children

Naked Man In Children’s Clothing Ad Creates PR Pain

by Newser.com on January 5, 2012

Huffington Post…

Note to management: If you’re selling children’s clothing by featuring kids running along the beach in your ads, not airbrushing out the naked guy in the background could cause some problems. At a minimum, some people are going to wonder how you missed the birthday suit — and doubt that you did. Earlier this week, La Redoute, a French clothing company, posted a picture on its website that featured a boy wearing its T-shirt running along the beach with three other children his age. Behind the kids, there was a man who, with the help of a zoom feature on the site, could clearly be seen in his birthday suit, according to the French news website 20 Minutes . Though the French have a reputation for relaxed attitudes toward nudity, Magali Gruet, the head of the Parisian news department of 20 Minutes, said many readers considered the ad offensive. “It is definitely an outrage, especially on a page with children,” Gruet told HuffPost Weird News. “It has shown up on Twitter, and then people shared it during lunch break.” La Redoute sought to nip any potential fallout by publishing an apology: “La Redoute apologizes for the photo published on its site and is taking steps to remove it. We have opted to delete all the posts including this picture. “We are aware that it may offend the sensibilities of surfers. We will strengthen the validation process of all brand communications so this can not happen again in the future.” Screen Shot From LaRedoute.fr Is that enough? Sally Julien , a Seattle-based PR professional who has represented many global brands, thinks so. “Professionally, I’d say that La Redoute has taken the best course of action in the situation,” she told HuffPost Weird News. “When they realized that some people were offended, La Redoute pulled the offending images quickly, stated its intentions for ensuring that this didn’t happen again, and apologized.” Julien said that “speed and transparency are always the top priorities when situations like this, er, arise. And they appear to have ticked those boxes in a genuine and authentic way.” Still, Julien admitted she was surprised at how the French were reacting to the whole scandale . “I thought only Americans could get so uptight at a bit of nudity,” she laughed. “Looks like we have exported that particular bit of prudishness abroad.” It’s not yet known whether the naked man’s appearance was a mistake made during the photo shoot or if the photo was doctored as a joke of some kind, according to MetroFrance.com . However, Sean Dougherty, a PR professional who has represented such global brands as Sun Microsystems, Moody’s Investors Service, Ernst & Young and Dewey Ballantine, suspects someone at La Redoute might have been ballsy enough to post the naked-guy photo intentionally. “The company either did it on purpose, &agrave la Benetton or Abercrombie & Fitch, to use controversy to call attention to its brand, or it’s historically sloppy in quality control,” Dougherty said. “Neither says anything good about the brand. My advice would be to move on and not speak about it. Attempts to give money to victims’ charities or otherwise show the work behind fixing the problem will make it look more like a stunt, regardless of the reality.” Meanwhile, the photo of the nude beach-goer — whose identity also remains unknown — seems to have become an Internet meme and has already inspired a Tumblr blog . Though the photo has outraged some citizens, Gruet suspects that it won’t have a lasting negative effect on La Redoute’s French customer base. “I think it’s momentary and people are laughing a lot about it,” she said. “The funny thing is their last ad campaign slogan was ‘everything is allowed.’”

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What’s Causing House Fires From Lightning Strikes?

