boston

CoStar’s People of Note (Oct. 10-16)

October 15, 2010

This week’s People of Note includes the following markets: Atlanta, Birmingham, Boston, New York City, Orlando, South Florida, Southwest Florida and Tampa/St. Petersburg. ORLANDO, SOUTH FLORIDA, SOUTHWEST FLORIDA, TAMPA/ST. PETERSBURG CBRE Names…

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Harvard Business School Receives $50M Gift From Indian Conglomerate

October 14, 2010

BOSTON — Harvard Business School has received a $50 million gift from India’s Tata Group, the largest gift from a foreign donor in the school’s 102-year history. Harvard says the gift from the international conglomerate will fund a new academic and residential building on the business school’s Boston campus for its executive education programs. Ratan Tata, chairman of Tata Sons Ltd. and a graduate of the school’s advanced management program, made the announcement Thursday with business school Dean Nitin Nohria and Boston Mayor Thomas Menino. Harvard hopes to break ground next spring for the new Tata Hall.

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Lease Up: McDermott Will To Take 165,000 SF on Capitol Hill

October 12, 2010

McDermott Will & Emery LLP signed a letter of intent with Clark Enterprises and Boston Properties to occupy 165,000 square feet of Class A, office space on Capitol Hill in the nation’s capitol. The letter indicates that the McDermott law firm will…

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Lease Up: McDermott Will To Take 165,000 SF on Capitol Hill

October 12, 2010

McDermott Will & Emery LLP signed a letter of intent with Clark Enterprises and Boston Properties to occupy 165,000 square feet of Class A, office space on Capitol Hill in the nation’s capitol. The letter indicates that the McDermott law firm will…

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Marcie Pitt-Catsouphes, Ph.D.: As Skilled Workforce Ages, Flexibility is Key to Business Success

October 8, 2010

During National Work & Family Month this October, many employers will be tempted to ask, ‘why now?’ With unemployment near record highs and even successful companies struggling to keep workers on the payroll, it’s natural to think this is not the right time to focus on the added benefits of workplace flexibility. But for older workers–and for their employers–there is no other time but now. The aging of the baby boomer population is poised to reshape the workforce in ways not seen since the widespread inclusion of women in the workforce in the latter half of the 20th century. Older workers now make up a larger part of the workforce than ever before (31.2 percent of working Americans are over the age of 55), and more and more people are working past the traditional retirement age. Personal economic hardships caused by the recession will almost certainly ensure this trend continues over the next few years. But just as older workers have become more dependent on continued employment than in the past, employees have become dependent on the skills of these older workers. A new series of reports from the Sloan Center on Aging & Work at Boston College examines the implications of the aging workforce across a broad range of industries. What we found in every case is that despite high unemployment, companies are more dependent than ever on their aging, experienced workers. There is, of course, no labor shortage at the moment, but many industries report a shortage of skilled labor. Employers don’t hire ‘just anyone’ to fill skilled positions; they rely on people with the requisite experience and competencies. In many cases these skilled workers are older workers, and as the economy recovers in coming years, employers will only grow more reliant on their existing, experienced workers. For example, manufacturing and health care are two fields dominated by older workers who possess very specific skill sets. Because many jobs in these sectors simply cannot be filled by workers without the proper skills and training, companies are dependent on keeping many of these aging employees past traditional retirement age. And as the economy picks up and demand for skilled workers grows, employers will be scrambling to stem turnover, attract replacement workers with the necessary competencies, and facilitate knowledge transfer from one generation to the next. So keeping many of these skilled employees in the workforce will be crucial, not only to workers and their families, but to employers, too. In order to retain these workers longer and to recruit adequate replacements, employers have to start thinking beyond compensation. Workers at all career stages report they want increased flexibility, but this desire is especially strong among older workers, who are particularly attracted to jobs that allow for flexible work arrangements and time off for family commitments. In rigidly organized industries such as manufacturing, embracing changes like flexible work arrangements will be crucial if companies hope to recruit and retain the best employees in coming years. And because there is no one-size-fits-all solution, companies need to start experimenting and see what works today. However, this looming crisis is not limited to fields dominated by older workers. Sectors currently staffed predominately by younger workers–such as retail and accommodations/food services –will see a change in the demographics of their workforce as the population ages in coming years. These fields are currently marked by high turnover and high rates of job dissatisfaction. Employees already experience challenges recruiting and retaining workers with the skills and commitments needed to perform their jobs effectively. As the workforce ages and demands for flexibility grow, it will get even more difficult for companies in these fields to retain good workers. The jobs as structured today are simply not tenable to many older workers. Employers who respond to their workers’ desires–not just for increased compensation, but for more flexible workplaces, too–are the companies that will succeed in the 21st-century economy. While the state of the economy today makes it somewhat difficult to imagine, in the very near future companies will have to do more than provide substantial compensation and benefits to keep skilled workers. By considering flexible work arrangements, expanding talent management strategies, and involving employees in decision making now, companies can prepare to meet the needs of tomorrow’s workforce. But we have to start today.

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Hancock Tower Sale Reflects Growing Investor Demand for Office Trophies

October 6, 2010

Boston Properties Inc. (NYSE: BXP) agreed to buy Boston’s 62-story John Hancock Tower, New England’s tallest building, from a joint venture between affiliates of Normandy Real Estate Partners and Five Mile Capital Partners for $930 million, or about…

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Video: Vogelzang Sees `Weakness’ in U.S. Stocks for `Few Weeks’: Video

October 4, 2010

Oct. 4 (Bloomberg) — Michael Vogelzang, chief investment officer at Boston Advisors LLC, talks about the outlook for U.S. stocks. Vogelzang also discusses the outlook for this week’s jobs report and earnings from financial companies. He talks with Carol Massar, Matt Miller, Dominic Chu, and Adam Johnson on Bloomberg Televion’s “Street Smart.” Jamie Tyrrell of Group One Trading also speaks. (Excerpt. Source: Bloomberg)

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Leo W. Gerard: No Fluke: Republicans Support Off-Shoring Jobs

September 30, 2010

Like the clear results on a pH test strip, the vote in the U.S. Senate this week on the Creating American Jobs and Ending Off-Shoring Act showed Republicans’ true color: Red. Red for China. Or Mexico. Or Indonesia. Or anywhere multi-national corporations get tax breaks for exporting American jobs. In this test of loyalty, every Republican in the Senate voted for corporate greed over American workers. No fluke, this is a GOP pattern. The red party has consistently sided with giant corporations to the detriment of the American economy and American workers. In voting against health care reform, Republicans chose giant health insurance corporations over uninsured Americans. In opposing financial reform, Republicans embraced Wall Street over the taxpayers who bailed out the big banks and don’t want to do it again. Republicans vainly attempted to rationalize those votes as opposing government regulation. There’s no regulation issue in the Creating American Jobs and Ending Off-Shoring Act. That Act would have removed tax incentives the U.S. government gives corporations to close domestic factories, fire American workers and move production overseas. And, conversely, the Act would have instituted tax cuts for corporations that return foreign employment to U.S. soil. Every Republican in the Senate voted against the Act. They voted to continue forcing Americans to give tax breaks to corporations that ship jobs overseas during the worst recession since the Great Depression. The GOP said it is right and proper for U.S. citizens to subsidize corporate killing of American manufacturing. And Republicans said it would be wrong to do the opposite — to use tax breaks to encourage corporations to restore off-shored jobs to the U.S. Democrats, whose first priority is American workers, are pushing a 17-bill Make it in America plan. The Creating American Jobs and Ending Off-Shoring Act is part of that effort to bolster domestic industry and employment. With joblessness stuck at 9.6 percent and with the U.S. trade deficit destroying or displacing 5.6 million jobs — 70 percent of them good-paying manufacturing jobs — in just one year – 2007, Democrats developed this plan to preserve American industry and jobs. Recent surveys of likely voters suggest the Democrats’ Make it in American program is exactly what Americans want and believe the country needs. In a Wall Street Journal/NBC News poll released earlier this week, 86 percent of respondents cited corporate off-shoring of American jobs as the primary cause of the country’s continuing economic distress. Similarly, a bi-partisan polling team that conducted a survey of likely voters for the Alliance for American Manufacturing in April found large majorities believe manufacturing strength is crucial to U.S. economic security and that the government should fortify American industry. These voters told the pollsters that they believe America no longer leads the world in manufacturing but could again with proper support. That can-do-it attitude is realistic. Already some manufacturers are on-shoring . General Electric is moving production of its energy-efficient water heaters from China to the United States. Caterpillar and NCR, a technology company, are doing the same. A survey in June found 21 percent of North American manufacturers brought production into or closer to the United States in the previous three months and another 38 percent planned to research such a move. Manufacturers gave USA Today numerous reasons for this repatriation. Chinese wages and shipping costs have risen. They cited poor quality foreign manufactured goods; theft of intellectual property; long product delivery times interfering with response to consumer demand, and benefits from providing engineers easy access to assembly lines. The trade publication, Supply Chain Digest , quoted two experts in an August story about the on-shoring trend: “George Stalk, a consultant at Boston Consulting Group, has led research efforts showing the inventory benefits for high margin, fashion-oriented goods from bringing production at least back to North America almost always trump the value of lower manufacturing costs in Asia. Those benefits come from both not losing sales from being out of stock and not getting stuck with obsolete inventory that a company can’t sell or must mark down dramatically.” And, the story quoted Jeremy Leonard, a consultant for Manufacturers Alliance/MAPI: “A lot of companies who have gone there to take advantage of cheap labor are starting to tell us that if you (calculate) total cost and don’t just look at wages, it’s actually not worth it.” Democrats sought to nurture and expand the repatriation trend. But like numerous Make it in America bills passed by the U.S. House, the Creating American Jobs and Ending Off-Shoring Act died at the hands of Senate Republicans. Democrats had the majority with 53 votes for the measure, but Republicans, as they have all year, blocked passage by using a filibuster to require a super-majority of 60. The next test for Republicans will occur Nov. 2. In the mid-term election, Americans red-in-the-face angry at the GOP for extending tax breaks to corporations for expatriating American jobs have the opportunity to show Republican politicians what it feels like to lose a job.

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Fed Officials Clash Over How To Fix The Economy

September 29, 2010

WASHINGTON — Divisions within the Federal Reserve over how to pump up the economy and lower unemployment came into sharper view Wednesday. Three Fed officials squared off in competing speeches over how much help would come from one likely next step – buying more government debt. Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, argued that such an effort may not help the economy much. Charles Plosser, president of the Federal Reserve Bank of Philadelphia, made a similar point. But, Eric Rosengren, president of the Federal Reserve Bank of Boston, said Fed policymakers must do what they can to bring some more relief. The Fed delivered a strong signal last week at its meeting that it was prepared to act if the economy weakened. High on the list of unconventional tools is buying more government debt, known as quantitative easing. The goal is to force down rates on consumer and businesses loans even more to get Americans to boost their spending. Doing so, would help the economy. In their speeches, Kocherlakota and Plosser expressed skepticism that quantitative easing would drive down rates nearly as much as such efforts did during the recession and financial crisis. Because financial markets are in better shape now than during the crisis, the difference between the rates on super-safe Treasury securities and rates on other consumer and business loans has narrowed. “I suspect that it will be somewhat more challenging for the Fed to impact them,” Kocherlakota said. A new debt-buying program “would have a more muted effect,” he concluded. Plosser said: “Monetary policy is not a magic elixir that can solve every economic ill.” However, Rosengren said buying more government debt could benefit the economy, and therefore should be considered. “It is important that policymakers be open to implementing policies” that are aimed at lowering unemployment and preventing inflation from getting too low, which could put the country at risk of deflation, he said in a speech in New York. Many economists believe the Fed is likely to announce action when it wraps up a two-day meeting on Nov. 3, the day after the congressional midterm elections. Although the Fed has yet to coalesce around a specific plan, one idea put forward by James Bullard, president of the Federal Reserve Bank of St. Louis, is gaining closer scrutiny. Under Bullard’s approach, the Fed would initially buy a moderate amount of government bonds – perhaps in the range of $100 billion or less. After that, the Fed would review the economic climate at each meeting and decide whether it needs to buy more government bonds to bolster the recovery. That would allow the Fed to avoid making the kind of upfront commitment to buy government debt on a large scale in the trillion-dollar range. It also could ease concerns among some Fed officials about carrying out the type of large-scale interventions seen during the recession. The Fed ended up buying a total of roughly $1.7 trillion of mortgage securities and debt, as well as government bonds, during the recession. Another big buying binge would complicate the Fed’s efforts later on to unwind all its stimulus. There are also concerns that another large-scale effort could spark inflation later on or trigger a wave of speculative buying that could create bubbles in the prices of bonds or commodities or other assets. On Wednesday, the three Fed presidents in their speeches weighed the pros and cons of buying government debt in general, rather than the specific Bullard proposal. Rosengren is currently a voting member of the Federal Open Market Committee – the group, including Fed Chairman Ben Bernanke, that makes decisions on interest rates and other policies that influence economic activity. Kocherlakota and Plosser will both be voting members next year, although they participate in the Fed meetings and debates over policy moves. Kocherlakota spoke in London, while Plosser spoke in New Jersey.

