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GRAPHIC PHOTOS: ‘I Still Feel That Little Finger’: Table Saw Victims Speak Out

May 25, 2011

WASHINGTON — A consumers’ advocacy group and a panel of table-saw victims called on government regulators and the power-tool industry Wednesday to enact new safeguards against saw-related mutilation and amputation. The number of table-saw injuries has risen to 40,000 annually, an increase of 10,000 a year in the last decade, National Consumers League Executive Director Sally Greenberg told reporters at the National Press Club. About 4,000, or 10 percent, of the table-saw accidents each year result in finger amputation, according to statistics compiled by the NCL. The nonprofit group’s leader called for the Consumer Product Safety Commission , the federal agency tasked with protecting Americans from dangerous products, push through a table-saw safety standard that was first proposed in 2003 but has since languished. She also asked the tool industry to drop its opposition to the regulations and pass along any new costs to customers if need be. “The vast majority of table-saw manufacturers haven’t changed their technology in 50 years,” Greenberg said. “This is a major public health and safety issue that cries out for a public policy response.” Long used by carpenters, construction workers and woodworking hobbyists, table saws typically come with little more than plastic guards to prevent fingers and hands from coming into contact with the blade. These guards are often removed by the saws’ operators to make the work easier. The consumers’ league would like to see manufacturers forced to adopt a technology developed by a company called SawStop , which brings the blade to a standstill when it senses the electrical impulse emanating from human flesh. (A demo of the SawStop technology can be viewed here.) Greenberg said the NCL has no affiliation with SawStop and receives no funding from the company. The safety measure would add about $100 to the price of a saw, she added. NCL officials and table-saw victims have been meeting with lawmakers this week to make their case. The Power Tool Institute , a trade group representing table-saw manufacturers including Black & Decker and Bosch, said in a statement that the price of table saws would “increase dramatically” if companies had to use the SawStop technology. “The lower-priced consumer bench-top saws will disappear from the market,” the group warned. It also said SawStop would enjoy an unfair market advantage. Four victims of table-saw accidents spoke out in favor of new standards Wednesday, including Adam Thull of Crosslake, Minn. Thull owns his own woodworking business, and a year ago this month most of his right arm went through a table saw as he was cutting a wood panel. The blade sliced clean through the bone and nerve in his forearm. Thull’s been told it may take five years for him to recover, if he’s lucky. “My two small children and my wife suffer along with me,” the Minnesotan said. Considering Thull didn’t have health insurance, the accident has devastated him financially in two ways: With five surgeries down and six to go, he’s run up a medical tab that he can’t even fathom; and at the same time, he’s also lost his ability to earn money. He can only work for five or ten minutes at a time before the pain in his arm becomes unbearable. “I’ve been able to find ways to do it, but there’s no feasible way to turn a profit,” Thull said. “It takes me ten times longer to accomplish anything.” In his ten years in woodworking, the 30-year-old had made a decent living doing what he loved to do. But now his family is on food stamps and receiving aid from the Lutheran Social Service of Minnesota. He doesn’t know how he’ll earn money in the future. “The business is more or less done. There’s no way to pay the insurance costs,” he said. “The physical suffering is on me, but my six-year-old knows. He says, ‘I wish daddy was like before the accident.’” Although there are no hard statistics, Greenberg said that about 20 percent of table-saw accidents seem to be work-related, with the rest happening to hobbyists. Like Thull, many table-saw victims are injured in the course of self-employed work. Curtis Harper, a firefighter from Provo, Utah, said he lost his pinky and suffered severe nerve and ligament damage while he was notching a corner of a wooden board in 2007. Harper owns a small mantel-making business, Masterpiece Cabinet and Mill. Looking at his mutilated hand after it ran through the saw, his first thought was that he’d lose his primary job, as a firefighter. He’s since gone back to work at the firehouse, but he’s lost much of the strength in his hand. And the accident isn’t easy to forget. “Phantom pain is real,” Harper said. “I still feel that little finger.” WARNING: Some of the photos below are gruesome.

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Richard ‘Skip’ Bronson: After the Sideshow

May 7, 2011

In the early 1980′s, there was a Broadway musical production that had a successful run in London and New York called Barnum, about the life of P.T. Barnum, the famed circus showman. The opening musical number, performed by Michael Crawford for a number of those shows, was entitled “There’s A Sucker Born Every Minute.” It chronicled Barnum’s colorful career and reflected his business strategy, too. One of his great business innovations was, of course, the sideshow, where an unusual performer or physical specimen would entertain the crowd while the real work of the circus was underway, moving elephants and raising tents and the like. That bit of theater, and Barnum himself, remind me of the last couple of weeks with the events of Black Friday and the implosion of the illegal offshore internet gaming operators. It is a story of Barnums and sideshows that has us all wondering what will happen next. Many were stunned by the events that led to the indictments of a number of the offshore moguls, who had been purposefully avoiding U.S. regulation and taxation, even as they were unscrupulously operating here on our shores. Not me — I’ve been warning of this for over a year and suggesting that this is just the tip of the iceberg to the issue. Everybody in gaming and in government knew who these foreign characters and companies were, yet chose to turn an eye toward their presence in our industry. Many in Washington were blinded by their high-priced lobbyists and their campaign contributions. One day, the huddle would want a federal bill, when the influence seemed to point toward victory there. The next day, they’d be hustling into a state where their friends would try to clear the path for a legislative or regulatory win. In either scenario, the efforts were doomed, as the truth was certain to emerge and the lawful, American system would recognize the smokescreen which, it did. So Black Friday comes and goes and has many wondering, does this mean that U.S. Internet gaming is doomed? Did they damage or destroy the opportunity? My answer is no, Black Friday didn’t ruin the emergence of U.S Internet gaming; it actually helped it. Black Friday forced us all to realize four key points. First, there is no role for the illegal operators in the U.S. system, however that ultimately gets structured. Those companies were a dark cloud that would constantly hover over our industry. They needed to be removed to create a clean slate and, they were. Secondly, it reaffirmed that online gaming must be held to the same regulatory standards of all other U.S. gaming, which is the strictest, most professional and effective in the world. I get that and, support it entirely, having been licensed in a number of states from my years with Mirage. And third, it confirms a point that I’ve known all along — there is plenty of American know-how and capability in the online space, with our Silicon Valley technology and world-class financial services platforms and transactional processes. We don’t need the seedy games, the uncertain finances and lax attitudes of many of the offshore operators. We have plenty of know-how and expertise right here and, the tax revenues should remain in the U.S., where they were generated. I know all of this for sure, as someone who has been on the front lines of this industry every day for the last couple of years. And fourth, this tells me once again that it is a state-by-state issue. The feds have tried twice in the last couple of years to do this but, cannot get it right and, they won’t. The states have the infrastructure and know how to create a sensitive balancing act that also protects the bricks, even as they move toward clicks. Black Friday was an ugly set of circumstances for many. But, the sideshow is gone now and, the rest of us can look ahead with optimism on a path that is cleaner than ever and more clear, too.

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Mary Bottari: Big Bank Backlash: From Coast to Coast People are Moving their Money

May 6, 2011

As the economy continues to stutter and new unemployment claims surge to an eight month high, it hasn’t escaped the notice of people on Main Street that the folks on Wall Street are back in the black. According to Fortune magazine , profits of the 500 largest U.S. corporations have surged 81 percent this past year. FORTUNE editors write, “We’ve rarely seen such a stark gulf between the fortunes of the 500 and those of ordinary Americans.” When Fortune is standing up for the workers, you know it’s bad. The Big Lie As the United States splinters further into two worlds, the American people have not forgotten who got us into this mess in the first place. They are refusing to buy the big lie peddled by new Republican Governors, like Scott Walker in Wisconsin or John Kasich in Ohio, that greedy public sector workers are to blame for our economic woes. They know who inflated the housing bubble and played both sides with credit default swaps, and it wasn’t teachers, firefighters or snowplow drivers. From San Francisco to Wall Street people are taking to the streets reminding governors and their friends on Wall Street and that they remember very well who tanked the global economy putting more than 8 million Americans out of work and creating a revenue crisis for many states. Hundreds protested inside and outside the Wells Fargo shareholder’s meeting in San Francisco this week, and the big bank backlash is gaining steam. Cheeseheads Say Move Your Money from M&I Bank Wisconsin State AFL-CIO is the latest in a wave of businesses, organizations, and individuals who are closing their accounts with M&I Bank . Yesterday the federation closed out a $100,000 CD it held at M&I. Taxpayers bailed out M&I with $1.7 billion of TARP funds. Instead of repaying the money, M&I executives and employees gave $54,000 in political contributions to Governor Scott Walker. Plus, M&I is planning on paying its failed executives $71 millions in bonuses this year when the bank is sold to the Canadian-owned Harris Bank and will close its Milwaukee headquarters. Mark Furlong the CEO of M&I is scheduled to receive $24 million bonus package after the bank is sold. In a letter to Furlong, Stephanie Bloomingdale, Secretary-Treasurer, WI AFL-CIO puts it bluntly: “By contributing money to Scott Walker and other Republicans, you have taken part in the destruction of Wisconsin’s middle class. As a company entirely dependent on American taxpayers for its survival, M&I owes its allegiance to those taxpayers… We care about our families and communities, while you care only about your bottom line. Here’s our bottom line: We’re moving our money.” The AFL-CIO joins the firefighters the teachers, church groups and hundreds of individual who have decided to chose a new bank. More actions are planned. If you are interested in moving your money, you can find a new bank or credit union at the Move Your Money site of the Huffington Post. Buckeyes Tell JPMorgan Chase to Stop the Foreclosures Ohioans will greet Jamie Dimon, “the most dangerous banker in the world,” at J PMorgan Chase’s annual shareholder’s meeting in Columbus, OH. After taking $25 billion in TARP bailout money and after acquiring Bear Sterns and Washington Mutual, Jamie Dimon thinks that the big banks aren’t big enough and neither is his bonus. In 2010, his total compensation topped $28 million. Hard to imagine what the spinmeisters were thinking when they advised Dimon to flee Wall Street for Ohio. Ohio is one of the states hardest hit by the epidemic of foreclosures and joblessness caused by Wall Street. It is a state where unions have been under attack, and where hard-won labor rights that built the middle class have been stripped away from public sector workers. Next week National People’s Action will release a study showing a projected one out of every ten homes in Cleveland, Cincinnati and Columbus received a foreclosure filing since the start of the housing crisis. Wall Street firms have long been big backers of Kasich. According to Ohio Citizen Action, Chase employees gave $29,000 to Kasich’s gubernatorial campaign. “Protesters will deliver a message to Wall Street – it is time for big banks like JPMorgan Chase to stop the foreclosures, pay their fair share, create jobs, and end the revenue crisis,” says Adam Keck, Senior Organizer, Mahoning Valley Organizing Collaborative. You are invited to join the Buckeyes in Columbus on May 17th and you can find more information at: Showdown in America . The Madison-based Center for Media and Democracy tracks corporate spin and spinmeisters at PRWatch.org.

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Video: Hegarty Says Fed Shifting Focus to Inflation From Jobs

April 29, 2011

April 29 (Bloomberg) — Martin Hegarty, co-head of global inflation-linked portfolios at BlackRock Inc., talks about the outlook for Federal Reserve monetary policy. Hegarty also discusses BlackRock’s investment strategy for U.S. Treasuries. He speaks with Lisa Murphy on Bloomberg Television’s “Fast Forward.” (Source: Bloomberg)

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Donald Trump: ‘I Am Very Proud Of Myself’

April 28, 2011

DOVER, N.H. — After weeks of suggesting Barack Obama was born in Africa, Donald Trump hastened to boast that he had forced the Democratic president to release a detailed Hawaii birth certificate disproving that claim, painting an apparent setback as a victory within minutes of arriving in the first-in-the-nation primary state. The developer and reality TV show host, who is considering a White House run, again showed the difficulty establishment Republicans are having in controlling the early stages of their wide-open nominating contest. He also proved himself a nimble messenger, or spinner. “Today I am very proud of myself because I have accomplished something that nobody else has been able to accomplish,” Trump told reporters Wednesday shortly after his black and red helicopter, emblazoned “TRUMP” on the side, touched down in Portsmouth. He arrived not long after the White House released the president’s long-form birth certificate from Hawaii. He said he was honored “to have played such a big role in hopefully – hopefully – getting rid of this issue. Now, we have to look at it, we have to see, is it real.” Trump said he hoped the birth certificate “checks out beautifully,” but he used the opportunity before television cameras to again sharply criticize Obama on several fronts, including Libya policy and gasoline prices. He also raised questions anew about Obama’s educational record and how he got into college. But he again offered no proof of anything amiss. Trump’s blistering attacks on Obama, including raising widely debunked rumors that the president was born abroad, have piqued the interest of some Republican voters. He has seen his standing in some polls grow in the months since he first dangled a presidential candidacy before a GOP primary electorate looking for a leader to aggressively challenge the Democratic president. Many rank-and-file Republicans still dismiss Trump as a non-serious distraction. But as he easily grabs headlines, other potential candidates are playing a more cautious game, and most don’t seem eager to talk about him. They’ve been distancing themselves from the so-called “birther” claims in recent days, and most weren’t eager to weigh in Wednesday. Sarah Palin, the former Alaska governor, sent a brief tweet that said: “Media: admit it, Trump forced the issue. Now, don’t let the WH distract you w/the birth crt from what Bernanke says today. Stay focused, eh?” That was a reference to Federal Reserve Chairman Ben Bernanke’s news conference. And former Massachusetts Gov. Mitt Romney said on Twitter: “What President Obama should really be releasing is a jobs plan.” Less than a year before Iowa and New Hampshire Republicans become the first to vote in the race, the GOP field is far from set. There’s no true front-runner and no single establishment candidate. That leaves ample room for attention-getting events by less orthodox politicians such as Trump and third-term Rep. Michele Bachmann of Minnesota. Romney, who lost the nomination in 2008, former Minnesota Gov. Tim Pawlenty and former House Speaker Newt Gingrich all have taken initial steps toward full-fledged runs but none has emerged as the candidate to beat. Many Republicans expect Bachmann and former Sen. Rick Santorum to make their interest official. They also are waiting to hear from former Utah Gov. Jon Huntsman and Indiana Gov. Mitch Daniels. The 2008 vice presidential nominee, Palin, and the Iowa caucus winner, Mike Huckabee, have dropped hints they will not run, but Republican insiders say no one is sure. Mississippi Gov. Haley Barbour became the latest Republican to opt against a presidential run this week. “This is shaping up to be a wacky year,” said Scott Reed, who managed Republican nominee Bob Dole’s 1996 campaign and had been advising Barbour. It’s the most wide-open GOP primary in four decades, he said, and the eventual nominee conceivably could jump in as late as September. “There is still room for someone to emerge as the conservative alternative to Romney,” Reed said. Most veteran Republicans don’t believe that person will be Trump, the thrice-married, much-caricatured developer who has donated heavily to Democrats in past years and switched his stands on key issues such as abortion. Karl Rove, the top political adviser to President George W. Bush, calls Trump a “joke candidate.” Jennifer Horn, a 2008 Republican congressional nominee from New Hampshire, said in an op-ed column that Trump has flip-flopped on major issues and is not a credible candidate. If Republicans allow him to “hijack the primary process then they deserve exactly what they get,” she wrote. Over the years, Trump has given thousands of dollars to Democratic candidates, including New York Sens. Chuck Schumer and Kirsten Gillibrand and Senate Majority Leader Harry Reid of Nevada. Trump talked of running for president as a third-party candidate in 2000, and he made a brief splash with a 1988 New Hampshire speech that some took as a preliminary Republican candidacy. In New Hampshire on Wednesday, Trump breezily dismissed his critics. “I think I’m quite conservative as a Republican,” he told reporters in Portsmouth. In at least two instances, he said, “I’m leading the polls.” Forcing Obama “to finally come out and issue a birth certificate can only help,” he said. Trump said he has given campaign money to “many Republicans, many Democrats. And I think there’s something nice about that,” because it promotes bipartisanship. As for switching his stand on issues, he said, “My views change. … I tell people, you have to remain flexible because the world changes.” He also turned the conversation to Obama. “Nobody even knows what’s going on in Libya,” Trump said. He said Obama claims to have little control over gasoline prices, but “he does if he gets on the phone or gets off his basketball court or whatever he is doing at the time.” After holding court before reporters, Trump traveled to several other stops, all within a nine-mile radius of the Portsmouth airport. He spent a few minutes shaking hands at a Portsmouth diner but spent little time in conversation. Passing by a table of older men, he waved and said, “Why aren’t you at work?” “We’re retired!” answered the group of former workers at the Portsmouth Naval Shipyard. “Don’t touch Medicare, right?” Trump said, moving on without waiting for an answer. Joe Lovell, of Somersworth, said seeing Trump arrive by limo was a surprise in this state that values close contact with presidential hopefuls. Asked what he thought of Trump, he said, “Nice hair.”