by AP on December 22, 2011

Huffington Post…

WESTERVILLE, Ohio (AP) — Reports of lightning-related fires and gas leaks in at least a dozen states have raised concerns about the use of flexible gas lines made of corrugated stainless steel tubing and have led to lawsuits, studies and efforts to better track the incidents. Manufacturers have defended the plastic-coated metal tubing, known as CSST, which has become increasingly common in new homes since it was introduced domestically more than two decades ago. Fire officials and researchers are trying to determine whether to blame a faulty product, unsafe installation or something else for the blazes. Four homes caught on fire in central Ohio over a stormy 12-hour period this summer. Genoa Township Fire Chief Gary Honeycutt said he believes lightning struck at or near the homes, and the electrical charge traveled along the CSST before jumping to a less resistant pathway nearby such as a metal ventilation duct. It then punctured a hole the size of a pencil tip in the tubing and created a gas leak that could ignite, he said. One of the fires charred the ceiling in the lowest level of Michael Wagner’s dream home, a two-story property near a country club and golf course in an area where farmland has been turned into neatly manicured neighborhoods of newer homes. “It had been burning the joists much like a blowtorch,” said Wagner, whose family moved into the home a few weeks before the fire and has been displaced for months because of smoke damage. The home passed inspection without problems, they said, but they later learned lightning had struck it and created a gas leak in 2004. Firefighters and gas providers point out that the fires seem to occur with an unusual combination of factors — a newer building that has CSST, a lightning strike in just the right place, the puncture of the tubing and the spark to ignite the gas. Most of the Ohio fires were in the central part of the state, though it’s possible there are others that haven’t been linked to the tubing because the reports didn’t include that detail. “I’d say we’ve got a problem with that product, but it’s very anecdotal evidence that we have,” said state Fire Marshal Larry Flowers, who recently started collecting information about such fires around Ohio. A class-action lawsuit filed in Arkansas against several manufacturers claimed the tubing posed an unreasonable risk of fire from lightning strikes, leading to a 2006 settlement that was worth up to about $29 million, according to a copy of the settlement agreement provided by an attorney not affiliated with the case. Lawyers involved in the case did not respond to messages for comment. And an unresolved wrongful death lawsuit blames a CSST failure for a 2008 blaze that killed three children and their grandmother in rural Jefferson, S.D. “For a homeowner or a business owner, really the problem with the product is it’s very unpredictable when it’s going to fail, and it’s a very difficult product to make safe,” said Mark Utke, a lawyer with the Cozen-O’Connor firm in Philadelphia, which is working on the South Dakota case and dozens more it connects to CSST. Manufacturers say the flexible tubing was developed in Japan as an alternative to rigid gas piping that could break during an earthquake, and hundreds of millions of feet of tubing have been installed in U.S. homes and other buildings. It can cost significantly more than black metal pipe, with one recent estimate putting the cost at 65 cents for a foot of rigid pipe in Ohio and about a dollar more for standard CSST. But the tubing is easier to install and can bend around corners, appearing much like a garden hose affixed to ceiling joists. Both types of lines meet existing product and code requirements, but manufacturers say that CSST is the safer option and that it’s less likely to crack, leak or cause a gas explosion because it doesn’t require as many joints to follow the shape of a building’s interior. “Of course we would like everything in the house to be safe from lightning, but that’s not a requirement,” said Bob Torbin, the director of codes and standards for Exton, Pa.-based Omega Flex Inc., one of the producers targeted in lawsuits. “And so we have to ask ourselves: Does this represent an unreasonable risk compared to other risks that you take when you occupy your home?” That’s a measurement that’s tough to quantify, he said. In response to concerns, Omega Flex stopped offering its earlier CSST product this fall and instead is promoting tubing wrapped in a special covering intended to make it more resistant to lightning strike damage. Some manufacturers and builders say there may be other contributing factors in the tubing fires, including whether gas lines are correctly grounded and bonded, meaning they’re linked into a system that would direct energy from a lightning strike into the earth. The president of the Ohio Home Builders Association said he has used the tubing and has no doubt that it’s a safe product when installed properly. “We have it in our home,” said Bill Owens, who’s also founder and president of Owens Construction in suburban Columbus. “A lot of it is just paying attention to the actual installation requirements and the code requirements associated with safe installation.” In Indiana, officials increased code requirements for bonding and grounding in new homes and expanded the required gap between gas tubing and other metal items to help decrease the risk of a problem. The research foundation affiliated with the National Fire Protection Association, which sets national codes that pertain to construction, is studying how to mitigate any lightning-related dangers of CSST and has sought information from various stakeholders in the discussion, including manufacturers and insurers. “Now that it’s out there, how do we make it safe?” said Mitchell Guthrie, an engineering consultant from Blanch, N.C., who has researched CSST and lightning protection and worked with a panel studying concerns. Iowa Fire Marshal Ray Reynolds said people in the insurance industry have linked the tubing to more than 200 fires in his state over the past two years, and he doesn’t believe proper grounding and bonding is the only solution. He said Iowa has seen some problems with properly bonded systems, and he decided to replace the tubing in his own home with the updated, extra-protected CSST. Wagner, the Ohio homeowner displaced by a fire, said he decided to replace his flexible tubing with rigid lines to help his family feel safer. The American Gas Association, which represents gas providers, doesn’t think CSST is a defective product, but it has helped develop product standards and has supported the industry’s effort to educate the public about concerns and to minimize any dangers. “It’s just a situation that could occur, just like lightning could penetrate a home and damage wiring,” said Jim Ranfone, the AGA’s managing director of codes and standards. “It’s not a panic situation, but it’s one that I would sort of keep tabs on to make sure the system was properly bonded,” he said. ___ Associated Press writer Doug Whiteman contributed to this report. ___ Kantele Franko can be reached at http://www.twitter.com/kantele10.