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Chip Conley: Apple & The Oakland A’s: They’re Both Playing Moneyball

September 28, 2010

As we round the bases for the last two weeks of Major League Baseball, it’s worth noting that big league managers may know more about 21st century leadership than Fortune 500 CEO’s, with the possible exception of Steve Jobs. Remember Michael Lewis’ bestseller Moneyball about how Oakland A’s General Manager Billy Beane remade the game of baseball by looking at new metrics as a means of determining which players had the greatest impact on his team’s success? Like Steve Jobs’ Apple in the battle against Microsoft, The A’s had high odds against them with a team payroll that was just one-third of what a bigger market team like the New York Yankees could pay their players. So, Billy Beane reevaluated the conventional wisdom that stolen bases, runs batted in, and batting average were the most important statistics to consider when selecting players for a team. Doing rigorous statistical analysis — and using a certain amount of gut wisdom — Beane was able to show that little-considered stats like on-base percentage or slugging percentage were bigger indicators of offensive success than some of the historical numbers that most teams used. The Oakland A’s soon leveraged their intellectual competitive advantage by selecting bargain players who helped them in a series of improbable playoff runs. Sadly for the A’s, the rest of the league caught up and teams like the Boston Red Sox parlayed these “Sabermetrics” — what Beane called these unique numbers — into the World Series. The A’s were back where they started, a perennial also-ran. Most business leaders are using 20th century metrics to create 21st century success. We were taught to “manage what we can measure” and, generally, what’s most easily measurable are the more tangible aspects of life. In business, this translates to metrics like profitability and cash flow — clearly important, but outputs in actuality, not the inputs that create success in the modern company. Today’s most valuable business assets often don’t appear on a balance sheet, an accounting relic that is 500 years old. In our knowledge economy, it’s not the tangible factories or equipment that creates sustainable success, it’s the intangibles like innovation, employee engagement, brand reputation, and customer evangelism that drive market performance. Stock analysts suggest that 80% of Apple’s value doesn’t appear on its balance sheet. The balance sheet is the output, just like the baseball standings are the results of how you’ve invested in your inputs. We’re living in a new era. And yet, we’re using the old metrics. Nearly two-thirds of the world’s GDP now comes from the intangible service industry — as opposed to tangible industries like manufacturing or agriculture — where competitive advantage isn’t about who’s the biggest, but who’s the smartest. Savvy business leaders are learning how to measure those intangible assets like loyalty and reputation — there are even social media benchmarks for your company now — so that they can modernize what they’re managing. What are the inputs or “Sabermetrics” in your business that you’ve been ignoring? Fortunately, Hollywood is a step ahead of most business leaders, as they realize that Moneyball defines our 21st century world of underdogs looking for a leg up. You’ll see Brad Pitt playing Billy Beane next year when Sony Pictures brings this epic story of “what counts” to theaters around the world. Let’s hope a few business execs sneak off on their lunch hour to learn this leadership lesson on the big screen.

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Video: Analyst Jackson Sees RIM PlayBook Priced at $300 to $350: Video

September 28, 2010

Sept. 28 (Bloomberg) — John Jackson, an analyst at CCS Insight, discusses Research In Motion Ltd.’s new tablet computer, the Blackberry PlayBook. The device has a 7-inch (18-centimeter) screen and won’t be available in the U.S. until early 2011. The company hasn’t provided a price for the device. Jackson speaks from Boston with Deirdre Bolton on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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Video: Kotlikoff Says Not Saving Makes U.S. `Poor Kid on Block’: Video

September 24, 2010

Sept. 24 (Bloomberg) — Laurence Kotlikoff, an economics professor at Boston University, talks about the U.S. savings rate and consumer spending behavior. Kotlikoff speaks with Deirdre Bolton on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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Video: Mort Zuckerman Discusses Economic Performance of Obama: Video

September 10, 2010

Sept. 10 (Bloomberg) — Mort Zuckerman, chairman of Boston Properties Inc., talks with Bloomberg’s Julie Hyman about the economic performance of the Obama administration. (This is an excerpt of the full interview. Source: Bloomberg)

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Stephen Elop, Microsoft Exec, Replaces Kallasvuo As Nokia CEO

September 10, 2010

HELSINKI — Nokia Corp. is replacing CEO Olli-Pekka Kallasvuo with top Microsoft executive Stephen Elop as the world’s top handset maker aims to regain lost ground in the fiercely competitive smartphone market. Elop, head of Microsoft’s business division, has held top posts at Juniper Networks Inc., Adobe Systems Inc., Macromedia Inc. He takes over Sept. 21, the company said Friday. Analysts welcomed the choice of the 46-year-old Canadian, who has worked closely with Nokia at Microsoft and Macromedia with developing the Symbian software platform for Nokia phones and delivering Flash player memory capabilities on Nokia devices. “On the software side he will be an asset to the company,” said Neil Mawston from Strategy Analytics. “The handset market is computerizing, so having an idea where the mobile handset software is heading in the future will be beneficial.” The company’s share price jumped almost 4 percent to euro8.04 ($10.22)in mid-afternoon trading in Helsinki. With Nokia stock down more than 20 percent this year due to two profit warnings, Nokia veteran Kallasvuo had come under increasing pressure amid speculation he would be ousted. Jorma Ollila, chairman of the board and former CEO credited with developing the Finnish company to an international leader in the mobile sector said Elop has “a strong software background and proven record in change management” to help Nokia meet new challenges. In 2005, Elop became CEO of Macromedia, maker of Flash software, just months before Adobe bought the company. Flash allows people to use their Web browsers to watch Internet video and animation, and the software is now increasingly used on mobile phones. He is a computer engineering and management graduate from McMaster University in Hamilton, Ontario, and also served as a systems executive at Boston Chicken, Inc. “My job is to take this organization though a period of disruption,” Elop told reporters. “Nokia has many great assets in smartphone arena. It’s about the entire experience, it’s about the platform, it’s about the applications, it’s about the services.” Elop said a key focus would be “to ensure and deliver that end-experience, not only what you think of as a device but all of the supporting elements.” The 57-year-old Kallasvuo, who joined the company in 1982, will leave as president and CEO on Sept. 20. He will give up his seat on the board of directors with immediate effect and be replaced by Elop, who heads Microsoft’s business division. Kallasvuo will continue to chair the board of the Nokia Siemens Networks unit in a non-executive capacity, the company said. Elop made a striking difference to Kallasvuo’s stiff press meetings made in halting English. He discussed ice hockey – close to Finnish hearts – and even jested about Finnish licorice candy he didn’t like. “It seems that Nokia is now ready for an international charismatic leader,” said Microsoft Finland CEO Ari Rahkonen. “He is an international leader with broad international networks, a very charismatic performer and very keen on technology.” The appointment would appear to be a logical choice for Nokia,which increasingly has turned to providing more services for handset users such as music and video downloads, navigational maps and games, in a global online market it estimates will reach euro100 billion this year with some 300 million active users by 2011. Also, Elop been an integral part of the growing cooperation between Nokia and Microsoft in recent years. In 2009, Nokia launched its first laptop, a netbook with a 10-inch screen that runs on Microsoft’s Windows 7 software. Previously, access to some of Microsoft’s most popular Web services, like Hotmail and Windows Live Messenger, have been built into Nokia phone models. Although it is still the world leader in handset sales – with a 33 percent market share – Nokia has been slow at detecting the latest trends, like folding clamshell models and touch screen handsets. Markets have for long been expecting something fresh and new from the company that once had the innovative edge in the industry but that has not happened since Kallasvuo took over in 2006. He has also been unable to tackle problems in the North American market, the company’s worst performer, despite a pledge to make it a top priority. Kallasvuo’s departure was hinted at as early as July. When announcing the company’s second-quarter earnings report, he conceded that rumors that he might be replaced were “not good for Nokia, and in one way or other we should be able to solve the problem to end the speculation.” Nokia also has predicted that while global mobile market will grow 10 percent this year its own growth will remain flat and its ailing network sector, Nokia Siemens Networks – a joint venture between Nokia Corp. and Siemens AG of Germany – continues to see revenue fall. Nokia, based in Espoo near Helsinki, employs 130,000 people worldwide. ____ Online: http://www.nokia.com

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Richard Herman: Time to Think Like an Immigrant

September 9, 2010

Carmen Castillo once fit the popular image of the daring entrepreneur. She arrived from Spain young, single and ambitious. Knowing nothing about computers, Castillo launched her high-tech consulting agency from a one-bedroom apartment, with little more than a phone book and chutzpah. Her humble start-up, Superior Design International, grew into a global consulting agency with more than $200 million in annual revenues. While young dreamers like Castillo helped to launch the New Economy, a new generation is taking the driver’s seat. Today’s entrepreneurs are more likely to bring maturity and experience to a start-up, twinning hard-earned skills with bravado. Research by Vivek Wadhwa, one of the leading chroniclers of the New Economy, found that the majority of entrepreneurs today are middle-class, middle-aged and married. It’s the mini-van set who are taking career leaps and chasing dreams, especially in high-growth industries. Wadhwa’s research team surveyed 549 company founders in a broad range of industries and found that they launched their companies at an average age of 40. Most came to entrepreneurship from the middle to lower middle class, married (70 percent), and with children (60 percent). Nearly half had worked for a company for at least 10 years, but sometimes more than 20, before striking out on their own. The findings “contradict some prevailing stereotypes,” the researchers concluded. “Entrepreneurs typically are well-educated and experienced…they largely come from the existing workforce and not from college.” This new generation of entrepreneurs listed a keen idea and a desire to get rich among their leading motivations. No doubt the Great Recession will encourage others to follow their path. Of the 8 million-plus jobs lost to the recession — in fields like manufacturing, real estate and financial services — many are not coming back, economists warn. Suddenly, joining the likes of Bill Gates or Sergey Brin takes on a new allure. There may never have been a more tempting time to plunge into America’s start-up culture. All the more important, then, to look before you leap. Entrepreneurship is fraught with anxiety and challenges, many of them unforeseen. Add the extra burden of family responsibilities, and the new entrepreneurs face new pressures. Where can they look for guidance, for an example to follow? How can they succeed at a quest that requires not only the right idea but the right attitude? They can start by studying the New Economy pioneers. They can start by thinking like an immigrant. In researching our book, “Immigrant, Inc.,” we met dozens of people who shaped a dream into a business success, despite having to cross a cultural gulf to do it. They were part of the wave of high skill immigrants who fell into the New Economy like seeds into the good earth. As Wadhawa and others have documented, immigrant founders were behind more than half the high technology companies to rise in Silicon Valley and about a quarter of the high-tech companies nationwide. In learning their stories, we found that the high-achievers typically parlayed immigrant skills into entrepreneurship skills. To succeed in business, they tapped personality traits that propelled them to immigrate, starting with dreaming big. “First of all, you believe in the American dream thing,” said Ric Fulop, one of the founders of Boston battery-maker A123 Systems. “You get here and you say, ‘OK, I have to make some happen.” Immigrant entrepreneurs know well the kinds of pressure that middle-aged entrepreneurs will face. Castillo held an expiring visitor’s visa when she launched her company in the early 1990s. To obtain an immigrant visa, she needed a job. Her start-up had to succeed. She became a highly-motivated, one-woman sales force. “The time was crushing for me,” she explained. “I wanted to stay in America.” She and others say they were often aided by an advantage unique to outsiders. Looking at the landscape with fresh eyes, they could spy opportunity the natives missed. To grow Transtar Industries into the largest transmission parts supplier in the world, Monte Ahuja introduced just-in-time delivery to neighborhood repair shops. Before him, “Everyone just kept doing things the same old way, waiting four days for parts.” Immigrants also benefit from cultural cohesion, what an experienced professional might call a contacts list. They use family to staff the business. Cultural kin become mentors, customers and suppliers. And they reach out to strangers. Time and again, the immigrant entrepreneurs expressed surprise at how often people helped them to keep going with an encouraging word, a key contact–until success became almost inevitable. But beware. Now closer to the age of a typical entrepreneur, Castillo has not escaped the pace she set at 21. “When you run your own business, it’s 24 hours a day, non stop,” she said. “At the top of Mt. Ranier, I’m thinking of my business. Once you start, there’s no way out.” Herman and Smith are co-authors of “Immigrant, Inc.: Why Immigrant Entrepreneurs are Driving the New Economy,” published by John Wiley & Sons, 2009. www.ImmigrantInc.com

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Rep. Luis Gutierrez: Credit Reports Only Where Credit Is Due

