the company’s market value in five months. Netflix Inc. shares closed Tuesday at $68.14, down from a peak of nearly $305 in July when the company infuriated its U.S. subscribers by announcing plans to raise its prices by as much as 60 percent. The sell-off has surprised and humbled Hastings, who revealed on stage that he had curtailed his sales of his Netflix holdings earlier this year because he was convinced the stock would quickly hit $1,000. Hastings said his biggest mistake was trying to phase out Netflix’s once-trailblazing DVD-by-mail rental service more quickly than millions of customers wanted. He and his management team concluded a few years ago DVDs that are destined to obsolescence, so they began concentrating on streaming video over high-speed Internet connections. Ending Netflix’s practice of bundling DVD-by-mail and Internet streaming subscriptions together so people are forced to buy them separately was meant to push more households into weaning themselves from discs. Customers instead saw the move as a betrayal by a greedy company and canceled their subscriptions in droves. “We became a sort of a Bank of America symbol, which is super unfortunate,” Hastings said Tuesday in comments monitored on a webcast. “We berate ourselves tremendously for that lack of insight because it didn’t need to be that way. But, you know, in three or five years, we aren’t going to remember it. It’s going to be: `Did we succeed at streaming?’ That’s all people are going to care about in three or five years. So we are not losing too much sleep over it. We are charging ahead.” There’s damage to repair along the way. Netflix entered October with 800,000 fewer U.S. subscribers than it had at the start of July, and the company has said there have been additional defections in the past two months, although the number hasn’t been quantified. The result: Netflix isn’t bringing in as much money as it hoped to pay for an expansion in in Latin America and Great Britain and cover rising fees to license movies and TV shows for its video-streaming library. The shortfall will saddle it with a loss next year, the first time that has happened in a decade. Hastings said he expects Netflix to enjoy robust subscriber growth next year, although he doubts the company will be able to match its performance during the first six months of this year when it added nearly 5 million subscribers. Virtually of the company’s future growth is expected to come from streaming-only subscriptions. “DVD will do whatever it will do,” Hastings said. “We are not going to hurt it, but we aren’t putting a lot of time and energy into it.” Netflix ended September with 25.3 million subscribers worldwide, including 23.8 million in the U.S. Nearly 14 million of the U.S subscriptions included a DVD-by-mail plan. To ensure it will have enough money to finance its ambitions, Netflix recently raised $400 million by issuing convertible debt to one of its major stockholders and selling 2.86 million discounted shares. That stock sale further irritated investors because Netflix spent nearly $200 million buying back 900,000 shares of its stock at an average price of $218 during the first nine months of the year. Hastings said Netflix probably could have gotten by without the extra money, but he decided to raise the extra cash to avoid a “crisis of confidence” among the company’s suppliers, including movie and TV studios that license their video and sell their DVDs to the company. Increasing competition is another major concern hanging over Netflix. Amazon.com Inc., Wal-Mart Stores Inc., Dish Network Corp. are already offering subscription packages that include Internet video. Verizon Communication Inc. declined to comment on reports it may also enter the market. Hastings said he doubted Verizon will make much of a dent unless it is prepared to pay between $1 billion and $2 billion annually to obtain the rights to professionally produced video. Right now, Hasting said, only Netflix and Time Warner Inc.’s HBO pay channel have made that kind of commitment. “If they are not willing to invest at those levels, it pretty hard to compete with us or HBO,” Hastings said. He went a step further, branding HBO as Netflix’s biggest rival now that the channel as expanded beyond cable TV with an on-the-go application for Apple Inc.’s iPhone and iPad, as well as devices running on Google Inc.’s Android software. The app is free, but viewing content on the devices still requires an HBO cable subscription. “It will be a little bit of an arms race with us,” Hastings said of HBO. “Hopefully, we will end up both creating amazing consumer experiences and end up pushing the bar in a positive way for each other.”

Read the full article →

A Catskills Casino? That’s Cuomo’s Plan

December 5, 2011

By MICHAEL GORMLEY, Associated Press ALBANY, N.Y. — New York Gov. Andrew Cuomo on Sunday proposed a major economic development package that would expand gaming, which could mean a Catskills casino, establish a new infrastructure repair fund, provide more tax credits for job growth and create a job-training program. The extensive proposal released to The Associated Press and to newspapers statewide as an opinion column is Cuomo’s response to an unexpected $350 million deficit this year and a projected $3.5 billion deficit in the 2010-13 fiscal year. Cuomo calls for “comprehensive reform of our tax code” to promote investment in jobs in New York. He doesn’t mention raising taxes or adjusting the tax code to raise taxes for wealthier New Yorkers. Democrats in the Assembly and Senate continue to push for a higher tax on wealthier New Yorkers to address the deficits without further cuts to education and health and social programs. Cuomo, a Democrat, led the Legislature to address a $10 billion deficit in April with a state budget that included a rare cut in spending. His plan could be presented in a special session of the Legislature to be held as early as this week, or it could be a centerpiece of his second year in office beginning in January. “We should pursue a comprehensive gaming plan — recognizing the reality that New York is already in the gaming business,” Cuomo said. He called for the creation of “destination gaming locations,” which in past proposals from Albany has included the Catskills, once home to a flourishing resort industry. “Through this plan we can promote job creation and recapture revenue that is currently being lost to other states,” Cuomo said. He said in the fall that he was looking into allowing private sector, non-Indian casinos in New York to capture some of New Yorkers’ gambling dollars now going to Connecticut and Atlantic City, N.J. Cuomo also proposes the “New York Works Initiative,” which would create a fund to finance the repair and development of highways, bridges and major construction. That could create immediate construction jobs as well as aid in the long-term growth of companies and attract new employers. Cuomo called for a second round of regional proposals based on local assets and strengths to fund more job-creating plans. The first round of his proposals for $1 billion in competitive grants is finishing up now. His job-training program would be aimed at helping inner-city youths land jobs, and cut into what Cuomo said is a 40 percent unemployment rate in inner cities. Cuomo called for continued cooperation with legislative leaders to avoid the partisan gridlock seen in Washington. “Now is not the time for rigid partisanship, but for effective leadership,” he said. “New York state government must rise to the occasion and lead once again.” The Senate’s Republican majority had no immediate comment on Cuomo’s proposal, but it will get a fair hearing, according to majority spokesman Scott Reif.

Read the full article →

Exec Facing Charges For Chaotic BlackBerry Sale

December 5, 2011

JAKARTA, Indonesia — Police say a senior executive of Canada’s Research In Motion is a suspect in last month’s stampede at a BlackBerry promotion in Indonesia. Police spokesman Col. Baharudin Djafar said Monday that several people fainted and dozens were injured at the global debut of the BlackBerry Bold 9790. The $540 phones – commonly known as Bellagios – were being sold at half price to the first 1,000 shoppers. Djafar said Canadian Andy Cobham, the outgoing country director for RIM, is among four suspects who could face charges of negligence leading to injury. The crime carries a maximum penalty of nine months in prison. Indonesia, a nation of 240 million people, has experienced a come-from-nowhere tech frenzy in recent years. With 6 million users, BlackBerry is more popular in Indonesia that smartphones from other makers.

Read the full article →

Stacey Tisdale: The Power of the Black Purse: Making Our Voices Heard this Holiday Season!

December 5, 2011

I was recently pitching a story to a news director about spending a day with a CEO. I really want to get inside a CEO’s head and try to give us a picture of his or her decision making process. The show is focusing on jobs, and the news director seemed a bit surprised that I wasn’t pitching the latest debate about the jobs bill, or something of that nature. I pointed out that I’ve been a financial journalist for twenty years. I think the story that doesn’t get enough attention is how limited the government’s ability really is when it comes to the labor market. Despite the sound bites about how one side is crippling the economy’s ability to create jobs or the other is anti-American, governments create the environment where the labor market can thrive. They do things like create incentives for companies to hire, make sure we’re being treated fairly, invest in infrastructure, and meet important deadlines. (That’s another story) The lasting fix for this economy, particularly the jobs crisis, is going to come largely from the corporate world. By some estimates, U.S. companies are sitting on more than a trillion dollars that they are not putting to work. I understand their reasoning: Consumers are nervous. There is political uncertainty, uncertainty about the global economy, etc. Still, we are in trouble. Some of these dollars could be invested in the American people — in our community — through things like job creation and job training. Black Voices — Black Dollars The American recession has become the black community’s depression. I don’t have to tell you about the high unemployment levels, rising poverty rates, and financial 911 that so many of us are facing. As I discussed in my last blog , it is very difficult to feel powerful or believe that you can make change when you’re facing these struggles. Still, the numbers paint a picture of a group with tremendous power. In its 16th annual ” The Buying Power of Black America ” report, Target Market News finds that in 2009, black households spent an estimated $507 billion in twenty-seven product and services categories. That’s an increase of 16.6% over the $435 billion spent in 2008. African Americans’ total earned income for 2009 is estimated at $836 billion. What would happen if we directed that $836 billion dollars towards companies that helped us? What would happen if this holiday season, for example, we only shopped at companies that were truly committed to giving us jobs and helping us thrive? Take a look at Black Enterprise’s list of the 40 Best Companies for Diversity . I urge you to join me in using the products and services of these companies during this holiday season and letting your thoughts and voices be heard on this blog. We Have the Stage A shift in consciousness is taking place in the world right now that can be a true turning point for us. The ‘system’ is not working and people aren’t taking it. Whether it’s overthrowing dictators in the Middle East, or ‘Occupying Wall Street,’ the lines of our tolerance have been crossed and we’re fighting back. Social networks, and the unprecedented ability they have given us to organize and work together, have proven to be a more powerful tool that armies, governments, and corporate board rooms. In the financial world, the bar was set by Occupy Wall Street. One of Occupy’s most ‘successful children’ was by far, Bank Transfer Day. Fed up with high bank fees, Kristen Christian used Facebook to urge consumers to take money out of big banks and put them into credit unions. A clear vision that prompted banking behemoths like Bank of America , Wells Fargo, and JP Morgan Chase to do something that bank reform legislation, political pressure, and a suffering economy could not, drop fees. The purpose of this blog is to start a dialogue in the black community that help us move into an emotional, psychological, and financial space where we feel empowered… Where we can collectively and individually make choices that allow us to build wealth. Give yourself and our community the gift of power this holiday season. When billions of dollars talk with the same voice, people listen!

Read the full article →

Fox News: The Muppets Are Communist, Captain Planet Evil

December 5, 2011

It ain’t easy being green, but according to Fox Business, Kermit the frog and his Muppet friends are reds. Last week, on the network’s “Follow the Money” program, host Eric Bolling went McCarthy on the new, Disney-released film, “The Muppets,” insisting that its storyline featuring an evil oil baron made it the latest example of Hollywood’s so-called liberal agenda . Bolling, who took issue with the baron’s name, Tex Richman, was joined by Dan Gainor of the conservative Media Research Center, who was uninhibited with his criticism. “It’s amazing how far the left will go just to manipulate your kids, to convince them, give the anti-corporate message,” he said. “They’ve been doing it for decades. Hollywood, the left, the media, they hate the oil industry,” Gainor continued. “They hate corporate America. And so you’ll see all these movies attacking it, whether it was ‘Cars 2,’ which was another kids’ movie, the George Clooney movie ‘Syriana,’ ‘There Will Be Blood,’ all these movies attacking the oil industry, none of them reminding people what oil means for most people: fuel to light a hospital, heat your home, fuel an ambulance to get you to the hospital if you need that. And they don’t want to tell that story.” Indeed, there was no mention of the benefits of oil drilling in the Muppets, but there was also no discussion of any other aspect of the industry. Richman, played by Chris Cooper, was out to destroy the Muppets theater. Kermit and his friends, then, were not committed environmentalists (though one must imagine the frog is concerned with his swampy homeland) but simply puppets looking to save a place they once loved. Still, Gainor blamed the film, and its predecessors, for Occupy Wall Street and the environmental movement. “This is what they’re teaching our kids. You wonder why we’ve got a bunch of Occupy Wall Street people walking around all around the country, they’ve been indoctrinated, literally, for years by this kind of stuff,” Gainor said. “Whether it was ‘Captain Planet’ or Nickelodeon’s ‘Big Green Help,’ or ‘The Day After Tomorrow,’ the Al Gore-influenced movie, all of that is what they’re teaching, is that corporations is bad, the oil industry is bad, and ultimately what they’re telling kids is what they told you in the movie ‘The Matrix’: that mankind is a virus on poor old mother Earth.” The Teletubies were unavailable for comment. Mahna-Mahna.

Read the full article →

Cyber Monday Smashes Records

November 28, 2011

NEW YORK — Shoppers seem to be just as enthusiastic about shopping on their computers and smartphones on Cyber Monday as they were about finding deals over the weekend. Online sales on Cyber Monday, which was started in 2005 by a retail trade group to encourage Americans to shop online on the Monday after Thanksgiving, were up mid-afternoon by 15 percent from a year ago, according to data from IBM Benchmark. Meanwhile, sales from mobile devices were up 7.4 percent. The group did not give dollar amounts. The Cyber Monday numbers point to Americans’ growing comfort with using their personal computers, tablets and smartphones to shop. Over the past few years, big chains like Wal-Mart Stores Inc., the world’s largest retailer, have been offering more and better incentives like hourly deals and free shipping, to capitalize on that trend. It’s important for retailers to make a good showing during the holiday shopping season, a time when they can make up to 40 percent of their annual revenue. On Monday, Amazon.com offered its bigger, more expensive Kindle DX for $259, or $120 off the regular price. The Express clothing chain was giving 30 percent off and free shipping on all online orders. And Wal-Mart, which has been calling the holiday “Cyber Week” in ads, was offering an LG 47-inch LED TV for $879, or $320 off the regular price. “Cyber Monday is far more exciting to me than Black Friday,” says Jamie Minoso, a 40-year-old English teacher from Alabama. “I do not enjoy the traffic and chaos involved in shopping at a mall.” To be sure, the strong start to Cyber Monday, created by a unit of The National Retail Federation, follows an even stronger kickoff to the holiday shopping season over the weekend. Americans shopped in record numbers, driven by earlier store openings and a push by retailers for online sales. A record 226 million shoppers visited stores and websites during the four-day holiday weekend starting on Thanksgiving Day, up from 212 million last year, according to the NRF. And sales on Black Friday, the day after Thanksgiving, rose 7 percent to $11.4 billion, the largest amount ever spent, according to ShopperTrak, which gathers stores’ data. Online sales were strong even over the weekend. Thirty-eight percent of all purchases were made online this year, up from 31 percent to 32 percent last year, says Sherif Mityas, partner in the retail practice of A.T. Kearney, who believes the increase was due to heavy promotions. Barneys, for instance, offered 40 percent off on its website on Thanksgiving Day, a day before it began its sales in stores. And Barnes & Noble offered 40 percent to 75 percent off online products, discounts that weren’t available in store. “Retailers are doing a good job of creating more excitement online in ways they can’t do in store,” Mityas says. “They’re creating that excitement of, `I’ve got to get that special deal,” that is really spurring traffic.’” It won’t be clear how well retailers will ultimately fare on Cyber Monday until Tuesday. But last year, sales on the day topped $1 billion for the first time, making it the heaviest day of online spending ever. Ahead of this week’s “Cyber Monday,” the NRF says nearly 80 percent of retailers plan to offer special promotions. And a record 122.9 million of Americans are expected to shop on the day, up from 106.9 million who shopped on “Cyber Monday” last year, according to a survey conducted for Shop.org. By early afternoon on Monday, traffic was up about 37 percent year-over-year, according to Akamai, an online content delivery company. Akamai says it expects online traffic to peak at about 9 p.m. Traffic has been up substantially since the Monday before Thanksgiving as retailers promoted online deals earlier than ever, says Lelah Manz, Akamai’s chief strategist of commerce. “There has been a huge volume of promotional activity being driven by daily deal sites, Facebook and other social networking sites,” she says.