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Olivier Blanchard: 2011 in Review: Four Hard Truths

December 21, 2011

What a difference a year makes … We started 2011 in recovery mode, admittedly weak and unbalanced, but nevertheless there was hope. The issues appeared more tractable: how to deal with excessive housing debt in the United States, how to deal with adjustment in countries at the periphery of the Euro area, how to handle volatile capital inflows to emerging economies, and how to improve financial sector regulation. It was a long agenda, but one that appeared within reach. Yet, as the year draws to a close, the recovery in many advanced economies is at a standstill, with some investors even exploring the implications of a potential breakup of the euro zone, and the real possibility that conditions may be worse than we saw in 2008. I draw four main lessons from what has happened. First, post the 2008-09 crisis, the world economy is pregnant with multiple equilibria — self-fulfilling outcomes of pessimism or optimism, with major macroeconomic implications. Multiple equilibria are not new. We have known for a long time about self-fulfilling bank runs; this is why deposit insurance was created. Self-fulfilling attacks against pegged exchange rates are the stuff of textbooks. And we learned early on in the crisis that wholesale funding could have the same effects, and that runs could affect banks and non-banks alike. This is what led central banks to provide liquidity to a much larger set of financial institutions. What has become clearer this year is that liquidity problems, and associated runs, can also affect governments. Like banks, government liabilities are much more liquid than their assets — largely future tax receipts. If investors believe they are solvent, they can borrow at a riskless rate; if investors start having doubts, and require a higher rate, the high rate may well lead to default. The higher the level of debt, the smaller the distance between solvency and default, and the smaller the distance between the interest rate associated with solvency and the interest rate associated with default. Italy is the current poster child, but we should be under no illusion: in the post-crisis environment of high government debt and worried investors, many governments are exposed. Without adequate liquidity provision to insure that interest rates remain reasonable, the danger is there. Second, incomplete or partial policy measures can make things worse. We saw how perceptions often got worse after high-level meetings promised a solution, but delivered only half of one. Or when plans announced with fanfare turned out to be insufficient or unfeasible. The reason, I believe, is that these meetings and plans revealed the limits of policy, typically because of disagreements across countries. Before the fact, investors could not be certain, but put some probability on the ability of players to deliver. The high-profile attempts made it clear that delivery simply could not be fully achieved, at least not then. Clearly, the proverb, “Better to have tried and failed, than not to have tried at all,” does not always apply. Third, financial investors are schizophrenic about fiscal consolidation and growth. They react positively to news of fiscal consolidation, but then react negatively later, when consolidation leads to lower growth — which it often does. Some preliminary estimates that the IMF is working on suggest that it does not take large multipliers for the joint effects of fiscal consolidation and the implied lower growth to lead in the end to an increase, not a decrease, in risk spreads on government bonds. To the extent that governments feel they have to respond to markets, they may be induced to consolidate too fast, even from the narrow point of view of debt sustainability. I should be clear here. Substantial fiscal consolidation is needed, and debt levels must decrease. But it should be, in the words of Angela Merkel, a marathon rather than a sprint. It will take more than two decades to return to prudent levels of debt. There is a proverb that actually applies here too: “slow and steady wins the race.” Fourth, perception molds reality. Right or wrong, conceptual frames change with events. And once they have changed, there is no going back. For example, nothing much happened in Italy over the summer. But, once Italy was perceived as at risk, this perception did not go away. And perceptions matter: once the “real money” investors have left a market, they do not come back overnight. A further example: not much happened to change the economic situation in the Euro zone in the second half of the year. But once markets and commentators started to mention the possible breakup of Euro, the perception remained and it also will not easily go away. Many financial investors are busy constructing strategies in case it happens. Put these four factors together, and you can explain why the year ends much worse than it started. Is all hope lost? No, but putting the recovery back on track will be harder than it was a year ago. It will take credible but realistic fiscal consolidation plans. It will take liquidity provision to avoid multiple equilibria. It will take plans that are not only announced, but implemented. And it will take much more effective collaboration among all involved. I am hopeful it will happen. The alternative is just too unattractive. From iMFdirect blog