September 1, 2010

Almost every day I hear from constituents who are struggling to find work, keep a roof over their heads or pay their medical bills. These daily struggles are commonplace across the country. Now there’s another phenomenon that adds insult to injury: in the midst of an economic crisis, employers are increasingly using credit reports to deny jobs to applicants. In this economy, using someone’s financial struggles to deny them a job isn’t just unfair to individual job seekers; it hurts the economy and our ability to recover. On August 10, the Chicago Tribune argued in an editorial against a new Illinois law preventing companies from using credit reports in hiring by stating that, “experts say there is evidence that workplace theft and fraud correlates with the financial distress indicated by bad credit” and that there is no downside to using credit reports to determine whom to hire. I couldn’t disagree more. I’m willing to bet that Bernie Madoff had a sterling credit report, right before he was arrested for perpetrating one of the largest financial frauds in American history. I am proud to be the lead co-sponsor of the Equal Employment for All Act (H.R. 3149), introduced by Congressman Steve Cohen (D-TN), which will ensure that unfair credit checks not hurt job-seekers and the economy by keeping qualified people out of work. A recent survey by the Society for Human Resource Management found sixty percent of employers are using credit reports on at least some applicants, up from just thirty-five percent in 2003. Employers justify using them because they supposedly measure one’s character . But here’s the fundamental problem: for a majority of people, poor credit doesn’t stem from irresponsibility or bad decisions, but rather from life circumstances and bad luck. And the problem is getting worse; 43.4 million people — 1 in 4 Americans — have credit scores that mark them as poor credit risks for lenders and now this may affect their job prospects, too. According to the Federal Reserve Bank of New York, the percentage of consumers with collections on their credit reports has doubled in the past decade. Let’s take the case of Debra Banks, a woman from Hawthorne, California who has been looking for a job for over a year. Debra has years of experience, stellar references, and a certificate in accounting. However, she has been rejected from several jobs due to her credit report that lists a series of medical bills that are in dispute. She was even denied a temporary job she had previously held — and performed with distinction — because the employer had since adopted a credit check policy. Debra is not alone: 60 percent of personal bankruptcies are linked to medical debt. Are these people really less likely to do their jobs well? Credit checks in employment also reinforce patterns of discrimination in American society. According to one Texas study, African Americans and Latinos have credit scores that are 5% to 35% lower than those of whites, due in part to predatory lending, foreclosures, unequal educational opportunities, and the historical wealth divide. This means that when employers check credit, Latinos and African Americans are usually starting with a deficit and are put at a disadvantage, raising serious civil rights concerns. Even TransUnion, the credit reporting company that has fought hardest against regulation of credit checks, has admitted that, “At this point we don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.” So if credit checks reinforce discrimination, don’t accurately measure financial responsibility, and don’t dependably predict job performance, why are so many employers using them? The answer is not altogether clear, but we do know that the multi-billion dollar companies that create and sell credit reports are heavily invested in marketing them to wider and wider audiences. This includes insurance companies, hospitals, landlords, and now, employers. I fully expect credit reporting companies to lobby against our federal bill as they have against bills at the state level. However, as more Americans find out about how unfair it is to others and how unfair it could be to them, the chorus of voices opposed to using credit reports in hiring will grow. Already, organizations that have led the fight against employment discrimination — UNITE HERE!, the Lawyers Committee on Civil Rights, the NAACP, National Council of La Raza and the National Organization for Women, among others — support our bill. On Monday, I held a town hall in Chicago that was attended by hundreds who came from as far away as Detroit, Boston and L.A. to express their concerns about this insidious employment practice. We heard time after time stories of discrimination in employment that only reinforced the necessity of passing this legislation. It renewed my resolve and commitment to working with Rep. Cohen and the supporters of this legislation to get this legislation passed this fall. Our bill is an important step in ensuring that a widely used and unfair measure of creditworthiness plays no part in the hiring process or in preventing industrious Americans from contributing to our economic recovery. Luis V. Gutiérrez represents the Fourth Congressional District of Illinois and is the Chairman of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit.

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The Most Educated Metro Areas In The U.S.: Richard Florida

August 30, 2010

Last Friday, my list of America’s Brainiest Cities ran over at The Daily Beast. Boulder topped the list, which comprised a mix of larger knowledge-intensive metros like Washington, D.C., Boston, Silicon Valley, San Francisco, Austin, and Seattle, and college towns like Ithaca, Charlottesville, Madison, Iowa City, and Durham, North Carolina, among others.

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Real Estate Boom-Time Won’t Be Returning Anytime Soon

August 23, 2010

Hey, kids! Were you hoping that one day, buying a house would once again yield the astounding level of wealth-by-appreciation that powered the housing boom of the past decade? Well, you’d better get yourself an alternate plan. Per the New York Times : Housing will eventually recover from its great swoon. But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg. That’s the news, from “analysts,” who have rather bearish things to say about the future of the housing market, including this little gem from Dean Baker, who “estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up.” And yet, hope springs eternal, especially is we define “hope” as “pure, irrational stupidity.” In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade. The truth of the housing market tells a different story: That’s from James Kwak at The Baseline Scenario, who points out : …I don’t think it’s correct to say that an era is over-an era when housing appreciation was the key to the economy. The chart above shows simply that that era never existed; housing was flat for a long time, and then there was a bubble. Instead, we had the illusion of an era of housing appreciation, produced mainly by leverage and price illusion. For every homeowner who made a killing because she got a fixed-rate mortgage in 1970, there was a new family that couldn’t afford a house in 1980 because interest rates were too high, or a savings and loan that failed because it was weighed down by those fixed-rate mortgages. I think that maybe people should hope for a return to boring stability of the last half of the twentieth century, instead of the massive misallocation of economic resources that has given America hundreds of vacant housing subdivisions. [Would you like to follow me on Twitter ? Because why not? Also, please send tips to tv@huffingtonpost.com -- learn more about our media monitoring project here .]

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Joan Williams: The Gender Pay Gap Grossly Underestimates Women’s Economic Inequality

August 20, 2010

The gender pay gap is standard measure of women’s economic inequality. At the dawn of second-wave feminism, it was 59 cents: women earned 59 cents for every dollar men earned. Today it’s up to 77 cents, according to the National Committee on Pay Equity. That’s progress, right? Here’s even more rosy news: women without children now earn over 90% of men’s wages. So maybe it is time to stop worrying about women and economics. Not so fast. Let’s start with the 90% statistic, which describes childless women at age thirty. Conservatives like to point to that one, concluding that what ails mothers is not discrimination but their own choices. In fact, I have argued, what the 90% statistic really means is that women, if they want equality, should plan to die childless at thirty. Such women have earnings nearly as high as men’s because most have not hit either of the two major forms of workplace gender bias. The single strongest bias is the maternal wall. Motherhood triggers powerful assumptions that mothers are less competent and committed to their jobs. “I had a baby, not a lobotomy,” protested a Boston lawyer, voicing the experience of many who find that, upon their return from maternity leave, they are given less work, no work or dead-end assignments. The resulting bias is a powerful drag on women’s prospects: mothers are 79% CHECK less likely to be hired, 100% less likely to be promoted, offered an average of a whopping $11,000 less in salary, and held to higher performance and punctuality standards than men, according to a study by Shelley Correll and co-authors. Most women at age thirty haven’t hit the other major form of gender bias either: the glass ceiling. Glass ceiling bias reflects, first, that qualities associated with leadership–assertiveness, self-confidence, directive behavior — are linked with masculinity. So women who exhibit them often are seen as socially clueless. To compound the problem, glass ceiling bias also means that women often have to prove themselves over and over again before they are even considered for leadership positions. Contemporary studies by social psychologists show that the glass ceiling is alive and well. So the claim that fact that childless women at age thirty make nearly as much as men does not prove that women have gained equality. Neither does the gender pay gap. Although it is standard measure of women’s economic equality, that statistic grossly overestimates women’s economic equality. Why? Because it compares men who work full time with women who work full time. This is an accurate picture of men, but it is an extremely partial description of women. Fully one-quarter of employed women work part time. The penalties associated with part-time work are an important contributor to women’s economic inequality. The penalty for working part time in the U.S. is enormous: seven times as high as in Sweden, and twice as high as in the U.K., according to Janet Gornick and Marcia Meyers. A recent report by the Joint Economic Committee documented that two-thirds of part-timers are women, and that part-timers in sales earn only 58 cents on the dollar, as compared with full timers. The last time I looked, when one compared all employed women with all employed men, including part-timers as well as full-timers, women only earned 59 cents for every dollar earned by men. Now that’s a sobering statistic. The old-fashioned gender pay gap statistic embeds the assumption that it is somehow “natural” and uncontroversial to impose sharp penalties on those who don’t work “full” time. But what, after all, is “full” time? As Alice Kessler-Harris pointed out long ago, its definition has changed a lot. The one thing that has remained constant is that “full time” has always been defined as the amount of time a man typically works. From the start of the Industrial Revolution until today, men have been able to work more hours than women outside the home because they work fewer hours inside it. And women still do twice as much housework, and four times as much routine housework, as men, according to Suzanne Bianchi and her co-authors. They also do three hours of child care for each hour men do. Of course, women could just stop changing the diapers, doing the laundry, cooking the meals. But no one wants them to, because that kind of unpaid work is every bit as crucial for sustaining a productive economy as paid work is. So it’s time to document, and to challenge, the highly artificial penalty imposed on anyone who does not work a full time schedule. The recent report by the Joint Economic Committee is a good first step. The second crucial step is to change the way we measure the gender pay gap, and to compare employed men and women, rather than restricting the analysis to full-timers. Only then can we get an accurate picture of the yawning gap between the earnings of men and those women. This piece originally was published in On The Issues :

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Highmount Capital to Open Amsterdam Office – Investment Advisor

August 20, 2010

Highmount Capital to Open Amsterdam Office Investment Advisor Highmount Capital, a multi- family office based in New York and Boston, plans to open an office in Amsterdam by September and to add offices in London and …

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Target Political Giving ‘A Debacle’ Says Target Institutional Investor

August 20, 2010

MINNEAPOLIS — A few Target Corp. and Best Buy Co. institutional shareholders weighed in Thursday on the flap over the companies’ political donations in Minnesota, urging the boards of both retailers to increase their oversight of campaign contributions. Walden Asset Management and Trillium Asset Management Corp., both of Boston, and Bethesda, Md.-based Calvert Asset Management Co. filed shareholder resolutions with both companies. Together, the three firms control less than 1 percent of each company’s outstanding shares — 1.1 million Target shares worth $57.5 million and 344,000 Best Buy shares worth $11.3 million — but they are moving the debate over the political giving to a new arena. Target gave $150,000 and Best Buy $100,000 to a business-focused political fund helping a conservative Republican gubernatorial candidate in Minnesota, triggering a national backlash from gay rights groups and liberals. The companies made the donations after a recent U.S. Supreme Court ruling freed them to spend corporate funds on elections. The candidate, state legislator Tom Emmer, opposes gay marriage and other rights for same-sex couples. “A good corporate political contribution policy should prevent the kind of debacle Target and Best Buy walked into,” said Trillium vice president Shelley Alpern. “We expect companies to evaluate candidates based upon the range of their positions – not simply one area – and assess whether they are in alignment with their core values. But these companies’ policies are clearly lacking that.” The shareholders said the donations don’t mesh with corporate values that include workplace protections for gay employees and risk harming the companies’ brands. Walden senior vice president Tim Smith said such giving can have “a major negative impact on company reputations and business.” The Target resolution urges the board to review the effect of future political contributions on the company’s public image, sales and profitability and to consider the cost of backing a candidate whose politics conflict with the company’s public stances. Spokeswoman Amy Reilly said Minneapolis-based Target had nothing to add to previous statements on the matter, including an apology from Chief Executive Officer Gregg Steinhafel. A spokeswoman for Richfield, Minn.-based Best Buy didn’t immediately respond to a message. The three investment companies together submitted the resolution to Target, while Calvert and Trillium filed the Best Buy shareholder proposal. One of Trillium’s clients, the Portland, Ore.-based Equity Foundation, divested a small Target holding of 170 shares on Wednesday.