Read the full article →

Larry Summers Denounces Inequality — But Why?

November 28, 2011

Why is Larry Summers suddenly so worried about inequality? The Harvard professor — a former U.S. Treasury Secretary and Barack Obama’s first Director of the National Economic Council — penned an opinion piece last week decrying the concentration of income at the very top. Warning of “a strong and troubling shift in market rewards for a small minority,” Summers cited “dismal” figures, such as a 275 percent increase in incomes of the top 1 percent from 1979 to 2007. During that same period, income grew a mere 40 percent for the middle class. The need for fixes is fiercely urgent, he said. But his timing is curious. Summers was driving economic policy during the worst economic downturn since the Great Depression, yet he remained largely silent on income inequality. A scan of news items featuring Summers during his recent time in power turns up almost nothing on this topic, at a moment when economic matters were at the forefront of public debate. The gist of Summers’ op-ed — that the United States has become a profoundly unequal society — will surprise no one who’s been following economic trends for the last several years, to say nothing of the country’s thousands of Occupy protesters, whom Summers conspicuously did not mention. But it’s remarkable to hear the alarm being sounded by someone who’s been portrayed by detractors as an embodiment of the tight link between Washington and Wall Street. Summers’ motivation is largely political, according to several economists contacted by The Huffington Post. “Reputation,” said Derek Shearer, who served in the Clinton administration as an economics official in the Commerce Department and is professor of diplomacy at Occidental College, when asked about the purpose of Summers’ recent move. “Show he’s a good liberal guy.” Summers did not return request for comment for this article. A career-minded technocrat like Summers — especially one who’s been associated with discredited policies like financial deregulation — has to try to stay on the leading edge of political discussion, Shearer said. “These are issues of the day, and he’s out marketing and branding himself. The facts are there, you can’t deny them. All he’s doing is stating reality. It’s like, ‘Oh, my god, there’s global warming.’ ” Dean Baker, co-director of the Center for Economic and Policy Research, agreed: “My guess is he’s being political here — he’s trying to go with the tide.” This isn’t the first time Summers has swung to the left while out of government. Baker and Shearer mentioned a series of increasingly progressive-sounding opinion pieces Summers wrote in the run-up to the 2008 election. “If you go back to ’06, ’08, he started to say some really good things in the Financial Times . There was talk about a new Larry Summers,” said Baker. But when Summers joined the Obama administration, where his job was to gather and present the president a range of economic policy options, many observers criticized him for marginalizing progressive opinions, including those of former Federal Reserve Chairman Paul Volcker and economists Joseph Stiglitz and James K. Galbraith. “None of the economists who were named to the council were particularly progressive,” Shearer said. “What you can fairly say is that there’s no evidence Larry was concerned with the issue [of inequality], and he really limited the range of interests and expertise that would be provided to the president. He saw himself as an expert on the economy, not somebody with strongly demonstrated progressive values.” In fact, when Summers is quoted talking about inequality in Ron Suskind’s new book, “Confidence Men: Wall Street, Washington, and the Education of a President,” it’s in starkly different terms than those employed in his recent opinion piece: “One of the challenges in our society is that the truth is kind of a disequalizer.” Summers is quoted as saying. “One of the reasons that inequality has probably gone up in our society is that people are being treated closer to the way that they’re supposed to be treated.” Summers has disputed aspects of Suskind’s account , but the remarks seem in line with a couple of other famous Summers statements. While a vice president of the World Bank in 1991, Summers penned a memo suggesting it was only logical for high-pollution industries to move to developing countries . Once the memo was leaked, Summers said it was written in jest. And in 2005, Summers said innate ability may partially explain why women are underrepresented in the sciences — comments that drew a firestorm of criticism at the time. To be sure, Summers has publicly adopted progressive positions before. During the 2008 campaign he spoke forcefully about inequality in a speech at a Harvard Business School conference . At the time, Summers was an adviser to Obama, and seen as a potential candidate to head the Treasury. Once secure in the White House, however, Summers seems to have lost focus on inequality: His next prominent statement about the issue came on October 14, 2010, when his departure from the Obama administration had already been announced. In an interview with the Washington Post , Summers spoke of the subject almost in passing, seemingly at the prompting of the interviewer, while discussing the benefits of letting upper-income tax cuts expire. The chief reason to do so, Summers said, was to allow the government to invest in job-creation: “Summers, who will step down and return to Harvard in January, agreed that tackling income inequality is also a factor,” read the article. “But ‘ this isn’t about redistribution ,’ he said.” Ira Kalish, director of global economics at Deloitte Research, said Summers should be forgiven for having other priorities while working in the White House. “The Obama administration was dealing with a near-collapse of the financial system. It was in a sense a triage,” said Kalish, who authored a study of income inequality’s implications for U.S. business . “They had to prevent the economy from collapsing before they could focus on longer term issues, and this [inequality] is a longer term issue.” While Shearer agreed that the Obama administration had to address many short-term issues, he said it wasn’t an either/or situation. “If this inequality was a major concern of yours, after dealing with the meltdown you move into the reform stages,” Shearer said, “and you of course could have been much tougher in the reforms you proposed.” At the very least, Shearer said, the White House could have established a presidential commission on inequality in the U.S., its causes and potential solutions. “That’s the bare minimum you could have done. That’s something Larry seemed to have no interest in. Instead they set up a Simpson-Bowles deficit reduction commission.” In his recent op-ed, Summers was careful to position himself at the political center, chiding those who blame “the success of the wealthy” for “the disappointing lack of income growth for middle-class workers,” as well as those who “call concerns about rising inequality misplaced or a product of class warfare.” But this equivocal stance — part denunciation, part defense of inequality — lead Summers into a vague and limited appraisal of the problem and its solutions. None of the economists contacted by The Huffington Post were impressed with Summers’ assessment of the problem of income inequality and potential solutions. Baker called the analysis “really the standard textbook stuff, small-bore stuff.” The cause of the problem, according to Summers, is that “the market system distributes rewards increasingly inequitably.” But Baker notes that the inequality we see is consistent with the direction of policy: “They designed the system to redistribute income upward. The taxpayers are subsidizing the executives at the banks and the shareholders. We have those huge compensation packages on Wall Street; that has nothing to do with the market, it’s government subsidy.” Trade agreements too have played a large part, Baker said, putting less educated workers in direct competition with people from the developing world. “That puts downward pressure on their wages, and at the same time we largely protect the most highly educated professionals — doctors, lawyers — so that they aren’t competing with their counterparts in the developing world.” “This is stuff that’s been said since the Clinton years,” Baker said. “The position is, ‘We have inequality from the market and we can ameliorate it a little bit with good policy.’ The position is that inequality came from the market, not inequality came from the policy.” “He’s not going to say something too controversial,” Shearer said. “Because then he’s not going to be hired by another hedge fund.” “You do very well if you don’t rock the boat in America. I don’t expect Larry to lead the charge,” Shearer added. “I’d be shocked if he did.”

Read the full article →

Occupy Philly Deadline Passes

November 28, 2011

PHILADELPHIA — A deadline set by the city for Occupy Philadelphia to leave the site where it has camped for some two months passed without scuffles or arrests as police watched nearly 50 demonstrators lock arms and sit at the entrance of Dilworth Plaza. The scene outside City Hall was far different from encampments in other cities where pepper spray, tear gas and police action resulted in the removal of long-situated demonstrators since the movement against economic disparity and greed began with Occupy Wall Street in Manhattan two months ago. Occupy Philadelphia has managed to avoid aggressive confrontations so far, and on Sunday night there was hope the City of Brotherly Love would continue to be largely violence-free. “Right now, we have a peaceful demonstration,” said Philadelphia Police Chief Inspector Joe Sullivan, nearly 45 minutes after the 5 p.m. deadline. Along the steps leading into the plaza, nearly 50 people sat in lines, their arms linked, refusing to leave. A police presence was heavier than usual but no orders to leave had been issued. The mood was upbeat in the hours before the evening deadline, with groups playing music and singing hymns. A few dozen tents remained scattered on the plaza, along with trash, piles of dirty blankets and numerous signs reading, “You can’t evict an idea.” “We can definitely claim a victory,” said Mike Yaroschuk, who was in the process of dismantling his tent. “We’ve opened a lot of minds, hearts and eyes.” Yaroschuk said he was leaving the plaza not because of the city-issued deadline but because of a request by unions whose workers will be involved in the long-planned construction project there in the coming weeks. He said Occupy’s efforts to draw attention to economic inequality and corporate influence on government were more important than its physical location. “This place is not a key battle for me … This is a marathon, not a sprint,” he said. Elsewhere on the East Coast, eight people were arrested in Maine after protesters in the Occupy Augusta encampment in Capitol Park took down their tents and packed their camping gear after being told to get a permit or move their shelters. Protesters pitched tents Oct. 15 as part of the national movement but said Sunday they shouldn’t have to get a permit to exercise their right to assemble. Occupy leaders said a large teepee loaned by the Penobscot Indians and a big all-weather tent would stay up. The Augusta arrests came when police say people jumped a waist-high, wooden fence on the governor’s mansion lawn and some climbed a portico to the building and unfurled an Occupy banner. As many as 50 protesters, some holding signs and beating a drum, gathered near the Blaine House gates. In Los Angeles, another deadline was getting closer, too, for hundreds of demonstrators to abandon their weeks-old Occupy Los Angeles protest. Although city officials have told protesters they must leave and take their nearly 500 tents with them by 12:01 a.m. Monday, just a handful were seen packing up Sunday. Instead, some passed out fliers containing the city seal and the words: “By order of Mayor Antonio Villaraigosa, this notice terminates your tenancy and requires you to attend the Occupy L.A. Eviction Block Party,” which the fliers’ said was scheduled for 12:01 a.m. Others attended teach-ins on resistance tactics, including how to stay safe should police begin firing rubber bullets or breaking out tear gas canisters and pepper spray. Back in Philadelphia, Steve Venus was fortifying the area around his tent with abandoned wood pallets left over from those who had already packed up. He said the $50 million construction project, including a planned ice skating rink, was not a good enough reason for Occupy Philadelphia to leave the plaza. Venus, 22, said that by enforcing the deadline, the city was essentially telling Occupy supporters “your issues are not important. The only issue that’s important is the ice skating rink.” On Friday, Mayor Michael Nutter expressed support for the movement’s ideals but said protesters must make room for the long-planned project, which they were told of when they set up camp Oct. 6. Nutter was out of town Sunday, but his spokesman reiterated that “people are under orders to move.” “We’re monitoring the situation and we expect people to leave immediately,” spokesman Mark McDonald said. Members of the governing body of Occupy Philadelphia, the general assembly, previously approved a move to a plaza across the street after union officials stressed the hundreds of jobs being created by the Dilworth reconstruction. But that vote mistakenly assumed protesters would be able to pitch tents there. Graffiti, lack of sanitation and fire hazards, including smoking in tents, were among the city’s chief concerns at Dilworth, which had about 350 tents at the height of the movement. The encampment also attracted significant numbers of homeless, although the plaza had long been frequented by that population even before the camp was established. The city did issue a permit to an Occupy Philadelphia faction called Reasonable Solutions that planned to continue demonstrating across the street beginning Monday. However, activities are limited to between 9 a.m. and 7 p.m., and no overnight camping is allowed. ___ Associated Press Writers Andrew Dalton in Los Angeles and Glenn Adams in Augusta, Maine, contributed to this story.

Read the full article →

WATCH: Store Closes For 2 Hours After Black Friday Crowds Get Pushy

November 27, 2011

A store in a suburban Chicago shopping mall closed for two hours Friday morning after people and merchandise alike were knocked to the ground during what police called a “mass push of bodies.” The Pink store at Orland Square Mall in Orland Park, Ill., attracted around 100 people who waited outside the stores to await the 4 a.m. start of their Black Friday sale , the Chicago Sun-Times reports. When Orland Park Police received 911 calls from customers who were being knocked to the ground inside the store. The store, a spinoff of Victoria’s Secret geared toward teenage girls and young women, was forced to close for about two hours , according to NBC Chicago. When the store re-opened after some cleaning up, mall security set up ropes and barricades to help control the crowd of shoppers swarming for deals. No arrests, injuries or stolen goods were reported from the scene. Orland Park Police Cmdr. John Keating told the Chicago Tribune ” we are very lucky there were no injuries .” “They didn’t anticipate the volume of shoppers that showed up for their sale,” Keating added. Representatives from neither the store nor the mall returned calls from both the Tribune and Sun-Times requesting comment on the incident.

Read the full article →

Woman Who Allegedly Pepper Sprayed Shoppers Turns Herself In

November 27, 2011

LOS ANGELES — A woman suspected of showering Black Friday shoppers with pepper spray surrendered to authorities but was released pending further investigation after she refused to discuss the incident, police said Saturday. The woman, whose name was not released, is suspected of firing pepper spray into a crowd in order to clear a path to a crate of Xbox video game players that were being unwrapped late Thanksgiving night at a Walmart in the upscale Porter Ranch section of the San Fernando Valley. The suspect got away in the confusion, and it was not known if she bought one of the Xboxes. Ten people suffered minor injuries from the spray and 10 others sustained cuts and bruises in the ensuing chaos. “Last night at 8:30 the suspect involved in the pepper spray incident at the Porter Ranch Walmart turned herself in,” police Sgt. Jose Valle said Saturday. She immediately invoked her right against self-incrimination, however, and refused to discuss the incident further. Police released her pending further investigation. Valle said investigators still have nearly a dozen witnesses to interview, including several spraying victims. He added it would likely be at least two days before an arrest in the case could be made. If the woman who surrendered is indeed the person who sprayed the crowd she could face battery charges. The attack took place about 10:30 p.m., shortly after the Walmart opened its doors for the traditional Black Friday sales that kick off the Christmas shopping season. A crowd of people had gathered to wait for store employees to unwrap the crate of discounted Xboxes. The incident was one of several across the nation that marred this year’s Black Friday. In the most serious case, a robber shot a shopper who refused to give up his purchases outside a Walmart in the San Francisco suburb of San Leandro. The victim was hospitalized in critical but stable condition. San Leandro police said the victim and his family were walking to their car around 1:45 a.m. Friday when they were confronted by a group of men who demanded their shopping items. When the family refused, a fight broke out, and one of the robbers pulled a gun and shot the man, said Sgt. Mike Sobek. ___ Associated Press Writer Terry Tang contributed to this story.