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Scott Mendelson: You Say Slump, I Say ‘Smaller Movies With Legs’

April 21, 2011

If Fast Five and/or Thor fail to open to $50 million or more, then I’ll start to worry. If Pirates of the Caribbean: On Stranger Tides doesn’t open anywhere near $100 million and doesn’t clear $250 million, I’ll start to be concerned. If Harry Potter and the Deathly Hollows, Part II grosses under $260 million, I’ll maybe start panicking. But until any of those things occur, let’s stop whining about the week-to-week comparisons at the box office. We’re not in a “slump.” Yes, weekend-to-weekend figures have been consistently down behind last year’s respective weekends for much of 2011. But when you look at the numbers on a movie-by-movie basis, you actually notice something wonderful. A flood of mid-budget, adult-skewed movies have opened at or above expectations, and many of them have had the kind of legs you just don’t see anymore. That’s the Hollywood we claim we want, so why are we complaining? The key thing to remember here is that studios don’t care about the total weekend box office figures. They care only about how well their films did in relation to expectations and cost. And quite frankly, this has been a very cheap first 1/3 of a year. Alice in Wonderland may have grossed $332 million domestic, but it also cost $200 million. There are only two films this year that have cost even $100 million, the $120 million-budgeted The Green Hornet (which was supposed to open late last year) and the $130 million-budgeted Rango . One could argue that Rango will struggle financially due to its cost and marketing expenses (it’s cleared $234 million so far worldwide), but it’s also the best film of the year, so there’s that… The Green Hornet was such a surprise success ($228 million worldwide thus far) that we’ll probably get a sequel if Sony can keep the budget at under $90 million. But Battle: Los Angeles didn’t cost $150 million, it cost just $75 million. And Sucker Punch didn’t cost $175 million, it cost $85 million. Sure, both of those films may have underperformed somewhat. Sucker Punch ($78 million worldwide) was an arty experiment that no one understood , while Battle: Los Angeles ($192 million worldwide) promised Independence Day but delivered Black Hawk Down . But even the ‘under performance of Battle: Los Angeles will mean tripling its budget, because Sony was able to deliver top-notch special effects for bargain basement prices. And even Sucker Punch will equal its budget worldwide, meaning that the film has a shot at “the black” once the DVD and Blu-ray are released. Heck, even the relative underperformance of Red Riding Hood will still yield profits, since the gothic horror film cost just $40 million and has grossed $60 million worldwide thus far. Same thing with the would-be franchise starter I Am Number Four . Sure, there probably won’t be a sequel, but since the film cost Disney and Dreamworks just $60 million, it’s a rock-solid hit at $128 million worldwide. Your Highness will lose money, but Universal was smart enough to cap expenses at $50 million, so the bleeding will be minimal. One can argue that there was no animated sensation like How to Train Your Dragon ($494 million worldwide), but How to Train Your Dragon , which cost $165 million, was pretty much the only major animated film in the marketplace during the first half of 2010. This year, just between February and April, we’ll have SIX animated films: Gnomeo and Juliet (a stunning $175 million worldwide on a $30 million budget), Rango , Mars Needs Moms (the one unqualified mom of the season, with just $36 million worldwide on a $150 million budget), Hop ($111 million thus far on a $63 million budget), Rio ($170 million worldwide thus far on a $90 million budget), and Hoodwinked Too (opening in two weeks at a cost of just $25 million). That’s a total cost of $488 million for six animated films (average cost: $81 million), with a total so-far gross of $726 million worldwide thus far (with Hop , Rio , and Hoodwinked having lots of cash to still pull in). Pointing being, the various animated films that have opened to near $40 million have had to fend off copious competition and pretty much all of them are on track to be profitable despite that, because (in most cases) the studios were able to contain costs to a reasonable level. And that’s just the high-profile cartoons and youth-driven would-be blockbusters. The real story this year has been the surge in adult-driven genre pictures and their uncommonly reasonable budgets and uncommonly strong legs. After years where a major adult-targeted, star-driven thriller or genre picture was cause for celebration, this year has thus far been filled with just that. Imagine, films targeted at grownups with old-fashioned movie stars, relatively intelligent and literate screenplays, narratives that were wholly original or based on actual novels, and almost all of them budgeted at a price that allowed them to be profitable without reaching blockbuster status. Source Code (cost: $37 million/worldwide gross: $56 million thus far), The Lincoln Lawyer (cost: $40 million/worldwide gross: $55 million thus far), No Strings Attached ($25m/$144m), Limitless ($27m/$111m), Unknown ($30m/$114m), The Adjustment Bureau ($50m/$111m), Hall Pass ($35m/$63m), and Hanna ($30m/$23m in under three weeks with international still to come). Not all of these films were great, but all of them were moderately-budgeted, most of them received positive reviews, some of them were even R-rated, most of them had moderate opening weekends and solid legs, and all of them will make solid profits in relation to their reasonable costs. Sure none of them reached the heights of Alice in Wonderland or Clash of the Titans , but they never were expected to. And wasn’t it wonderful to have a season where old-fashioned potboilers took precedence over inflated special-effects epics and/or franchise entries? Isn’t it kinda wonderful that the unneeded cash-grab that is Scream 4 will likely get out-grossed (domestically at least) by a $1.5 million haunted house drama starring adult actors (Patrick Wilson and Rose Byrne), Insidious , that has dropped less than 30% two weekends in a row due to audience excitement and word of mouth (after three weekends, it’s already at $36 million off of a $13 million opening)? I don’t care if the cumulative weekend takes of these films have often failed to match the respective weekends from last year. Even if we agree that fewer people are going to the movies this year, we must acknowledge that the current crop of movies are much cheaper than years previous, and that they are attracting a consistent crop of older moviegoers, just the sort that have allegedly fled the marketplace. Summer will start next weekend, so the kids will get their big-budget fantasies soon enough and the pundits can all start whining again about how the movies are DOOMED, and everything is a sequel or remake or comic book-adaptation. But we know better, don’t we? If the summer of 2011, with a nonstop deluge of massive films that will arguably have to deliver massive opening weekends, doesn’t deliver expected blockbuster results, then we can start worrying. But the winter/spring of 2011 was not a failure at the box office. It was a successful return of smaller films aimed at adults, films that didn’t make most of their money in the first three days, movies that actually stayed in theaters long enough to allow casual moviegoers to check them out a month or so down the line, movies that existed as a movie first and a corporately-tied product second. Looks to me like 2011 has been a pretty terrific year thus far. One can only hope that summer 2011 is anywhere near as artistically and commercially satisfying…

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Video: Doradla Says RIM Phones More Important Than Tablets

April 19, 2011

April 19 (Bloomberg) — Anil Doradla, analyst at William Blair & Co., talks about the outlook for Research In Motion Ltd.’s BlackBerry PlayBook tablet computer and the company’s smartphones. Doradla talks with Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Video: Wu Says RIM’s PlayBook Needs Applications: Video

April 19, 2011

April 19 (Bloomberg) — Shaw Wu, an analyst with Sterne, Agee and Leach Inc., talks about the outlook for Research In Motion Ltd.’s BlackBerry PlayBook and Apple Inc.’s iPad 2. Wu speaks with Mark Crumpton on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

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Video: BlackRock’s Hambro Calls For New Share Buyback From BHP

April 19, 2011

April 19 (Bloomberg) — Evy Hambro, portfolio manager of BlackRock Inc.’s flagship World Mining Fund, talks about the price of metals and investing in commodities compared with exchange traded funds. Hambro also discusses BHP Billiton Ltd.’s share buy-back program. He speaks with Mark Barton on Bloomberg Television’s “On The Move.”

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Video: BlackRock’s Fuhr Says ETFs Have Room for Growth in U.S.

April 18, 2011

April 18 (Bloomberg) — Deborah Fuhr, head of exchange-traded funds research at BlackRock Inc., talks about trends in asset flows for ETFs and exchange-traded products in the first quarter of 2011. Fuhr speaks with Julie Hyman on Bloomberg Television’s. “Fast Forward.” (Source: Bloomberg)

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Video: Taylor Says RIM PlayBook Tablet Has `Number of Flaws’: Video

April 15, 2011

April 15 (Bloomberg) — Chris Taylor, San Francisco bureau chief of technology blog Mashable, talks about Research In Motion Ltd.’s BlackBerry PlayBook tablet computer, which goes on sale next week. Taylor speaks with Margaret Brennan and Scarlet Fu on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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Bloomberg’s Follies — A Lesson for Other School Districts

April 8, 2011

NEW YORK — Whether circumventing term limits or banning smoking in restaurants, Mayor Michael Bloomberg is nothing if not a politician accustomed to getting his own way — without apologizing for it. Cathie Black’s brief tenure and resignation from post as schools chief represents a serious blot on the mayor’s record. Thursday marked one of Bloomberg’s only public displays of remorse during his three-term reign. But the perceived guilt resulting from the publishing executive’s appointment and abrupt removal from office offers a timely lesson to school districts across the country now searching for new education leaders: a primer on precisely what not to do. Early in Bloomberg’s first term, the same ruthless acumen that made him a billionaire in business was transferred to the governance of New York City. Nowhere was this more evident than in his power over the nation’s largest school system. After wresting control of the largely failing system, he appointed the Department of Justice’s trust-busting attorney Joel Klein to preside over the city’s 1.1 million schoolchildren and their teachers. Dennis Walcott is Bloomberg’s new appointee. Nationally, Klein’s promotion signaled an important shift in what had otherwise been a more traditional governing structure. In other words, Bloomberg brought his private boardroom manner into the city’s grittier public classrooms. A business-minded approach, whether in merit pay or shutting down schools, ruled the day. Seen in this light, and in the light of similar policies promoted by U.S. Secretary of Education Arne Duncan, Black’s promotion as an outsider wasn’t really all that different. But the jury is still out on whether what works in big business can so easily be transposed onto the fixing of schools. “In the business world, there’s an assumption that if you can sell soap, you can sell automobiles,” said Diane Ravitch, a New York University education historian and former U.S. Assistant Secretary of Education. “That doesn’t transfer to education.” Hence, the lesson: Bloomberg’s latest gaffe may have larger implications, especially for cities like Detroit, Atlanta and Newark that are currently on the hunt for new education leaders. The credentials are key, or at least a resume demonstrating some time in the classroom, said Pedro Noguera, an NYU education professor. “Bloomberg defended Cathie Black even though she has no background in education, saying that her managerial experience was more than enough to make up the difference,” he said. Anthony Adams, president of Detroit’s school board, said the decision-making process in New York was botched from the beginning. “The process in New York was handled by the mayor only,” he said. “We’re advocating a much broader process with a lot of stakeholders involved. We’re being more consultative, so we’ll end up with a better result.” His search committee includes deans of education colleges and communicaty education advocates. Adams added that he hopes to announce the name of Detroit’s new chief academic officer — not superintendent, given the district’s emergency management — by June. The recent search for a new leader of New Orleans’s Recovery School District is a textbook example of putting these lessons to use. Just one day before her exit, Black’s deputy chancellor John White, who is a career educator, announced his departure to head the RSD. To Louisiana’s education chief Paul Pastorak, who recruited White, it was important that the next leader of the Katrina-ravaged district have experience in the classroom. That White had already been in the business of restructuring New York’s schools was particularly attractive. A life-long attorney himself, Pastorak said a traditional pathway into school leadership was not necessary — as long as there was some time in the classroom. White rose up through the ranks of Teach for America. Pastorak said that during the process, he was “keen on engaging” educators and the community to understand its educational needs. These superintendent searches, and others in Providence, Chicago, Florida’s Broward County and Montgomery, Maryland are coming to a head as the national education debate takes on a decidedly corporate tinge. Duncan, the current U.S. Secretary of Education who defended Black in December , has been a long-time champion of charter schools, a model embraced by corporate types for its emphasis on accountability, since his days as CEO of Chicago’s schools. Michelle Rhee and Klein rose to national prominence promoting similar big business-backed reforms. “Some believers in this corporate model think there are generic management skills that simply transfer readily from corporation to corporation to the public sector, regardless of the particular industry,” said Jeffrey Henig, a professor of political science at Columbia University’s Teachers College. The question remains: To what extent will the Black fiasco reverberate through the next generation of education reform darlings? Aaron Pallas, a professor of sociology and education at Teachers College, guesses not much. “This will not derail the widespread efforts to look at expertise outside of education,” he said. “I suspect this is going to be an aberration — not viewed as any kind of bellwether.” Likewise, his colleague, Henig, isn’t waiting for a sea change. “I don’t think it will cast a shadow on the Michelle Rhee/John White model, or folks in charters and new venture funds,” he said, referring to the recent wave of outside hedge funders who have stepped in to reform education. “At least Rhee and White have the educational credentials. And I don’t think they were particularly Cathie Black fans, either.”