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Richard Zombeck: Massachusetts Passes Cornerstone Homeowner and Tenant Protection Bill

August 12, 2010

Massachusetts is once again leading the pack in protecting consumers by passing legislation to protect families from getting thrown out of their homes. ” An Act to Stabilize Neighborhoods ” has been two years in the making and was sponsored by Senator Susan C. Tucker, an Andover, MA Democrat. She filed the bill two years ago after hearing about evictions of tenants in her district who were ravaged by foreclosures. The bill was unanimously approved (with some minor amendments) by the Senate in April and by the House last week. On Saturday, Governor Deval Patrick signed the bill in Brockton, MA – a city that’s seen 2,500 foreclosures since the economic downturn. The State Banking Commission will be responsible for fine tuning much of how the bill is implemented, which in many states could mean the end of the homeowner. Massachusetts however has proven to be fairly diligent when it comes to protecting the consumer. Here are some of the major elements of the bill: The law encourages banks and homeowners to work out a loan. Banks that do not negotiate to modify the loan in good faith will have to wait five months to foreclose as opposed to the previous 90 day waiting period. Tenants who rent homes that become subject to a foreclosure will be protected against no-fault evictions. Encourages redevelopment of foreclosed properties by providing a local option to exclude nonprofits from property taxes during the term that the nonprofit rehabilitates the home and converts it into affordable housing. Criminalizes mortgage fraud. Requires mortgage counseling for low income seniors in order to receive a reverse mortgage. The provision does not take effect until August, 2012 to ensure that there is sufficient counseling capacity. Loan modifications have been the source of endless hardship and frustration for homeowners. Recent articles have made it painfully clear that HAMP has been used by banks and servicers as a means to suck money out of already cashed strapped homeowners with no real hope of help. NPR recently ran a story about Fannie Mae using HAMP to their own advantage, ” and according to Caroline Herron, a longtime Fannie Mae executive who left the agency before returning as a consultant on the HAMP project, Fannie Mae ran HAMP to benefit its own bottom line, not to help troubled borrowers ,” the story reads. In July a Bank of America analyst went so far as to say that HAMP had an “implicit goal” of making liquidations orderly, according to a recent Huffington Post article . In other words, HAMP was nothing more than a tool to allow banks to stall foreclosure while still making money as not to flood the market with inventory. Somehow, according to the analyst who wrote the report, the purpose of HAMP (or Making Home Affordable ) was to help banks better foreclose on families. Since it would appear that the objective is, in most cases, to foreclose, this bill will hopefully give homeowners, at the very least, ample time to get a lay of the land while negotiating to keep their home. Banks and mortgage servicers in Massachusetts aren’t too happy about the new bill. Their complaint of course is that the bill could slow down their ability to throw people out of their homes and sell the property. Mark Rodgers, Citi Mortgage’s spokesman told The Boston Globe, “We have a responsibility to recover the property either for ourselves or the investor-owner of the mortgage, so it can be marketed and sold promptly.” This is slightly contradictory to a comment Rodgers made on a blog post claiming that Citi has helped 990,000 homeowners since 2007. Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association, told the Boston Globe that they were shocked at how quickly the bill was passed this week – a bill that was two years in the making. He also said lenders fear the law will drag out the foreclosure process for months. “This is a very difficult bill for the industry,” Cuff said. And if that wasn’t enough he added, “This bill is all geared for the consumer protection side.” The bill is a good starting point. Its strength is in the protection for renters who end up, as far as lenders are concerned, as collateral damage and an inconvenience in foreclosures. Tenants can no longer be arbitrarily evicted without cause, as was common practice for many foreclosing financial institutions. As for homeowners struggling with mortgages, in order to foreclose in less than 150 days, the lender is required to file an affidavit stating that they met with the homeowner over the phone or in person, the time and place of that communication, parties participating, relief offered to the borrower, a summary of the creditor’s net present value analysis, and certification that any modification or option offered complies with current federal or state law or policy. “Our goal is to get borrowers and lenders to the table to save those loans that can be saved,” Senator Tucker told the Boston Globe in April. The loan modification offer would have to comply with accepted federal or state modification standards, including participating in the Home Affordable Modification Program. The more common and preferred by servicers in-house modifications are not considered acceptable. This is crucial, because when servicers create their own modification programs they write their own rules and don’t have to bother with the pesky guidelines. In the case of my mod for example, Ocwen Financial Corp. increased the original principal by $15,000 (basically starting from scratch with a generous tip), they charged off $12,000 to the IRS (I have yet to be told why), and the paperwork and accounting practices are so convoluted that it would take a team of legal experts and CPAs to decipher it. Mediation is conspicuously missing from the bill and would help alleviate some of the anxiety that homeowners feel when being railroaded by a bank. On the other hand if the mediators are trained by the banks and mortgage brokers, homeowners will get shafted. Of course mediation costs money and bills are harder to pass when they have a price tag. The bill also criminalizes mortgage fraud, punishable by fines and imprisonment. The number of violations that turned up on my mortgage and paperwork alone could more than cover the cost of a few mediation sessions, so maybe that’s something to work towards. The bill was two years in the making and involved an impressive list of groups and organizations that banded together to get it passed — they are listed at the end of this post. This bill and its overwhelming acceptance by the legislature will hopefully serve as an inspiration and model to other states as a way to help homeowners who are trying to stay afloat. Sean Caron, a lawyer with Citizens Housing and Planning Association said, “What’s been most impressive to me through this entire process is that this was the result of a lot of different grass roots and advocacy groups working together. And that it is possible to make a change that will help people.” The banks have shown the amount of clout they have with Congress and have been allowed to run amok with the lives and finances of families for too long. In this case at least, the people and organizations of Massachusetts have put some rules in place that may not level the playing field, but it will make it harder to bulldoze. To read stories from homeowners or to submit your own go to www.shamethebanks.org The Organizations that made the passing of this bill possible are: Citizens Housing and Planning Association, Massachusetts Alliance Against Predatory Lending, City Life/Vida Urbana, Massachusetts Association of Community Development Corporations, Planning Office of the Archdiocese of Boston, Chelsea Collaborative, Brockton Interfaith Community, Merrimack Valley Project, Neighborhood of Affordable Housing (NOAH–E. Boston), Greater Boston Legal Services, Harvard Legal Aid Bureau, Massachusetts Law Reform Institute, Greater Four Corners Action Coalition, Boston Community Capital, Unitarian Universalist Church of Bedford, Boston Tenant Coalition, Boston ABCD,Emerging Leaders Program at UMass-Boston, UMass-Boston Center for Social Policy, Metropolitan Boston Housing Partnership, Massachusetts Catholic Conference, Chelsea Neighborhood Developers, Lawrence Community Works, Oak Hill CDC, Central Massachusetts Housing Alliance, HAPHousing, WATCH CDC in Waltham, Unitarian Universalist Social Action Network, JALSA, Massachusetts Communities Action Network, Lawyers Committee for Civil Rights, ARISE for Social Justice/Springfield, Lawrence Community Works, Community Labor United, NE Conference of the NAACP, Mass. Jobs With Justice, Coalition for Social Justice, National Lawyers Guild, Charles Hamilton Institute for Race and Justice, Green Rainbow Party, Chinese Progressive Association, Arlington Community, Mass. Advocates for Children, Boston NAACP, New England United 4 Justice, H.O.M.E, VLP, Union of Minority Neighborhoods, Mass. Coalition for the Homeless, National Consumer Law Center, United Auto Workers.

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Dan Dorfman: Wait Till 2012, Or maybe 2013

August 11, 2010

It’s the time-worn battle cry of the sports losers: Wait till next year! That, in fact, is the wail we may soon be hearing from two athletic greats–Tiger Woods and Roger Federer. Look for a similar cry, one from Wall Street, at least as far as economic forecasters go, but with a very significant variation: Wait till 2012! Worse, that may have to be qualified with a maybe. Call it a long overdue date with the harshness of economic reality. Or as one former Federal Reserve governor recently told a money management giant in Boston: “Up from here right now is fantasy. It’s down or if we’re lucky, sideways.” His remark zeroes in on a growing and painful recognition, notably that the widely projected spirited recovery at this stage is largely a function of hope than reality. In other words, the economic bulls were touting their buoyancy from a mythical place called kookoo-land. But the real world is that we now face the prospects, at best, of slowing growth. Or more likely, as some others see it, another year and-a-half of economic anemia, a renewed economic downturn or maybe that dreaded double-dip recession. The numbers tell the sad story. In recent months, expectations were widespread that the economy would exhibit more pep, in turn enabling GDP growth to run slightly above 3% in both 2010 and 2011. No more. Those predictions are rapidly going the way of the hula hoop. Now, the forecast is increasingly under 3% growth, if not under 2% or even 1%. Why the downgrades? Because Wall Street’s economic fraternity has been confronted by a rising number of unpleasant surprises–the latest and most worrisome being disappointing second quarter GDP growth of 2.4% (which may well be lowered to around 2%) and a shortfall in new private job creations in July. As a result, they’re addressing a growing number of economic soft spots by cutting their forecasts in increasing numbers. In effect, they’re reversing the unfounded outburst of optimism we’ve seen in recent years. In mid-2008, for example, amid a rapidly deteriorating economy, the battle cry among economists was wait till next year. But by year-end 2008, it was obvious that was nonsense and the new cry became wait till the second half of 2009. That, too, turned out to be a pipe dream. Now, though, with the second half of 2010 increasingly suspect as is a 2011 recovery, given the failure of government stimulus to revitalize the sagging housing and jobs markets and encourage Americans to spend more, the growing message now is wait till 2012. One fella sounding that battle cry is Scott Brown, chief economist at Raymond James Financial, who has just chopped his economic projections for the next couple of quarters to 1.5%-2% from 2%-2.5%. And for all of 2011, he has cut his GDP forecast to 2.3% from 2.5%. As Brown sees it, the economy will continue to suffer from a number of headwinds, such as the ratcheting down of the federal stimulus, a slowdown in consumer spending, strains in state and local budgets, lingering problems in residential and commercial real estate and expiration of the Bush tax cuts. “The economic outlook won’t be clear for some time,” he says, which suggests to him choppy, sideways market action for the rest of the year. Making matters worse, Brown indicates his outlook for a 2012 economic rebound may be overly sunny, given his belief that it could take another six to seven years before the unemployment rate gets back down to a more respectable 5%-6%. Further, he thinks it may take another five to six years before housing bottoms out. In other words, his wait till 2012 battle cry is accompanied by a distinct maybe. Or given the uncertainty, perhaps a more appropriate cry might be: Wait till 2013 or later! Peter Morici, an economics professor at the University of Maryland, has also lowered his economic forecasts, knocking down his current quarter’s GDP growth rate to 2.8% from 3.2% and full year growth in 2010 and 2011 to 2.6% from 2.8%. “I don’t see any economic growth until after the mid-term elections,” says Morici, who describes President Obama as “a one-man economic wrecking crew whose policies scare the bejesus out of business.” One astute economist who has been razor sharp in her crystal-ball gazing is Madeline Schnapp, economics chief of West Coast liquidity tracker TrimTabs Research. Citing among other factors the end of the inventory- rebuilding cycle, sluggish consumer demand and waning government stimulus, she, too, has slashed her GDP growth numbers. They now stand at 2.2% in the current quarter, 2% in the fourth quarter “if we’re lucky,” she says, and 2% for all of 2011 if the Bush tax cuts expire. Such an expiration, she points out, would be equivalent to a $500 billion overnight tax increase. Another big worry, according to Schnapp, is the estimated retirement over the next 10 years of 78 million baby boomers, or roughly 25% of the population. These are savers, not spenders, she says. Further, she notes, it’s frightening that they’ll retire with an estimated average of just $50,000, and some as little as $10,000. What does all of this worrisome stuff you’ve just read mean? In simple terms, the economy will continue to reel. And if so, the most propitious market strategy, as some see it, might well be: Don’t wait for a fire to head for the exits. What do you think? E-mail me at Dandordan@aol.com

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Video: Kotlikoff Says U.S. Needs Health, Tax Policy Changes: Video

August 11, 2010

Aug. 11 (Bloomberg) — Laurence Kotlikoff, an economics professor at Boston University, talks about the state of the U.S. economy. Kotlikoff speaks with Erik Schatzker on Bloomberg Television’s InsideTrack.” (Source: Bloomberg)

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Fairmont Copley Plaza in Boston To Sell for $98.5M

August 3, 2010

An entity of Fairmont Hotels & Resorts agreed to sell The Fairmont Copley Plaza hotel in Boston’s Back Bay to FelCor Lodging Trust for $98.5 million, or approximately $257,180 per room. The sale is scheduled to close in the third quarter. FelCor is…

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David Isenberg: Washington Rules and PMC

August 3, 2010

Today is the official release date of Washington Rules: America’s Path To Permanent War by Andrew J. Bacevich Bacevich is author of several, meticulously documented books on American geopolitical ambitions and the use of the military to serve those ends. Past works, to name a few, include The Imperial Tense: Prospects and Problems of American Empire ; American Empire: The Realities and Consequences of U.S. Diplomacy ; The New American Militarism: How Americans Are Seduced by War ; The Long War: A New History of U.S. National Security Policy Since World War II ; and The Limits of Power: The End of American Exceptionalism . This book, and some of his past ones are published by the American Empire Project, a book series that deals with the recent imperialist and exceptionalist tendencies in U.S. foreign policy. Bacevich, it is important to note is no garden variety armchair academic. Although he is now a professor of international relations at Boston University he is also a retired career officer in the United States Army. He graduated from West Point in 1969 and served in the United States Army during the Vietnam War. Later he held posts in Germany and the Persian Gulf up to his retirement from the service with the rank of Colonel in the early 1990s. On May 13, 2007, his son, 1LT Andrew J. Bacevich, Jr., was killed in action in Iraq by an improvised explosive device in Iraq. In terms of street credibility he has tons more than the average commentator on the issue. He has doubtlessly experienced far more about the way military affairs actually happen in the real world than the average PMC trade association will ever know. So what he writes on the subject of PMC is worth reading. I disagree that PMC are mercenaries, based on the legal definition of the word as one finds in the Geneva Conventions. But everything else in the below quote I agree with one hundred percent. Since Vietnam, military and civilian authorities presiding over the capital that bears the old general’s name have abandoned his position, radically revising–indeed severing–the relationship between citizenship and soldiering. As with owning a gun or getting an abortion, military service falls within the realm of activities governed by individual choice. To defend the country and its interests, the United States now relies on volunteers who fill the ranks of a professional military establishment only loosely connected to American society. In General Washington’s day this was known as a “standing army.” To the extent that the pool of willing volunteers proves insufficiently deep, the Pentagon makes up the difference by outsourcing many functions that uniformed regulars once performed. In an earlier day, such hired auxiliaries were known as war profiteers or mercenaries, terms freighted with unsavory connotations. Today to conceal such unseemliness, the preference is to use anodyne terms like private security firms and private contractors. The United States does not rely on this mix of military professionals and profit-oriented contractors because doing so delivers policy outcomes at an affordable price. Based on these criteria, the arrangement flunks, as the post-9/11 record amply demonstrates. Only when it comes to satisfying the ambitions of those wielding power and influence in Washington, while giving the American people a pass, can this system be said to work. The Founders, the commander of the Continental Army not least among them, disparaged standing armies as inconsistent with republican virtue while posing a potential threat to republican institutions. Today, Americans evince little interest in cultivating virtue, preferring instead the frantic pursuit of happiness, defined more often that not in terms of wealth, celebrity, and personal license. Washington meanwhile concerns itself less with the well-being of republican institutions that with feathering its own net, relying on adventurism abroad to divert attention from chronic dysfunction at home. pp. 243-244

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Cash-Strapped States Pushing Back Retirement Ages For Workers

August 2, 2010

( This post has been updated .) In response to the massive pension obligations owed to soon-to-retire baby boomers, at least 10 states have voted to push back the retirement age of their employees, the

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America’s Best Rentals — How Far $3,000 Per Month Goes Across America (PHOTOS)

July 30, 2010

Times are tights and these rentals are bargains. Zillow, one of the web’s most trusted aggregators of real-estate information , scoured its listings and found rental properties that give tenants the biggest bang for their buck. From Boston to Seattle, you can find steals in housing markets across the nation, like one Seattle condo that not only overlooks Lake Washington, but also boasts an in-ground pool. Below, we’ve gather rentals priced around the $3,000 per month range in various large U.S. cities that offer significant bang for your buck. And for more real-estate bargains, check out Zillow .