Read the full article →

Small Retailers Fight Back On ‘Small Business Saturday’

November 26, 2011

Big retailers like Walmart, Best Buy and Target may command the headlines on Black Friday, with their $300 laptops and $200 flatscreen TVs and crowds camping out overnight for the best deals. But don’t count out the mom-and-pops, who are fighting back with deals of their own on the second-annual Small Business Saturday. Across the nation, small retailers are armed and ready for what they hope will be their biggest shopping day of the year: Small Business Saturday . Sandwiched between the powerhouse Black Friday and Cyber Monday, Small Business Saturday was created by American Express, which offers registered customers a $25 credit if they spend $25 or more on their American Express card at a participating small business on that day. This year, President Obama endorsed Small Business Saturday describing it as a way to “keep our local economies strong and help maintain an American economy that can compete and win in the 21st century.” “Research shows that the holiday season makes up for the bulk of small businesses’ yearly sales,” says Patricia Norins, an independent consultant and Small Business Saturday shopping expert for American Express. “Right now, retailers are looking for as many ways as possible to drive traffic to their stores.” With projections that 90 million consumers will be out shopping this Small Business Saturday, Norins calls this “a huge opportunity.” Norins has talked to small-business owners who are planning everything from balloons and banners to Santas and tree lightings. Many are joining forces to produce shopping maps of participating local businesses or offering cross promotions such as handing out different free cookies at neighboring stores. Norins believes this type of momentum can translate beyond the day to connect customers with local businesses year-round. “Consumers have a huge opportunity to find unique products and personalized customer service,” she says. “It instills a sense of community, which is important on a local and national level — more money stays in the community and more jobs are created.” We talked to eight small retailers nationwide to find out how and why they’re going above and beyond to attract shoppers this Small Business Saturday.

Read the full article →

WATCH: Near Riot Ensue Over $2 Waffle Makers

November 25, 2011

Black Friday 2011 has seen its share of noteworthy, bargain-fueled madness. Shoppers lined up earlier than ever to take advantage of midnight openings and to get discounts at some stores that even opened on Thanksgiving Day. There have been reports of shoppers pepper spraying one another in the hunt for deals and even robbers shooting Black Friday customers to get their loot. And now, crazed shoppers reportedly got in a fight over $2 waffle makers at a Wal-Mart near Little Rock, Arkansas WBTV reports. After the video went viral, sites all across the web began to offer their commentary. Gawker wrote that the video embodies everything that’s “awesome” about America, including the “horrible economy, aggressive consumerism, mindless violence and a complete lack of concern for one’s fellow human beings.” Meanwhile, Reddit wonders if waffle makers could spawn a new slew of riots.

Read the full article →

Ex-Olympus CEO Says He’s Willing To Return To Disgraced Company

November 25, 2011

The British ex-CEO of Japan’s Olympus Corp emerged from a frosty meeting of directors on Friday convinced its board would eventually quit over an accounting scandal engulfing the firm, but he said he wasn’t “begging” to return and clean up the mess. Michael Woodford, still an Olympus director despite being fired as CEO and blowing the whistle over the scam, described the meeting as a tense encounter with no handshakes or apologies offered from the men who had sacked him barely a month ago. Instead, he said, the board had agreed that the once-proud maker of cameras and medical equipment should strive to avoid being delisted from the Tokyo stock exchange, a sanction that would make the business more vulnerable to takeover. “I just see a lot of suffering and misery for no gain,” Woodford said of the prospect of a delisting. “But we should have the investigation, it shouldn’t be fudged,” he told a news conference after the almost-two-hour meeting at Olympus’s Tokyo headquarters, where he was mobbed by reporters and TV crews as he entered and left the building. Woodford, back in Japan for the first time since fleeing the country right after his October 14 sacking, said there had been no talk at the meeting of him returning to his former post. “I’m not begging to come back,” he said, though he added that he was willing to do so if shareholders desired it. “I didn’t volunteer for this, I’m not a hero,” he added. “There was a tension in the room, but there seemed to be an understanding that it was in no one’s interest to raise the temperature,” he said. “They didn’t shake my hand and I didn’t offer mine. We said good morning and goodbye.” Major foreign shareholders have called for Woodford to be immediately reinstated, saying he can restore faith in the 92-year-old firm. The visit by Woodford, who also met this week with police and other investigators probing the scandal, coincided with a rally in Olympus shares, which have been buoyed by speculation the firm can escape delisting. The stock rose as much as 25 percent on Friday before closing up 8.6 percent at 1,107 yen. It has rebounded a whopping 77 percent in just four trading days, though it is still down more than half since the day before Woodford’s dismissal. Woodford said Olympus could survive as an independent entity as long as banks, so far supportive, kept backing it. DUBIOUS DEALS, CRIME SUSPICION Olympus had fired Woodford, a rare foreign CEO in Japan, alleging he had failed to adapt to Japanese culture and the company’s management style. Woodford says he was axed for questioning dubious merger and acquisition payments. Suspicion has swirled about possible links between the payments and organised crime. Woodford said he had no firm proof of gangster links but urged authorities to “follow the money.” “That would be concerning if organised crime was involved … but there’s no evidence of that to date,” he said. The 51-year-old freckle-faced Briton had left Japan after his dismissal citing concerns for his safety. Olympus first denied any wrongdoing, but later admitted it had hidden investment losses from investors for two decades and used some of $1.3 billion in M&A payments to aid the cover-up. Woodford said after Friday’s board meeting that the top priority was for Olympus to meet a December 14 deadline for filing its financial statements for the six-months to September — after which, he added, current management should go. The company would be automatically delisted if it misses the deadline. Even if it meets the deadline, the Tokyo Stock Exchange can still delist it, depending on the scale of past misstatements or if a link is found to “yakuza” gangsters. A third-party panel appointed by Olympus to look into the accounting scam said this week that it had not yet found any evidence of involvement by organised crime. AUDITORS, GOVERNANCE The Olympus affair has raised questions about whether its auditors, the Japanese arms of global giants KPMG and Ernst & Young, should have done more to follow up on red flags. KPMG’S chairman, Michael Andrew, on Friday called for a global set of standards for the auditing industry but said that KPMG had done the right thing in the actions it took pertaining to the Japanese company. “What is pretty evident to me is that it is a very, very significant fraud,” Andrew said in a speech in Hong Kong. “We should wait for the Japanese authorities to disclose that.” “I think it is very hard to jump to the conclusion that it’s a corporate governance failure,” he said. The scandal has also revived criticism of corporate governance in a country that Woodford said needed people who would “challenge and scrutinize.” He also took a swipe at mainstream Japanese media for being slow to cover the scandal. “What Japan should do is look around the world for the best human resources … It would be sad if no more gaijin come,” he said, using the Japanese word for foreigners. On the eve of the board meeting, two Olympus directors and an internal auditor blamed for the scandal quit and the president announced that current management was ready to step down once the firm’s recovery was on track. Current president Shuichi Takayama should stay until December 14, but changes could start thereafter, Woodford said, adding that his fellow directors seemed to realize they would have to go but had given no explicit commitment to resign. Woodford also said Japanese authorities probing the scandal, whom he met in Tokyo on Thursday, wanted to talk to him again. Tokyo police, prosecutors and regulators have launched a rare joint probe of the scandal. The U.S. Federal Bureau of Investigation and Britain’s Serious Fraud Office are also looking into the affair. Shareholders have asked Olympus to seek more damages from former and current executives if they are found to have caused losses to company value through acquisitions at the center of a scandal, the company said in a statement on Friday. (Additional reporting by Yoko Kubota, Taiga Uranaka, Lisa Twaronite and Mayumi Negishi; Writing by Linda Sieg; Editing by Mark Bendeich) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

10 Walmart Shoppers Injured In Pepper Spray Incident

November 25, 2011

LOS ANGELES — Authorities say at least 10 people suffered minor injuries inside a crowded Walmart store in Los Angeles after a female shopper used pepper spray during a confrontation. The incident occurred shortly after 10:20 p.m. Thursday in the San Fernando Valley as shoppers looking for Black Friday deals were let inside the store. Shawn Lenske, a Los Angeles fire spokesman, said the injuries, all of them minor, were due to “rapid crowd movement.” Police Lt. Abel Parga says a woman used pepper spray, hitting other customers. It’s unknown what caused the confrontation. Parga said police were looking for the woman. No arrests have been made.

Read the full article →

Thanksgiving Kicks Off Anxious Holiday Season For Retailers

November 24, 2011

(Phil Wahba) – The holiday shopping season starts in earnest on Thursday, with retailers anxious to see if U.S. consumers are willing to spend despite an endless stream of scary headlines about the fragile economy and their own precarious finances. However, in the eyes of retailers, the shopping period has been churning along for some time as retailers like Wal-Mart Stores Inc and Toys R Us started early by offering layaway programs, and others offering major deals to lure shoppers. These incentives have increased the stakes for retailers, and when Americans are done with their turkey dinners on Thursday, many will be getting a jump-start on ‘Black Friday’, the biggest shopping day of the year, and one that sets the tone for the entire season. “If Thursday and Friday are not very good, chances are it will not pick up going up to Christmas,” said Keith Jelinek, a director at consulting firm AlixPartners’s retail practice. WalMart, Gap Inc’s Old Navy and Sears Holdings’ K-Mart are again open on Thanksgiving Day to get a headstart, while Toys R Us opens Thursday evening. But to narrow the gap in store hours, discounter Target Corp, electronics chain Best Buy and department store chains Macy’s Inc and Kohl’s Corp will open doors at midnight on Thursday. Retailers themselves concede the pressure is on. “At the end of the day, we are trying to respond to what our customers want to do, and they are telling us that’s when they want to shop,” Mike Vitelli, president, Americas and enterprise executive vice president, Best Buy, told Reuters. Others, like J.C. Penney Co Inc are taking their chances and opting to open early Friday morning as they did last year. The National Retail Federation expects sales in November and December to be up 2.8 percent over last year. So retailers see little margin for error in their fight for sales. The battle will also be waged online, where comScore expects sales to be up 15 percent this year. Wal-Mart starts its Black Friday ‘doorbuster’ deals on Thursday at 10 p.m. at its stores. Amazon.com Inc, not to be outdone, will offer its deals online at 9 p.m. But Wal-Mart is also offering 30 percent more deals on Thanksgiving. The knock-down-drag-out fight comes as the rebound in sales cooled in October, when many top chains like Macy’s and Saks reported disappointing sales and shoppers were hit with a steady stream of bad news about the economy. It will be a tougher fight for chains that have struggled of late, like Gap, Penney and electronics giant Best Buy. PriceGrabber.com, a price comparison website, found that searches for electronics in recent days were flat with last year, helped only by a surge in interest in new tablets like Amazon’s Kindle Fire and Barnes & Noble Inc’sNook. The NRF expects 152 million people to hit stores this weekend, up 10.1 percent from last year. But that will be fueled by bargain hunting, with the real test coming after the weekend, as retailers see if shoppers are only willing to hit stores when there are juicer deals on the table. Last year, after a strong Black Friday weekend, shoppers sat on their hands until closer to Christmas – waiting for stores to hand out bigger bargains. “I think as time goes on, you’re going to see a leveling and a softness in the numbers,” said Al Ferrara, director of BDO USA’s national retail practice. (Reporting by Phil Wahba in New York, additional reporting by Dhanya Skariachan; Editing by Bernard Orr) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

Stock Market Plunges On German Debt Concerns

November 23, 2011

The eurozone will face a vote of confidence on Monday by the U.S. stock market. Heading into the Thanksgiving holiday, the U.S. stock market plunged after Germany, Europe’s largest — and arguably most secure — economy, found it surprisingly difficult to sell its government bonds or sovereign debt Wednesday. It’s a sign that private investors are fleeing Europe and exacerbating the sovereign debt crisis there. With the stock market closed Thursday and open for just a half a day on Friday, it likely won’t be clear until Monday if the crisis is starting to spread to the United States. U.S. stocks may plunge on Monday if the situation in Europe deteriorates, some economists said. “The markets are exaggerating the situation,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. “But by the same token, they’re sending a message, and that strikes a cautious note.” By avoiding Germany’s sovereign bond auction, private investors signaled that they have lost patience with European leaders and confidence that the eurozone will be able to avoid a breakup and a deep recession. The impact of investors’ skittishness is growing. If they don’t buy government bonds, interest rates on European sovereign debt spike , making it harder for countries to finance their debt pushing them closer to default. In other words, investors fearing the worst could actually be making their fears come true. The German central bank was forced to buy 39 percent of the 10-year sovereign bonds that Germany issued today, in a clear rebuke by private investors. The U.S. stock market plunged in response, as the S&P 500 fell 2.21 percent, and the Dow Jones Industrial Average plummeted 236 points to 11,257.55. European stocks also took a beating. The DAX index in Germany fell 1.44 percent and the CAC 40 in France fell 1.68 percent, and the value of the euro fell one percent against the dollar. “This auction was disastrous for Germany, and one can easily conclude that this is one of the first concrete signs that the eurozone is in the process of breaking up, that investors have just about given up,” Bernard Baumohl, chief global economist at the Economic Outlook Group, said. Germany almost set itself up for an unsuccessful bond auction though, said Jay Bryson, global economist at Wells Fargo Securities. He noted that the interest rate that Germany was offering on its new 10-year bonds — just 2 percent — was lower than the 2.25 percent interest rate offered last month and 3.25 percent interest rate during the summer. The lower returns simply were not as appealing, Bryson said. If Germany, Europe’s safe haven, can’t sell off its debt to private investors, then more troubled countries such as Italy and Spain may find it difficult to avoid insolvency. And if those countries default, it could spell the end for the euro. Investors are at this point afraid of nearly all European bonds. Interest rates on French and Austrian sovereign debt are approaching four percent, indicating that investors are increasingly eager to sell any European sovereign debt, no matter how well the country’s fiscal house has been put in order nor how strong the economy is. Bryson noted that European banks also have been less willing to lend to large corporations in a sign that credit is tightening. “The markets seem to think that euro is on the edge, ready to fall off the cliff,” Cardillo said. “The message is loud and clear that the markets are basically going to force the Germans to compromise.” Germany, the most powerful country in the eurozone, has largely stood in the way of a rescue by the European Central Bank. The president of Germany’s influential central bank recently said that the ECB must not violate its charter, which prevents it from buying sovereign debt directly from European governments. But if the markets continue to inflict harm on Germany as well as the rest of the eurozone, Cardillo said, Germany eventually may relent and allow the ECB to buy large amounts of sovereign debt and issue euro bonds, driving down borrowing costs and ending the short-term crisis.