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Mike Green: Uplifting Black America: Private Capital and a High-Growth Entrepreneurship Ecosystem

April 5, 2011

It’s a simple formula: Investing in high-growth companies creates jobs while generating more wealth for investors. The formula has worked for America’s private venture capital investment community for 65 years. Unfortunately, no such active community exists in Black America. This week, the National Venture Capital Association and the Angel Capital Association meets in Boston for the ACA Summit (April 4-6, 2011) and NVCA Annual Meeting (April 6-8). Together, these organizations are comprised of more than 500 groups of private equity investors who make up a large portion of the reason why the 21st century Innovation Economy races along at breakneck speed and offers solutions to the problems of high rates of unemployment and diminishing levels of wealth. There are no such comparable gatherings in Black America. Producing Jobs and Wealth Between 1980 and 2005, all net job growth in America was produced by companies less than five years old. That doesn’t happen without angel and venture capital investing in high-growth entrepreneurship. Source: Pricewaterhousecooper’s National Venture Capital Association 2010 MoneyTree Report: Data provided by Thompson Reuters During the same time period, venture capital experienced its largest boon since it was first introduced in the ’50s. In the ’50s and ’60s Blacks were legally and institutionally barred from many facets of the American Dream. In the 70s, Americans were still consumed by widespread, overt racial disparities, some of which seeped underground during the ’80s and ’90s, when private equity capital enjoyed its heyday and the establishment of a firm economic investment infrastructure and high-growth entrepreneurial culture None of that job- and wealth-creating infrastructure was built in Black America … or any broad regions comprised primarily of any racial minority demographic groups. Infrastructure: High-Growth Entrepreneurial Ecosystem The culture of high risk-high return capital investment had been established by the 80′s, which led to rapid growth in the technology sectors. This laid the foundation and established conditions in which high growth startups could emerge. These startups have gone on to revolutionize, if not create industries, including biotechnology (Genentech), personal computers (Microsoft, Apple) and eventually internet-based commerce including social networking sites like Google, Facebook, etc… This type of high risk and explosive entrepreneurial culture has yet to take root in Black America, but not due to lack of an entrepreneurial, innovative or creative spirit among Black Americans. Rather, it has been the lack of understanding of the relationship between (high) risk capital, explosive entrepreneurship and economic growth that has hampered Black America’s participation in the Innovation Economy. The private equity capital investment community laid the framework for the high-growth Innovation Economy today, which has replaced the former manufacturing economy, which replaced the agrarian economy. Power of Private Equity Capital Investment Click on image to access interactive data graphic at Kauffman.org Today, it is private equity capital investments from high net worth individuals and SEC-qualified investors (both known as angels), along with venture capital, that ignite the fire blazing into new technology frontiers. Fueling that fire is science, technology, engineering and math (STEM) education and those pursuing professions in the various STEM fields. Since 1995 , more than 50,000 companies have received a total amount greater than $439 billion in venture capital equity investments. That’s not counting angel investments, which typically enter in the equation early and exit earlier than venture capital. Much of this activity has somehow escaped Black America. However, it is also clear that very few of those companies are led by Black entrepreneurs. In 2010, Black tech entrepreneurs received just 1% of technology based equity investments. America’s Job Creators Meet in Boston Likely few Blacks will find their way to the ACA and NVCA events in Boston this week, where many of the people responsible for the success of high-growth entrepreneurs (who have created jobs that reduced the unemployment rate and generated more wealth for investors) will come together to network, learn, share and improve their infrastructure. Indeed, the private equity investment infrastructure is expanding. And President Obama has recognized the private equity investment community as the leading opportunity for job creation and wealth generation in America, as well as the solution for the U.S. becoming more competitive in the global marketplace. So, where is Black America? Missing: Black Capital Investments While the recent unemployment numbers brought good news for the nation as a whole, with total unemployment dropping to a two-year low, it left a sour taste in the mouths of Black Americans, who must contend with the notion that the rate of unemployment today for Black Americans remains double the rate it is overall for the nation. That point hasn’t changed much since Dr. King bemoaned being left out of the American Dream when he articulated his famous “Dream” speech in August of 1963. Moreover, a May 2010 data report by the Institute on Assets and Social Policy reveals that wealth is being generated in America at an astounding rate, yet has managed to bypass Black America. This report shows a quadrupling of the wealth gap between Blacks and Whites over the 23 years the study was conducted (1984 – 2007). It’s not a secret how wealth is created in America on a mass scale. Other minority groups have managed to figure out the formula. Asian Americans Invest in STEM / High-Growth Entrepreneurs For example, Asian Americans, who own nearly one million fewer businesses than Black Americans, produced $2.5T in total gross receipts compared to $137 billion by 1.9 million Black-owned businesses. Asian Americans have an investment infrastructure. They own hundreds of companies in Silicon Valley. They also produce STEM-educated professionals and high-growth entrepreneurs at a significant rate. Black Americans are no strangers to entrepreneurship nor innovation. Our focus, however, has been on lifestyle entrepreneurship ventures primarily rather than high-growth equity backed enterprises that produce more fast-growing employer firms. Government Solutions? It is no secret the focus of economic activity in Black America has targeted conducting business with the government as a prime channel of activity. Thus, major investments of time, energy and money have been made in obtaining political cache in attempts to affect public policies that open doors of access and opportunities for a tiny percentage of Black-owned small businesses. This focus on government solutions, which proved prudent during the 20th century battles over constitutional citizenship, must be transformed to fully engage in the 21st century quest for economic equity citizenship. Today, Black America is missing out on a vital element required for job creation and wealth generation: an innovative infrastructure that focuses on high-growth entrepreneurship fueled by a pipeline of STEM ingenuity and risk capital. Such an infrastructure would be the foundation of capital investments necessary to fund an ecosystem of high-growth entrepreneurship. Real Economic Solutions If Black America is to change the current paradigm of a widening wealth gap compared to White America and a rate of unemployment consistently much higher than the national average, it must recognize an immediate need to establish its own private equity investment community and establish strong ties with the current infrastructure that has decades of experience. Perhaps a step in the right direction would be to show such a significant presence at the equity capital investor gatherings in Boston this week to a degree that simply the sheer attendance numbers alone would raise eyebrows and interest. Or perhaps there should be a convening of the minds within our community to address this important issue? What’s preventing us from establishing such a valuable infrastructure and ecosystem? The numbers speak for themselves. While the rest of America has figured out how to create both jobs and wealth, Blacks have consistently lagged behind in both. The missing element in Black America is a viable, growing equity capital investment community that can fuel high growth entrepreneurship and Black participation in the Innovation Economy.

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Video: McCourt Says RIM’s Risk-Reward Scenario Is `Compelling’

March 25, 2011

March 25 (Bloomberg) — Tavis McCourt, an analyst at Morgan Keegan & Co., talks about Research In Motion Ltd.’s operations and business outlook. RIM, maker of the BlackBerry smartphone, yesterday forecast first-quarter revenue and profit that missed analysts’ estimates. McCourt speaks with Betty Liu, Jon Erlichman and Dominic Chu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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Video: Lamba Says RIM’s PlayBook Sales Targets `Tough’ to Meet

March 25, 2011

March 25 (Bloomberg) — Abhey Lamba, managing director at International Strategy & Investment Group, talks about the sales outlook for Research in Motion Ltd.’s PlayBook tablet. RIM, maker of the BlackBerry smartphone, fell as much as 13 percent in late trading yesterday after forecasting first-quarter revenue and profit that missed analysts’ estimates. Lamba speaks with Erik Schatzker on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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Janis Bowdler: Time to Move On: Families Facing Foreclosure Need Better Solutions Than HAMP

March 24, 2011

More than one million Latino families have either lost or will soon lose their homes. In California, Hispanic-owned homes account for nearly half (48 percent) of all foreclosures. The rapid loss of homes among Latino and Black homeowners has increased the gap in homeownership rates between White families and families of color. Our research shows that foreclosures wipe out wealth that should have paid for retirements and college educations, depress neighborhoods and home values, and harm family relationships . Our efforts to support community-based housing counselors working with families in foreclosure has helped us better understand how national foreclose prevention programs and policies can effectively reach the ten to 13 million families expected to lose their home during this calamity. As did others who are deeply concerned about the impact of the housing crises on families, we worked tirelessly to share information and provide guidance and recommendations to Congress and the administration. We had high hopes for the Obama administration’s signature Home Affordable Modification Program (HAMP). And when we recognized signs of trouble with HAMP’s implementation, and complaints from the community began to mount, we offered additional options and solutions to administrators. Unfortunately, many of our recommendations went unheeded. While HAMP set out to provide three to four million modifications, only 600,000 families have received permanent loan modifications through the program. Treasury has made some tweaks, but fundamental changes are needed to reach more families in distress. Our counselors still report difficulty obtaining modifications for worthy homeowners, and the lack of compliance has made justice unattainable for those wrongfully foreclosed upon. Moreover, the private sector’s move away from HAMP―proprietary modifications outnumber HAMP modifications two to one―suggests that the program’s influence and relevance are waning. At best, HAMP addresses the housing crises of yesterday; continued congressional focus on the program is preventing us from taking the bold steps that are needed to help millions of Americans facing foreclosure today. For these reasons we are left with little choice but to support the “HAMP Termination Act of 2011″ (H.R. 839). It’s time to focus on foreclosure prevention remedies that reach further. Congress and the administration must consider more effective approaches, such as these five promising ideas: • Leverage private-sector innovation. Rather than modifying mortgages one at a time, remaining HAMP funds could be leveraged to negotiate directly with investors to buy toxic mortgages in bulk. The savings can be passed to the homeowner in the form of principle write-downs and other modifications. Wall Street is way ahead on this, and similar models should be brought to scale. • Support local success . Boston Community Capital is helping evicted homeowners reclaim their property. States are using the Hardest Hit Fund to respond to unique local conditions. Congress and the administration should elevate and scale local victories. • Require more accountability from Fannie Mae and Freddie Mac. The OCC called for an end to the “dual tracking” of foreclosures and modifications, and Bank of America has committed to partnering with others to address this unfair practice. Their efforts are severely undermined, however, without Fannie and Freddie on board. The Treasury and FHFA must compel the GSEs to implement this basic tenant of responsible foreclosure prevention. • Give the state attorneys generals (AGs) a shot. The AGs must accomplish what the Treasury has not―set firm, enforceable rules for modifications that include principle write-downs. The recently leaked terms raise concerns that the settlement might not go far enough. The AGs must conduct a rigorous inquiry and not settle until they have the best deal for their state. • Give homeowners some leverage. Many deserving homeowners miss out on modifications because they are mired in their servicer’s bureaucracy. A little leverage in the form of a bankruptcy safety net would prompt more thorough customer service. Bankruptcy reform has failed in the House and Senate, but this budget-neutral option should be reconsidered for struggling homeowners. Other efforts show more promise―namely the Neighborhood Stabilization Program and state endeavors through the Hardest Hit Fund―but these programs are not a substitute for a national strategy to modify mortgages for deserving homeowners. Stabilizing our housing market is essential to our economic recovery and should be a concerted, bipartisan effort. We call on Congress and the administration to set politics aside and work together on a comprehensive strategy to put an end to needless and wrongful foreclosure.