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Video: Kennedy Says Non-MLB Events Bring `Significant’ Revenue: Video

July 21, 2010

July 21 (Bloomberg) — Sam Kennedy, president of Fenway Sports Group, says hosting soccer games and other non-baseball events at Boston’s Fenway Park helps generate “significant revenue.” Fenway will host its first soccer game in 42 years tonight when 34-time Scottish Cup champion Celtic plays Sporting Clube de Portugal. Bloomberg’s Michele Steele reports. (Source: Bloomberg)

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10 Cities Where Sellers SLASHED Home Prices In June (PHOTOS)

July 17, 2010

If you’re looking for a home in Boston, Phoenix Baltimore, Dallas or Minneapolis, we have some good news. For the second month in a row, home sellers are cutting prices in droves in these cities, according to Trulia , which maintains one of the most comprehensive real estate sites on the web. “Buyers definitely have the upper hand in negotiations this season,” said Trulia’s co-founder and CEO Pete Flint, in a statement announcing this month’s price reduction report. As of July 1, 24 percent of listings on the market have experienced at least one price reduction, a nine percent increase from the previous month. On the whole, price reductions have become more frequent during the past few months, fueled by the expiration of the federal first-time home buyer tax credit. This July, 22 out of 50 of the largest U.S. cities had at least 30 percent of homes reduced in price, compared to 10 cities last month, Trulia reports. Nationally, the average price reduction was 10 percent. Check out the U.S. cities in which the largest percentage of home sellers are cutting prices — and visit Trulia for more information . (Katerina Stamatiou contributed to this report)

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Paul Abrams: Don’t Put the Blame on James

July 10, 2010

Cleveland and Ohio have good reason to be upset. Their home-grown hero has left town, for an easier run to a championship. If news reports are accurate–and they rarely are–his departure will mean a $20 million loss in revenues for small businesses in the Cleveland (or perhaps, just arena) area. But, do not put the blame on James. I know, I know, the “sport mirrors life” analogies are way overblown, but this is not really a story about basketball per se. It is more a matter of business, and social values. Indeed, perhaps this “sports” version of what has been happening to our middle class will penetrate our collective psyches more than what seem to be a series of isolated events, such as closing of manufacturing plants first here and then there, and the dominance of the non-value producing financial sector on the economy. So, put the blame where it belongs–a rejiggering of our cultural values foisted upon the country by rightwing media. And, the Lloyd Blankfeins of the world. Rightwing media, and their belief tanks, preach that our economy works best for everyone when each person does what is best for himself. No obligations to anyone but the shareholders, who are spread far and wide. Sure, throw in a bit of charity, but heaven forbid to think of justice, or even loyalty. (See, e.g., ” My Response to Mortimer Zuckerman: Charity Should Be a Way Station on the Road to Justice “, December 29, 2009). Move your workforce offshore, increase profits, and then set up a charitable foundation in the city you decimated to take minimal care of a small fraction of the lives and livelihoods ruined. Contrast this with the ethos of Bill Russell who led the Boston Celtics to umpteen championships. He stayed in Boston for his entire playing career. The Celtics bought no one. All of his teammates rose through the ranks in Boston. He made them better players, and together the team–let’s repeat, the team–won. Russell and the Celtics worked at building championship teams. They didn’t cobble them together with pieces from elsewhere. They worked. Enter, Lloyd Blankfein, Goldman Sachs’s CEO. He claims he does ” god’s work “. Work? What exactly does Goldman Sachs produce? Money, to be sure, lots and lots of it. And, today, to hear the rightwing ethos, that is the only measure of value. Sure, Goldman Sachs provides some value as facilitators and lenders, no doubt about that. But, their billions come from trading for their own account. Compare him to Steve Jobs or Bill Gates. They also made money, lots and lots and lots and lots of it. But, they did it by producing a lot of tools and gadgets we all use today to make our work and lives better, more efficient, and more fun. Or, to Stanley Cohen and Herb Boyer. They made money, lots of it. But, they invented the way we can produce human proteins in large amounts, uncontaminated by what may be swimming around in peoples’ blood. Anemic because of kidney failure? Now, blood counts can be normalized by taking a small amount of a human protein produced by normal, but not diseased, kidneys. Diabetic because of pancreas cell failure? Now, blood sugar can be controlled by taking the same insulin the body is no longer making. Painful arthritis not controlled by standard medicines? Now, symptoms can be eased by injecting a human protein that sops up one of the major disease-causing molecules before it reaches the joints. So, it’s not the money. It’s the ethos, the work, the relationship of what is produced to that money. LeBron was not ‘patriotic’ to the place that nurtured him, that gave him his start. But, Blankfein and his friends are not very patriotic to the country that gave them not only their start, but also weakened the rules of play so they could make huge fortunes, only to tank the rest of the economy. And, what have Blankfein and his cohorts done since that man-made disaster? Used their money and clout to enable them to continue the same activities, paid themselves enormous bonuses and fought against taxes to help pay the expenses for the damage they did. Sorry, I did forget the $500M they will set aside to give to worthy causes. Thanks Lloyd. The trillions in middle class wealth your (and your colleagues) activities cause? Someone else’s responsibility, eh? What about the $13B laundered through AIG? Tough luck. And, we let them get away with it. Yes, we did. So, Lebron James is going to make a lot of money, and the Miami Heat paid a lot of money to three superstars so they can all be champions together. What in our culture has taught him that doing anything differently, for any other reason, is of equal or greater importance? In fact James did not even take the highest bidder–an easy road to championships was more important. And the owners of the Cleveland Cavaliers are furious–after all, the value of their franchise just dropped precipitously. It would be interesting to check their business histories to see what they did when loyalty would have cost them a deal, or a profit margin. What did they do? Don’t put the blame on James. It is how we raised him. Yes, us.

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Courtney Reum: On a Plane With Young Entrepreneurs

July 9, 2010

I would never feel right saying that going on a Virgin America flight has become old hat (especially when Sir Richard Branson is on board), but flying Virgin is not my brother Carter and my “first rodeo” as they say. We have been fortunate to partner with Virgin for over a year now and thus our brand VeeV Acai Spirit has been the alcohol du jour for such launches as Ft. Lauderdale, Orange County and Boston to name a few. Having said that, Virgin America’s recent Toronto launch flight was arguably the most rewarding both personally and professionally. Yes, there were the requisite celeb friends like Stacy Keibler, Gregory Smith (whom I sat next to on the flight and is a great guy), and new artist Drake (who somehow was the namesake of the aircraft that made the maiden voyage) but this flight stood out for other, more altruistic reasons: The new Virgin America / Virgin Unite Young Entrepreneurs Program. Virgin America Airlines partnered with Virgin Unite, the non-profit foundation of the Virgin Group, to launch the Young Entrepreneurs Program. The goal is to work with non-profit organizations to help young people from difficult backgrounds start and grow businesses as a pathway out of poverty. Virgin selected a handful of green entrepreneurs to help out with mentoring, coaching and job shadowing to give these budding entrepreneurs a leg up in the future. The location: Virgin America’s flight to Toronto! The young entrepreneur mentees were: Huong Chen, 19 of Always Adamo Sabrina Branco, 16 of Sabrina’s Sweet Treats Eric Foster, 22 of AllHighSports.com DeShawn Davis, 23 of Dream Ear Productions In addition to my brother Carter and me, the other mentors were: Eric Ryan, Co-Founder of Method Products Jason Pomeranc, Founder of the Thompson Hotel Group Tony Cohen, President of Global Edge Investments Clint Greenleaf, Founder of Greenleaf Book Group Rob Kurtz, Executive Editor of AOL Small Business Each young entrepreneur was paired up with a more seasoned veteran (hard to think of myself that way but so be it). As part of the festivities, we listened to “plane pitches” from these young entrepreneurs en route to Toronto and tried to provide these aspiring go-getters with mentoring and practical advice. They gave us a list of “suggested” topics such as the origins of our business, challenges we faced, whom we seek out for guidance, funding, how we market our products, etc. At first this seemed liked a tall order given that most of us had gotten up circa 4 am to catch the flight from LAX to SFO with the likes of Sir Richard Branson, Governor Arnold Schwarzenegger and others. However, given the cause (and that there was a film crew on board that was capturing footage for a future documentary about the program), I quickly wiped the sleep from my eyes and attempted to say something coherent and beneficial. Carter and I were paired with Huong from Always Adamo. Her idea was to create couples t-shirts that had designs that needed both people wearing the t-shirts to be understood and have meaning. She enlightened me that this had already become a phenomena in Asia and she wanted to be the first to truly bring it to the US. As any good entrepreneur would tell you, in the beginning it’s all about having a unique and differentiated proposition. Asking “how” (as in ‘how will I do that?’) just leads to a defeatist state of paralysis that will never cultivate action and ultimately great innovation. With that in mind, I thought Huong’s idea was unique and had a shot. She was shy at first but still very friendly, which helped the conversation flow. She had done her homework and prepared a list of questions that she politely peppered me with one after another. Carter focused on the VeeV story and I focused on her idea in order to not be duplicative while we chatted for over an hour on the flight and then again at the red carpet festivities in Toronto. I’m looking forward to staying in touch with Huong and seeing where her business goes from here. After speaking with my other fellow mentors, I think most of them had similar experiences. The young entrepreneurs were green, but they were so energetic and spirited it gave us all something to believe in and look forward to… and at the very least, we all agreed that they were much more polished than we were at their age. I think that this program will continue to evolve over the coming months/years, but I’m genuinely excited to watch it grow and contribute in some small way to a program that could truly be transformational.

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REIT To Invest $77M in Boston Marriott Newton

July 8, 2010

Chesapeake Lodging Trust agreed to purchase the Boston Marriott Newton in Newton, MA, for $77.25 million, or about $180,000 per room. The deal is set to close by the beginning of next month. The Boston Marriott Newton is a 430-room property at 2345…

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Greg Brown: The Smart Grid: The Future is Now

June 30, 2010

This year’s hurricane and tornado seasons threaten to bring power outages and remind us once again of the challenges facing our current electric grid system. Thousands of people could be without power and will look for solutions to prevent similar disruptions in the future. While the short-term remedy may require firing up a home generator, the long-term solution is a smart grid. At Motorola, we are currently partnering with U.S. electric utilities to provide the wireless communications infrastructure to create a smarter grid. Smart grid communication infrastructure is basically the Internet for electricity transmission and distribution systems, with information technologies embedded throughout the system such as digital meters, remote sensors and data communications devices. Smart grid technologies provide energy producers and consumers with real-time information and better control of the electric grid, improving energy reliability, reducing energy costs and minimizing greenhouse gas emissions responsible for climate change. We can improve energy delivery and reliability. Power outages cost Americans more than $150 billion a year. That’s about $500 per person. Currently, most power companies do not have communications systems that reach their entire grid infrastructure and often don’t know there has been a power outage until a customer calls to report it. Advanced smart grid communication technologies will give power companies greatly enhanced capabilities to remotely monitor and control energy distribution systems to determine where the outage has occurred, which customers have been affected and how to re-route energy around problems. More importantly, with more frequent monitoring and diagnostics to enable effective preventative maintenance, the utility will be able to prevent an outage from occurring in the first place. We can reduce consumer energy costs. In-home smart metering devices – a component of a smarter grid – can help consumers save energy and money. Smart meters and in-home displays provide energy data to consumers, allowing them to monitor their consumption patterns and better manage their electricity use. Studies show that simply giving people access to and control of this information can result in energy savings of 5-15 percent. With better information, consumers can visibly see the economic benefit of turning down their air conditioning on hot summer days or switching off the lights when they leave a room. We can help fight climate change. It’s clear that human activity is warming our planet, and we must act to reduce our contribution to the problem. A smart grid will not only save energy costs and reduce our carbon footprints by reducing energy consumption but also it will make it easier to integrate energy from renewable sources onto the grid, two critical elements to reducing climate change-causing emissions. According to a report released by the Boston Consulting Group and GeSi, a smart grid in the U.S. could reduce emissions by as much as 7.5 percent by 2020 – nearly half of the reductions proposed by the U.S. Congress. To achieve these benefits, we need the right policies to incent the transition to a smarter grid. In February 2009, the U.S. Congress earmarked $4.5 billion for smart grid development in the stimulus bill and more incentives are included in the comprehensive energy and climate bill introduced last month in the Senate. In the meantime, the Federal Energy Regulatory Commission can begin revising regulations created for a century old electric system to make way for a 21st century smart grid. In addition to the right policies, a secure wireless data system to transmit energy information will be essential to protect the electrical grid. At Motorola, we have a proven history of providing secure and dependable voice radio systems for the military, police and fire departments and utilities. We will continue to partner with utility companies to bring the same level of quality and reliability they’ve experienced with our voice radio systems to their wireless data systems for a smarter grid. We can create a more reliable, less costly and environmentally responsible electricity system. The technology is available, the benefits are clear, and it’s time to take action.