Read the full article →

Occupy Protesters Tout Small Businesses For Black Friday Shopping

November 23, 2011

PORTLAND, Ore. — Occupy protesters want shoppers to occupy something besides door-buster sales and crowded mall parking lots on Black Friday. Some don’t want people to shop at all. Others just want to divert shoppers from big chains and giant shopping malls to local mom-and-pops. And while the actions don’t appear coordinated, they have similar themes: supporting small businesses while criticizing the day’s dedication to conspicuous consumption and the shopping frenzy that fuels big corporations. Nearly each one promises some kind of surprise action on the day after Thanksgiving, the traditional start of the holiday shopping season. In Seattle, protesters are carpooling to Wal-Mart stores to protest with other Occupy groups from around Washington state. Washington, D.C., is offering a “really, really free market,” where people can donate items they don’t want so others can go gift shopping for free. Others plan to hit the mall, but not for shopping. The 75-person encampment in Boise, Idaho, will send “consumer zombies” to wander around in silent protest of what they view as unnecessary spending. In Chicago, protesters will serenade shoppers with revamped Christmas carols about buying local. The Des Moines, Iowa, group plans flash mobs at three malls in an attempt to get people to think about what they’re buying. “We didn’t want to guilt-trip people at a mall,” said Occupy Des Moines organizer Ed Fallon. “We wanted to get at them in a playful, friendly way, to support local businesses.” Protesters say the movement shouldn’t take away money and seasonal jobs from the working-class majority it purports to represent. The corporations, not the shoppers, are the focus of any protests, they say. But organizers do hope their actions drive people to reconsider shopping at national chains and direct their attention to small, locally owned stores. That may not fly with small businesses wary of any association with the movement, which presents itself as pushing back against corporate power. “If you ask, a lot of small business owners identify as business owners, not specifically small business,” said Jean Card, spokeswoman for the National Federation of Independent Business. “I would like to believe there is a silver lining, but I don’t picture a frustrated consumer that can’t get into a box store turning around and going to a small business. I see that person going home.” Trying to shop exclusively local neglects economies of scale, job specialization and other benefits that big, multi-state corporations can bring, said George Mason University economist Russ Roberts. “Don’t punish yourself by not shopping where you can get the best deal; that’s foolish,” Roberts said. Besides, small businesses aren’t necessarily better employers in terms of wages, benefits, opportunities for advancement and other measures, said John Quinterno, principal at the public policy research firm South by North Strategies in Chapel Hill, N.C. He calculates that small mom-and-pops, which he defines as businesses with fewer than 10 employees, account for nearly 80 percent of employer firms in the U.S., but only about 11 percent of the jobs. “Sometimes we romanticize small business – and I say this as a small business owner myself – so that it skews some of our debates about economic and labor policy,” Quinterno said. “It doesn’t mean they aren’t important. It just means that larger businesses tend to create a lot more value-added per job.” The protests are largely focused on shopping areas in affluent suburbs home to big chain stores. As with the entire movement, the protests bring with them a litany of causes. In addition to protests of big chains, causes include clothes made from animal fur, McDonald’s, homelessness and, in Las Vegas, the low gambling taxes paid by casinos. The formula is ideal for the Occupy protests, many of which faced evictions from large-scale encampments in recent weeks. With a large number of people in a confined space, the Black Friday protests present one of the earliest tests for the movement in its new, fragmented iteration. Most protests plan to make a point and move on, a strategy they’ve implemented in some cities with targeted marches for specific causes since the camps were broken up. “It’s not about specific occupation camps anymore,” said protester Peter Morales of Austin, Texas. “It’s more of, you know, real awareness of what’s going on in our government.” Another shop local movement, Small Business Saturday, was started last year to encourage people to shop at small businesses on the day after Black Friday. But the Occupy groups are underwhelmed, since Small Business Saturday was started by American Express. Last year, small retailers that accept American Express saw a 28 percent increase in sales volume on Small Business Saturday from the same day the year before, AmEx says. “It’s just another example of the banks and Wall Street trying to take the very real desires of working people to have a humane economic system and twisting it to their ends,” said Peter Rickman, an activist with Occupy Milwaukee. Pam Newman, 30, of Louisville, Ky., knows well the trappings of Black Friday. A former Best Buy employee, Newman would watch troves of wild-eyed shoppers kick, claw and scrape their ways to holiday deals. She’s coy with the details of the Occupy Louisville protest – “There are some plans I can’t talk about” – but said the focus will be on people who haven’t made up their minds. “Look, some people have printed out the deals two weeks ago. We’re not getting to them,” Newman said. “While we would like to dissuade the folks camping out and `occupying’ Wal-Mart, they’ve already made their mind up. “We’re looking for the shoppers on the fence.” ___ Rexrode reported from Raleigh, N.C.

Read the full article →

Airport Workers Say Pay Is Illegally Low

November 23, 2011

CHICAGO, Ill. — Every day she goes to work at O’Hare International Airport, Elda Burke faces the same dilemma. Burke, 30, works as a passenger attendant at the airport, escorting the elderly and disabled to and from their gates by wheelchair. Even though the airlines describe this as a free service, Burke’s employer has her working partly for tips, which is why her base pay is a low $6.50 an hour, somewhat like a restaurant server’s, rather than the typical Illinois minimum wage of $8.25. But unlike diners at a restaurant, many of the passengers Burke will be escorting on their holiday travels this week won’t realize she’s working for tips — and by federal law, she won’t be allowed to tell them. “We cannot say anything,” Burke says. “If we do that, they can fire us.” Burke works for Illinois-based Prospect Airport Services, Inc., a company that has contracts to supply service workers at O’Hare and other airports around the country. Prospect and similar contractors often pay their workers like Burke at a reduced rate before tips, which allows them to shift a portion of the salary burden to passengers. Such a pay scheme is perfectly legal , so long as the employer makes up the difference whenever a worker comes up short of the minimum wage after tips. But several attendants at O’Hare claim their pay often works out to be less than the legal minimum, an issue that lies at the center of an ongoing unionization push among service workers at the airport. The Service Employees International Union has been trying to organize workers at O’Hare and Chicago’s other airport, Midway International, this year. SEIU officials say a union could help airport workers earn a living wage. They note that many have not seen raises in years and don’t have paid vacation or sick days, even though they carry some security responsibilities, like checking the cleaning crews who enter planes. Burke says she started out at $5 per hour in 2002 and has only received a $1.50 pay bump in her nine years. She also says she has gone without health insurance the entire time because the company plan is too expensive. “A lot of them are paid poverty wages, in some cases below the minimum wage, and they have no access to affordable health care insurance,” says Izabela Miltko with SEIU Local 1. “They’re organizing to have a dignified workforce and to win higher wages.” Tom Murphy, general counsel for Prospect, says that the company has been following all state and federal laws, and that the complaints from workers like Burke amount to “a union ruse.” A handful of workers recently filed labor-law complaints against the company with the state labor department, though a subsequent inspection of the company by officials found that the company was in compliance with minimum-wage laws, Murphy notes. “For years they’ve always gotten paid well more than the minimum wage,” Murphy says. “Their paychecks match the law. I don’t know what more we can do.” A labor department spokesperson says the state is currently investigating the allegations. Workers who don’t earn the minimum wage are supposed to fill out “tip sheets” detailing how much they earned in tips and how much they’re owed by their employer, if anything. These sheets are rarely if ever filled out, Murphy says, because workers do in fact take home sufficient pay. But Burke and some of her colleagues at O’Hare say many workers don’t fill out tip sheets because they feel their supervisors won’t deal with it or because they don’t want to be seen as not pulling their weight. Several of them told HuffPost that they often don’t earn the $1.75 in tips each hour that they’re expected to. According to a survey of workers done by the SEIU, 86 percent said there was a time they didn’t earn the minimum wage. “A lot of people just stopped reporting their tips,” says Aaron Crawford, a 20-year-old aspiring pilot who takes public transit to O’Hare from Chicago’s South Side for each shift with the wheelchair. “They know it won’t be taken care of.” Some workers attribute their low pay partly to the fact that they work in the international terminal, where many of the foreign travelers don’t have the tipping customs of Americans. The federal Air Carrier Access Act that requires airlines to staff attendants for disabled and elderly travelers also prevents those attendants from soliciting tips or putting out tip jars. Waldo Gucwa, a 22-year-old student who’s been an attendant at O’Hare for three years, says that some workers who are desperate for tips try to artfully steer the conversation with passengers toward employment, in hopes that the passenger might ask if they can accept tips. Gucwa also says that many young, apparently able-bodied travelers seem to request wheelchair service as a way to bypass the lines at security, and often choose not to tip at the end of the ride. The attendants are forbidden from asking a passenger if he or she is actually disabled. “There are days you leave here with 7 bucks, 8 bucks” in tips, says Gucwa, who said he supports the idea of a union. “When you go home and do the math, you’re not even getting the minimum wage, and that’s the reason people are getting real riled up around here.” The O’Hare workers aren’t the first to say they’re earning less than the minimum wage escorting passengers. Last year a group of 20 workers who drive passenger carts at Dallas-Fort Worth International Airport sued Prospect. The workers claimed the company had switched them to a tipped pay schedule because it had put in a low bid on the airport contract and could no longer afford to pay the full minimum wage, according to the suit . The workers said they did not “customarily” receive tips and were required to do odd jobs on top of escorting passengers. Worker paychecks, the complaint alleged, were “extremely confusing” and often led to a wage below the federal and state minimums. Workers said they stopped reporting their low tips because they feared losing their jobs. Prospect denied the allegations and the case was settled, according to court documents. This summer, wheelchair escorts at Bush International Airport in Houston lodged similar allegations against their employer, Nashville-based PrimeFlight Aviation Services. The workers were earning between $5.25 and $6.35 per hour before tips, and some told the Houston Chronicle that they were pressured to pad their tips out of fear they’d be punished or lose their jobs if their employer had to pay them more. One worker told the paper she reports $80 worth of false tips each month, nonexistent earnings that she would be paying taxes on. PrimeFlight was receiving state funding for its workforce — up to $2,000 per employee — but the company was recently suspended from the subsidy program, the Chronicle reported earlier this month. Keisha Davis, a passenger attendant at O’Hare, says she’s been trying to raise her two-year-old twins on her salary, but she can’t do it without food stamps and Medicaid. She says she was earning more money when she was pregnant, taken off wheelchair duties and paid a flat rate of $8.25 per hour. Now that she’s escorting passengers again, she too says her tips don’t boost her pay to where it needs to be. “We really couldn’t make it without government assistance,” Davis says. “It’s like living from paycheck to paycheck to paycheck. … At the end, there’s nothing left.”

Read the full article →

Black Friday 2011: Millions More Plan To Shop This Year, Survey Finds

November 17, 2011

Americans plan this year to go shopping in greater numbers on Black Friday, the biggest shopping day of the year and unofficial kick-off the holiday spending season. Some 152 million shoppers say they will hit stores on November 25, the day after U.S. Thanksgiving, up 10.1 percent from 138 million people last year, according to a survey by the National Retail Federation, an industry group. For the November-December period, the NRF previously forecast retail sales would rise 2.8 percent to $465.6 billion, in what executives and analysts have said will be a more competitive season than last year. Major retailers are leaving little to chance. For instance, discount retailer Target Corp and department stores Macy’s Inc and Kohl’s Corp are opening their doors earlier than ever, at midnight on Thanksgiving. The survey, which polled 8,502 people between November 1 and November 8, also found that 17.3 percent of people will look for Black Friday deals on retailers’ Facebook page and 11.3 percent on group buying sites such as Groupon Inc and Living Social. (Reporting by Phil Wahba in New York; editing by Andre Grenon) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

Gingrich Denies Freddie Mac Accusations, Says "Random Strange Person" Attacking His Marriage

November 16, 2011

MASON CITY, IOWA — Republican presidential candidate Newt Gingrich on Tuesday denied reports that his $300,000 contract with Freddie Mac in 2006 was paid to him so he would stop Republican lawmakers in Congress from dismantling the government-sponsored mortgage giant. “That’s not accurate,” Gingrich said of a Bloomberg report that quoted unnamed former Freddie Mac officials. “I do no lobbying of any kind, and I offered strategic advice and that’s all I do. I don’t go to the Hill. I don’t lobby in any way. I haven’t for the years I’ve left the speakership, period.” But former Speaker of the House Gingrich (R-Ga.) did not say if he warned Freddie Mac of a looming housing crisis — a defense he used when asked about his contract last week at a debate in Michigan. The Bloomberg story said Gingrich never warned Richard Syron, Freddie Mac’s CEO at the time, of such an issue. When asked if he had warned Freddie Mac about a housing bubble after he signed his contract with Freddie Mac in 2006, Gingrich said he did not know. “I have no idea what the dates were. I offered strategic advice over a period of time. I did no lobbying of any kind. And I’m very happy to offer people strategic advice if they come and ask my advice,” he said. Earlier Tuesday, The Huffington Post’s Amanda Terkel reached out to Freddie Mac for comment on what Gingrich did for the organization and whether or not, as he said, there was a confidentiality agreement preventing him from discussing the work. The housing giant declined to comment . Gingrich has railed previously against Democratic lawmakers he claims helped cause the housing crisis by using Government Sponsored Enterprises such as Freddie Mac to hand out home loans to borrowers who could not afford them. He added Tuesday that he does not believe GSEs are inherently a bad idea. “I personally think there are circumstances where Government Sponsored Enterprises are legitimate,” Gingrich said. “You go back and look at the transcontinental railroad, you look at rural electric coops — there are a lot of ways to organize activity in this country. So I was quite happy to talk about the GSEs, which was the question. But once you got into a cycle where people were literally giving mortgages to people with no credit at all, you don’t have to be much of a historian to know that’s not sustainable.” During the debate in Michigan last week, Gingrich said he wanted to privatize Freddie Mac and its sister organization, Fannie Mae. “It’s a good case for breaking up Fannie Mae and Freddie Mac and getting much smaller institutions back into the private sector to be competitive and to be responsible for their behavior,” he said. Gingrich also told HuffPost that he was aware of a flyer being distributed in Iowa that attacked him for previous infidelities, an incident first reported by Politico , but he brushed it aside. “Look, this is a free society in which various random strangers can do many things,” he said. “And I think if you read the flyer, it was clearly written by a random strange person. I don’t worry very much about what happens in a free society.” The flyer purports to have been paid for by Iowans for Christian Leaders in Government. When asked a second time if he thought a political opponent or rival campaign had designed the flyer, Gingrich said, “It was worded too badly. None of the campaigns I know would have written it that badly.” Gingrich spoke with HuffPost after touring North Iowa Area Community College with his third wife, Callista. Callista Gingrich is mentioned in the flyer as a “young staffer” who carried on an extramarital affair with the then-House Speaker for several years before Gingrich divorced his second wife and married her. At one point during the tour, Callista Gingrich mentioned to a college instructor that she had spent 11 years “as a staffer” on the House Agriculture committee. “A lot of hearings,” she said, as Newt shot a sideways glance her direction.