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Stephen Herrington: Swarm of the Black Swans

March 17, 2011

Moving to Southwest Washington State where I built a house on the beach with my hands and the skill and hands of a couple of excellent German expatriates, I was struck with the attitude of locals toward storm surge and possible tsunami. It had never happened the locals said, dismissively. Last week a tsunami happened, and, thankfully, we were spared. We weren’t so in 2007 when a hurricane force storm hit and denuded the surrounding tree farms of hundred year old trees and took 30 feet out of the barrier dunes. Luckily, it hit at low tide. They have no name classification for a storm like that in this place because there’s no cultural memory for it — it’s named by the date, December 7, 2007. Fortunately I built an octagon house to slip through the wind and to withstand it with integral shear walls, thick and wide earthquake foundation footers, hurricane rafter ties, a 140 mph roof and a backup generator. In the aftermath, my neighbors wandered around picking up parts of their houses and burning them for heat and light for five days until power was restored. All roads in or out were blocked by thousands of fallen 100′ fir trees. Record snows and flooding and record heat and drought stalk the land in the same year now. Call it climate change or an act of God or whatever you want. Tornadoes and wildfires in the winter? But I’m not here to argue climate change. Whether it’s manmade or not or whether it even exists. I’m here to argue that unexpected things happen to people who refuse to expect them. Nassim Nicholas Taleb coined the term Black Swan as a metaphor of something so unexpected in markets and finance that it was generally considered to be statistically impossible, like the birth of a black swan to snow white parent swans. His point was that if it were statistically so unlikely that it seemed it shouldn’t happen that would not mean that it couldn’t happen. What they try and stress in statistics theory is that likelihood is not preventative, not a shelter. Standing away from a tree during a lightening storm is preventative. Not betting you can fill an inside straight in draw poker is preventative. Probability is not an affirmative defense. Hedge funds were built on the unlikelihood of combinations of events ever happening. Hedge funds eventually evolved, by intentional design effort, insurance policies against unlikely things happening because of the actuarial unlikeliness of those things happening. The volumes in derivatives seems to indicate that everybody with a net worth of or operating expenses of $10 million bought them to hedge against unforeseeable disaster. Trouble was, the disaster that would follow was because the actuarial assumptions didn’t account for the unforeseeable, they accounted for the foreseeable and the statistical likelihood of the foreseeable. Disasters routinely smack actuarials in the face with a brick. A “hurricane” in the Pacific Northwest was foreseeable but it had been discounted by folk wisdom. A hurricane of the force and site of Katrina was foreseeable but had been statistically discounted in likelihood the way my neighbors had discounted the largest storm anyone had ever seen in their lifetimes. Hundred year floods and hundred year snows and hundred year heat waves and droughts had not happened in the Midwest and east for lifetimes, let alone in the same year. The oil rig with the best performance record in the fleet had the worst oil spill since drilling for oil became a practice of humans. A little extra pressure on the crew and management to meet a schedule in a difficult bore caused the accident that killed 11 and saturated a quarter of the Gulf with crude. That little extra performance pressure was not foreseen because no one had ever pushed the limits of performance like that before. The consensus of the foreseeable was that no such thing could happen. Somehow, and for some time, someone, perhaps a driller (master foreman) or a roughneck, had punched an ambitious corporate prick in the face to stop a disaster, again and again. That last safety valve didn’t work this time. The consensus foreseeable had been designed into Fukushima nuclear facilities. Likely earthquake intensities were designed into the structures. A tsunami sea wall had been built for the likely size of tsunami. But intensity and tsunami were surpassed at once, and the redundant systems failed to arrest the dangers of damaged nuclear facilities. Obvious design flaws in those backup systems were excused by assumptions of what is probable given the sea wall and earthquake measures. The housing bubble collapsed, and because of assumptions that all risk had been taken out of the system by laying it off on counterparties to bad loan practices, it became a disaster in catastrophic scale. No one foresaw that the counterparties couldn’t absorb the scale of claims against them. The consensus wisdom was that they could underwrite it all, the consensus not knowing the depths of exposure they were buying into because of the lack of transparency in the private equities markets. The perfect financial tsunami took out the engine of American finance in a sequence of events not unlike events that triggered the melting down of Fukushima nuclear reactors. 9/11 happened because even the small measures necessary to stop it weren’t considered by reason of the likelihood of it being so small. When the personal ego ambitions of George W. Bush were added to the catastrophe, it was multiplied into 1,000 times the original tragedy to persons and properties and our international standing. Bush’s ambition to be a “war president” was not calculated into the risk assessments. A conflagration could have been stopped by measures at airport check in, and would have had we foreseen the magnitude of the eventual outcome. Black Swans. The world is so big, so volatile, there are so many people living on the edge of volcanoes both natural and manmade, it’s impossible to excuse the thinking that governments are not responsible, or that governments are not needed to correct their own irresponsibility and the irresponsibility of their private enterprises. The American housing bubble collapse triggered the near failure of global finance. Only government, by harnessing the power of the worlds largest economy through borrowing, saved the globe from total financial meltdown. Only governments can repair the damages of events so calamitous that they swallow up private capital’s ability to underwrite the risks. To make governments smaller is to take the biggest risk of all. That risk is that nothing will happen that it will take a government to fix. Bad decisions are made by governments. Bad decisions are made by private enterprise. Independent of each other, they would still both make bad decisions. But together, enterprise looks to influence government to sanction their mistakes and correct them if they go terribly wrong. Government makes fewer mistakes unencumbered by the influence of private enterprise to backstop enterprise’s willingness to take risks or it’s just plain stupidity. Government and business is a union that is mutually and universally destructive because of the quid pro quo of campaign finance. Business influences government to think poorly, an outcome which abrogates it’s charter to “promote the general welfare.” The ability to foresee is not that hard. I figured to build a house that would stand a 100 years in an environment of horizontal rain and an unpredictable sea and sand. So what could happen in a 100 years was input into how I built it. Unfortunately, this is a skill of foresight lost by politicians, most particularly those on the right. My house may yet not survive a 100 years. But it will not be for the lack of the foresight I had while building it. It will be lost for the risk of a foreseen earthquake in the subduction fault just a few miles off shore, the last rupture of which happened 300 years ago. The Monday Morning Economist

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Robert Kuttner: The Continuing Mortgage Mess

March 14, 2011

One of the most startling exit-poll results to emerge from the 2010 midterm elections was the finding that the 35 percent of voters who (correctly) blamed the economic collapse on Wall Street actually voted Republican by a margin of 56-42 percent. As Ruy Teixeira and John Halpin wrote in a sifting of the exit polls, “The Obama administration’s association with bailing out Wall Street bankers, who are heavily blamed for the bad economy, apparently had a negative effect on Democratic performance in this election.” To put it mildly. But since the election, Republicans keep on demonstrating that they are even better friends of the banks than the ambivalent Democrats. Tea Party populism at the grass roots coexists with close alliance with the financial industry where it counts. Under the guise of reducing the budget deficit, the Republican House and Senate budget would dramatically reduce funding for the agencies that regulate Wall Street. Richard Shelby, the ranking Republican on the Senate Banking Committee, keeps inserting himself into a law-enforcement proceeding, trying to block the proposed legal settlement of abuses in mortgage foreclosures and documentation that has been put forward by the 50 state attorneys general. Shelby last week called the plan: “Nothing less than a regulatory shakedown by the new Bureau for Consumer Financial Protection, the FDIC, the Fed, certain Attorneys General, and the Administration, led by Elizabeth Warren. This proposed settlement appears to be an attempt to advance the Administration’s political agenda, rather than an effort to help homeowners who were harmed by a servicer’s actual conduct.” It’s worth reviewing the back story. State attorneys general, led by Iowa’s Tom Miller, but with the vigorous support of Republican as well as Democrat AGs, have documented a wide range of illegal abuses by mortgage companies and banks dealing with homeowners who were victimized by corrupt lenders. So called “robo-signers” falsely signed affidavits that the bank or other mortgage service company had the right to foreclose when in fact it had no such legal right. Timely payments that were sent in to pay principal and interest were improperly applied to late fees and other penalties, causing homeowners to fall behind in their payments and then fall into technical default, leaving them vulnerable to foreclosure. While many homeowners who were working in good faith with the lender to secure refinancing or loan modifications, the loan servicer was proceeding on a separate track to foreclose and take away their house. Cases are legion of frantic homeowners not getting phone calls returned and being unable to get a straight story of how much money they owe, and to whom. Some military families lost their homes while a breadwinner was serving in Iraq, in flat violation of law. The proposed agreement with the five largest banks that control 59 percent of the mortgage market, drafted by the state AGs, would prohibit such abusive practices, define permissible procedures, and collect a one-time penalty fee from the banks in the range of $20 billion as an alternative to the criminal prosecution that the mortgage industry so thoroughly deserves. As the tireless Bill Black, a former senior financial regulator, keeps pointing out, in the savings and loan scandals of the 1980s, there were more than a thousand felony convictions. S&L executives went to jail. There was an interagency task force coordinating criminal prosecution, and this under the Reagan administration. And unlike the subprime disaster and its continuing fallout, the S&L collapse was largely contained to that industry, did not end up punishing homeowners, and caused little damage to the wider economy. Instead of using their political influence to resist the proposed global settlement of mortgage abuses, banking executives should consider themselves lucky. The proposed settlement would be a two-fer. It would prohibit illegal and deceptive practices, define proper ones, and would produce some of the money needed for the principal reductions to keep some ten million Americans from losing their homes. The Administration’s Home Affordable Modification Program (HAMP) is a widely acknowledged failure. About 600,000 loans — fewer than one at-risk mortgage in ten — have gotten relief. The program, which includes a modest incentive payment to banks, is entirely voluntary to bankers. The administration’s reluctance to push for stronger medicine is rooted in the banking industry’s reluctance to book losses on their balance sheets. By pretending that under-water mortgages are worth 100 cents on the dollar (until they are foreclosed) banks can pump up the stated value of their assets. But it would be far better for all concerned if banks reduced the principal amount of at-risk mortgages to roughly the actual market value of the home. That would compel honest accounting, and allow millions of homeowners to keep their homes. The present policy, by contrast, continues the epidemic of foreclosures and the resulting drag on housing prices. The downdraft in the real estate sector, in turn, functions as a deadweight drag on the economy. Leaks and counter-leaks suggest that the Obama administration is split on whether to strongly push for the AG’s proposed global settlement. The Treasury Department, both Secretary Tim Geithner, and the Office of Comptroller of the Currency, basically are siding with the banks. Elizabeth Warren, assistant to the president and acting director of the Consumer Financial Protection Bureau, favors the plan, as does the FDIC, and the Department of Housing and Urban Development. The banks and their Republican allies are, not surprisingly, dead set against it. But it is one thing for Republican politicians like Shelby to weigh in against policies they oppose. It is utterly shameful for them to try to block law-enforcement proceedings. Republicans like Shelby are all for states rights when it’s convenient, but not when state AGs go after their banker pals. As more and more abuses come to light, and more homeowners are fighting back against illegal foreclosures, the average foreclosure proceeding now drags on for almost two years. Just this month, the banking giant, HSBC had to suspend foreclosure actions because of questions about documentation and dubious practices. With Republicans so explicitly in bed with bankers, and after the drubbing that the Democrats took last November, you would think that it might occur to the White House that it makes good political as well as economic sense to be more clearly aligned with the interests of consumers. But that is still contested terrain. If the proposed global settlement does fail, bankers will face a continued legal morass, and some may yet face criminal proceedings for abuses. It would be tempting to wish that fate on an industry that is responsible for so much wider suffering. But it would be far better to get the mortgage mess behind us and get on with the economic recovery. Rather than political brickbats, the state AGs and Professor Warren deserve Shelby’s thanks and Obama’s strong support. Robert Kuttner is co-editor of The American Prospect and a Senior Fellow at Demos. His latest book is A Presidency in Peril.

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Robert Lenzner: Oil Prices Above $100 Threaten Recovery, Stock Market

March 4, 2011

Higher oil prices trumped the lower unemployment figures today. Violence in Libya trumps signs of economic recovery; 8.9% unemployment and a 3.1% gain in factory orders. The Economist cover today says it all; “Just as the world Economy was recovering,” came the “2011 oil shock.” After all, the Middle East and north Africa produce more than 1/3rd of the world’s oil. Mull that factoid thoroughly over the weekend. Another run-up to $103 for West Texas crude and $116 for Brent oil — the unpleasant ramifications of Middle East unrest — are a much more powerful dynamic than the reduction of unemployment in the US below 9% for the first time in 2 years. This is called the unexpected ramifications of geopolitics as a monkey wrench into the quantitative easing policy of the Bernanke Fed. Welcome to global risk! Revolution can indeed disrupt oil supply, shake confidence in a recovery, and drive investors to panic and sell. Investors in the stock market are the new refugees, unseen, but heard. Higher oil means lower stocks, as Wall Street deals with the expectation of the economy’s renewed momentum slowing down. A slowing down economy means a slowing down earnings projection and profit taking after the sensational run-up since last summer. At $100 a barrel, the cost of oil will raise the costs of transportation and production of many goods, cutting down some measure of already modest projections of economic growth. “We do not see $100 oil derailing the US expansion. However, if sustained $100 oil could shave some 0.3% to 0.5% from GDP, implying 2.7% growth in 2011 instead of 3.0%,” says Marshall Front, founder of Front Barnett LLC, a Chicago investment counseling firm. “It would take gasoline prices above $4.00 a gallon for a protracted period to threaten the expansion.” The ultimate scare scenario, brought to us by perpetual bear Nouriel Roubini, is the provocative prediction that $150 oil (higher than July, 2008) will take 2% out of GDP. Nasty; better pray for the Saudi monarchy to stay firmly in control, and Iran, Kuwait, UAE are able to maintain their usual production for export. Gold and silver still acted strongly today. Silver, incredibly, rose over $35 an ounce, and is up 25% since we first recommended it last fall. But traders like Dennis Gartman, a technician with a big following (CNBC’s guru) and GLD, the huge ETF, have been sellers in February. (GLD had outflow over $700 million in February — after being down $2 billion in January. We reported that turning point phenomenon.) As GLD goes, so might gold in the short run. Now comes Larry Fink, CEO of BlackRock, asserting his investment attraction to the much maligned dollar. You will recall the rule of thumb that 70% of the time, when the dollar is strong, gold is weak. Fink, founder and CEO of BlackRock, the largest investment management firm in the world, with $3.5 trillion in assets, is predicting a 4% coupon for 10 year Treasuries, and as a result a strong dollar. He is a major buyer of dollars, and if correct a rising dollar will be a depressant for gold prices. “Inflation in the long run will not a be a problem,” Fink said on TV this week. “I’m a very big buyer of the dollar.” Not good for the gold bulls, John Paulson and George Soros — and their flock of followers. You heard it here first.