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Jed Kolko: Trulia’s Real Estate Crystal Ball for 2012

December 21, 2011

My crystal ball is never as crystal-clear as I’d like, but I do think that we can expect a gradual economic recovery to move the housing market a few steps back toward normal in 2012. Even so, we still have a long ways to go. As we exit 2011, prices still not have rebounded after their huge declines, inventories are still well above normal, and the foreclosure rate is still far higher than before the bubble. Even the best possible 2012 won’t get us halfway back toward normal. Before getting into the predictions, let me be upfront about what I’m assuming. After 14 months of job gains, I expect the economy to continue its slow but determined recovery. I don’t do my own macroeconomic forecasts, but every single one of the fifty-ish economic forecasters surveyed by the Wall Street Journal expects the economy to grow throughout 2012, and that makes sense to me . Of course, any unexpected severe political or financial crisis could tip us back into recession, and then all bets are off. Here’s to hoping that doesn’t happen. My five predictions for housing in 2012: Delinquencies will go down, but foreclosures will go up. Fewer borrowers will fall behind on their payments next year, thanks to the strengthening economy and refinancings. The share of delinquent borrowers is already down more than a quarter from the peak a couple of years ago. But many borrowers who fell behind on their payments during the housing crisis are still in limbo: last year’s robo-signing controversy threw a wrench in the gears of the foreclosure process. That means that some delinquent loans haven’t yet entered the foreclosure process, and even fewer moved all the way through foreclosure — especially in Florida and other states where foreclosures require a longer legal process. Once a settlement is reached with banks over robo-signing in those states, we’ll see a new wave of foreclosures and foreclosure sales that’s long overdue. It’s a necessary step in getting the housing market back to normal even though it will be painful for people who lose their homes — and will rattle American’s confidence in the housing recovery. Rents will rise — which is a bad thing. With fewer people buying homes and more people losing their homes to foreclosures, the rental market is only going to get tighter especially in older, dense cities like New York , Washington DC and San Francisco . High rents will hold back economic growth if businesses can’t pay workers enough to have a roof over their heads. Squeezed city-dwellers won’t get relief until late 2012: that’s when a wave of new multi-unit construction projects that started late this year will be completed and available for rent. To tackle growth-killing high living costs in the priciest cities head on, local governments need to get rid of height restrictions and arduous permitting processes, which hold back urban construction and push development to the suburbs. Mortgage rates will inch up — which will probably be a good thing. A stronger economy will push Treasury bonds and mortgage rates up because inflation becomes more likely and investors demand higher rates to hold bonds. The Fed’s “Operation Twist” will prevent rates from rising too much, but other forces could push rates up higher or, alternatively, send them falling. If investors think the U.S. government will have trouble paying its debt — which they might if the government can’t agree to raise the debt ceiling or narrow the deficit — they’ll demand higher rates because of that risk; but global economic uncertainty — even here at home — could lower American interest rates if investors think American bonds are safe relative to other investments. Got whiplash yet? You’re forgiven. Lots of factors can push rates up or down. For the housing market, which direction