Read the full article →

Apple Slams iPhone Rumors

October 19, 2011

By Poornima Gupta and Edwin Chan SAN FRANCISCO (Reuters) – Apple Inc stunned Wall Street by reporting results that missed expectations for the first time in years, blaming rumors of the new iPhone for hurting demand in the September quarter. Shares of Apple fell 7 percent in extended trading on Tuesday, wiping some $27 billion off the value of the world’s largest technology company. It was Apple’s first quarterly earnings under Chief Executive Tim Cook, who took over from Steve Jobs in August at a critical juncture for the company. Apple is battling Google Inc in the mobile arena, as well as other challengers such as Samsung and Amazon.com Inc. “Investors are going to start to speculate that there is change under way now that Jobs is gone, and that there’s trouble ahead. We don’t share that point,” said Channing Smith, co-manager at Capital Advisors Growth Fund, which holds Apple shares. “The iPhone is where the weakness was and it’s an explainable one. The strong demand for the iPhone 4S set up strong demand for the holiday season.” Apple said it sold 17.07 million iPhones in its fiscal fourth quarter ended September 24 — well short of the roughly 20 million forecast by analysts. The iPhone is Apple’s flagship product, yielding some 40 percent of annual sales. Revenue rose 39 percent to $28.27 billion, lower than the average analyst estimate of $29.69 billion, according to Thomson Reuters I/B/E/S. It was the first time Apple missed revenue expectations since the fiscal fourth quarter of 2008. Net profit was $6.62 billion, or $7.05 a share. That fell shy of expectations for earnings of $7.39 per share. The last time Apple missed EPS estimates was in the first quarter of 2001, according to Thomson Reuters I/B/E/S. “Expectations for this company were red-hot, that is why we downgraded it,” said BGC Partners analyst Colin Gillis, who lowered his rating on the shares days before. “The reality is their business is not an annuity. They have to sell their quarter’s worth of revenue every 90 days.” “They had a big upgrade cycle with the iPhone, the numbers came in weak. They need to set records every time they report to keep up the momentum.” Apple executives said consumers had postponed purchase decisions until the crucial holiday quarter because of speculation that a new phone was on the way. Apple unveiled the iPhone 4S in early October, and it hit stores last Friday. Apple — which typically offers projections so conservative they are disregarded — on Tuesday forecast December quarter revenue and earnings above Wall Street’s estimates. “There’s no question this was a transition quarter ahead of the 4S,” said WP Stewart portfolio manager Michael Walker. “With the early pace of iPhone 4S sales, my guess is that disappointment is relatively short-lived.” “I’m not going to call Q3 a throwaway quarter for iPhones, but it was definitely a transition.” A PERIOD OF TRANSITION Cook started his first earnings conference call as CEO by honoring Jobs, who died on October 5 after a years-long battle against pancreatic cancer. He said he was “very confident” of posting record iPhone sales in the current quarter. The company moved 4 million iPhone 4S units — more than double its predecessor — in its first three days, despite lukewarm reviews. Another area for optimism for Apple was iPads. The company moved 11.12 million units during the quarter despite attempts by various manufacturers, including Samsung, to capture a slice of the tablet market. Now Amazon.com has also entered the fray with its Kindle Fire tablet. Acknowledging the competition, Cook said it was “reasonable to say” none of Apple’s rivals have gained any traction, and he expected the tablet market to be bigger than personal computer in the long term. Cook also told analysts that Greater China — mainland China, Hong Kong and Taiwan — was becoming an all-important region for Apple as it has “quickly become No. 2 on our list of top revenue countries very, very quickly.” Revenue from the region increased four-fold to $4.5 billion during the quarter. The new CEO fielded questions on Apple’s cash pile of over $81 billion, saying the money provided flexibility for acquisitions and investing in the supply chain. “That said, I’m not religious about holding cash or not holding it,” he added. “It’s a topic for the board on an ongoing basis.” Apple’s Mac sales saw a large spike during the September quarter but it failed to lift earnings. Apple sold 4.89 million Macs, up 27 percent from a year ago. Gross margin came to 40.3 percent — a tad higher than Wall Street’s forecast of 39.74 percent. International sales accounted for 63 percent of the quarter’s revenue. “We expected iPhone sales to decline in the September quarter from the June quarter as a result of the announcements we made … in June, where we said we would launch iOS 5 and iCloud in fall,” Peter Oppenheimer, Chief Financial Officer, said in an interview with Reuters. “That basically created the rumor of the day across the September quarter, especially at the end.” Apple said it expected December quarter earnings of $9.30 a share on revenue of about $37 billion. Wall Street is projecting $9.01 for the period, but it was unclear if that was comparable. “What is interesting is the guidance is less conservative than usual for their next quarter. It’s a timing issue, where it looks like the business that people thought would be in the September quarter is occurring in the December quarter,” said Sterne Agee analyst Shaw Wu. Apple shares fell to $394.78 in after-hours trading, after closing at $422.24 on the Nasdaq. (Additional reporting by Edwin Chan in Los Angeles, Liana Baker and Jennifer Saba in New York; Editing by Gary Hill, Bernard Orr) Copyright 2011 Thomson Reuters. Click for Restrictions

Read the full article →

Identity Theft Bust Exposes Need For ‘Smart’ Credit Cards

October 10, 2011

When authorities announced Friday that they had charged more than 100 people in a massive identity fraud operation , they did not just blame the alleged thieves. They also blamed the credit card companies. At a press conference, Queens district attorney, Richard A. Brown, accused U.S. credit card companies of “putting too much money into marketing and not enough into security” and claimed they “would rather take the losses” than invest in proven security measures, according to The New York Times . Deputy Inspector Gregory T. Antonsen, the commander of the New York Police Department’s Identity Theft Squad, told reporters the bust showed the need for computer chips implanted in credit cards to deter fraud. Experts say the United States is far behind Europe in adopting smart cards, which require cardholders to enter a personal identification number on a keypad, similar to a debit card transaction. Smart cards deter fraud because they contain computer chips that encrypt transaction information and require thieves to not only steal card data but also know the cardholder’s PIN, experts say. The card’s computer chip also has the potential to generate one-time-only passwords for more secure online commerce, experts say. “It makes it much harder to commit fraud,” said David Robertson, publisher of The Nilson Report, an industry trade publication. While European banks have issued millions of smart cards to consumers, U.S. banks still rely largely on credit cards with magnetic stripes, which are more vulnerable to thieves, experts say. That partly explains why fraud in the United States accounted for a growing proportion of global fraud losses last year, according to a study issued by The Nilson Report last week. The U.S. loses 9 cents to fraud for every $100 worth of credit and debit card transactions, while the global average is 4.5 cents, according to Robertson. U.S. banks have been reluctant to issue smart cards because it would require retailers to make expensive upgrades to their payment systems, which they have been reluctant to do, said John Hall, a spokesman for the American Bankers Association. “The chip technology is certainly more secure but if you can’t use your chip card anywhere it doesn’t do anyone any good,” Hall said. But that may start to change as credit card companies try to compel retailers to accept the new technology. In August, Visa announced that retailers who do not support smart cards by 2015 would be liable for fraudulent transactions. Meanwhile, MasterCard has said ATM owners must accept smart cards by 2013 or they will be liable for fraud stemming from their machines. For retailers, smart cards are one of several new forms of payment that require expensive upgrades to their terminals, including payment systems that allow consumers to wave their mobile phones over a card reader, according to Joe LaRocca, senior asset protection adviser for the National Retail Federation. The cost of transitioning about 15 million retail terminals to accept chip-based cards is between $12 billion and $15 billion, Robertson said. Retailers believe banks should help fund the conversion, LaRocca said. The effort to compel retailers to accept chip-based credit cards represents a significant shift in the attitude of the credit card industry, Robertson said. Historically, card issuers have made such large profits that fraud was viewed as a cost of doing business, he said. But now, the credit card industry is becoming less profitable and fraud is becoming less accepted, he said. The push also reflects a concern that thieves will increasingly focus on exposing vulnerabilities in magnetic-stripe credit cards in the United States as the rest of the world adopts the more secure smart cards, Robertson said. Smart cards might have deterred the widespread fraud operation detailed Friday by authorities in New York, Robertson said. The crime ring, dubbed “Operation Swiper,” involved thieves who posed as retail workers and used skimming devices to steal credit card data, then programmed that data into the magnetic stripes of blank credit cards, authorities said. The scheme netted an estimated $13 million in fraudulent purchases. New York police called it the largest identity theft bust in U.S. history. However, smart cards may not be immune to hackers, either. Last year, researchers at Cambridge University found they could make a payment using a smart card without knowing the card’s PIN by using a device to intercept communications between the card and the terminal. The researchers concluded that smart card technology “is seriously flawed” and “should be considered broken.”

Read the full article →

Report: Plan To Aid Jobless Homeowners Fails To Give Out All Its Money

October 7, 2011

A government program aimed at helping unemployed homeowners avoid foreclosure ended with more than half its money unspent . The Emergency Homeowners’ Loan Program ended last month and the government will use only $432 million of the $1 billion it set aside for the program , according to USA Today . The reason? Officials charged with administering the program couldn’t approve enough applicants in time to receive the aid. The Department of Housing and Urban Development approved 11,832 of the 100,000 applications for the program, which was enacted as part of the Dodd-Frank regulations passed in response to the financial crisis, according to USA Today . Officials initially said that the program would provide $50,000 to 30,000 unemployed or underemployed homeowners in order to avoid foreclosure. One of the reasons for the low number of approved applicants could be the strict requirements of the program. In order to receive a loan, applicants had to prove that their income had fallen by at least 15 percent due to the economic downturn , according to The Washington Post . In addition, applicants had to prove that once the loan disappeared — it has a maximum of two years or $50,000 — they’d be able to resume paying their mortgage. Organizations across the country reported having difficulties finding applicants who qualified as the deadline for the loan neared at the end of last month, The New York Times reported. At a community development corporation in Minnesota’s Twin Cities of St. Paul and Minneapolis, 31 out of 250 applicants received approval , according to the NYT . A non-profit in California faced a similar uphill battle; the organization deemed 25 of the 1,200 applicants qualified and of those 25, five were approved as of Sept. 28, The Times reported. The Emergency Homeowners’ Loan Program is just one of the Obama Administration’s loan modification programs that haven’t reached their goals , according to Propublica. Others include the Home Affordable Refinance Program, which aimed to help 4 to 5 million homeowners refinance their mortgages at low interest rates and a plan that gave money to state governments to experiment with programs for helping homeowners. The Home Affordable Modification Program — a plan also passed as part of the Dodd-Frank reforms that aimed to use subsidies to push bailed-out banks to modify home loans — has also had less than stellar results. When Obama first introduced HAMP in 2009 he said it would help 3 to 4 million homeowners; instead, the program has helped less than 700,000. Despite the deluge of programs aimed at helping homeowners and the housing market, the industry that precipitated the recession has yet to recover. A surplus of foreclosed properties is continuing to push home prices down and millions of homeowners owe more on their homes than they’re worth .

Read the full article →

Syreeta McFadden: ‘Let’s Meet the Moment. Let’s Get to Work.’

September 9, 2011

Here’s the thing: Nobody hires in August. I know this fact quite intimately. I had begun my job search in the summer of 2008, before my job was ‘eliminated’ at the end of 2008. I was working in the real estate world then, and contrary to popular narratives, signs of distress were everywhere in 2007. In August 2008, a colleague enlightened me to this universal corporate meme. So when the new numbers were released from the department of labor that showed zero job growth for the month of August and the unemployment rate held at 9.4, I didn’t flinch. My expectations were already low. I’m no politician, just an average, slightly over-educated black woman who worked in the very industry that seems to be the lynchpin of the Obama’s job plan and well, a fake psychic. Here’s me in February 2009 : So this brings me to my current thinking about infrastructure. Infrastructure is more than the physical universe of roads, bridges, schools, power grids, levees, dams, reservoirs, trains, subways. Think of them as veins and vessels within the body. The body cannot live without the mind. Teachers, firefighters, police officers, servicemen and women flow through that universe. So do you and I. And all of us need to be a bit more educated about how we all are connected in this life. How do we individually complement the stimulus package that was just signed? Infrastructure, beyond the jobs and economic stability it can create, includes you, me and a dose of intellectual curiosity. America is a young nation with old systems in play. All that American ingenuity we’ve been taught about has laid fallow for too long. Here’s Obama in 2011 : The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working. It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for long-term unemployed. (Applause.) It will provide — it will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. (Applause.) It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and if they hire, there will be customers for their products and services. You should pass this jobs plan right away. (Applause.) Indeed. This thought process is rooted in simple economics: cash begets demand, demand begets supply, begets higher GDP. This is stimulus for main street. Create an environment so that consumers spend and employers hire. Investment in infrastructure is known by most policy wonks as the speediest metric to mark job growth. It is not unlike the recession of 2000/2001, when everyone looked toward investment in construction starts for housing, to compensate for the epic failure and job losses from internet companies folding. And that housing boom (and inevitable bust) carried the country out of recession of the early aughts. I suppose the logic remains the same here for the American Jobs Act; incentivize the private market (small businesses) to hire more 14 million Americans out of work, put cash in the pockets of those underemployed and overworked Americans so that we spend more and grow the economy. Construction jobs are like cells dividing, besides the trades that get hired, folks who do work with their hands, it also creates a bureaucracy, a host of support staff to manage the endeavor. It’s not a bad idea… Which is really to say that while this is effective method to stimulate job growth, it is a terribly old idea. If we’re to presume that everyone in the job market is looking to specialize in masonry, electrical, engineering trades, then he’s definitely on to something. It certainly would require a re-education or refining of capabilities. The ‘jobs’ that this bill will likely create would require a highly specialized labor force, one that seeks transform an erstwhile trader/bookseller that’s been serving up your latte at your local coffee shop for the past six months to rewire a school to support a 4G network. When we talk of job creation what exactly are we talking about? I suppose I wanted Obama to level with me (the American people, labor) and say: ‘The jobs you had are not coming back. It’s time to embrace new possibilities. Have you considered returning to school? Have you thought of working with your hands? Perhaps there’s an idea that we could fund that would be to benefit of us all? Let’s build something.’ Or: ‘Employers, to remain competitive in the global economy, you’re going to need to innovate your business practices. It also means that you must take a risk: you must train your new hires to be competitive in this new economy. You may also want to check your biases towards the long term unemployed at the door. Invest in them and they’ll invest in you. Seriously. Everyone’s got to eat…’ Or: ‘Graduates of 2009-2011, help is on the way. We certainly didn’t train you for this.’ Or: ‘Work is changing. Gone are the careers and jobs of your parents and grandparents. Over the next two decades, you will all become specialized workers, and independent.’ I had already entered this new economy with my eyes wide open. I had trouble imaging a scenario where my job as amorphous as it was would be resurrected. It was time to reconsider my options. I recalled a 2009 Obama, the Obama who then referenced another young president: When written in Chinese the word crisis is composed of two characters. One represents danger, and the other represents opportunity The ‘opportunity’ in this economy, meant for me to re-imagine my own career goals and my quality of life. And after 18 months, 200 cover letters sent to various job openings listed on Idealist, Indeed, Monster, friend referrals and a modestly underused LinkedIN profile, I began to embrace the idea that the job I sought would be one of my own creation. It is still a work in progress, but it took silence and rejection for me to embrace the entrepreneurial side of my nature. One I hadn’t realized I had. I’m not alone, there’s a small army of us, growing and scarcely counted in labor statistics: Today, careers consist of piecing together various types of work, juggling multiple clients, learning to be marketing and accounting experts, and creating offices in bedrooms/coffee shops/coworking spaces. Independent workers abound. We call them freelancers, contractors, sole proprietors, consultants, temps, and the self-employed. Horowitz’s assertion isn’t new news. An article I fail to recall from 2009 called us ‘Perm-a-lancers’. A friend of mine has been a permalancer for major advertising agency for years. I don’t doubt Obama’s pragmatic resolve in cajoling an intractable legislative body to respond to the pressure of crumbling economy and frustrated electorate. Yet, I felt pandered to. In 2009, I understood the need for the Recovery Act to do the work of the American Jobs Act as presented in broad strokes tonight. In 2009, it was infrastructure investment that saved some jobs or at least stopped the hemorrhaging. For a time. Obama doesn’t have the power to hire 14 million Americans at livable wage. Or the countless/invisible underemployed class. I don’t think anyone inside the Beltway has a clue (or at the very least, willing to be honest) about what it’s going to take for us to redefine job growth for this new American century.