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James K. Galbraith: Economists Warn of ‘Irrational Fears’ of the Deficit and Stymied Recovery

February 28, 2011

Economists for Peace and Security has issued the following statement on current budget debates, pointing out that the entire premise is false and that giving in to the demands to cut the deficit imperils fragile recovery. James K. Galbraith, along with Ken Arrow, Andrew Brimmer, Robert J. Gordon, is among the notable signatories. FEDERAL SPENDING AND THE RECOVERY A Statement by Directors, Trustees and Fellows of Economists for Peace and Security Annandale-on-Hudson, New York – February 28, 2011 – The budget adopted by the House of Representatives on February 19, 2011 does not make economic sense and is likely to do more harm than good. First, the rationale for the measure is based on a false premise. Secondly, the budget cuts being proposed will impede and may end the recovery. If the recovery fails, unemployment will increase and the financial crisis could re-emerge. The premise that the US government is broke is false. The US government has never defaulted and will not default on any of its financial obligations. Deficit spending is normal for a great industrial nation with a managed currency, and it has been our normal economic condition throughout the past century. History proves, and sensible economic theory confirms, that in recessions, increased federal spending — not balancing the budget — is the tried and true way to return to a path of sustained growth and high employment. Eliminating waste in government spending is desirable. But that is not what the House proposes; indeed the House budget failed to address the largest waste in federal government, namely in the military, and the House failed to remove our most egregious subsidies, such as to oil companies. To adopt a policy of deep budget cuts at this stage of recovery is to surrender to irrational fears in the service of a political, not an economic, agenda. As economists, as citizens, and as long-time critics of waste in government, we call on the Senate to reject the House proposal and to craft an alternative that places first priority on sustaining economic recovery and on dealing with the country’s true economic and social problems, which include unemployment, home foreclosures, the fiscal crisis of states and cities, our infrastructure needs, energy security and climate change. Current Signators*: Clark Abt, Brandeis University and Cambridge College Kenneth Arrow, Stanford University, Nobel Laureate Marshall Auerback, Madison Street Partners Barbara Bergmann, American University and University of Maryland Linda Bilmes, Harvard University Stanley Black, University of North Carolina Andrew F. Brimmer, Brimmer & Co. Kate Cell, Principal, Kate Cell Consulting Lloyd Jeff Dumas, The University of Texas at Arlington Gary Dymski, University of California, Riverside James K. Galbraith, The University of Texas at Austin David Gold, The New School Robert J. Gordon, Northwestern University Michael Intriligator, UCLA Richard F. Kaufman, Bethesda Research Institute Ann Markusen, University of Minnesota Richard Parker, Harvard University Dimitri B. Papadimitriou, The Levy Institute of Bard College Gustav Ranis, Yale University Kathleen Stephansen Lucy Law Webster, Center for War/Peace Studies, New York *Please note that affiliations are listed for identification purposes only. Cross-posted from New Deal 2.0 .

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Barry Moltz: What Business Can Learn From Oscar-Winning Movies

February 28, 2011

The King’s Speech : Resiliency wins. There is no magic bullet to being successful in business. The King didn’t show up one day to work with Lionel Logue and he was cured. It took decades of work for the King to make effective speeches. Only persistence and hard work can inch business owners towards their goals. The Black Swan : Competition is all around you. Some of it is real, some maybe imagined, but the real competition is with your own business vision. It is critical to keep perspective. This is where trusted mentors can be helpful. The Fighter : It always takes hard work. There is no faking your way to success in business. Dicky Eklund could have become a champion like his brother, Mickey Ward, if he had been serious about working harder. 127 Hours : Be creative. Sometimes business solutions take a long time to appear. It is only when you have tried everything else that the solution becomes evident. Also, never work alone since it can be dangerous! The Social Network : Greed is powerful . Business success and wealth can bring out in the worst in people. Read every contract. Eduardo Saverin did not read the new stock agreement when Facebook took its first outside investor. This caused his large dilution in the next investment round. When it comes to legal documents, trust no one. Pay your own lawyer. Inception : Dreaming about your business is powerful aphrodisiac . But those dreams need to be based in reality. Do customers buy your product to solve a specific pain? The Kids are All Right : It takes a team. Building a business (or a family) is not a one-person job. In fact, the only way to leverage financial success is to have an effective management team. Business is not about ideas, it’s about the execution of those ideas by your team. Toy Story 3 : Change is inevitable. No business stays the same forever. Markets and customers evolve. The only question is, how do we adapt? What did you learn?

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Democrats Rebel Against Governor Cuomo’s Budget

February 28, 2011

ALBANY, N.Y. — More than 40 elected Democrats made a rare attack on Gov. Andrew Cuomo and his proposed cuts to the party’s priorities of education and health care as the state tries to trim a $10 billion budget deficit, according to a letter obtained Monday by The Associated Press. In a letter to the state Democratic Party and the governor, the Democrats railed against Cuomo’s budget policies, calling them “neither balanced nor well-conceived” and warning that they would hurt children and the elderly. The group said Cuomo was not exemplifying what a “new Democrat” should be. The governor started using the term at last year’s Democratic convention to describe a pragmatic official in hard fiscal times. “According to the governor, that is what it means to be a ‘new Democrat,’” the letter said. “According to the governor, this is the path to becoming ‘the most progressive state in the nation.’ If this is what it means to be a new Democrat, and if this is what it means to be progressive then something is very wrong.” Neither Cuomo nor the party immediately responded to requests for comment. The letter is signed by Democrats on city councils and other legislative bodies in New York City, Albany, Binghamton, Kingston, Monroe County, Rockland County, Broome County, the town of Danby, Tompkins County, the village of Hempstead, Buffalo, and Ulster County. Cuomo won by a huge margin in the November election on a platform to clean up Albany and curb decades of spending and overtaxing. The popular former attorney general voiced the outrage seen in public opinion polls that politics and special interests have made state government unaffordable to taxpayers. His fiscally conservative stand that opposes tax increases is most strongly supported by the Senate’s Republican majority and in the polls. Last week’s Quinnipiac University poll found strong support for Cuomo and continued disfavor for the state Legislature. It also showed strong opposition to cuts in education and health care. Cuomo’s $132.9 billion budget proposal would cut spending 2.7 percent. The group urges Cuomo and the party to abandon proposed cuts to school aid, prescription aid for the elderly and other cuts to education and health care. Instead, the group is pushing for Cuomo to continue a temporary surcharge on New Yorkers making more than $200,000 a year. The income tax surcharge is scheduled to expire this year, although it could bring the state as much as $5 billion. The group said letting it expire would be a “massive tax break” for millionaires while schoolchildren and other vulnerable New Yorkers suffer. “If the new Democratic Party is acting like conservative Republicans, I don’t want any part of it,” said New York City Councilman Robert Jackson, one of the Democrats who signed the letter. “Elected public officials, it’s their duty and responsibility to stand up for justice and equality of all people,” Jackson said in an interview. “We’re speaking truth to power.” This isn’t the first time Democrats have tested the governor. On Thursday, veteran Democratic Assembly Richard Gottfried of Manhattan leveled some criticism at Cuomo’s Medicaid task force report that will result in cutting some services and funding to hospitals. Gottfried, who was on the task force, said the final report has good ideas, but there are concerns, too. His comment was met with a blistering statement from Cuomo’s spokesman that Gottfried “has been the protector of the Albany status quo and special interests for years.” The next day, Gottfried and Assembly Speaker Sheldon Silver issued a joint statement saying they were optimistic the task force report would result in long-term financial stability while safeguarding care. Days before, Democratic New York City Councilman Charles Barron led a disruption of Cuomo’s speech to black and Latino lawmakers with chants of “Shame on you!” and “Tax the rich!” Five of those who signed the letter noted they were part of the group called the Black, Latino and Asian Caucus.

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JPMorgan CEO Gets $17 Million Pay Day

February 18, 2011

NEW YORK — JPMorgan Chase & Co. has granted Chairman and CEO Jamie Dimon stock and options worth $17 million, just a month after one of Wall Street’s largest banks posted a big jump in quarterly earnings. Dimon’s bonus follows huge compensation boosts earlier this month for the heads of Goldman Sachs Group Inc. and Citigroup Inc., as many big banks _and their stocks – have rebounded from the financial crisis. The New York bank said in a regulatory filing Thursday that it granted Dimon 251,415 restricted stock units, of which half vest in January 2013 and the rest the following year. Based on the stock’s closing price Wednesday, the day the units were granted, the award is worth $12.1 million. Dimon, 54, also received 367,377 stock appreciation rights, which have a 10-year term and become exercisable in five installments staring next January. Using the Black-Scholes calculation method, the rights are valued at about $5 million. Dimon’s salary and other compensation weren’t disclosed in Thursday’s filing. JPMorgan Chase pleased investors in January with news that it will raise its dividend soon, pending approval from the Federal Reserve. The bank also reported that its income jumped 47 percent in the final three months of 2010 as fewer customers defaulted on their loans. Last month, Goldman Sachs more than tripled the salary of CEO Lloyd Blankfein to $2 million, not including stock awards, and also granted raises to four other top executives. Citigroup Inc. gave its top executive, Vikram Pandit, a salary raise to $1.75 million, from just $1 the previous year. Bank of America Corp., however, has said it won’t give its top executive a raise for 2011 and won’t hand out cash bonuses to top management. CEO Brian Moynihan’s salary will remain $950,000 for 2011, though he could get up to $9.05 million in stock awards if the nation’s largest bank by assets hits certain performance targets.

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S. Korea’s S-Oil Swings to Black in Q4 on Higher Margins

January 27, 2011

S. Korea’s S-Oil Swings to Black in Q4 on Higher Margins

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Black Diamond Awarded Oil Sands Contract

January 19, 2011

CALGARY, ALBERTA–(Marketwire – Jan. 18, 2011) – Black Diamond Group Limited (“Black Diamond” or “the Company”) (TSX:BDI), a leading provider of modular accommodation and energy services in North America, is pleased to announce BOXX Modular, the Company’s modular workspace division, has secured a contract to supply and install 101 modular units at a major Canadian oil sands site. BOXX Modular will be supplying and installing lunchroom complexes, locker rooms, self-contained lavatories, security units and other workspaces for the remote site. The new units are currently being manufactured with installation expected to commence in late spring, 2011. The total project value exceeds $8.5 million and the contract is BOXX Modular’s largest single award to date.

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Wall Street’s Secret Society Elects New Members

January 16, 2011

This weekend a tight-lipped group of power brokers elected two new members into Kappa Beta Phi , Wall Street’s secret society founded in 1929, Bloomberg reported. The organization, dubbed ” Wall Street’s Frat ” by the WSJ elected Barclays M&A chief Paul Parker and Leon Black, a senior managing director at buyout firm the Apollo Group, in a posh ceremony at Manhattan’s St. Regis Hotel. While the group’s members aren’t fond of talking to the press, there is reportedly a loose hierarchy of members. The group reportedly uses titles like “grand swipe, grand smudge and grand loaf,” Bloomberg notes. Bloomberg reporter Max Abelson was seated outside the lobby and relayed this strange anecdote. Here’s Abelson : “As the evening began, a reporter seated in the lobby watched people enter the hotel, where a night in the Astor Suite costs about $1,050. When a man appeared holding a photograph of the reporter in a gray T-shirt giving a thumbs-up sign — a profile photo from his Facebook page — the reporter promptly left.” Last year, the Wall Street Journal got rare access to a Kappa Beta Phi induction ceremony , even nabbing one of the event’s pamphlets. Among those listed as the organization’s “Exalted Avisory Council (Past Grand Swipe’s)” were former Bear Stearns CEOs Jimmy Cayne and Alan D. Schwarz and Home Depot co-founder Kenneth Langone. Inductees, referred to as “neophytes” by members, are traditionally required to sit at tables with long black table cloths, and, at least in last year’s ceremony, are required to preform for the crowd. Last year, shipping magnate Peter Georgiopoulos reportedly performed a version of the “What a Feeling” song from the 1980s hit “Flashdance.”

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The 14th Banker: So Bill Daley, Who’s Your Daddy?

January 7, 2011

Yesterday President Obama heralded his newly appointed Chief of Staff, to great fanfare from the Republicans, US Chamber of Commerce, Wall Street Journal and others. According to the Wall Street Journal , The selection of Mr. Daley shows that the president is more concerned with reaching out to the independent voters and to the Republicans who now control the House and have greater numbers in the Senate. Per CNN , Daley is the son of legendary Chicago Mayor Richard J. Daley and brother of the city’s current mayor, Richard M. Daley. He runs Midwest operations for the investment bank JP Morgan Chase, and his appointment is expected to help patch up Obama’s frosty relations with the business community after nasty battles over health care reform, taxes and government regulations. So I am open-minded about this. Clearly Obama needs a change in program and needs someone who can reach across the aisle. But reaching across the aisle is not the same as capitulating. Even the Huffington Post reporting is fairly sanguine on this. Daley, the son and brother of Chicago mayors, has always been the Inside Daley, the one who deals quietly with the powers that be in the city and country — the brokers of money, commerce, family and tribal politics. Daley is an ancestral Democrat, which means that he believes in the government’s role in helping people survive and live a decent life. He is an Irishman through and through, with a fierce faith in friends and loyalty. He is a big-city guy, at home in big-city haunts. But he is not an ideologue of the left or right. He helped Bill Clinton pass free-trade agreements, even though Democratic union bosses hated them. Now a banker, he opposed some provisions of the bank-reform bill. He also expressed skepticism about the political and substantive wisdom of Obama’s spending a year on health care reform. He’s not for government for government’s sake. The question for Daley is “who’s your daddy?” The revolving door between Wall Street and Washington power elites is still revolving. His predecessors have proven to be lap-dogs. As a big bank insider, Daley knows . He knows the games being played. He knows the scare tactics used to manipulate Washington for what they are, scare tactics designed to keep the status quo. He knows the business tactics and the business ethics. He knows the compensation structure and what it incents. He knows what management really cares about. He knows why executives shun shareholder empowerment. He knows why they offshore so many jobs. He knows why trading operations are housed where they are and how trans-national banks play the regulatory arbitrage game globally. He knows if the books are cooked. He knows if Primary Dealers get a heads up on Fed market actions and why they win in trading virtually every day, whichever way the markets move. He knows if they trade against their customers. He knows why they fight transparency. He knows why they fear Elizabeth Warren and may attempt to castrate her budget. With this knowledge comes a greater responsibility. Our financial system is past its prime. It is not longer suitable for the evolving society. So will Daley stand for the entrenched interests, or muster the courage to help the President usher in a new age by rigorous enforcement and funding of Dodd-Frank, such as it is, and by pressing for additional measures to close gaps in the legislation? Should a new crisis emerge, will he allow the process of creative destruction to take place with adequate systemic safeguards as proposed by Bill Black and Randall Wray? Will he permit bondholders to take the haircuts their risks and rewards warrant or will he support the big bank subsidy of implicit TBTF status? Bill Daley, who’s your daddy?