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Richard Zombeck: Scott Brown Has Put the People’s Seat Up For Sale

June 30, 2010

Now that Scott Brown has managed to score the same backroom deals he opposed during his campaign run for Senator of Massachusetts he’s threatening to vote against the financial reform bill he’s said he was for. Sound confusing? It really isn’t when you consider Brown is among the top five congressional recipients of “contributions” from the finance/insurance/real estate industry. An impressive rank to have achieved compared to the other four who have spent years in the Senate. The usual story of Scott Brown’s election to the Senate in MA is that he was put there to kill health care reform. But all the money he’s getting from the finance industry makes it clear that they may be hoping he will also be the 41st Republican to kill financial reform. According to his profile on OpenSecrets.org all of his top campaign contributors are financial companies. In April of this this year, Brown was asked for his opinion on the financial regulatory reform bill. ” I can’t support it ,” he said. When asked what areas he thought should be fixed, he replied: “Well, what areas do you think should be fixed? I mean, you know, tell me. And then I’ll get a team and go fix it,” he said, talking to a reporter who wanted to know what kind of changes he hoped to see. Brown said one of his main concerns is that the legislation is “going to be an extra layer of regulation,” which is true. That’s the point of the legislation. The financial industry nearly destroyed the global economy as a result of lacking regulation. That’s why this legislation is being argued: to bring oversight and accountability through regulation. Brown went on to say that he finds the notion of a Consumer Financial Protection Agency problematic because “it’s more government.” He added, “Is that good? … If it’s an area we need to fix, then I’m certainly open to it. But I haven’t heard that that’s the biggest thing that’s problematic with it.” Sen. Dick Durbin (D-Ill), has been quoted repeatedly as saying, “And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.” Brown, who has, by his own admission, carved out deals for Fidelity Investments, State Street, and MassMutual, among other Massachusetts based financial institutions can’t make Durbin’s point any clearer. In addition he’s argued for major loopholes in the Volker Rule that would allow firms to continue to gamble with taxpayer-backed capital. In the meantime, Brown recently blocked a bill extending unemployment. As a result of this vote 1.2 million people lost access to the extended unemployment benefits. Several hundred thousand are being added to that number every week. Fifty million Medicare claims from June are currently in process at the reduced rate, according to AARP. The Center on Budget and Policy Priorities estimates that dropping the $24 billion in aid to states will lead to cuts in services and thousands of layoffs, and that spending cuts to close states’ aggregate budget shortfall  in 2011 would lead to 900,000 public- and private-sector layoffs. On a Tuesday morning WBUR interview with Deborah Becker, Barry Bluestone , dean of the School of Social Sciences, Urban Affairs and Public Policy at Northeastern University, speculated that over two million people will be without benefits once the program expires. According to Bluestone, 10,000 people will lose crucial funds every week in Massachusetts alone. This decision sparked a rally on Monday in front of his Boston office by an estimated 500 protester representing dozens of activist, education, and labor organizations urging Brown to stop blocking a vote on the FMAP bill, containing $700 Million in federal relief. “Let Senator McConnell, let Senator Collins, let Senator Brown and every other Republican explain why one of their own constituents doesn’t deserve to keep their job, shouldn’t be able to send their kid to college, can’t put food on their table without maxing out their credit cards,” said Lori Lodes an employment and labor activists with SEIU. “Rooting against America, Republicans are taking pride in keeping families out of work as their only strategy for winning elections.” Brown’s latest argument and rhetoric when it comes to financial reform is that the fees and assessments that the bill requires banks to pay amount to a tax and that he has vowed never to vote for a tax increase. Of course when Massachusetts residents voted for him they were assuming he meant their taxes, not those of Wall Street. Statements like those make it apparent that Brown is no less confused by financial reform than he was in April during an interview with the Boston Globe or when I and other Bay-State activists met with his staffer Nat Hoopes in D.C. and were told the only things in the bill Brown was opposed to was the so called “slush fund” in respect to the resolution authority designed to ensure that the banks themselves – not the taxpayers will have to pay for future failings. Now, according to Brown, it’s a “tax”. Brown and others in the GOP can call it a tax as much as they want. The truth, which they seem to conveniently avoid, is that it is a fee of $3-4 Billion per year (less than 10 percent of their yearly bonuses) to be collected until the sum reaches $20 Billion. After 25 years the fund would go towards the deficit. A small price to pay for an $800 billion tax-payer bailout and having almost brought the world economy to its knees. Any time someone alludes to Brown having filled or taken Sen. Ted Kennedy’s seat, Brown quickly responds coyly with, “it’s the people’s seat.” It’s become apparent that the people’s seat is for sale.

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CBRE Trust Pays $55M for Boston Area Office Bldg.

June 29, 2010

CB Richard Ellis Realty Trust made its first entry into the New England office market by purchasing a 200,411-square-foot office building in the suburbs of Boston, MA, for $55.56 million. The Gutierrez Co. sold the Class A property for approximately…

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CBRE Trust Pays $55M for Boston Area Office Bldg.

June 29, 2010

CB Richard Ellis Realty Trust made its first entry into the New England office market by purchasing a 200,411-square-foot office building in the suburbs of Boston, MA, for $55.56 million. The Gutierrez Co. sold the Class A property for approximately…

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Euro Has Biggest Weekly Gain Since May 2009 on European Debt Concern Ease

June 19, 2010

By Catarina Saraiva and Ben Levisohn June 19 (Bloomberg) — The euro rose the most this week against the greenback in more than year as an easing in concern over Europe’s debt crisis spurred traders to end bets the shared shared currency would decline. The euro appreciated for a second week versus the yen, the first back-to-back weekly gains since March, as increased demand at a Spanish bond sale and an agreement by European Union leaders to disclose how banks perform on stress tests damped investor worries about the region’s financial system. The dollar fell versus the yen as Japan’s ruling party announced a deficit- cutting plan and disappointing U.S. data increased speculation the Federal Reserve would keep interest rates at a record low. “The recent news out of Europe is reassuring,” said Camilla Sutton , a Bank of Nova Scotia currency strategist in Toronto. “Europe will release the results of stress tests and give the market the clarity it looked for. The U.S. will be on hold for longer. That helped equities and boosted risk appetite.” The euro rose 2.3 percent to $1.2388 this week, the biggest gain since the five days ended May 22, 2009, from $1.2112 on June 11. It touched $1.2417 yesterday, the highest level since May 28. Europe’s common currency rose 1.3 percent to 112.40 yen, from 111 on June 11. The dollar fell 1 percent to 90.71 yen, from 91.65 a week ago. The common currency gained as futures traders decreased their bets that the currency will decline against the U.S. dollar to the lowest level since April, figures from the Washington-based Commodity Futures Trading Commission show. Short Covering The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain — so-called net shorts — was 62,360 on June 15, after dropping 44 percent from 111,945 a week earlier. “Seventy percent of the euro’s gain was short covering,” said Brian Dolan , chief strategist at FOREX.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey. “The downside had become extreme, and sentiment was extreme. It’s slow going on the way up. I think we’ll see losses developing faster than recoveries.” Spain sold 3 billion euros ($3.7 billion) of 10-year debt on June 17 at an average yield of 4.864 percent, less than the 5.04 percent that the bonds traded at before the sale. Demand was 1.89 times the amount on offer. It also sold 479.2 million euros of 30-year debt at 5.908 percent, and the bid-to-cover ratio was 2.45, higher than the 1.38 at the previous sale on March 18. ‘Cloud of Suspicion’ “We had the credit markets more or less stabilize,” said Boris Schlossberg , director of research at online currency trader GFT Forex in New York. “That’s why the euro continues to perform well.” European Union leaders this week agreed to disclose how banks perform on stress tests, seeking to show investors the financial system can withstand financial shocks. French Finance Minister Christine Lagarde yesterday said a European Union decision to publish the results of stress tests will “clear a cloud of suspicion that’s out there.” She made the comments while attending the St. Petersburg Forum in Russia. The pound gained this week the most versus the greenback since the week of April 2 before of the U.K.’s announcement of budget cuts on June 22, which may help it avoid the rising bond yields afflicting Spain and Portugal. ‘Investor Enthusiasm’ Chancellor of the Exchequer George Osborne is set to outline the deepest spending cuts since at least the 1970s to tame a budget deficit of 11 percent of gross domestic product last fiscal year. U.K. government bond yields have fallen 0.339 percentage point since Prime Minister David Cameron took office six weeks ago on expectations his coalition government will step up the pace of deficit reduction. The pound climbed 1.9 percent to $1.4824 this week from $1.4552 on June 11. It fell 0.4 percent to 83.59 pence per euro. The yen posted a second weekly gain versus the dollar after Japanese Prime Minister Naoto Kan pledged to cut the world’s largest public debt. Kan said he’d consider an opposition party proposal to raise the consumption tax. BNY Mellon is “seeing net buying of the Japanese yen, not so much as a risk aversion play, but because of investor enthusiasm about Japan’s ruling party announcing a new plan to combat deflation, reduce the budget deficit and restore growth,” Samarjit Shankar , a managing director for the foreign- exchange group in Boston, wrote in a note to clients. BNY Mellon is the world’s largest custodial bank, with more than $20 trillion in assets under administration. ‘Likely to Decelerate’ The greenback fell against all 16 major currencies this week after the number of American’s filing for jobless benefits for the first time rose, increasing speculation that economic growth in the U.S. remains fragile. Initial jobless claims in the U.S. increased by 12,000 to 472,000 in the week ended June 12, according to Labor Department figures. Economists surveyed by Bloomberg News projected 450,000 claims, according to the median forecast. Futures trading on the CME Group Inc. exchange showed a 36 percent chance that the Fed will raise its target rate for overnight bank lending by at least a quarter-percentage point by its January meeting, down from 55 percent odds one month ago. The U.S. economy will stagnate in the second half of the year as households, businesses and state and local governments trim debt, according to John Herrmann of State Street Global Markets in Boston. “There is an incredible amount of deleveraging going on in the economy,” Herrmann, a senior fixed-income strategy, said in an interview June 17 on Bloomberg Radio with Tom Keene . “Organic growth in the economy is likely to decelerate” as government stimulus fades and temporary census workers complete their contracts, he said. To contact the reporter on this story: Ben Levisohn in New York at blevisohn@bloomberg.net ; Catarina Saraiva in New York at asaraiva5@bloomberg.net .