Read the full article →

Economists Looking For Bold Ideas On Black Unemployment

September 8, 2011

President Barack Obama will address a joint session of Congress tonight because of what many economists, pundits and politicians have called a jobs crisis. But the nation’s current employment picture closely mirrors the state of black unemployment before the recession began. Fixing the overall jobs deficit and addressing the way that the recession has ravaged black and Latino households will require bold, even controversial solutions, economists say. “It’s funny that what we call a crisis now is actually a little better than where black workers were in the so-called boom times,” said Algernon Austin, a labor sociologist at the Economic Policy Institute, a Washington, D.C.-based think tank. “The fact that there was no targeted effort to address African-American unemployment before the recession is a large part of the reason that the jobs problem is so big now.” In 2007, just before the recession began, black unemployment sat at 8.5 percent. In August, black unemployment reached 16.7 percent, a figure unseen since the 1980s . At the same time, the nation’s overall unemployment was 9.1 percent and job growth was zero. But in the depths of a jobs crisis that several economists say may portend a double-dip recession, white unemployment fell slightly to 8 percent. Together, black and Latino workers make up nearly 40 percent of the nation’s unemployed. To address a job crisis where black and Latino workers are being crushed but no one is doing well, the country needs a large influx of government spending and a commitment to create two major jobs programs, said Austin. One program should attempt to put any unemployed person back to work, and the other should target hard-hit demographic groups. Researchers at the Economic Policy Institute have found that the economy could support about $600 billion in government spending this year. “A lot of people right now have gotten caught up in this debate about whether we need a targeted approach to address minority unemployment or whether something universal would work. I’m saying we need both,” added Austin. At a July gathering, the Congressional Black Caucus called on the White House to funnel extra job creation dollars to geographic areas with high rates of poverty. Unlike a jobs program that targets black or Latino workers specifically, geographic targeting is politically feasible, several members said. “It’s time for this president to start proposing big, game-changing ideas that might address long-term joblessness and the growth and persistence of the black-white wealth gap,” said Darrick Hamilton, an economist at The New School. A Works Progress Administration-like program could help to repair some of the recession’s economic scars, said Hamilton. It would put workers into jobs where they can develop, enhance or at least maintain their skills, and it would give unemployed workers income until the economy improves. But to address the persistent and growing economic gap between white and black households, those at the top of the income scale and those near the bottom, the president should also propose wealth-building accounts for every child at birth, said Hamilton. With interest and limits on the purposes for which funds could be withdrawn, eventually every adult would have a pool of funds to cover the cost of attending college, setting up a household or purchasing a home. In 2009, the most recent year for which data are available, the gap between the median wealth of the nation’s white and nonwhite households –- that’s cash and other assets — grew to an all-time high . The median white household has about $113,000 in wealth, compared to about $5,600 for black households and $6,300 for Latino households. “The growing wealth gap in this county is the single biggest piece of evidence that an age of equality and meritocracy has not arrived,” said Hamilton. “That’s a controversial thing to say. But fixing it would go a long way toward solving a number of other social problems.” The most important thing that the president can do tonight is shift the conversation away from the idea that American families are tightening their belts so the government should do the same, said Heidi Shierholz, a labor market economist at the Economic Policy Institute. That is not economically sound, she said. (The institute has identified 10 things that Congress could do to create jobs and spend effectively.) The nonpartisan Congressional Budget Office periodically documents the economic effect of different types of government spending. Shierholz said that, according to the CBO’s most recent report in late 2010, the key to stimulating the economy and job growth is to spend those funds on things such as food stamps, unemployment insurance and a continued payroll tax holiday. These funds tend to hit bank accounts and be quickly spent, which benefits the economy, said Shierholz. In the current economic climate, tax incentives that encourage hiring also produce more economic activity and job growth than those that encourage companies to buy new equipment or facilities, she said. Companies are flush with cash right now, but are not spending or hiring because of lax consumer demand. The president should also propose financial aid for the states, said Shierholz. Such aid would likely stem the tide of black unemployment because nearly 25 percent of black adults hold government jobs . Right now, cash-strapped state and local governments are shedding about 30,000 jobs a month, she said. “We have to stop that kind of hemorrhaging,” Shierholz said. “I mean, not to prioritize workers, but we are talking about teachers here.”

Read the full article →

Rev. Jesse Jackson: They Hate Government — Until They Need It

August 30, 2011

Irene has hit, leaving destruction in its wake. We could track Irene and prepare for it; we could not stop it. And now, states and localities, despite the secessionist mumblings of Texas Gov. Rick Perry, cannot pay to repair the damage. Representatives from North Carolina to Virginia to New Jersey, even those most vocal about slashing government spending, now call on Washington for help. Conservatives scorn government until they need it. The economic disaster is a manmade — not a natural — disaster. Some economists, mostly ignored, warned about it, but could not stop it. And now, it will take federal action to repair the damage. Some 25 million Americans are in need of full-time work. Poverty is spreading, particularly among children. The hardest hit include what was an emerging middle class of African-Americans, Latinos and other minorities. Men and women who worked hard, got an education, found a good job, bought a house or a condominium, and were capturing a piece of the American Dream. Then came the housing bust, and what Paul Krugman now calls the ‘Lesser Depression.’ Suddenly and shockingly, teachers, accountants, store managers, construction workers, nurses, state and local employees find themselves losing almost everything. The Obama administration stanched the free fall of the economy. But even as the weather experts overestimated Irene’s destructiveness, the economic experts, as Fed Chair Ben Bernanke just admitted, underestimated the scope of the economic damage. Now the economy is stalled. President Barack Obama has announced that he will release a jobs agenda in September, a range of ideas that will include extending the payroll tax cut, extending unemployment insurance and investing in infrastructure. Republicans have already called those ideas dead on arrival. Conservatives embrace federal help after natural disasters, but scorn it in the wake of the manmade economic calamity. Little is likely to happen — unless people get in motion. Those at the top need to hear from those suffering at the bottom. The unemployed need to march on Washington to demand work. People of faith need to protest against children without adequate food or shelter. Some are conflicted. They fear that protest conflicts with politics. That protesting the lack of action will help elect Republicans who seem to be competing in a race to the bottom. But that is not our history. In 1960, Martin Luther King supported Kennedy instead of Nixon to prevent America from going backward. Then he marched in the streets of Birmingham to pass the Civil Rights Act to move the nation ahead. In 1964, Martin Luther King supported Johnson instead of Goldwater to prevent America from going backward. Then he marched in Selma to pass the Voting Rights Act to move the nation ahead. For Dr. King, there was no conflict between voting strategically to prevent the triumph of reaction and leading a nonviolent mass movement to pressure a president to achieve profound social change. When we in the movement struggled for social justice, we helped weak presidents become stronger. When we in the movement struggled for social justice, we helped good presidents become great. Americans are sensibly dismayed at Washington’s corruption. The banks get bailed out, while homeowners go under. The entrenched interests like Big Oil keep their subsidies; the unemployed go without work. Dr. King understood how formidable entrenched power is, but he also understood the power of democracy. Only the people can break the logjam of powerful interests. Change comes not from the bottom up. The pundits and the politicians are waiting for Obama. They will then report on the Republican reaction. The lobbyists will weigh in. Obstruction is the likely outcome. This will change only when people are, in the words of Fannie Lou Hamer, “sick and tired of being sick and tired.” The ‘Lesser Depression’ will not be solved from above. It will be solved when we overcome the depression of our spirit with the assertion of our humanity. As we honor the life and legacy of Dr. King and enshrine his likeness on the Mall, let us dream again, hope again, march again. The 1963 jobs and justice coalition, labor, civil rights activists, the religious — as well as youths — must reconvene for a summit and then nonviolently and massively take thousands of resumes to Washington. Put a real face on real needs. We can change the course to inclusion again. As Dr. King would often say, what makes America great is that although America is not always right, we have the right to fight for the right. That is a special genius of our free and open democracy.

Read the full article →

Seniors Faces Foreclosure After Making Mortgage Payment Too Early

August 22, 2011

A senior couple in Pasco County, Florida is facing the prospect of foreclosure. But the reason doesn’t have to do with missed mortgage payments. This time, it’s reportedly because they paid too early one month, and used the wrong routing number the next . Only three months after Sharon Bullington, 70, negotiated a mortgage modification under the Obama administration’s Home Affordable Modification Program (HAMP), Bank of America informed her and her husband that they had been ejected from the trial plan for improper payments, St. Petersburg Times reports. (h/t The Daily What.) The problem was that Sharon has made her January payment in December, instead of the required “month in which it [was] due.” She then allegedly incorrectly wrote her routing number on her February payment, leading the bank to cancel the modification. The Bullington’s explanations and pleas for help have reportedly been to no avail. The episode is only the latest in a series of oddball foreclosure stories that have included a homeowner being asked to pay $0.00 in order to avoid foreclosure and JPMorgan repurchasing a soldier’s home on the same day he returned from a tour of duty in Iraq . But in many ways, the Bullington’s story goes against the typical narrative of a post-recession American homeowner’s struggle. Instead of paying too early, most of those threatened with foreclosure are struggling to make payments on time. Indeed, the number of mortgages which are overdue by a month rose to the highest level in a year in the second quarter of this year , according to Bloomberg . Consequently, the jobs crisis is largely being blamed for the percentage of home loans overdue by 30 days, according to the Mortgage Bankers Association in Washington. Also a rarity is the Bullington’s ability to successfully negotiate a mortgage modification in the first place. Despite the continued existence of the Obama administration’s anti-foreclosure initiative HAMP, the number of preliminary mortgage modifications approved in June was the lowest since April 2009, at 15,000, according to government data reported by The Huffington Post . Read the entire story here

Read the full article →

Rep. Hank Johnson: Regaining Prosperity… and Protecting It: Job Creation and Financial Literacy in Black America

August 11, 2011

I am so pleased to see The Huffington Post inaugurating its Black Voices site, and I appreciate the opportunity to contribute in its first week. As an African-American member of Congress at this critical moment in our nation’s history, my first duty is to bring jobs back to the community I represent. To create jobs, we need smart and bold investments that put people back to work today and sustain opportunity in the future — investments in infrastructure, energy, education, science and technology. The Recovery Act stimulus package that was passed in early 2009 helped stabilize an economy in free fall and laid the foundations for sustained investment in these pillars of economic growth. But the current Congress, with a Republican-controlled House of Representatives, categorically refuses further investment in job creation and is singularly focused upon deficit reduction. Don’t get me wrong: long-term deficit reduction is an admirable goal. We do have to rebalance our national checkbook in years to come, and President Obama has advanced substantive proposals to do just that. But now is the time for aggressive investment in jobs and economic growth. The Republican refusal to invest in jobs — motivated in part, I believe, by their belief that a weak economy will harm President Obama’s reelection prospects — harms the black community in particular. African Americans have been disproportionately impoverished and unemployed by the “Great Recession” that began in 2007. The statistics are staggering. In 2009, African Americans saw their median household worth fall by 53 percent — yes, you read that correctly — compared with a 16-percent reduction in median net worth for white households. This acute toll on the black community only exacerbated preexisting inequality. The median wealth of white U.S. households in 2009 was $113,149, compared with just $5,677 for blacks. That ratio is 20 to 1. In 1995, it was 7 to 1. With our communities in such pain — and an obstructionist Republican House of Representatives unwilling to do the right thing — it is doubly important that we get out the vote in 2012, retake the U.S. House of Representatives, and reelect President Obama to the White House. If you think it is difficult today to enact policies that invest in the American people — especially America’s most vulnerable people — imagine the consequences of further losses at the ballot box in 2012. A further point: African Americans’ staggering financial losses suffered during the recent recession reveal a fundamental economic weakness in our communities — financial illiteracy. Effective and responsible wealth management insulates our families both against predatory lending practices and sudden loss of wealth during an economic crisis. The African-American community has been pervasively victimized by predatory lenders who sell high-cost, high-interest financial products like subprime mortgages, rent-to-own schemes and tax-refund lending. Without a doubt, a crackdown by law enforcement on exploitative lending practices is critical; the financial reform legislation passed by Congress in 2009 makes great strides toward justice. But a consumer base uninformed of the risks and unable to defend itself against predatory lending will always be easier to exploit. That makes dramatically improved financial literacy imperative, especially for the black community. Financial literacy is equally critical if families are to protect themselves against risk during an economic downturn. Let me put it bluntly: had African Americans better understood personal and household financial management — had we equipped ourselves to thrive under complex and unpredictable economic circumstances — we would not have been so disproportionately harmed by this economic crisis. Of course, taking our responsibility does not absolve the financial lending institutions from theirs. But take responsibility we must. As a community, we must manage our finances more effectively so that no single event can undo decades of economic progress. It will require a collective effort to get it done. As a small step toward this worthy goal, I am proud to announce today my co-sponsorship of H.R. 300, the Young Adults Financial Literacy Act introduced by Indiana Congressman Andre Carson. This bill will establish a grant program at the Treasury Department to fund the establishment of centers to support development and implementation of financial literacy programs for young American adults and families. It will continue to be a tough climb out of these difficult times. And there will be difficult times again ahead. Each of us must evaluate our financial circumstances and those of our families, friends and neighbors. We must arm ourselves with the knowledge and tools to manage our wealth effectively so that our communities can never be so deeply damaged again.