rates go is less important than why. Gradual economic recovery is good news for the housing market even if it means higher mortgage rates — that’s what I think will win out next year. We’ll have higher rates for a reason we can cheer. Government will sit on its hands. In election years, politicians don’t take risks : they’re more talk and less action, so don’t expect any bold housing policy reforms next year. What’s more, with the housing market now recovering, we’re not in enough of a crisis to force political opponents together. The time has passed for bold government action on housing. We’ll look back wistfully on the modest policy wins of 2011: borrowers who’ve kept up their payments can now refinance under the expanded HARP program , and the government is planning ways to sell or rent out vacant homes it owns (which will probably be announced in early 2012). But these targeted policies won’t move the needle on national foreclosures, sales or prices. Smart cities are hot. In 2012, the local housing markets that will enjoy rising prices, new construction or both, are those that start the year with stronger job growth and fewer empty homes holding back the market. Based on these factors, along with other leading indicators, here are my top five cities to watch: Austin, TX , and Houston, TX . The bloom’s not off the yellow rose of Texas . Steady job growth and a construction revival make Austin and Houston two of my five cities to watch. Texas isn’t hung over from the housing boom like the other big states of the South and West, so there’s little to hold back growth. Honorable mention to Fort Worth and San Antonio . San Jose, CA . Wasn’t California at the center of the foreclosure crisis? Didn’t prices there fall more than everywhere else in the country? Yup. But there’s no such thing as the California housing market: California is almost as diverse as the U.S. Even though prices plummeted and foreclosures skyrocketed in inland California, the coast is another world. San Jose’s perennially tight housing market makes it faster to bounce back. The San Jose market — which includes most of Silicon Valley — has rapid job growth and the lowest vacancy rate in the country. Suburbs of Boston, MA . This Cambridge – Newton – Framingham market just west of Boston has a strong jobs engine and, like most of New England, missed the worst of the housing bubble. Honorable mention goes to Worcester , one step further west, and Boston’s northern suburbs around Peabody . These areas all benefit from offering more bang for the buck than crowded, expensive Boston: this is because most people looking to move are searching in more suburban or smaller areas than where they live now. Rochester, NY . That’s my hometown, and knowing what’s happened to Kodak and other pillars of the local economy, I was surprised when Rochester scored on the top 5 list. (I applied the same formula to all cities and did not have my thumb on the scale.) Prices — which fell little during the boom — are stable, and the economy has weathered blow after blow and is expanding. What do these markets have in common? Three — Austin, San Jose, and the area west of Boston — are technology centers. In those three metros, as well as in Rochester, a center of high-skill manufacturing industries, education levels are well above the national average. As the recovery proceeds, smart cities are leading the way. During the housing boom, the go-to cities tended to be lower-skill, lower-education metros. But in 2012, smart is hot: it’ll be the revenge of the nerds. Links to Trulia Insights blog posts: Jobs Report Bodes Well for Housing Asking What Our Country Can Do For Housing Where Construction Activity is Rumbling The Federal Government’s Re-Fi Plan: The Good, The Bad and The Ugly Renting Out Government-Owned Homes is the Right Move – But Probably Wouldn’t Make Any Difference to You Where Vacancies are High