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Heebner’s Hold on Top Fund Spot Slips as CGM Focus Slumps for Third Year

June 16, 2010

By Charles Stein June 17 (Bloomberg) — Ken Heebner is mired in his third straight year near the bottom of the mutual-fund return rankings, threatening his status as the top-performing U.S. stock-picker of the new century. The $3 billion CGM Focus Fund , which Heebner runs from Boston, is the only domestic stock fund to trail at least 96 percent of peers in 2008, 2009 and again this year, according to research firm Morningstar Inc. The fund has lost 54 percent since June 30, 2008, compared with the 8.7 percent decline by the Standard & Poor’s 500 Index , a proxy for the U.S. stock market and the fund’s benchmark. “He’s been in all the wrong sectors at all the wrong times,” said Jonathan Rahbar , a fund analyst for Chicago-based Morningstar. The nosedive rivals that of Bill Miller , the Legg Mason Inc. fund manager who beat the S&P 500 for a record 15 consecutive years, then dropped to the back of the pack in 2006 through 2008. Like Miller, Heebner has lost investors, with net withdrawals of $1.8 billion since August 2008, according to Morningstar. Unlike Miller, he lagged behind the rest of the market last year, gaining 10 percent while U.S. stock funds on average rose 33 percent. Miller’s Value Trust was up 41 percent. Even with the losses, CGM Focus returned an average of 17 percent a year in the decade ended May 31, the highest among more than 3,200 U.S. diversified mutual funds, Morningstar’s data show. In second place was Lord Abbett Micro Cap Value , which gained 14 percent. Investors Turn Elsewhere Steven Roge , who buys mutual funds for clients, said the ballooning of Heebner’s assets in 2008, when CGM Focus had net deposits of $3.3 billion through August after soaring 80 percent the previous year, convinced him there were better places to invest. “When a fund attracts assets that quickly, we worry about a manager’s ability to handle it,” said Roge, whose Bohemia, New York-based firm, R.W. Roge & Co., oversees $200 million. Heebner, co-founder of Capital Growth Management LP, wasn’t available to comment, Martha Maguire, a spokeswoman for the firm, said in an e-mail. Capital Growth is part of Natixis Global Asset Management, a unit of French bank Natixis SA . The 69-year-old Heebner is known for making concentrated bets in industries from homebuilding to commodities and for his willingness to shift gears quickly. He also bets on falling stock prices, a technique called short selling that many funds don’t pursue. Hurt by Financials CGM Focus fell 6.3 percent this year through June 15 as the S&P 500 rose 0.9 percent, including dividends, according to data compiled by Bloomberg. The fund was hurt in the period by declines in financial stocks and commodity producers. New York-based Goldman Sachs Group Inc. , its second-largest holding, lost 19 percent. Its third-biggest stake, miner Freeport-McMoRan Copper & Gold Inc . of Phoenix, dropped 16 percent. Ford Motor Co., the Dearborn, Michigan-based automaker and CGM Focus’s top position, was up 16 percent. Heebner in the first quarter bought new stakes in miners including Cleveland, Ohio-based Cliffs Natural Resources Inc . and BHP Billiton Ltd . of Melbourne, according to a May 14 filing with the U.S. Securities and Exchange Commission. He sold holdings in Internet companies Google Inc. of Mountain View, California, and Seattle-based Amazon.com Inc. Metal and mining stocks accounted for 36 percent of his holdings as of March 31, the filing shows. Bank stocks represented 16 percent of the portfolio, the second-largest position. In addition to Goldman Sachs, Heebner held Morgan Stanley and Citigroup Inc., both based in New York, and Pittsburgh-based PNC Financial Services Group Inc. Financial Crisis Returns started to falter in the second half of 2008, when Heebner’s holdings of energy, metals and agriculture stocks began to tumble. After selling the commodity stocks, he bought financials, including insurers such as Hartford, Connecticut- based Hartford Financial Services Group Inc. , according to filings with the SEC. “The escalating financial crisis took its toll on these issues during the fall,” Heebner wrote in the fund’s 2008 annual report. Financial stocks fell 38 percent in the fourth quarter of that year, following the bankruptcy of Lehman Brothers Holdings Inc. in September, Bloomberg data show. CGM Focus dropped 48 percent for the year, compared with a decline of 37 percent by the S&P 500. Missing the Rally Heebner sold his insurance holdings at a loss in the first quarter of 2009, he said in that year’s annual report with the SEC. The timing hurt, as many of those stocks soared after the market reached a 12-year low in March. Hartford almost tripled in the final nine months of 2009. Heebner’s delay in shifting back to stocks that could benefit from the rebounding economy in 2009 “diminished the fund’s overall performance,” he wrote. When CGM Focus didn’t bounce back in 2009, Brian Smith, a financial adviser based in Vienna, Virginia, decided to reduce his holdings. “It was too easy to find things that were moving up,” he said in a telephone interview. Dennis Marin, who also owns the fund for clients, decided to stick with Heebner. “Over the next three to five years our bet is that we will do well with him,” said Marin, president of Erie, Pennsylvania- based Wedgewood Investors Inc., which manages $600 million. Hot to Cold In May 2008, about a month before the fund’s assets peaked at $10.3 billion, Fortune magazine called Heebner “America’s hottest investor.” In the first seven years of the last decade, CGM Focus returned 32 percent annually while the S&P 500 gained less than 2 percent a year. Heebner has run the fund since it was created in 1997. In 2000 and 2001 he profited by betting against technology stocks. At the same time he began buying homebuilders such as Miami-based Lennar Corp . ahead of the boom in construction and home prices. By the start of 2005, before homebuilding stocks began their decline, he had sold them and moved into energy and commodity companies. The price of oil more than tripled between the end of 2004 and the middle of 2008, Bloomberg data show. “Historically he has done phenomenally well knowing when to rotate,” said Rahbar of Morningstar. The fund’s wins and losses are magnified by its concentration. CGM Focus’s top 10 holdings represented 73 percent of assets of as March 31, Morningstar data show. Its turnover ratio — a measure of how much the portfolio changes in a year — is 464 percent, more than four times greater than peers, Morningstar said. The declines since 2008 “don’t indicate Heebner has lost his talent or his expertise,” said Ronald Sugameli , manager of the $130 million New Century Alternative Strategies Portfolio, a mutual fund that invests in other mutual funds. CGM Focus represented about 1.5 percent of Sugameli’s fund as of May 31, Bloomberg data show. While he expects Heebner’s performance to bounce back, Sugameli isn’t planning to boost his holdings of CGM Focus, he said in a telephone interview. Given the fund’s volatility, Sugameli said, “it is best used in small doses.” To contact the reporter on this story: Charles Stein in Boston at cstein@bloomberg.net

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Private Banks Touting Asia Expansion Plans Make Clariden Leu’s Lee `Puke’

June 16, 2010

By Joyce Koh June 17 (Bloomberg) — Private banks touting plans to step up hiring in Asia are undermining the industry by driving up compensation expectations, said the regional head of Credit Suisse Group AG ’s Clariden Leu unit. “If you go by the numbers, it makes me puke: I don’t know who these people are, and why they’re talking like that,” Singapore-based Jimmy Lee , a 20-year private banking veteran, said in an interview on June 11. “They’re shooting themselves in the foot.” UBS AG , Standard Chartered Plc and Morgan Stanley are among companies that have announced plans to hire more private bankers to help Asia’s swelling ranks of millionaires manage their money. Wealth in the Asia-Pacific region outside Japan is expected to grow at twice the global rate, the Boston Consulting Group said this month. Increased competition for Asia’s riches has led to a shortage of qualified private bankers in Singapore, and turnover among advisers in search of bigger paychecks is antagonizing clients concerned about privacy, said Lee, who joined Clariden Leu in March 2009. “It takes time to build these people,” he said. “It affects me because when I talk to other relationship managers, they’ll say if so many banks are growing, they’ll feel good, and they tend to ask for much higher salaries which are unrealistic sometimes.” The Asia-Pacific region’s share of global wealth will rise to almost 20 percent in 2014 from 15 percent last year, with China and India driving growth, according to the Boston Consulting Group report. ‘Merry Go-Round’ The industry may need an additional 900 wealth managers in the next five years to cope with growth in the region, according to a September research note from UBS. Switzerland’s biggest bank said last month it is reviving an effort to recruit and train people who don’t have industry experience for its Asian unit as competition for private bankers heats up. Many private banks expect “instant gratification” and look for wealth managers who can bring existing relationships and assets, Chris Claridge, managing partner at the Consulting Partnership , a Singapore-based headhunting firm, said in an interview yesterday. Pay increases for advisers who switch firms is averaging about 15 percent to 30 percent amid a “ridiculous merry go- round” among staff, Claridge said. “There’s a fair bit of wishful thinking going on,” he said. Banks in Asia are talking about hiring “without really thinking through” where the new employees will come from. Private banking clients are concerned the turnover in advisers will threaten privacy, said Lee, 48. Hiring at Clariden Leu, 89 percent owned by Credit Suisse, will depend on the availability of qualified people, he said. “My information is shared with six other banks if my private banker moves to six banks, and that is a problem,” he said. “You’re actually causing trouble for your clients if you keep moving around. That’s something this industry should look to minimize.” To contact the reporter on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net

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Australian Buyout Revival May Stall as TPG, Equity Firms Face Resistance

June 16, 2010

By Angus Whitley June 17 (Bloomberg) — A recovery in Australian buyouts may be curtailed as private-equity firms with as much as A$8 billion ($6.9 billion) of cash to spend grapple with reluctant sellers and scarce credit. “Although it’s a good time to buy, people aren’t choosing to sell,” Katherine Woodthorpe , 53, chief executive officer of the Australian Private Equity & Venture Capital Association Ltd. , said in a June 15 interview in Sydney. “You have to have both those stars in alignment.” Stock valuations in Australia have fallen this year even in an economic recovery, as investors fret over Europe’s debt crisis. Blackstone Group LP, TPG Capital and Carlyle Group last month bid A$1.8 billion for Healthscope Ltd. , attempting the country’s biggest buyout in two years, according to people with knowledge of the matter. That bid may have been the high point of the revival in private-equity takeovers in Australia, said Woodthorpe, whose group represents about 60 foreign and local firms. Some companies, emboldened by improved economic prospects, are resisting overtures from the buyout industry and banks remain reluctant to finance large deals, she said. “The vendors are still not as anxious to sell as you might have thought,” Woodthorpe said. “People are looking at pricing and saying: ‘I don’t necessarily need to sell, so I don’t know that I want to sell at these prices.’” Her organization, known as Avcal, estimates Australian firms like Archer Capital and CHAMP Private Equity have A$5 billion to A$6 billion to deploy between them, while overseas funds have about A$2 billion to spend on local assets. Hoard of Cash That’s still less than the A$11.1 billion buyout offer for Qantas Airways Ltd. in 2007, near the end of the era of cheap credit that preceded the global financial crisis. Shareholders of Australia’s largest carrier rejected the bid. Deprived of financing during the crisis, private-equity firms are returning as economies recover. Buyout companies worldwide plan to invest a record $507 billion in cash raised before the collapse, triple the comparable figure in December 2001, according to London-based researcher Preqin Ltd. Carlyle Group, the world’s second-largest private-equity firm, said in May it had $33.5 billion waiting to be invested at the end of 2009. David Rubenstein , co-founder of the Washington- based firm, said June 4 at a Boston conference that the worst was probably over for the industry. Competition Begins Private equity-led takeovers announced in Australia reached $323.5 million this year excluding the offer for Healthscope, Australia’s second-biggest hospital owner, according to Bloomberg data. That compares with $7.56 million in the same period last year. New York-based Blackstone , Carlyle, and Dallas, Texas-based TPG haven’t made public their bid. Healthscope yesterday declined to comment. “A lot of private equity funds have a large amount of capital still to be deployed,” said Andrew Stuart , chief executive officer of BKK Partners Pty, a Sydney-based corporate advisory firm. “We’re just about to see competition beginning for the deployment of that capital.” With banks reluctant to finance multibillion-dollar deals, buyout firms in Australia will probably focus on targets worth A$500 million or less, said Woodthorpe at Sydney-based Avcal. Banks are unwilling to extend more than A$1 billion for a leveraged buyout even when lending in groups, and the ceiling is more likely to be closer to A$750 million, said Woodthorpe. Credit can take months to obtain, compared with weeks before the financial crisis, she said. More Equity Nineteen banks are financing the A$1.82 billion offer by Blackstone, TPG and Carlyle for Healthscope , the Australian Financial Review reported June 4. A rival A$1.84 billion bid, which Healthscope disclosed without naming the suitor, was made by Kohlberg Kravis Roberts & Co. and CVC Asia Pacific, the newspaper said. Buyout firms will find it tougher to outbid corporate acquirers as they need to finance a larger part of deals with equity than before the crisis, said Bryan Zekulich, Sydney-based private equity managing partner at Ernst & Young LLP. “That does limit the ability to pay significantly higher prices,” he said. “If you are a corporate buyer and have synergies available, than arguably you should be able to outbid the private equity house that’s just trying to leverage.” Debt accounted for as much as 70 percent of the largest buyouts in Australia before the financial crisis, according to Avcal. Now, firms have to stump up half the price in equity, the organization estimates. Shareholders are pressing boards for more detail on private equity approaches, said Zekulich. The wariness stems partly from deals including the failed buyout of Qantas three years ago, when shareholders rejected a board-endorsed bid from a group that included Macquarie Group Ltd. and TPG, he said. “Boards and shareholders are still a little bit uncomfortable giving too much access to private equity players,” Zekulich said. “There’s a slight change in underlying shareholder sentiment.” To contact the reporter on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net

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Patricia Handschiegel: The New Power Girls: What A Power Girl Needs To Know About Reinventing At Any Age

June 16, 2010

It’s weird how things work out sometimes. It was April 2008 when one of my many business trips to Manhattan unexpectedly turned from just two short days to ten. When I travel, I always love to stay with friends and family when I can – my closest friends and I are like sisters. A couple of days together is a blast. Unexpected chaos left me in the city far longer, and by the weekend I was staying at her place alone near Union Square for the coming ten days as she had a trip planned. Entrepreneurs are used to chaos. I adapted, got settled. I went to the Whole Foods nearby and stocked the house with favorite comfort items – good wine, fresh fruits and vegetables, and the most amazing chocolate tart dessert. I went for long jogs through the city, worked and did business. I’ve gotten stuck in snowstorms and downgraded hurricanes. If you’re going to be put in a situation, make the best of it that you can. Years later, I have looked for those chocolate tarts every time I’ve gone to any store here, including Whole Foods. A few weeks ago, a friend and fellow Power Girl whose been a driving force behind amazing luxury hotel brands like the Liberty in Boston, sent me a text about a cool entrepreneur she had wanted to connect me with. Whether they’re in New York, Los Angeles, San Francisco, Miami, Boston or Chicago, the women entrepreneurs I’ve met and know are constantly mingling and making introductions like this. Of course I would, I replied. Later that month, I had a call with Bo Bartlett, founder of the Daphne Baking Company. Bo had a successful career for most of her life before realizing her true dream was to open a bakery. With courage she took the steps needed to make that exact dream happen. Today, Daphne desserts are carried at dozens of major supermarkets and grocery stores. The desserts are so good, the company has a whole side customer base among caters and restaurants, who rely on Bo’s incredible confections. As we talked, Bo shared how she came to the conclusion to let go of her longtime, successful career and how well into her adulthood shifted gears including going back to college to learn her new craft. We chatted about taking the leap to launching a business as she told the stories behind creating Daphne. The entire conversation, I kept thinking to myself that this was going to be a great topic for a New Power Girls post — that women in business can make a move at any age. There’s a false mentality in our country that younger is better, even though statistically that’s not really the case. People regardless of age have the chance to take the leap again and again. Bo’s living proof of it. “If you visit our website, you’ll see them,” she adds as we continue our call. I’m in front of my computer in my L.A. living room and quickly type the company name into Google search. Within seconds there were the very chocolate tarts I had during that New York trip so long ago. It takes a minute to regain my composure as I tell Bo the story and how I’ve looked for her very tarts ever since. If there’s ever the greatest story of why someone should take a leap, give their goal a shot or go with their gut and do something, this is it.