Read the full article →

Natural or Relaxed, For Black Women, Hair is Not a Settled Matter

August 4, 2011

ATLANTA — All month, Sharee Bryant had been hearing women talk about hair. She’d overheard two women in a grocery store checkout line talking about a $62 shampoo and conditioner combo designed for black women who had decided to forgo chemically straightening their hair. She’d heard a woman at her church questioning why so many of the young women in the pews had the temerity to show up with their hair in it’s natural texture — curly, kinky or somewhere in between. And, she had read online about the black women driving from places as far away as Arkansas and Chicago to the Spring World Natural Hair Show in Atlanta. So, by the time Bryant — an Atlanta-area insurance agent who’s taken to wearing her natural hair coiled into Bantu Knots since cutting off her chemically relaxed bob last year — stood in a 35 minute line outside the late April hair show, she had a list of the products she wanted to touch, sample and smell. Still, what Bryant, 34, heard next took her by surprise. “Go to the beach. Go to the club. Wherever you want to go this summer. Ladies, what you need is a Prota Organic Weave,” a rail-thin woman equipped with a Janet Jackson-style headset microphone announced from a booth near the front of the sprawling exhibit space. “Let it blow in the wind. That’s right shake it.” “You can have the man you want, the life you want, ladies,” the woman continued. “Change your look up today for $15. I can change your life for $15. Right here, we’ve got what you need, organic weave.” The pitch wasn’t just persistent — it had deeper resonance. For black women, how they wear their hair is complicated by a deep well of personal, social and commercial interests. Despite a record-one year decline in chemical hair relaxer sales and a boom in beauty products, websites, blogs and YouTube channels aimed at black women with natural hair , the conversation around black hair is anything but closed. In 2011, the question of when and why so many black women chemically relax their hair or go natural remains fraught and very much open. “I really feel like this may be the year that the natural finally went mainstream,” said Bryant, before pursing her lips and taking one of those deep, stay-calm breaths. Prota’s pitch woman was doing her thing just a few feet away from a table where Bryant had stopped to inspect a 6 oz., $27 jar of curl cream. “I’m really kind of surprised — maybe even a little offended — that weave woman is here. As far as I’m concerned, she’s like a money changer in the temple.” In early part of the 20th century, a black beauty products operation created by Madam C.J. Walker made her the nation’s first black millionaire. Today, black hair care products make up a nearly $10 billion industry, according to industry data. But in the last two years, chemical hair relaxer sales — made mostly to black women — have dropped 12 percent, according to Mintel, a consumer spending and market research firm. “In this business, that’s a big dip, a very, very big dip,” said Kat Fay, a senior beauty personal care analyst at Mintel. “Of course, those years do coincide with the recession. And we know that it can be expensive to maintain a relaxer or a weave. But there are some real indicators that something else, something related to the growing popularity of natural hair and a paradigm shift away chemicals may be taking hold here.” The sight of black women with curly, kinky and Esmeralda Spalding-sized hair has grown so common, that in July, CNN published a sort of natural black hair etiquette guide on its website. The story explored white curiosity about black women’s natural hair and the historical and cultural reasons why touching a black woman’s hair without invitation is rude. But black hair — the hefty price tag of a single hair weave (sometimes more than $1,000), the harsh chemical make up of hair relaxers and why millions of black women spend time and money to get and maintain them — might have remained almost exclusively a conversation between black women if it were not for Chris Rock, Fay said. In 2006, Rock and HBO films produced the documentary, Good Hair. In it, Rock used his characteristically comical approach to explore a serious set of questions about black women and why straight, long hair remains the prevailing beauty ideal. The movie also put a new phrase in the national vernacular when several women interviewed for the documentary called chemical relaxers, and the devotion they inspire, “creamy crack.” ( Watch the trailer and explanation of the phrase creamy crack ). On screen, Rock explained that the movie had been inspired by his young daughter’s question about her natural hair. Rock’s daughter asked him why she didn’t have, “good hair.” The cultural weight and social value of straight hair is very strong, and Fay is not aware of a single company that has stopped producing relaxers, despite the sales declines. But some of the world’s largest and best-known black hair companies, such as Bronner Brothers and L’Oreal-owned Mizani, which built their reputations on relaxers, have also started producing natural hair product lines, said Michelle Breyer, one of the owners and founders of NaturallyCurly.com, an off line beauty industry market research company and online discussion and retail space that caters to women (of all races) with curly or kinky hair. Both Bronner and Mizani were at the Atlanta hair show with staff in place to not just hand out samples, but apply them to would-be customer’s hair, discuss the results and advise the displeased. Today, there are stores that have entire sections of products dedicated to curly hair, Breyer said. And the practice of planting black hair care products on one aisle and everything else aimed at everyone else on another is disappearing even in a lot of chain stores. All sorts of companies are even adopting some of the styling language — wash and go, twist set and braid out to name a few — for their packaging that is common to the online discussion spaces and blogs where black women review how to care for natural hair. “Hair has incredible social significance,” said Nowlie Rooks, author of the book, “Raising: Beauty, Culture and African American Women.” Rooks is also the associate director of Princeton University’s Center for African American Studies. “Think about the obsessive level of attention men loosing their hair give that process. In some cultures people shave their hair as an act of mourning. For African American women, wearing one’s natural hair was just not socially acceptable for the longest time.” Perhaps no one knows this better than Alicia Nicole Walton, the writer and psychotherapist behind CurlyNikki.com, a natural hair care blog. Curly Nikki’s blog stands out in the sea of online voices talking about the decision to “go natural” and the care and maintenance of natural hair. Walton does more than just evaluate products, she pays to the emotional and social issues that surround black women’s hair in a regularly occurring series of posts written by Walton and guest writers called On the Couch . Walton grew up in a home where chemical hair treatments were banned because of an experience that her father had with “a bad Jehri Curl ,” she said. But in college, Walton had a harder time getting to a salon to have her hair temporarily straightened with a heated straightening comb. Then, she damaged her hair when she used a flat iron, another temporary heat straightening method, too often at home. Her boyfriend — now husband — pointed out that Walton’s moods, even her self-esteem seemed to rise and fall around the appearance of her hair. When it was straight, Walton was up. When it was not, Walton was down, he said. Walton decided this wasn’t emotionally healthy and began experimenting with wearing her hair in curly and braided styles. Her father wasn’t pleased. “He said, ‘please don’t sacrifice your career for this hair choice,’ ” Walton said. “‘How will you get a job or get into graduate school with that hair?’ But that was the thing, what I was doing wasn’t really a choice, like dying your hair pink. This is what grows out of my head.” For older African Americans, natural hair or appearing in public with one’s hair un-straightened can seem a lot like going somewhere without pants, Walton said. But concerns for many younger African Americans. In 2010, NaturallyCurly.com purchased Walton’s blog for an undisclosed amount. “Let’s just say that my husband and I don’t absolutely have to work,” said Walton, a new mother who hopes to establish a therapy practice for women with body image and self-esteem issues. Choosing a natural hair style in the 1970s often conveyed a political message, Walton said, citing Angela Davis’ afro. But in the hair show, packed into 75,000 square feet in the Georgia International Convention Center, the politics of natural hair seemed to take a backseat to commercial interests. During the two-day event, thousands of black women approached sales staff — black and white — for advice about their hair. White-owned companies continue to dominate sales, but many of the small- to medium-sized black-owned companies are trying to infiltrate the market. And, most of the black start-up owners interviewed for this story view white women with curly hair as the next customer frontier that will help their businesses continue to grow. But there are also plenty of signs that natural hair has yet to become completely socially acceptable. Each year, a number of workplace discrimination suits are filed related to African Americans wearing their hair in its natural state, dreads or braids, said Rooks. In 2007, a Glamour Magazine editor told a group of female attorneys gathered for a session on corporate fashion dos and don’ts that natural hair, more specifically afros, dreads and other “political” hair styles were an absolute don’t. Glamour magazine declined to identify the editor, but it wound up apologizing to its readers and the law firm. The unidentified editor in question has, according to a statement released by Glamour, resigned. And then there is the way that some people have responded to 13-year-old Malia Obama’s hair. When Malia Obama accompanied her mother, First Lady Michelle Obama, abroad in 2010, she wore her hair in a series of two-stand twists that were left coiled for most of the trip. The Free Republic, online message boards for political conservatives, temporarily disabled comments related to the trip because of statements made by readers describing Malia Obama and her hair in terms such as “typical ghetto trash.” Several questioned whether her appearance was suitable to represent the United States abroad. Natural black hair remains such a charged issue that late last year when Sesame Street’s white head writer, Joey Mazzarino, wrote a short musical skit for his adopted Ethopian daughter, he created a sensation. Mazzarino’s daughter had made it clear that she wanted long, blonde, bouncy hair, he said. The song Mazzarino wrote in celebration of natural black hair and then assigned to one of the show’s puppets, “I Love My Hair” went viral. To date, it has drawn more than 2.5 million hits on YouTube, and provoked mashups , innumerable blog entries and a call from an African American woman who told Mazzarino that the song moved her to tears. “Natural hair is not quite a stigma at this point, but there can be risks,” said Rooks. At the natural hair show, there were dozens of women in line at the Miss Jessie’s mobile salon space and more watching product demonstrations at the foot of its stage. There was a line that stretched 42 women deep at the shop set up by Uncle Funky’s Daughter, another well-known beauty product lines aimed at women with curly or kinky hair. While they waited, some posed for pictures with the company’s logo — a black woman with a shoulder-grazing Afro. And the scene around the Hair Rules booth looked something like a crowded bar. Dozens of women were trying to get the staff’s attention, waiving money, shouting questions and requests over other customers’ heads. But whether it was the product, the company’s Beyonce-look-alike model or the pitch woman’s ability to make the late infomercial star Billy Mays seem soft spoken, the Prota Organic weave booth also drew a small crowd. One person who went nowhere near the Prota display was Yaisa Strickland. Strickland, an attorney in Washington, D.C., cut off her mid-back length relaxed hair last year after her sister convinced her that they should both eliminate chemical straightening. When she did it, Strickland was unsure she would be able to live with the look or amount of natural hair left on her head. So she did her “big chop” in Atlanta, the “weave capital of the world,” as Strickland said. If she’d felt awkward after her big chop, she was sure that she could find a talented hair stylist somewhere nearby to attach a weave. But when it was done, Strickland liked what she saw. She could really see her face. There would be no hiding behind a shroud of hair. And, there was something else. “I know that sounds dramatic, but I used to spend six to eight hours once at least once a month in the salon,” said Strickland, who wears a modern curly take on the afro that natural hair care enthusiasts often call a TWA — the teeny weeny afro. “I used to have to plan when and how I was going to exercise because you know you don’t want that straight hair that you’ve invested in to get wet off schedule. But since I cut my hair, I’ve told people, you could be living instead of spending half your life and your budget on your hair. I really can not imagine going back.”

Read the full article →

WATCH: Arianna Huffington Says ‘Job’s Issue Is A Demand Issue’

July 25, 2011

Politicians in Washington have yet to reach an agreement to raise the debt ceiling . Many other Americans have other concerns. Last night on ABC’s This Week with Christiane Amanpour , Huffington Post Media Group Editor-In-Chief Arianna Huffington, senior correspondent for FOX Business Network Charlie Gasparino, former Clinton Budget Director Alice Rivlin and journalist George Will sat down to debate the question on the minds of many Americans: What’s more important — the federal deficit or the jobs deficit? Polls continue to indicate that Americans say jobs is the more important issue facing America . The roundtable discussion on This Week , however, painted a more complicated picture. And while Charlie Gasparino says an agreement over the federal deficit might allay the hiring fears of small businesses, Arianna Huffington says the primary hurdle facing the jobs crisis is the lack of demand. “The jobs issue is a demand issue,” Huffington said. “Corporate America has $2 trillion dollars in cash they are not spending, corporate profits are up 60 percent, the problem is not the lack of cash, the problem is not that [businesses] can’t borrow money at very reasonable rates.” “The problem is [businesses] don’t trust demand,” Huffington continued. “By capping spending we’re going to make demand even weaker.” Watch the debate on the jobs and federal deficit question on “This Week”:

Read the full article →

David Paul: Debt Ceiling Battle Offers House Republicans Untold Leverage

July 17, 2011

Everyone wants in on this act. Particularly the bond rating agencies. Having been caught asleep at the switch in the run-up to crises past, Moody’s and Standard & Poor’s are loath to let it happen again. Going back to the Drexel Burham/Michael Milken affair, they affirmed the strong ratings on Executive Life just before the junk bond world collapsed. Same with Orange County, California, before losses in its investment pool drove it into bankruptcy. They threatened the bond insurance companies with downgrades if they did not bulk up their balance sheets with housing bonds, and we are all know how that ended up… Now, Moody’s and S&P want to play in the Treasury bond/debt ceiling game of high stakes poker in Washington. This week, both rating agencies piled on, threatening the United States with downgrades on its bonds if the debt ceiling matter is not promptly resolved. These pronouncements tend to have consequences, as the leadership of united Europe has found out. Greece has become yesterday’s news, as over the past two weeks Portugal and Italy have seen their bond prices tumble and interest rates skyrocket as the markets responded to rating agency comments on their fiscal fortunes. Outraged European central bankers, struggling to find an effective solution to the crumbling of the Eurozone, attacked the bond rating firms for hidden political motivations and threatened to take action to “break the oligopoly.” And what of the Treasury market? How did U.S. Treasury bond market respond to the threatened downgrades? Not even a whimper. Actually, a rally of sorts. Yields on the benchmark 10-year Treasury declined by four basis points this week. As buyers bid up the prices, yields fell from 2.95% to 2.91% today, down from just over 3% a week ago. Europe’s pain — much to their undying chagrin — continues to be our gain. From the bond market perspective, the debt ceiling debate seems almost to be a sideshow against the backdrop of the disintegration of Europe, even with only two weeks to go until Armageddon. It’s the new reality TV. Everyone is watching, everyone is talking about it, but if the markets are a measure of the real world, this most important and urgent of matters seems to have become part of the entertainment-cable-Internet-popular culture other-world that consumes our lives, but isn’t really part of our lives. Perhaps it is because we tend to believe that an actual default on U.S. Treasury obligations is simply beyond of the realm of possibility. We see all the actors yelling and screaming in Washington, playing their assigned roles, but we know deep inside that they cannot actually let the world unravel around them. Just because they are scared of Grover Norquist? There is another point of view, which is that this is not about our debt at all, but a tug of war for which the debt ceiling is just a dramatic point of leverage. It is not about debt, because some would argue — though few appear to be listening — that constitutionally there is no crisis. The 14th Amendment would seem to be quite clear — to a lay-person — that the full faith and credit of the United States obligations cannot be questioned — and therefore cannot be undermined even by Congress. The counter-argument that has been offered is that the Constitution gives only to Congress the power to borrow. But the simple fact is that all of the bonds on which people suggest that we might default were borrowed with the full authority of Congress. And once authorized and issued, the obligation to repay cannot be questioned — or so it would seem. Perhaps the bondholders who are lining up at the Fed window in D.C. — even as they are running from the same in capitals across Europe — know what seems to have eluded the bond rating agencies, which is that the debt will be paid, that the market — as is its wont — has already priced in the risk of default on our bonds, and it is a small price indeed. It is all the other “obligations” that are at risk. All of those obligations — the ones that impact the lives and livelihoods of all but the holders of our bonds — that are only valid if each Congress chooses to make good on the commitments of some prior Congress. And those obligations are indeed at risk, for the simple reason that as a nation we have consistently determined that we are not willing to tax ourselves for the goods and services that we seem to want, and with no action on the debt ceiling we will have neither the tax revenues nor the bond proceeds to pay for all of them. The issue is not default. The issue is spending. In the view of House Republicans and Tea Party activists, spending should come down dramatically. Sacred cows should be slaughtered. Entitlements should be reconceived. The New Deal and the Great Society have run their course. But for the Senate Republicans the motivations are more complex. The plan put forward by Senator Mitch McConnell skillfully serves a larger set of interests and would allow the status quo ante so dear to Senators to survive. His plan would essentially would take Congress out of the debt ceiling game, and give his colleagues the best of all outcomes: The spending would continue while someone else — the President — would take the blame. Right now, both the President and Senate leaders believe that the fear of default should provide enough motivation to get something done — along with the cover each side needs to take steps that might otherwise be unthinkable: Cutting entitlements, raising taxes, trimming the military . But so far, the House leadership is not biting. For the Democrats, the McConnell proposal may well emerge as a middle ground of sorts. But for the House Republicans and the Tea Party — those who truly want to reduce the size of government — McConnell’s success would constitute a stinging defeat, an historic moment lost, and a movement scorned. The ultimate question is what the President plans to do on August 2nd if there is no agreement. One must presume that there is a plan in place: The 14th Amendment will be upheld, the bonds will be paid, the full faith and credit of the nation will be reaffirmed — and massive cuts and sequesters will be put into effect. As great as the fear of default might be, both the President and Mitch McConnell must fear even more what would happen next. If the markets are right, and no default ensues, the motivation to reach a middle ground or face-saving solution will dissipate, and each side will once again be captive to their base. Caught in a lie — that he knew there would be no default — the President would lose the high ground. Vindicated for their obstinance, the House leadership will have even less reason to negotiate. That may well be the endgame that true believers among the new breed of House Republicans have in mind. And it does not make them crazy, just strategic. If they believe that default will not be allowed to occur — as a matter of Constitutional obligation and proven bi-partisan deference to the bond markets — then reaching August 3rd with no agreement might reasonably be their goal. In three weeks, they can achieve their objective of an America forced to live within her means. And ironically, from that perspective the only thing the President could do to stop them would be to allow a default to occur even when it is within his power and authority to prevent it.