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WATCH: Occupy Wall Street: A Night Of Action

November 18, 2011

As night fell on Foley Square in Lower Manhattan, Occupy Wall Street protesters came out in the thousands for a final rally at the end of the movement’s two-month anniversary. The atmosphere was festive — it even drew a large number of families. Erica Brody brought her young daughter Ella to the protest. “I think it’s important to be out here for our children, and for people to see that we care about the future and what happens to this country. … they are the next generation”, she said. Jessie Spector and Helen Stillman are recent college graduates, who, by their own account, come from wealthy families. They said they want to use their wealth and privilege to leverage resources for change. “All of us have a role to play, including those of us who are connected to communities of the one percent”, Stillman explained. As the protesters gathered to leave the square for a final march across the pedestrian walkway of the Brooklyn Bridge, scores of riot police stood by. A sense of enthusiasm filled the crisp night air. Holding a small candle in his hand, union worker Lewis Torres appeared hopeful about the future of the movement, but when asked about the next step he replied, “I’m feeling good, but that’s the best question — what is going to happen next?” Watch the video above to get a better sense for the scene at Foley Square.

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Sarah O’Leary: Would the Next Courageous Marketer Please Rise Up

November 17, 2011

Fighting the Exploitation of Children Should Be Marketing’s Next Big Cause. If we learned anything from the unthinkable events that occurred on the Penn State University campus, it is that the American public will not stand for the exploitation of our children. The documented cases of alleged abuse at the hand of a trusted adult sparked massive outrage across the country and around the world. As marketers, we can help those in our society who are the most at risk to predators such as accused serial rapist Jerry Sandusky and the countless others who look to harm or neglect children. We can use our power for good. There was a time when the marketing industry thought any association with something as negative and terrifying and potentially deadly as breast cancer would be disastrous. Unthinkable. Brand imploding. Who wants to think of cancer and dish soap at the same time? It was lunacy! But in came Susan G. Komen and the Yoplait Lids program and a host of other cause-related partnerships to make believers of us all. We learned that a) as long as the shopper believed in the charitable cause and b) believed in what marketers were doing to assist it, she would support it. Women, even more than men, are extremely motivated by cause related marketing. Since they account for an estimated 90 percent of packaged goods purchase decisions and influence the same percentage in all household purchases, it only makes sense that brand leaders look to cause-related initiatives as spokes in their marketing wheels. (This is not to say that men-directed products aren’t fertile ground for a child welfare initiative — they certainly are. Dads and granddads and brothers are maddened by these heinous crimes, thus prime audiences for exploration.) The Center for Missing and Exploited Children, R.A.I.N.N. (Rape Abuse and Incest National Network) and a host of others fighting for the welfare of children as well as the brands themselves would stand to benefit greatly by creating worthwhile marketing partnerships. The brands associated with such sponsorships, knowing that adults of all shapes and sizes see the importance of such support, would certainly benefit both financially and in terms of image. And if a brand wanted to “own” a charity, it could begin its own. The stigma of brand vs. “scary charity” association was in the minds of brand marketers, as we learned with breast cancer, not in those of shoppers and consumers. Just imagine … For everyone who “friends” Pillsbury baked goods products on Facebook, a donation is made to Pillsbury’s “Rise Up for Kids!” Program, benefiting End Exploitation Now. For every wrapper submitted at retail of specially-marked Pillsbury products, more money is donated. Retailers who purchase Pillsbury products can receive “Rise Up!” grants that they can deliver to appropriate children’s charities in their areas. Pillsbury sponsors a “Rise Up!” website, hotline and Facebook page that kids in need of assistance could call for help. The possibilities are only limited by our imaginations. We learned from the fervor caused by recent events (and from our own cause-related history) that anyone of us who sells anything in America could benefit from a partnership that protects children. Here’s hoping we Rise Up and answer the call. Sarah O’Leary is a creative marketing expert, author and public speaker. She works with corporations and agencies worldwide to develop innovative solutions to their marketing challenges. She can be reached at soleary64@gmail.com

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Walmart Scales Back Health Care Benefits For Part-Time Employees

October 21, 2011

NEW YORK — Wal-Mart Stores Inc., the nation’s largest private employer, is scaling back health care coverage for future part-time workers while raising premiums for some full-time workers. The discounter says that rising health care costs are forcing it to eliminate healthcare coverage for future part-time workers who work less than 24 hours a week. New part-time employees who average 24 hours to 33 hours a week will not be able to include a spouse as part of their health care coverage. However, their children will qualify under their plan. The company also says full-time workers who are smokers will see their premiums substantially rise. Wal-Mart, based in Bentonville, Ark., defines full-time workers as anyone who works 34 or more hours per week. The company employs more than 1.4 million workers.