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Divided States of America: Black America Suffers Depression-Like Joblessness

January 7, 2011

The latest snapshot of the American job market, released by the Labor Department on Friday, confirms what most ordinary people already knew without need of a government report: Little is improving quickly or broadly enough to dislodge the anxiety that has taken up long-term residence in many communities. The unemployment rate fell to 9.4 percent in December, from 9.8 percent the month prior. But that had little to do with people actually finding work, and much to do with the jobless simply giving up and halting their searches, dropping out of the statistical pool known as the labor force. A deeper dive past the headline numbers reveals a reality that ought to trigger national alarm but hasn’t for the simple reason that it is already embedded in the country we have unfortunately become: the Divided States of America. Among white people, the unemployment rate dropped in December to 8.5 percent — hardly acceptable, but manageable were the government spending more to expand a fraying social safety net and generate jobs. For black Americans, the unemployment rate was 15.8 percent. Professional economists will not pause for an instant at those figures. It is a truism that the black unemployment rate generally runs double the white one, and yet when did that become acceptable? How can there be so little discussion about a full-blown epidemic of joblessness in the African-American community, as if the commonplace incidence of despair — and, more recently, reversed progress — somehow amounts to old news? “Can you imagine any other group at that level of unemployment and the media dismissing it as not important?” the Rev. Jesse Jackson asked during an interview this week. He described deteriorating inner-city, predominantly-black communities in Chicago and Detroit. In New York, a recent study found that more than one-third of African-American men aged 16 to 24 were unemployed between early 2009 and the middle of last year. “These are the same areas that were targeted for foreclosure by the banks, through reverse redlining,” Jackson said, referring to the way subprime lending operations preyed with particular dispatch on minority communities. “These are the same areas that have less access to transportation, which makes it nearly impossible to get to where the jobs are. You are structurally locked out of economic participation and growth.” The picture becomes more vivid still using a broader Labor Department measure known as underemployment, which counts jobless people along with those who are working part-time for lack of full-time work, or who have given up looking for work but are eager for jobs. Among African-Americans, the underemployment rate was running just under 25 percent late last year, according to an analysis of government data by the Economic Policy Institute in Washington. That compared to a rate of about 15 percent for white Americans. Nearly 15 years have passed since the publication of “When Work Disappears,” a masterful book by sociologist William Julius Wilson describing in compelling detail the impact on working class African-American neighborhoods suffering large job losses: in a word, disintegration. Little has changed since then except for an acceleration of the slide. There is no magic bullet for urban strife in poor communities, but if you had to pick one thing that can fix a great deal in one shot, a paycheck is as good as it gets, as Wilson’s book makes clear. A job is a source of pride, a reason to get out of bed, an imperative to take care of one’s health, and — if the economy is functioning properly — a justification to keep going and strive for better. A job is reason to steer clear of drugs and alcohol, and an alternative to the risk of earning money through crime. A job allows households to function, keeping families together, and proving children with the support they need. When jobs disappear so, too, do these sources of social cohesion, these motives to avoid trouble, these reasons for navigating the commonplace difficulties of any human day. Anger builds, which can lead to violence. Economic necessity motivates people to look for creative ways to earn money, sometimes taking them outside the law. Wilson convincingly argues that morally loaded, often-racist depictions of inner-city black poverty have tended to distract many Americans from the single greatest factor behind the troubles that have claimed once-vigorous communities — the steady bleeding of decent paychecks. When Wilson’s book was published back in 1996, the black unemployment rate sat at just above 10 percent. By 2000, with the American economy in the midst of a historic boom, it had dropped to 7 percent. But by early last year — following eight years of lean job creation and then two years of the worst recession in a half-century — the black unemployment rate exceeded 16 percent, or 1 in 6. Drill deeper into the Labor Department data, and the numbers get more disturbing still. Among black men between the ages of 25 and 29, the unemployment rate was just under 21 percent in December. And that actually constituted an improvement from the 25.7 percent it reached in the spring of 2009, during the worst of the Great Recession. In short, over the last decade, most of black America has been effectively ensnared in an endless recession that became flat-out catastrophic when the rest of the county officially sunk into the downturn in the fall of 2007. Even among black college graduates, the unemployment rate sat at just under 8 percent in December — four times the rate in late 2006, back when the economy was still producing jobs. By contrast, the unemployment rate for white college graduates sat at 4.3 percent in December, roughly double the rate at the beginning of the recession. It is difficult to absorb these numbers without coming to a simple conclusion: In black America, a veritable depression is still unfolding, tearing at communities that had previously seen substantial progress, turning first-time homeowners into foreclosure victims and transforming proud college graduates into bewildered jobless people, unclear why their hard work and education have failed to translate into the step up they were supposed to in the movie trailer version of the American dream. And yet, the political system is busy with other things, such as how to blame union labor for local budget disasters — caused by financial services companies that pay their executives seven- and eight-figure sums — or how to cut the federal budget deficit by depriving people of health care. In Washington, the leadership of both parties seems stuck in the mode of trying to manufacture the illusion of a recovery — via photo ops at factories and pontificating about spending cuts — while doing little or nothing to bring a real recovery about. Meanwhile, whole swaths of the economy are falling away, going uncounted in the monthly Labor Department surveys and little-regarded by politicians. In the calculus of American power, just as in the reports used by our economic experts to set policy, it’s as if much of black America has simply ceased to exist.

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Storms Delay $1B In Retail Spending

December 29, 2010

ATLANTA — The blizzard that swept through the Northeast on Sunday and Monday delayed $1 billion in retail spending, according to research firm ShopperTrak, but won’t derail a holiday shopping season expected to be the best since 2007. The effect won’t be as bad as last year’s pre-Christmas snowstorm that similarly paralyzed parts of the East Coast. That cost retailers an estimated $2 billion, according to weather research firm Planalytics. About $10 billion in retail sales usually occurs Dec. 26-27, ShopperTrak says. Bad weather likely delayed about 10 percent of that. The storm’s effects weren’t enough to change ShopperTrak’s estimate for a 4 percent gain over last year in revenue for the Nov. 1-Dec. 31 holiday season. Retailers will still see much of the spending when shoppers return to stores as streets are cleared and transportation restored. This year’s storm cost retailers 11.2 percent of their foot traffic Sunday and 13.9 percent Monday, ShopperTrak estimates. The fact that the day after Christmas fell on a Sunday this year might have hurt sales a bit even where it didn’t snow, ShopperTrak founder Bill Martin said, because of local laws that limit or ban Sunday hours in some places. Dec. 26 will rank 10th-busiest day of the holiday shopping season, the firm estimates. Last year, it was second-busiest behind Black Friday. Black Friday was again the busiest shopping day this year, with $10.69 billion in sales. Coming in second was Dec. 23, as last-minute shoppers picked up $7.86 billion in gifts and other items and gave retailers a strong finish. Strong sales the week ending Dec. 31, which accounts for about 15 percent of total holiday spending, could make this year the best holiday season ever. Earlier this week, MasterCard Advisors SpendingPulse, another research firm, said consumer spending excluding autos rose 5.5 percent to $584.3 billion from Nov. 5 through Dec. 24, compared with the same period a year ago. SpendingPulse tracks all forms of spending, including cash. The total beat the 2007 record of $566.3 billion for the period, though adjusted for inflation, it is slightly below the record.

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The 14th Banker: Year-End Perspective on Corruption

December 27, 2010

Perhaps it is time to explain the tone of my holiday greeting, in which I expressed optimism. Happy Holidays to all. It has been an eventful year. This is the season of hope and, despite all the matters that we have criticized over this past year, I am full of hope. There are well-meaning people all around us. Those that are not well-meaning, are generally uninformed, misinformed, or unskillful in their thinking. All of these things can change. We are in an evolutionary process. At times it will seem like we are stepping back. Yet we are moving forward. While I have been enjoying the presence of friends and family and relaxing in the spirit and ambiance of the season, the media and blogosphere have continued to do heavy lifting.  We will get to that in a minute.  But first, my reason for optimism. Given the religious nature of Christmas itself, it is entirely appropriate to look to our spiritual traditions to consider the circumstances of our present day. The trend that encourages me has been a theme of all major spiritual traditions, which emphasize the ideas of “light” and “truth” as essentially redemptive. They are redemptive in our present day lives in two ways. The first is that the realization of truth is essentially healing inwardly (spiritual world). The second is that the truth moves us to action and provides impetus to heal ourselves and others outwardly (material world). And these two are synergistic. Inward strength enables outward action. (As an aside, I would invite readers to share along these lines from their spiritual traditions or personal reflections) So while I have rested, others have reported. The steady exposure of corruption in our system, the light that shines unwavering on the regimes of corruption, will have its effect. There is developing a common understanding that the system we have today is broken and that we must find the means to make it constructive.  Here are some of the worthy stories of the last 10 days. First off, on the theme of corruption, it would be silly to assume that the corruption we see in the financial system is anything other than a reflection of the corruption of power more generally. Here are two examples. In this first, it is reported that the revolving door between government and industry is as active in the realm of the military as in the financial realm. The Boston Globe highlights that the normal path for retiring senior military officers, whose pensions are already generous, is to go to work in influential and non-transparent ways for defense contractors. The Globe analyzed the career paths of 750 of the highest ranking generals and admirals who retired during the last two decades and found that, for most, moving into what many in Washington call the “rent-a-general” business is all but irresistible. From 2004 through 2008, 80 percent of retiring three- and four-star officers went to work as consultants or defense executives, according to the Globe analysis. The article goes on to illustrate how these retiring officers have inside tracks into the Pentagon and wield influence without disclosure of their financial conflicts of interests. This does remind me of one aspect of the banking business, which is that “Don’t Ask, Don’t Tell” is much more than a policy regarding gays in the military. It is the practice of people who know that there are ethical issues or conflicts of interest and consciously choose to do nothing about them because of mutual benefit. A second example of corruption generally is in relation to academia and industry.   This is a video interview so I can’t quote it here, but the gist is that economists that opine on regulatory matters, have undisclosed financial conflicts of interest with the companies that would be affected by regulation. Another outstanding piece from recent days is this written interview with Bill Black , from Parker and Spitzer. It is succinct and readable. The emergence of Black as a very articulate and visible critic of the culture of fraud is significant. One feature of our system of media is that for messages to get out, they have to be repeated over and over. Many academics do their research, publish a paper, perhaps write a book, and then their voice fades. Black is showing an endurance that provides hope that he can move the needle of perception. What is different about Black’s approach is that he is very clear and specific in his charges. He does not generalize. He is very specific about how certain frauds work. This will make general denials less effective. There was also a meaningful judicial ruling against Wells Fargo . Hat tip Naked Capitalism . What makes this ruling interesting is that although it set aside a minor part of the jury award, a $1.6 million issue, to be subject to a new trial, is that it was punitive as a result of the judge’s determination that the fraud was systematic. It is unusual to award the payment of the plaintiff’s attorney’s fees, or to order disgorgement of fees paid for services (the other component of the additional $15 million plus is interest on the $29.9 million). The basis for awarding attorneys’ fees? The bank is such a menace to society that having counsel root it out is a public service. From the  Minneapolis Star Tribune (hat tip reader Ted L): The judge said that the nonprofits’ lawyers, led by Minneapolis litigator Mike Ciresi, provided a “public benefit” by bringing the bank’s wrongdoing to light. Thus, Monahan said, the bank must pay the plaintiffs’ attorneys fees and costs, which Ciresi’s firm estimated at more than $15 million… Terry Fruth, a Minneapolis attorney who has been watching the case closely on behalf of his clients, said Monahan’s post-trial order could help other investors prove similar claims against the bank. “The judge didn’t just find that Wells Fargo acted with disregard to the rights and interests of the particular plaintiffs,” Fruth said of Monahan. “He said the way it ran the program was with disregard to the rights of the customers. … He has made a finding that is going to bind Wells Fargo in other cases.” The judge made very astute observations about how business works these days. Executives create the environment in which unethical business practices can flourish, but want to keep a level of plausible deniability. That is a pretense. Finally for today, this article about how the FinReg was effectively diluted. The source is a Barron’s article but Yves Smith provides the commentary. Here’s a quote to whet your appetite. But since there has been a singular lack of appetite to do adequate forensics into what caused the crisis, since it might prove to be embarrassing to people still in powerful positions, regulators can follow the inertial course of listening to the palaver that the financial services industry puts forward to allow it to continue looting. So back to my original premise, all this bad news is reason for hope, in that it shines light in dark, hidden places. This light will shape the common understanding, and the common understanding will shape future choices. However, it will be up to us to make those choices. If there is any unifying theme to these articles, it is that those in positions of power are not the ones that will support change in the system. Rather change in the system can only come through action on the part of the vast majority of citizens who do not have a stake in the status quo.

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Fantastic Friday: Will Christmas Eve Shoppers Set Spending Record?