Read the full article →

BP: Oil Spill Victims Should Not Get Any More Payments

July 8, 2011

NEW ORLEANS — BP is arguing that most victims of last year’s Gulf oil spill should not get any more payouts for future losses because the hardest-hit areas are recovering and the economy is growing. The British oil company argues its case in a 29-page document made public Friday and filed with the Gulf Coast Claims Facility. The $20 billion fund is responsible for paying for damages from the spill. The company says the fund should end payments for future losses to everyone, except in limited cases for oyster harvesters. The company had already argued that fund administrator Ken Feinberg’s formula for determining final payments artificially inflates future expected losses.

Read the full article →

Federal Judge To Resentence Media Mogul Conrad Black

June 23, 2011

CHICAGO — Competing portraits of Conrad Black – once one of the world’s most powerful media moguls – will be on display Friday in Chicago at his resentencing hearing, where a judge will decide whether he heads back behind bars or remains free for good. The Canadian-born businessman is a devil-may-care elitist who looks down his nose at the rest of humanity, according to prosecutors; and a gentleman, unbowed by adversity, who quietly has gone about helping others, counters the defense. Which portrayal U.S. District Judge Amy St. Eve accepts may factor into her ruling about whether to return Black to a Florida federal prison for several more years or, as his lawyers have asked, to resentence him to time already served. The resentencing is a climax of a long legal saga for Black, 66, who rubbed shoulders with the rich and powerful before his fall to disgrace, convicted in 2007 and sentenced to 6 1/2 years for defrauding investors in Hollinger International Inc. Black, whose empire once included the Chicago Sun-Times, The Daily Telegraph of London and small papers across the U.S. and Canada, was freed on bail after serving two years to let him to pursue what would be partially successful appeals. The 7th U.S. Circuit Court last year tossed out two of Black’s fraud convictions but upheld a conviction for fraud and one for obstruction of justice. And it said Judge St. Eve would have to sentence Black again for those two standing counts. Despite the nullified counts, prosecutors are asking St. Eve to hand the burly, silvery-haired Black the same 6 1/2-year sentence she originally meted out in 2007, meaning he would have to spend about 4 1/2 more years in prison. “He fails to acknowledge his central role in destroying Hollinger International through greed and lies, instead blaming the government and others for what he describes as an unjust persecution,” prosecutors said in a recent filing. Black’s lawyers, in turn, have accused government attorneys of vindictiveness. In filings of their own, they say the fervor prosecutors have shown in justifying the stiffer sentence displays “a drive-by disparagement of Mr. Black which reveals nothing but the intensity of the governments dislike for him …” A major point of contention Friday is likely to be accounts of Black’s behavior during his two years in prison. The defense argues Black was a model prisoner, noting that the accomplished biographer – whose subjects have included Franklin D. Roosevelt and Richard Nixon – helped teach inmates American history and economics; and gladly offered advice about business and other matters to prisoners who constantly approached him. “In a place where hope is a rare commodity, Conrad provided at least a glimmer of it to countless inmates,” one inmate wrote in a letter, cited by the defense in a recent filing. Prosecutors say the defense paints too rosy a picture of Black’s prison life. One prison employee, Tammy Padgett, claimed in an affidavit filed by prosecutors that Black had arranged for inmates – “acting like servants” – to clean and cook for him, to iron his clothes, mop his floor and perform other chores. Another employee told her that Black once insisted that she address him as “Lord Black,” after an honorary title bestowed on him by Britain, Padgett added. The defense denied both characterizations. After his conviction, the defense showed letters from such celebrities as Sir Elton John, describing Black as someone who had devoted much of his life to helping charities. It’s not clear if his attorneys will roll out similar letters vouching for Black on Friday. His big chance to squash the convictions arose in June of 2010, when the U.S. Supreme Court sharply curtailed disputed “honest services” laws that underpinned part of Black’s case. The appellate court that reversed two of Black’s convictions cited that landmark ruling. But the appellate judges said the one fraud and obstruction of justice convictions were not affected by the Supreme Court’s ruling. The fraud conviction, the judges concluded, involved Black and others taking $600,000 and had nothing to do with honest services: It was, they asserted, straightforward theft. Defense lawyers have criticized honest services laws as vague and a last resort of prosecutors when they couldn’t show money changed hands. Watchdogs countered they were key to fighting white-collar and public fraud.

Read the full article →

Bonnaroo Reports Tenth Death Since 2002

June 14, 2011

The Bonnaroo Music Festival in Manchester, Tenn., one of the most popular music festivals in America, was held from June 9-12 of this year. Rapper Eminem headlined a bill that included some of the biggest names in music, among them The Black Keys, Arcade Fire, My Morning Jacket, Lil Wayne, and The Strokes. In the past few days, however, two tragedies have surfaced out of the festival, bringing to the forefront the obvious dangers of cramming some 80,000 concertgoers together in 90-degree heat with an endless supply of drugs and alcohol. The Coffee County Sheriff Stephen M. Graves said Monday that 24-year-old Christopher Yoder of Raleigh, N.C., died of hyperthermia after being airlifted from the Bonnaroo grounds to Erlanger Hospital in nearby Chattanooga. Festival organizers released a statement: “The safety of our patrons is our no. 1 concern, and we are deeply saddened by this.” The announcement came after the body of 32-year-old Beth Myers was found in one of the Bonnaroo tents on the evening of June 9. Organizers say that Myers’ death was heat-related, but in both cases, the toxicology- and autopsy-test results have still not been officially released. Since the festival’s launch in 2002, ten people have died at Bonnaroo. The first reported deaths in the its history, of a 22-year-old Kentucky woman and 20-year-old Michigan man, occurred in 2004 when temperatures reached nearly 100 degrees. Toxicology reports indicated that both had cocaine and marijuana in their systems. That year, a spokesman for the Bonnaroo production organization Superfly Entertainment, Rick Farman, told the Middle State Tennessee University student newspaper that the deaths were unfortunate, but the concert was a success overall. “Both [deaths] are sad occurrences,” he said in June 2004. “Our goal is to provide a safe and fun environment for everybody out here, and I think that we have the proper policies and procedures in place, and you know, like anything else, we’ll review those.” Thousands of others have been treated for heat exhaustion since then. Carl Monzo, director of Bonnaroo’s Emergency Medical Services, reported to the Tennessean that in 2010, air-conditioned medical tents were taking in about 25 percent more people than in past years. Bonnaro provides air-conditioned “movie-tents” with free screenings on festival grounds, but unofficial showers located on Bonnaroo campgrounds cost about $10 for festival-goers. The Bonnaroo Festival has frequently been referred to as America’s version of Glastonbury, the popular music festival that takes place in South West England at the end of June every year. In 1994, that festival reported its first death in its 24-year-history, when a man died of a reported drug overdose. Coachella, an equally popular music festival near Palm Springs, Ca., also reports temperatures in the triple-digits. But 21-year-old Benjamin Muller is the only concertgoer to die at festival since it began in 1999. So is it something about the Tennessee heat? Certainly holding the festival in June, rather than a cooler month increases the risks the predominantly boozed-up and drugged-out crowd faces. Representatives for Bonnaroo and its producing organizations did not immediately return requests for comment. “I couldn’t make that statement, that we should blame the Tennessee heat,” said Dr. David Claypool, an emergency medicine physician with the Mayo Clinic. “Heat is heat. California might be a little drier, but any heat is going to be difficult for people.” Ken Wilkerson, the chief of Hamilton County Emergency Medical Services, points to differences between Bonnaroo and the nearby Riverbend Festival in Chatanooga, a nine-day music event featuring over 100 bands and a daily attendance of 60-90,000 people. “The difference is that people [at Bonnaroo] are enduring the heat and humidity problems twenty-four seven,” he said. “People coming to Riverbend are coming from home. They’re well-hydrated before they get here.” Wilkerson also notes the distance from Bonnaroo’s location in Manchester to the nearest medical facility in Chatanooga. If someone is injured at the Bonnaroo festival, they need to be flown off the grounds. “From time of [injury], you’re looking at minimum of an hour, an hour and a half — maybe two hours,” said Wilkerson. “Whereas here at Riverbend, something happens you can get to it in 10 minutes.” Of course, Wilkerson added, the rampant alcohol consumption and drug use doesn’t help anything either. “Alcohol is the worst dehydrator of any fluids you can put in,” he said.

Read the full article →

theGrio: Dream of black home ownership fading

June 10, 2011

After peaking at 50 percent in 2006, the African-American homeownership rate has now fallen to 44.8 percent, Census Bureau data show. By comparison, the homeownership rate for whites in the U.S. is 74.1 percent, and the nation’s overall homeownership rate currently stands at 66.4 percent.

Read the full article →

Family Office Exchange is betting that RIAs and the ultra-affluent can’t get … – RIABiz

May 31, 2011

Family Office Exchange is betting that RIAs and the ultra-affluent can’t get … RIABiz This is the story of Family Office Exchange ramping up its efforts in response. Impervious to the gravitational pull of a down economy, the family office business keeps plowing ahead and one big Chicago-based consultancy is planning its own aggressive … and more »

Read the full article →

Dove Ad Casts Spotlight On Madison Avenue Racism

May 25, 2011

When people ask Eugene Morris why he left a virtually all-white advertising firm in the early 1970s for an African-American one, he tells them about the time he asked a white higher-up for an overdue raise. “He started telling me about how well-dressed I was,” Morris recalled. “He told me that I had a nice sports car, which I did, and he told me that he knew that I had a very nice apartment. He started naming all these things, these possessions of mine, and he said, ‘Aren’t you making enough money?’ I thought the next thing he was going to say was, ‘Well what more would a ‘mmmm’ want?’” Incidents like these added up, Morris said, and after a while he decided he’d had enough, as did many other young black executives who left the advertising world after an initial surge of racially progressive hiring in the late ’60s and early ’70s. Morris cited this incident recently to illustrate one of the reasons why the racial make-up of the mainstream advertising business still looks much as it did in the early ’70s, which is to say, predominantly white. “When I first came into the business, if I had projected forty years into the future,” said Marshall, “I never would have described the current situation, where African-Americans are still in the single digits in all these agencies.” For all too obvious reasons, the dearth of black executives in advertising doesn’t normally receive much attention from the mainstream media, but a controversial Dove body wash ad cast the issue into the spotlight this week. Supposedly an attempt to present Dove as a company that values cultural diversity, many believe that the ad fell astoundingly short. It shows a black woman, a white woman, and an olive-skinned woman, possibly Latina, standing side by side — a tableau of racial harmony. What’s offensive is what’s behind them: a pair of skin close-ups with “before” and “after” titles positioned so that it looks like they’re referring to the black and white woman, respectively. As Copyranter, the blog that caused an stir on the Internet earlier this week by posting the ad, noted, it’s as though the ad is pitching a product that ” turns Black Women into Latino Women into White Women .” The blog Styleite reached a similar conclusion, writing, “Visually, it communicates that if you have dark skin before you use VisibleCare, you’ll have pale skin afterward .” Noting another salient difference between the black model and white one, Styleite added, “You’ll also be thinner.” In a press statement, Unilever, the company that makes Dove products, said that all three women were “intended to demonstrate the ‘after’ product benefit” and added, “We do not condone any activity or imagery that intentionally insults any audience.” What’s most significant about the ad — and most embarrassing to Unilever — is that no one at the company seems to have anticipated that people would find it offensive. And that speaks to a larger issue, one that the activist and former magazine editor Michaela Angela Davis framed like this: “When it comes to advertising, it’s not enough to just have a black woman in the room. She has to be in the boardroom — she can’t just be in the changing room.” The lack of black women, and men, in Madison Avenue’s boardrooms is a problem that the attorney Cyrus Mehri hopes to publicize. Two years ago, his firm, Mehri and Skalet, partnered with the NAACP to create the Madison Avenue Project , an initiative aimed at increasing the ranks of blacks and Latinos in advertising. A report released by the group in 2009 showed that black college graduates working in the business earn 80 cents for every dollar earned by whites with the same qualifications. Based on a survey of the various pools from which advertising firms traditionally draw talent, the study’s authors also concluded that the industry had under-hired blacks by an order of 7,200 jobs. Responding to the Dove ad, Mehri said, “I don’t see how an African-American woman would not be offended by this ad, and I think it’s indicative of an industry that still resembles the ‘Mad Men’ you see on TV. They have not evolved or progressed from the 1960s.” Last year, the Madison Avenue Project commissioned an analysis of the ads shown during the 2010 Super Bowl. Of the 76 creative directors responsible for selling beer, cars and other products to the game’s 106 million viewers, 70 were white men and five were white women. The only non-white creative director, Joelle De Jesus, whose “House Rules” commercial for Doritos was one of the few ads to show a non-white character, was actually an amateur who’d scored the spot by winning a contest. As it happens, Unilever was one of the advertisers in that line-up; a commercial called ” Manthem ,” which hawked Dove’s product line for men, culminated with a shot of the white male protagonist dancing on the shoulders of a black man. Asked why advertising firms don’t hire more blacks, Mehri said, “They don’t believe that blacks can market to the mainstream.” Morris, who is now the head of E. Morris Communications, an agency that specializes in advertising to black customers and, incidentally, has lost business recently as companies looking to cut corners reassign their black-oriented campaigns to the general-market firms that handle their other accounts, said, “I would say that it would make more sense, when you think about it, that African Americans would be better at creating general assignment advertising for whites than whites would be at creating advertising for blacks. There’s no way I can survive in this world if I don’t understand white people, whereas white people can basically survive without ever having a meaningful interaction with a black person.” Both “Manthem” and the Dove body wash ad that offended so many people this week were produced by the advertising and public relations giant Ogilvy & Mather. When it comes to hiring non-white executives, Ogilvy’s record is “very, very poor,” said Mehri. “They have very few, if any, minority creative directors.” Ogilvy did not respond to a request for comment. WPP, the holding company that owns Ogilvy, referred an additional request back to Ogilvy. One of the ironies of the Dove body wash ad is that Unilever has gone out of its way in recent years to lure in customers with the message that, to quote from its recent press release, “real beauty comes in many shapes, sizes, colors and ages.” In 2004, the company launched what it called the Dove Campaign for Real Beauty, a parade of ads that featured “normal-looking” women of varying shape and size and ethnicity (all of them beautiful). Gwen Sharp, a sociologist who co-writes the blog Sociological Images , said, “It always shocks me when you have companies that I know spend enormous amount of money on their ad or their focus groups, and in the best case don’t catch, and in the worst case don’t care, about the cultural undertones that their ads play into.” She pointed out that Unilever also makes Fair & Lovely, a skin cream marketed to women in India that, if its advertising is to be believed , can actually make you white.

Read the full article →