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WATCH: Fox News Host’s Bizarre Mockery Of Occupy Wall Street

October 15, 2011

Fox News host Eric Bolling found a new way to mock the Occupy Wall Street protesters on Friday’s episode of “The Five.” Bolling wore a tin-foil hat and nerdy glasses, and held a sign reading “Occupy The Five.” The gesture seemed to go down well with most of Bolling’s colleagues, who chortled appreciatively at his lampoonery and played video of what they felt were stupid protesters in the movement. Co-host Andrea Tantaros chimed in, saying that the protesters never brushed their teeth. Greg Gutfeld added that he didn’t see any point to Occupy Wall Street. Co-host Bob Beckel was not so amused, though, telling Bolling he should be “embarrassed” for his family. Occupy Wall Street has not exactly been met with joy and approval at Fox News. Ann Coulter compared the protesters to Nazis during an appearance on the network’s sister business channel, and Bill O’Reilly called them “crackheads.” The movement has returned the favor, criticizing Fox News in interviews and shouting down its hosts when they have made the trek to the Lower Manhattan encampment. WATCH: Watch the latest video at video.foxnews.com

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Is This The Next Michigan?

October 15, 2011

ANN ARBOR, Mich. — When Rich Sheridan lost his job in the dot-com bubble about a decade ago and decided to start his own company, he had some trouble explaining the idea to his wife. “I came home and told Carol I had lost my job and she went, ‘So you’re unemployed,’” he said. “And I said, ‘No, I’m an entrepreneur now.’” Even after weeks of working in his basement with friends on the business plan, when it came time to invest some $15,000 of the family’s money in the nascent firm, Carol was confused. “I was just thinking, what business?” she recalled, adding that she thought her husband and his friends had been applying for jobs together in the basement. What they had been plotting instead was Menlo Innovations , a software-design outfit that now has 42 employees and that Sheridan and his partners expect will bring in about $5 million in revenue this year. And they weren’t alone. While Michigan’s economy is distressed overall, the emergence of countless small technology start-ups here in recent years gives some hope that there are better days ahead. But even as a report issued this month showed that, for all the state’s challenges, Michigan gained more tech jobs than any other state in 2010, there is still some lingering uncertainty about a brand of business that is much different from automobile manufacturing. Take Carol Sheridan’s father, for one. He worked for Chrysler for 10 years and was later a tool and die maker for an auto parts manufacturer. When Rich Sheridan wanted to start Menlo, his father-in-law “looked at him funny,” as James Goebel, another of the founders, remembered. The state as a whole has had to wrap its mind around these new kinds of companies, which are among the fastest growing in Michigan. Even as GDP growth struggles here, the high concentrations of students and engineers have made it an attractive place to start new companies. Many of these have been founded by graduates of the University of Michigan, which recently announced that it would begin investing in companies that begin on its campus. Still, Goebel said that Michigan investors in general are more risk-averse than venture capitalists in other states. “People here only want to start the next HP or Apple,” he said. “But you have to start 10,000 firms to end up with HP and Apple. It’s a new idea here that you would start companies knowing so many would fail.” Menlo certainly hasn’t failed, and nobody is looking at its founders with anything except admiration anymore. The company has been named a “Michigan Economic Bright Spot” and one of the fastest-growing private companies in America. Software they developed for a cytometer manufacturer helps count cells in fluid and has been one of the firm’s biggest successes. Now they’re ready to branch out into even riskier territory. Nontraditional business arrangements, such as deferring design fees in exchange for an equity stake or royalties in the final product, have always been central to what Menlo does, and was central to getting the firm off its feet in its earliest days. Now the founders are considering making this kind of “leveraged play” almost their entire business. “It’s a completely new model,” as Goebel put it, “and that’s true for us and also for the state in general.” This post is part of Patch: The Road Trip . Read Arianna Huffington’s introduction to the project , and be sure to follow Paul on Twitter and MapQuest .

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The Jefferson Innovation Summit: Business Leaders Brainstorm A New Era Of American Creativity