December 24, 2010

NEW YORK — It’s Black Friday, The Sequel. Stores are rolling out deals and expect to be swimming in shoppers on Christmas Eve as stragglers take advantage of a day off work. For retailers, the last-minute rush caps the best year since 2007, and possibly ever. With Christmas falling on a Saturday this year, Friday is a holiday for most U.S. workers. That lets shoppers hit the stores first thing in the morning. “I’m calling it Fantastic Friday, because I really do think it’s going to be one of the busiest days of the year,” said Marshal Cohen, chief fashion industry analyst with researcher NPD Group. A strong Christmas Eve would round out a surprisingly successful holiday season for retailers. The National Retail Federation predicts that holiday spending will reach $451.5 billion this year, up 3.3 percent over last year. That would be the biggest year-over-year increase since 2006, and the largest total since spending hit a record $452.8 billion in 2007. A strong finish could even give 2010 the crown. While both are heavy shopping days, Christmas Eve draws a different breed of buyer than Black Friday, the day after Thanksgiving and the unofficial start to the holiday shopping season. “Those who get up and brave the cold on Black Friday are usually looking for hot items, not only to buy gifts but to score something for themselves,” said Kathy Grannis, a spokeswoman for the National Retail Federation. “They’re planners, and they map out what they want to buy.” Shoppers who come out on Christmas Eve, on the other hand, were either waiting for the biggest discounts or they didn’t have the money to spend earlier, she said. Or they just tend to dilly-dally. While many Black Friday shoppers relish the hunt, last-minute buyers are harried and focused on getting things done. And true to stereotype, they are mostly men, said Dan Jasper, spokesman for Mall of America in Bloomington, Minn. Accordingly, stores push men’s and women’s sweaters in their circulars, while shoes and children’s apparel take a back seat. Jewelry also tends to be a top last-minute gift item, though that category has been strong throughout the season. E-commerce has driven much of the holiday’s spending growth. For the season to-date, $28.36 billion has been spent online, a 12 increase over last year, according to research firm comScore. Online shoppers spent $900 million last weekend alone. Many people who postponed their shopping this year blame busy schedules. The number of hours U.S. workers are putting in at the office each week has been on the upswing since the official end of the recession in June 2009, according to data from the Bureau of Labor Statistics. That leaves less time for shopping during the week. Vivian Lowe, 34, works for an ad agency in Atlanta and didn’t start her shopping until Wednesday. “It just caught up with me this year,” she said. She spent Thursday at the Lenox Square Mall in Atlanta and plans to hit Target on Christmas Eve because she sees it as a one-stop shop. Procrastinators like Lowe shouldn’t hit too many snags. Store inventories are not as depleted as last year, when merchants scared about having too many leftovers saw some empty shelves near the end of the season. But shoppers are not seeing the 75-percent-off-everything fire sales that characterized the 2008 holiday. Still, many stores are offering discounts this week. Express’s store at the Manhattan Mall in midtown had a huge yellow sign in its storefront window promoting an “end of the season 50 percent sale” on selected items. Macy’s is offering 30 percent off some bags and jewelry, while the Gap is applying that markdown to everything in the store. At CVS, there are buy-two-get-one free deals on bath-and-body gift sets and discounts on a 7-inch LCD TV and DVD player combo. Ron and Lisa Johnson of Indianapolis came to Circle Center Mall Thursday morning just to buy boots for their 20-year-old daughter, Kaitlyn Shirar. Nearly four hours later, they sat on a bench with a pile of bags from Nine West, H&M and Forever 21. “We haven’t found anything that wasn’t on sale,” Lisa said. Retailers say shoppers have mostly stuck to a big lesson taught by the recession: using cash, not credit. Toward the end of the season, they pulled out the plastic a little more often, but that’s normal. Overall, analysts consider the increased spending a sign more consumers have paid down debt and have cash to spend. Besides sales, retailers are finding other ways to accommodate procrastinators. Many stores, including Best Buy Co., let shoppers order online and then pick up the merchandise at the store. Best Buy’s deadline to order on its website is 3 p.m. Christmas Eve, and most stores close at 6 p.m. Amy Adoniz, the store manager at Best Buy’s store in Union Square in Manhattan, said that as of midday Thursday, 16 people were in line to pick up items ordered on its website. 7-Eleven convenience stores, always handy in a pinch, will be open all day on Christmas and are expanding their gift-worthy offerings by stocking a broader selection of wines, hand-held games and stuffed animals. Toys R Us plans to keep its doors open until 10 p.m. Friday, but is taking a different tack from the discounters, raising prices on some popular toys to take advantage of shoppers’ desperation. It bumped up the prices of the Leapster Explorer hand-held learning device by $20 and the Nerf Stampede Blaster by $5, said Gerrick Johnson, a toy analyst at BMO Capital Markets. “Retailers are realizing that rather than give these toys away, they can actually make a profit on them,” Johnson said. If all else fails, shoppers will fall back on gift cards. Spending on the plastic vouchers is expected to reach nearly $25 billion this holiday season, 5 percent more than last year, according to the National Retail Federation. Michelle Jose, marketing manager for White Marsh Mall in White Marsh, Md., says that more than half of the mall’s gift card sales for the entire year are made in the last three days before Christmas and she expects “strong sales to finish up the holiday.” Ian McCarty, 26, who lives in Atlanta and works for Emory Healthcare, was finding good deals at Lenox Square Mall on Thursday, but had trouble finding the right sizes. He picked up a gift card at Gap and was on his way to Talbot’s to pick another one up for his mother. “It’s the easiest thing to do,” he said. ____ AP Retail Write Mae Anderson in Atlanta and AP Business Writer Tom Murphy in Indianapolis contributed to this story.

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Holiday Shoppers Sprint To End; Retail Revenue Up

December 23, 2010

NEW YORK — Holiday shoppers are racing to the end of the season at a more feverish pace this year, with retail revenue up 5.5 percent during the last weekend before Christmas. The figure, released by ShopperTrak on Wednesday, is a drastic improvement from the same weekend last year, when revenue dropped 6.2 percent because a big East Coast snowstorm closed malls and kept shoppers at home. This year’s improvement is especially encouraging for retailers, for whom a big weekend all but sealed a shopping season of healthy revenue gains. ShopperTrak reported shoppers spent $18.83 billion Dec. 17-19. That includes $7.58 billion spent on what retailers call “Super Saturday” – the Saturday before Christmas. The number of shoppers rose 3 percent over the weekend before Christmas last year. ShopperTrak expects retail spending to rise 4 percent for the holiday season. It fell 0.4 percent during the 2009 season. Anything over 4 percent is considered a healthy gain. The final days leading up to Christmas are important for retailers. Some do a third of their annual business during the season. The final countdown to Christmas is especially important. ShopperTrak estimates that the 10 days before Christmas usually make up 31 percent to 34 percent of holiday-season retail revenue. Consumers appeared to be in the mood to hit just one location for their shopping needs, with Thomson Reuters reporting that traffic at malls was higher on Super Saturday than a year ago. But ShopperTrak anticipates this Thursday will likely edge out Super Saturday to become the second-biggest sales day this season behind Black Friday, as last-minute shoppers scramble to pick up gifts. Black Friday sales were $10.69 billion, according to ShopperTrak. The Walking Co. store at Circle Centre Mall in downtown Indianapolis has seen a steady flow of customers. “We’re at least breaking even with where we were last year, if not better,” manager Robert Stapleton said. Recent data from MasterCard Advisors’ SpendingPulse, which tracks spending across all transactions including cash, shows Americans were spending more on clothing, luxury goods and even furniture during the period from Oct. 31 through Saturday. Online spending has also been strong. As of Friday, shoppers have spent $27.46 billion online since Nov. 1, up 12 percent from a year ago, according to research firm comScore Inc. Improved spending is also a sign that the economy may be regaining its footing. The Commerce Department reported earlier this month that November retail sales rose 0.8 percent, marking the fifth straight monthly gain. Department stores led the way with a 2.8 percent gain, the biggest for this category since a 3 percent increase in November 2008. Retailers are expected to have a strong December, with Thomson Reuters predicting that revenue at stores open at least a year will be up 3.6 percent on average for the month. Discount stores like Target Corp. and BJ’s Wholesale Club Inc. are expected to do well, along with teen clothing retailers like Abercrombie & Fitch Co. and Zumiez Inc. This figure is a key gauge of a retailer’s health because it measures results at existing stores instead of newly opened ones. ___ AP Business Writer Tom Murphy contributed to this story from Indianapolis.

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Marian Salzman: Tapping Consumer Minitrends: Predictions for 2011

December 14, 2010

This is the 11th in a series of 12 posts expounding on the 2011 forecasts in the annual trends report from Salzman, president of Euro RSCG Worldwide PR and an internationally respected trendspotter. How does a trend get legs? Some trends start small and grow elephantine as if by force of nature, like the rise of women in power and the strength of Asia, both unstoppable trends here for the long term. Others, especially the ones that really spell opportunity for innovators, can need nudges — as well as that special brand of foresight that always looks prescient in retrospect. The people who succeed in today’s fast-paced world are those who have their eyes on the future and on such opportunities. Microtrends: The Small Forces Behind Tomorrow’s Big Changes , the book by Mark Penn, worldwide CEO of Burson-Marsteller, who writes a weekly “Microtrends” column in The Wall Street Journal and was the pollster who identified soccer moms in 1996, is perhaps the definitive source on minitrends, but he didn’t see that the U.S. election was one big trend: Change. That said, minitrends are exactly what communications people can tap to generate news, to be in and of newsmaking. A trend’s growth factor depends, like all things do, on timing: Is the right technology in place in the right hands for a tech trend to take off? Or, if it’s a new product or service, has it hit the price-point sweet spot in such a way as to get a handle with the right number of the right people? Here are some minitrends I’m calling out for 2011: The rise of African consumers. The continent of Africa has more than 1 billion people, with 35 democracies (compared with nine a decade ago). And as an “emerging market,” investment bankers are bullish on it , citing the IMF’s forecast for a growing GDP in sub-Saharan Africa–home to 84 percent of the continent’s population–at 5 percent this year, accelerating to 5.5 percent in 2011. Havas Worldwide, Euro RSCG Worldwide PR’s parent, has invested in South Africa, such as with a sports and entertainment marketing arm , and, indeed, South Africa is increasingly seen as an entry point for doing business on the continent in various industries, but the trend will be pan-African . MIT’s Technology Review reported that cell phones are one technology that have migrated well to Africa despite the poor infrastructure and political instability that have been barriers in the past. The report described customers using them for applications including digital banking and payments. Leading to another minitrend… Money-transfer services. This is mobile banking, aka mBanking or SMS banking. A BusinessWeek report (in 2007) quoting forecasts from Nokia Corp. estimated worldwide mobile subscriptions to grow to 5 billion by 2015, when two-thirds of the people on earth will have phones. Clearly, while mobile banking spells convenience in the developed world, in the developing world it can mean the difference between banking and not banking . TMCnet has cited reports that emerging markets will collectively compose about 60 percent of the mobile banking market share in 2013. Gavin Krugel, director of mobile banking strategy at the GSMA , “goes a step further,” says Mint.com, claiming that ‘…one billion consumers in the world have a mobile phone but no access to a bank account.’” The GSMA Development Fund has started Mobile Money for the Unbanked , and its intention is to deliver banking services to those who live under U.S.$2 per day. Mobile health care. Our colleagues at Havas Health, Larry Mickelberg in particular, tipped us off to this trend. Vodafone, which Technology Review cited as having big expansion plans for Africa, estimated in 2009 at the Mobile World Congress that there are 2.2 billion mobile phones in the developing world but only 11 million hospital beds. The U.N. Foundation reports on its initiatives at the intersection of mobile tech and health care. In South Africa, for example, Project Masiluleke’s AIDS hotline through SMS showed a 350 percent call volume increase (click on the report’s Current Impact & Future Needs link). This all demonstrates — as I said in a previous trend — the strong benefits for traditional businesses that adopt social-good profits into their mission. For health nuts in the developed world, medical apps for smart phones — did you know you could track your blood pressure with your iPhone or Android ? — are the latest craze. A smarter way to read. Mobile readers are, of course, here to stay, with reports that the iPad tore out of Apple stores at a rate of 8.8 per hour on the recent Black Friday. Estimates are calling for about 7.1 million iPads to be sold this year, doubling in 2011 and nearly tripling in 2012. E-readers are already great ways to read magazines and newspapers, but new free apps such as Flipboard , which put people’s SoMe shares into magazine format (flipping pages) for easy readability, make these devices smarter and more ergonomic all the time. Jeff Bezos told TechCrunch that dropping the price of the Kindle — whose sales beat hardcover book sales at Amazon by a rate of 143 to 100 — to $189 saw sales triple. So even though conversations might continue about people “preferring” real books and magazines to e-readers, great interfaces such as The New York Times app — and one the Times touted, Reuters News Pro — make reading even complex articles onscreen perfectly comfortable. There’s every gain in portability, too; they don’t even have to be removed from carry-on luggage in the airport security line. Small-scale solar. Even though the recession has hit big solar projects in the developed world, in emerging markets I forecast small-scale solar energy growing in leaps. Renewable Energy World magazine is strong on technologies such as micro-inverters, which eliminate the need for a central inverter in a solar installation. Given that in 2009, it was reported that nearly 44 percent of the population in the developing world lacks electricity, it is also estimated that by 2020 developing countries–especially in Asia, Africa and Latin America — will represent huge markets for solar. The challenge of making such installations cost-effective, experts argue, lies also in getting these countries to adapt (and funding widespread initiatives to this end) to energy-efficient lightbulbs and other efficient appliances so that outdated household gear doesn’t put undue power demands on a system that indeed promises to change the face of the developed world’s energy-use patterns. As ever, technology is a key driver in minitrends; the developing world and mobile tech will prove to be a new direction for opportunities in the near future. Previously: “Mad as Hell–and Only Getting Madder” “Talk to the Hands” “Net Gain” “Public Mycasting System” “Booting Up” “Yes, We Can…Reinvent Ourselves” “Reinvention, Part II” “Separated at Worth” “Gender Bender” “Who’s in Control?” Tomorrow: Wrapping Up

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Video: Fink Builds Wall Street’s Brain as BlackRock Rises

December 10, 2010

Dec. 10 (Bloomberg) — Bloomberg Businessweek’s Sheelah Kolhatkar discusses Larry Fink, chairman and chief executive officer of BlackRock Inc. and the outlook for the company. BlackRock is the world’s biggest asset-management firm, a $3.45 trillion powerhouse that is Wall Street’s largest trading partner. Kolhatkar speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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Andrew Hamblen Promoted to Senior Vice President and General Manager of Ameristar Casino Resort Spa Black Hawk

December 1, 2010

LAS VEGAS, NV–(Marketwire – December 1, 2010) – Ameristar Casinos, Inc. ( NASDAQ : ASCA ) today announced that Andrew Hamblen, a gaming industry professional with nearly 25 years of leadership experience, has been promoted to Senior Vice President and General Manager of Ameristar Casino Resort Spa Black Hawk .