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Stocks That Rise as Market Tanks May Tempt You Commentary by John Dorfman

June 14, 2010

Commentary by John Dorfman June 14 (Bloomberg) — The stock market decline that began April 23 lasted six weeks — if June 7 was the bottom, which we don’t know for sure yet, of course. It felt more like six years. Holders of some stocks, though, have reason to smile. Surprisingly, about 30 percent of U.S. stocks have gained 10 percent or more for the year to date. That’s true even though the total return on the Standard & Poor’s 500 Index, perhaps the best gauge of the overall U.S. stock market, is negative 1.2 percent for the year. About 800 stocks with a market value of $250 million or more have scored gains of 10 percent or more for the year. Prominent in the winner’s circle is SPDR Gold Trust , better known by its stock symbol GLD. It is an exchange-traded fund that owns gold bullion and intends to track the price performance of gold, minus fund expenses. State Street Corp. created GLD in late 2004. Since then, it has posted gains every year, ranging from 5 percent in 2008 to 30 percent in 2007. So far this year GLD is up about 12 percent. No wonder I got an e-mail last week that said, “Forget about your (expletive deleted) stocks! Just buy gold.” I rarely dabble in gold or gold stocks, because one can’t calculate a price-earnings or price-revenue ratio on gold bullion, and those ratios are usually high on gold mining stocks. Yet I must agree there is a fair chance that gold will do well the next several years. Gold Strategy Many investors are seeing their faith in paper currencies weakened as governments around the world run up big deficits. In my opinion, GLD is not a bad way to own gold because it is simple, direct, and doesn’t involve large costs for storage and insurance. Speaking of gold, Newmont Mining Corp. , the largest U.S. gold producer, is up about 19 percent year to date. Newmont, based in Greenwood Village, Colorado, doesn’t meet my valuation criteria. However, its ratios are more attractive than most gold-mining stocks. Another big company in this favored group is DirecTV of El Segundo, California, the largest U.S. provider of satellite TV services. On May 6 it posted 59 cents a share in earnings, beating analysts’ average estimate of 46 cents, with good results in both the U.S. and Latin America. The shares are up about 15 percent this year. I wouldn’t buy DirecTV stock. Debt is about 300 percent of equity, which raises the risk level. And DirecTV shares seem high-priced to me at 21 times earnings and 12 times book value. No ‘Winner’s Curse’ Hershey Co. of Hershey, Pennsylvania, has risen about 42 percent this year. I believe that investors breathed a sigh of relief when Hershey let Kraft Foods Inc. of Northfield, Illinois, win the hand of Cadbury Plc. Investors had feared a bidding war, in which Hershey might overpay and suffer what’s known as the “winner’s curse.” In addition, Hershey posted first-quarter earnings almost double last year’s, surprising analysts. It pushed through a price increase on about a third of its product line, and sold more candy bars nevertheless. Would I bite? Not at 21 times earnings. Also, I don’t relish the company’s debt level, at more than 200 percent of equity. More to my taste is Impax Laboratories Inc. of Hayward, California, which trades at only seven times earnings. Impax manufactures both proprietary and generic drugs. Public since 1995, the company posted a series of losses, then broke into the black in 2007. The stock is up about 53 percent this year. Drugs, Satellites Its earnings bounce around. Last year Impax earned 82 cents a share. This year it is headed for $3.13, analysts estimate. Their early guesses for 2011 call for $1.46 a share. This month the company settled a patent dispute with Endo Pharmaceuticals Holdings Inc. and Penwest Pharmaceuticals Co. over a generic version of a medicine for Parkinson’s disease. I also like GeoEye Inc. of Dulles, Virginia. It operates a satellite imaging service, taking pictures of earth from space. Google Inc. uses the company’s satellite images for its Google Maps and Google Earth services. GeoEye shares are up about 14 percent this year and trade at 11 times earnings. The company posted record revenue in the first quarter. Consider this recommendation speculative, as the company’s debt is higher than I usually prefer. SanDisk Corp. , located in Milpitas, California, appears to be coming out of the recession nicely. In the first fiscal quarter, it posted revenue of about $1 billion, up from $659 million a year earlier. Earnings were 99 cents a share, one of SanDisk’s best quarters. Shares are up about 54 percent this year. Disclosure note: Personally and for clients, I own shares in Endo Pharmaceuticals. I have no long or short positions in any of the other stocks mentioned in this week’s column. ( John Dorfman , chairman of Thunderstorm Capital in Boston, is a columnist for Bloomberg News. The opinions expressed are his own. His firm or clients may own or trade securities discussed in this column.) To contact the writer of this column: John Dorfman at jdorfman@thunderstormcapital.com .

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Stocks That Rise as Market Tanks May Tempt You Commentary by John Dorfman

June 14, 2010

Commentary by John Dorfman June 14 (Bloomberg) — The stock market decline that began April 23 lasted six weeks — if June 7 was the bottom, which we don’t know for sure yet, of course. It felt more like six years. Holders of some stocks, though, have reason to smile. Surprisingly, about 30 percent of U.S. stocks have gained 10 percent or more for the year to date. That’s true even though the total return on the Standard & Poor’s 500 Index, perhaps the best gauge of the overall U.S. stock market, is negative 1.2 percent for the year. About 800 stocks with a market value of $250 million or more have scored gains of 10 percent or more for the year. Prominent in the winner’s circle is SPDR Gold Trust , better known by its stock symbol GLD. It is an exchange-traded fund that owns gold bullion and intends to track the price performance of gold, minus fund expenses. State Street Corp. created GLD in late 2004. Since then, it has posted gains every year, ranging from 5 percent in 2008 to 30 percent in 2007. So far this year GLD is up about 12 percent. No wonder I got an e-mail last week that said, “Forget about your (expletive deleted) stocks! Just buy gold.” I rarely dabble in gold or gold stocks, because one can’t calculate a price-earnings or price-revenue ratio on gold bullion, and those ratios are usually high on gold mining stocks. Yet I must agree there is a fair chance that gold will do well the next several years. Gold Strategy Many investors are seeing their faith in paper currencies weakened as governments around the world run up big deficits. In my opinion, GLD is not a bad way to own gold because it is simple, direct, and doesn’t involve large costs for storage and insurance. Speaking of gold, Newmont Mining Corp. , the largest U.S. gold producer, is up about 19 percent year to date. Newmont, based in Greenwood Village, Colorado, doesn’t meet my valuation criteria. However, its ratios are more attractive than most gold-mining stocks. Another big company in this favored group is DirecTV of El Segundo, California, the largest U.S. provider of satellite TV services. On May 6 it posted 59 cents a share in earnings, beating analysts’ average estimate of 46 cents, with good results in both the U.S. and Latin America. The shares are up about 15 percent this year. I wouldn’t buy DirecTV stock. Debt is about 300 percent of equity, which raises the risk level. And DirecTV shares seem high-priced to me at 21 times earnings and 12 times book value. No ‘Winner’s Curse’ Hershey Co. of Hershey, Pennsylvania, has risen about 42 percent this year. I believe that investors breathed a sigh of relief when Hershey let Kraft Foods Inc. of Northfield, Illinois, win the hand of Cadbury Plc. Investors had feared a bidding war, in which Hershey might overpay and suffer what’s known as the “winner’s curse.” In addition, Hershey posted first-quarter earnings almost double last year’s, surprising analysts. It pushed through a price increase on about a third of its product line, and sold more candy bars nevertheless. Would I bite? Not at 21 times earnings. Also, I don’t relish the company’s debt level, at more than 200 percent of equity. More to my taste is Impax Laboratories Inc. of Hayward, California, which trades at only seven times earnings. Impax manufactures both proprietary and generic drugs. Public since 1995, the company posted a series of losses, then broke into the black in 2007. The stock is up about 53 percent this year. Drugs, Satellites Its earnings bounce around. Last year Impax earned 82 cents a share. This year it is headed for $3.13, analysts estimate. Their early guesses for 2011 call for $1.46 a share. This month the company settled a patent dispute with Endo Pharmaceuticals Holdings Inc. and Penwest Pharmaceuticals Co. over a generic version of a medicine for Parkinson’s disease. I also like GeoEye Inc. of Dulles, Virginia. It operates a satellite imaging service, taking pictures of earth from space. Google Inc. uses the company’s satellite images for its Google Maps and Google Earth services. GeoEye shares are up about 14 percent this year and trade at 11 times earnings. The company posted record revenue in the first quarter. Consider this recommendation speculative, as the company’s debt is higher than I usually prefer. SanDisk Corp. , located in Milpitas, California, appears to be coming out of the recession nicely. In the first fiscal quarter, it posted revenue of about $1 billion, up from $659 million a year earlier. Earnings were 99 cents a share, one of SanDisk’s best quarters. Shares are up about 54 percent this year. Disclosure note: Personally and for clients, I own shares in Endo Pharmaceuticals. I have no long or short positions in any of the other stocks mentioned in this week’s column. ( John Dorfman , chairman of Thunderstorm Capital in Boston, is a columnist for Bloomberg News. The opinions expressed are his own. His firm or clients may own or trade securities discussed in this column.) To contact the writer of this column: John Dorfman at jdorfman@thunderstormcapital.com .

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Mark Miller: Here Comes the Public Option for Long-Term Care Insurance

June 11, 2010

In the din of debate over health care reform legislation, one of the bill’s most important features went almost unnoticed — a public option for long-term care insurance. The law signed into law earlier this year establishes a national insurance program for purchasing community living assistance services and support (CLASS for short). The new plan, which will be rolled out over the next several years, was a top priority of the late Sen. Ted Kennedy. CLASS should help raise the profile of long-term care insurance (LTC) — an important financial tool that doesn’t make it into most retirement plans. Long-term care needs can throw a monkey wrench into even the best-designed retirement plan. About one-third of Americans turning 65 this year will need at least three months of nursing home care sometime during their lives, according to the Center for Retirement Research at Boston College (CRR). Another 24 percent will need more than a year of care, and 9 percent will need more than five years. Medicare covers only a small portion of long-term care needs, and the cost of a semi-private room averages $79,000 per year. CRR calculates that the mean lifetime exposure to long-term care costs for our 65-year-old couple is $260,000, with a five percent risk of a $570,000 expense. Read the full story this week at RetirementRevised.com .

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Morgan Stanley Hires Adam Parker From Bernstein as U.S. Equity Strategist

June 10, 2010

By Elizabeth Stanton June 10 (Bloomberg) — Morgan Stanley said it hired Adam Parker from Sanford C. Bernstein & Co. as U.S. equity strategist. He will join the New York-based company on Sept. 9, according to an internal memo confirmed by Sandra Hernandez , a spokeswoman. Parker spent more than 10 years at Bernstein, an investment research firm owned by AllianceBernstein LP , the New York-based manager of $466 billion. Most recently he was chief investment strategist and director of quantitative research, according to the memo. He was a runner-up in both categories in Institutional Investor’s 2009 survey. Previous roles included global director of research and senior semiconductor analyst. Stephen Penwell , head of North America equity research, will oversee Parker, who will make the firm’s forecasts for the Standard & Poor’s 500 Index. Jason Todd , a global equity strategist, has had that responsibility since the January 2009 departure of Abhijit Chakrabortti , who was U.S. equity strategist. Parker, who didn’t immediately return a phone call to his office at Bernstein, earned a doctorate in statistics from Boston University, a master’s degree in biostatistics from the University of North Carolina and bachelor’s degree in statistics from the University of Michigan, according to the memo. To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

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