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Video: Strasser Expects More Consumers to Spend This Holiday

November 26, 2010

Nov. 26 (Bloomberg) — David Strasser, an analyst at Janney Montgomery Scott LLC, discusses so-called Black Friday retail sales and the outlook for consumer spending during the holiday season. Strasser speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (This is an excerpt of the full interview. Source: Bloomberg)

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Video: Margolis Expects `Black Friday’ Sales to Beat Estimates

November 26, 2010

Nov. 26 (Bloomberg) — Jay Margolis, a Bloomberg Television contributing editor and a former retail executive, discusses the outlook for so-called Black Friday retail sales. Margolis talks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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Mike Green: Saving Ebony-Jet: One Million Facebook "Likes"

November 26, 2010

You’re invited to participate in a bold experiment to help preserve an important piece of Black American history. It’s simple, yet, in the 21st century, simplicity has become the most powerful tool of innovation. You can help preserve an iconic symbol of Black American achievement by clicking the Facebook “like” button at the top of this blog post. Then tell your friends and family to do the same. Alternatively, you can leave a supportive comment below. It’s for a good cause. An important cause. There’s no Million Man (or Woman) March. There’s no need to brave frigid temperatures and inclement weather. You don’t even have to contribute money. Step 1: Click the Facebook “like” button or leave a supportive comment (or both). Step 2: Send this blog post to your friends and family, asking them to do likewise. Step 3: Revel in the knowledge that you have helped preserve an iconic symbol of African American media history. Saving Ebony-Jet Headquarters The Johnson Publishing Company — owners of the iconic African American media brands, Ebony and Jet magazines — has sold its building headquarters, located at 820 S. Michigan Avenue in Chicago. Columbia College recently purchased the 110,000 square foot historic headquarters of Ebony-Jet for an undisclosed amount. The Johnson Publishing Company is planning to move its media operations to a new location within the next 18 months. Headquarters of the Johnson Publishing Company as featured in Ebony Magazine , September 1972. Click here for full photo gallery . Preserving the iconic headquarters of Ebony-Jet has become a common focus of numerous debates across the landscape of Black America. Reactions to the sale have ignited emotion-filled discussions. Some believe a part of Black American history is being sold. Others, like Eric Easter , the former vice president of digital and entertainment for Ebony-Jet , believe the history lives on within the brand, not just within the building. Easter argues: “For anyone decrying some great loss of history, I would argue that the history is secure. More important than Johnson Publishing owning the building or residing in it, is that the building even existed for its time. It stands as a major achievement. Historians and preservationists should be more concerned that the landmark does not get torn down and that its story be told prominently and correctly.” Columbia College is planning to honor the Johnson family with some tangible recognition in the building that pays homage to past achievements. That’s a respectful transition and end to a bygone era. But we (as in you and I) can do more. Mr. John H. Johnson (left) meets with the building’s architect, John Moutoussamy. Click here for full photo gallery . City and Media: Chicago’s Black Founders For those who are unfamiliar with Ebony and Jet magazines, and have little knowledge of the Johnson family’s media empire, the words “iconic” and “historic” may seem a bit far-fetched. To the uninitiated, the widespread emotional reverberations may seem like over-inflated reactions to sensible decisions made by Linda Johnson Rice , Chairman of Johnson Publishing Company and daughter of John H. Johnson , the company’s founder. Linda Johnson Rice, chairman and CEO of Johnson publications including Ebony and Jet magazines. Outside of the spotlights of White media and the common knowledge of many White Americans, the building at 820 S. Michigan Avenue was instantly adopted in 1972, into the minds and hearts of millions of Black Americans, as a proud symbol of Black achievement in the face of institutionalized racial oppression and degradation. The building stands as a monument of one Black family’s success in a White-dominated media industry. It stands tall on prime real estate in Chicago, where White financiers had such a strong foothold, that the last Black man to build a business structure on such coveted land was Jean Baptiste Point du Sable , the city’s first permanent resident in 1779 . When Black media were reporting the facts regarding lynchings, Jim Crow, redlining, disparities in public education and numerous insights into the infrastructure of White power, throughout every sector of society, most White media ignored such stories. Black media have historically reported the stories most White media would not report. Still, when the issue of race relations is raised today, the dismissive reflex in pointed palms of raised White hands reveals the relative small amount of knowledge about Black America that permeates White America. Today, millions of minds remain closed to any information that threatens to destroy pristine paradigms constructed by White media over the past century. Johnson’s 11-story media office tower in Chicago was completed in 1972, eight years following the Civil Rights Act of 1964 and just four years in the wake of the assassination of Dr. Martin Luther King Jr. The lobby of Ebony-Jet headquarters at 820 S. Michigan Avenue in Chicago. Click here for full photo gallery . The Ebony-Jet headquarters in Chicago became a symbol of achievement in spite of the stumbling blocks and closed doors that threatened every step of the process. In like manner to the monumental reaction to the election of President Barack Obama, the establishment of a Black-owned building in the business sector of Chicago’s famed loop in the early 70s became a source of pride for Black Americans who seldom saw much in media of which to be proud. Symbol of Black Pride and Black Beauty Model Charmayne Caldwell poses for photographer Isaac Sutton in the photography studios at the Ebony-Jet headquarters in 1972. Click here for full photo gallery . In the 20th century evolution of media, the Ebony-Jet empire was a media brand that reached all of Black America. It chronicled our achievements. It heralded our heroes. It turned a spotlight upon our issues, our families, our relationships … our daily lives. In Ebony-Jet , we saw beautiful Black people. White media showcased beautiful White people. It lauded White heroes. It proclaimed White America as trustworthy, wealthy and strong. White media held White America up as a symbol of freedom, justice and moral leadership for the world to admire and emulate. Neither before nor after the Civil Rights Movement did White media see our daily struggles or achievements. But Ebony-Jet did. Muhammad Ali with his wife and family were featured in the September 1972 issue of Ebony. Click here for full photo gallery . In the pages of Ebony-Jet , Black families saw scholars, university and corporate leaders, politicians, college and pro athletes, Hollywood celebrities and extraordinarily talented musicians … all of whom had Black faces. Many of those important faces and stories didn’t exist outside of the lens of Ebony-Jet . The magazines held up mirrors of positive images of Black life in America and we stared into our own reflections and smiled. In the face of rampant racial discrimination on every level — political, legal, health, financial, employment, entrepreneurship, education, military — Black America looked for something to make us smile. Ebony-Jet did more: It made us proud. Mrs. Eunice W. Johnson stands in her office, which showcases some of the many pieces of African art that exist throughout the building. Click here for full photo gallery . Giving Thanks Today, this iconic media brand is transitioning from 20th century to 21st century operations. A part of that requires it to shed some of the heavy costs associated with the 20th century. The sale of the Ebony-Jet headquarters building, of which the JPC only uses 40 percent of available space, is a done deal. But this is the 21st century. The JPC is considering preserving the historic building as it is today, inside and out, in digital 3D. The final product will provide a navigable, interactive 3D replica of the historical décor and artifacts within the building that can be accessed online. The JPC employees enjoyed complete meals in the building’s cafeteria for only $1 a day. Click here for full photo gallery . There are costs associated with such technology, of course. But, there is no cost for you to support the digital preservation plan. Just click the Facebook “like” button at the beginning of this post or leave a supportive comment below. Few opportunities come along in our lives in which we can make such a profound difference with the click of a mouse. This moment is your opportunity to make a difference and say thanks to Ebony-Jet for the support it has given us for generations. If you support the idea to preserve the JPC headquarters as a digital 3D replica, click the Facebook “like” button or leave a supportive comment. Then spread the word. It’s never been easier to participate in preserving Black American history. And we cannot expect anyone but us to care enough to preserve what is important to us. Let’s push the Facebook “like” number to one million or more. Let’s show our appreciation to Ebony-Jet for its work in preserving our history by supporting the preservation of its history.

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Thanksgiving Sales Bring Shoppers, Grumbles

November 26, 2010

NEW YORK — Not all Americans tucked into turkey with their families on Thanksgiving. Some were out shopping, hitting sales ahead of the crowds expected Friday. After a year of cautious spending and worry over an uncertain economy and high unemployment, more stores this year extended hours into Thanksgiving Day, a day when stores are traditionally closed. Many grumble about the relentless march of commercialism creeping into the holiday. But at least some shoppers took the bait. While crowds appeared relatively light compared with the weekend ahead, the extended hours drew in overseas visitors, those who have to work Friday and some who couldn’t resist a good deal. Sears, Kmart and some Sports Authority, Gap, Old Navy and Banana Republic stores were among those open Thursday. At an Old Navy in Lutherville, Md., Brenda Tarver, 65, a retired postal employee from Baltimore, was dragged out of the house by her daughters, but was finding good deals on clothing. “They’ve got good prices and a variety of items. A lot of things are 50 percent off,” she said. Willy Gerelbest, 45, a counselor from Brooklyn, was shopping at Kmart in New York for sneakers on sale for $9.99. “I saw the advertising and just wanted to check it out,” he said. “Tomorrow I have to work.” David Friedman, president of marketing for Sears Holdings Corp. said the decision to open 7 a.m.-noon on Thanksgiving Day stemmed from positive response to a similar “early Black Friday” sale in November, as well as success with Kmart, which Sears also owns and has been open on Thanksgiving for 19 years. Workers will earn holiday pay and still be home in time for a Thanksgiving meal, Friedman said. At the Sears store at the Mall of America in Bloomington, Minn., the largest U.S. shopping and entertainment complex, sales were fueled by a charity walk at the mall. The walk – and a good sale – drew Helen Schultz, of White Bear Lake, Minn. She bought a 19-inch RCA LCD HDTV for $129.99, saving $70. But she said wouldn’t have bought it Thursday if she hadn’t been there for the charity walk. “I don’t think shopping should be done on Thanksgiving,” Schultz said. “But they need to make money.” Toys R Us CEO Jerry Storch said the company decided to open at 10 p.m. Thanksgiving Day because reaction was so positive to the stores’ midnight opening last year. Before that, stores opened at 5 a.m. on Friday. He expects brisk sales of hot toys like Santa-ma-jig, a green and red singing doll. “Customers lined up at 8 p.m. on last year. They wanted us to open earlier,” he said. A similar promotional blitz greeted online shoppers Thursday, though the holiday isn’t a bonanza there, either. Last year, consumers spent about $300 million online on Thanksgiving, compared with $887 million on Cyber Monday, according to comScore. According to Akamai Technologies, which tracks traffic to 270 retail sites, traffic peaked at 11 a.m. and was up about 14 percent from Wednesday. John Thompson, senior vice president and general manager of Best Buy Inc.’s website, said this year the company reached out to its frequent online shoppers and gave them early access to deals. “Thanksgiving Day is a day when we are seeing more and more consumers choose online as a place to begin their research and actually transact,” he said. With nearly 15 million unemployed in the U.S., some store workers were grateful for the holiday pay or extra time off that comes with working on a holiday. Bryce Humerick, 21, of Towson, Md., a sales associate at the Old Navy store in Lutherville, said he was happy to be making time-and-a-half. “I don’t mind,” he said. “My Thanksgiving dinner isn’t until later.” Not everyone was so pleased. In the hardware department of the Mall of America’s Sears, John McDonough had volunteered to work, but he bemoaned the increasing commercialization of the holiday season in general. “It’s a crying shame,” he said. “What has corporate America done to us?” ___ Sarah Brumfield in Lutherville, Md., and Steve Karnowski in Bloomington, Minn., contributed to this report.

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Black Friday 2010: Holiday Shopping Season Kicks Off

November 26, 2010

After weeks of “Black Friday” sales pitches, the real thing is finally here. Retailers are ushering in the traditional kickoff of the U.S. holiday shopping season on Friday with expanded hours, deep discounts and online deals to draw bargain-hungry shoppers. In a bid to grab shoppers earlier, a number of stores including Old Navy, Toys R Us and Sears opened on Thanksgiving Day. Toys R Us was counting on getting an extra boost by opening 24 hours straight, starting at 10 p.m. on Thanksgiving. The crescendo follows a weeks-long push to woo shoppers. Many stores had trotted out the “Black Friday” label on sales as far back as October. The shopping strip in Nanuet, N.Y., was quiet on Thanksgiving night until you approached Toys R Us. The parking lot was full, as were the neighboring lots, and thousands of customers waited in the frigid rain to get in the store. Alexander Sallahian, 20, of Nanuet, came to get an iPod 32G for $300. It would come with a $50 gift card, which he planned to use for gifts for Christmas. “I like the idea of getting more bang for the buck,” he said. Sheena Spaugh, a 26-year-old academic adviser from Cockeysville, Md., was picking up items for herself at the Old Navy in Lutherville, Md., on Thursday because Friday is her birthday. But she plans to head to Target on Friday to pick up $3 DVDs. Not in her plan: firing up the computer to look online. “I like the hustle and bustle of shopping,” she said. Retailers are hoping to capture others’ dollars online. Wal-Mart and Target were among a gaggle of retailers that dramatically stepped up deals on their websites Thursday, hoping to lure online shoppers stuffed with turkey. The fierce battle for shoppers’ wallets promises savings for those willing and able to buy amid an economy that’s still worrying many. The good news is that retailers are heading into the season with some momentum after a solid start to November. Shoppers who can afford it are buying more nonessentials, like jewelry and luxury goods. That’s helping to lift their spirits about the holiday season, which is expected to generate revenue gains modestly higher than a year ago. “It’s a dogfight between retail companies,” said Chris Donnelly, a senior executive in consulting group Accenture’s retail practice. “This year is the first time that there’s a little more money in the marketplace so they’re being more aggressive about getting the last dollar. At the end of the day, they’re going to outweigh people who are pulling back.” Still, nearly 15 million are unemployed, and concerns about job security still cloud consumer confidence. Spending may be picking up but has not returned to pre-recession levels. So, retailers are pushing deals on basics as well as offering discounts on more deluxe items, from bigger flat-panel TVS to more elaborate play sets. Kohl’s, which planned to open at 3 a.m. Friday, one hour earlier than a year ago, is promoting diamond bracelets and diamonds heart pendants for $99 each, down from $500 or $575. The store is also offering 50 percent off all toys. Thanksgiving weekend is huge for retailers. In recent years, Black Friday has been the busiest shopping day of the year, according to data from research firm ShopperTrak. But it doesn’t necessarily provide a complete forecast of holiday sales. In fact, shoppers seem to be procrastinating more every year, so the fate of the holiday season is increasingly down to the last few days. Retailers do study buying patterns for the weekend to discern shoppers’ mindset. This year, that means taking the measure on their willingness to spend just a little bit more. Last year, the Thanksgiving shopping weekend accounted for 12.3 percent of overall holiday revenue, according to ShopperTrak. Black Friday made up about half of that. ___ AP Business Writer Rachel Beck in Nanuet, N.Y., and AP Writer Sarah Brumfield in Lutherville, Md., contributed to this report.

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Video: Duffy Says Retail `Is Back,’ Sees Holiday Sales Rising

November 25, 2010

Nov. 24 (Bloomberg) — Robert Duffy, senior managing director for FTI Consulting Inc., Melissa Otto, director of TIAA-CREF Investment Management, and William Angrick, chief executive officer of Liquidity Services Inc., talk about the outlook for Black Friday and U.S. holiday retail sales. They talk with Jon Erlichman and James Ellis on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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