October 14, 2011

CHARLOTTESVILLE, Va. — No one knows where good ideas come from. In some cases, the answer may simply be to throw a bunch of brains together in a room and see what happens. That was the approach favored by the Jefferson Innovation Summit, a conference hosted by the University of Virginia this Tuesday and Wednesday. Named for Thomas Jefferson, who founded the university, the summit was aimed at kick-starting American entrepreneurship and encouraging new forms of thinking. What’s the best way to go about that? Well, education will certainly play a role. Patent law might need some tweaking. The government could stand to rethink its immigration policy. And we could use a few more movies like “The Social Network.” It all sounds ambitious — maybe even a bit blue-sky — but none of it was for a lark, as CNBC executive Tyler Mathisen pointed out early on. After inching along for the past couple of years, growth in the U.S. has just about come to a halt. Everyone — from the frantic job-searcher to the overworked salaryman — is struggling as a result. Meanwhile, other economies are surging forward. At the summit, China’s name was repeatedly invoked, often in faintly ominous tones. “We do not have the playing field to ourselves anymore,” Mathisen told the attendees in his introductory remarks on Tuesday. The U.S. needs an explosion of jobs. But more than that, those at the summit agreed, the country needs to rediscover its imagination. Many occupations that were available to the middle class in the 20th century, like sales and administrative work, are headed overseas or being swallowed by new technologies . Meanwhile, student testing from the past two decades suggests that creativity is on the wane among American schoolchildren — the same kind of creativity that gives rise to new industries and new ways of doing business. If the U.S. is to recover from its doldrums, it seems, innovation will need to take center stage once again. This is a lofty goal, and by all accounts, the summit’s participants only got incrementally closer to it. Days were spent tossing out suggestions, not crafting and polishing a game plan. At times, the scene even recalled the leaderless potpourri of Occupy Wall Street , another group of earnest problem-solvers struggling to focus their energies to a single point. But the summit’s organizers say this week’s events were less a self-contained process than a jumping-off point for something bigger. “A lot of ideas are just stewing right now,” said Dan Bierenbaum, a senior research associate at the Batten Institute at UVA’s Darden School of Business, which arranged the summit. This week was about “planting seeds,” Bierenbaum told The Huffington Post. PAINTING A PICTURE If the summit was a place to plant seeds, the gardeners were certainly an accomplished bunch. Most of the summit participants — a handpicked set of 60 or so — boasted long titles and longer resumes, and represented a wide gamut of interests. There were academics and business leaders, engineers and mayors. There was a sustainable farmer, a White House technology officer, an executive at General Electric and a Grammy-winning music producer. The members of the group started off with a role-playing business scenario — steered by Mathisen, playing a grad student who’s invented a new kind of ecologically friendly housepaint. Mathisen took participants through some of the twists and turns faced by entrepreneurs: Where does a young business go to get funding? How does it decide where to build a manufacturing base? What happens when a huge conglomerate like General Electric calls up with an offer? They were hypothetical questions, but reflective of real challenges that small businesses face all the time. The conversation on Tuesday didn’t yield pat answers, but it got the wheels turning, attendees say. At that discussion, at a dinner on the Monticello grounds that night and at the next day’s brainstorming session, much of the talk focused on the best way to develop and attract talent, and to make it as easy as possible for good ideas to become thriving enterprises. The most frequently cited issue was education — how to get students thinking creatively, not just in college but as early as kindergarten. That would only happen, the participants agreed, if there was enough money to pay for teachers and technology. On Tuesday, John Abele, the founding chairman of Boston Scientific, offered the view that students won’t flock to the technical studies without a cultural shift — something to make it “attractive and fun and interesting and cool to learn skills of engineering and science.” One way to get that going, another participant told The Huffington Post, would be to wield the power of fiction — to tell “great stories of successful entrepreneurs,” as with “The Social Network,” that could light up young people’s dials. But there were other suggestions beside winning the hearts and minds of youth. According to people who attended Wednesday’s session, which was closed to the media, participants talked about the need for managers to focus more on long-term projects, rather than short-term returns since new inventions and processes often need time to gestate. They talked about setting higher standards for patents, requiring new inventions to be truly original rather than just minor improvements to existing products in the hopes of pushing developers to be more creative. And they talked about revising immigration law, so that people who come to the U.S. to get advanced degrees can have an easier path to citizenship. Some people suggested that since so much commercial growth is driven by immigrants, perhaps educators and business leaders should have a say in who gets a visa or a green card. The conversations ranged far and wide, according to those who were there. And while everything that came up remains theoretical, the summit participants are serious about carrying their ideas forward. “I left knowing there are an incredible amount of very smart people and there are answers to be had,” said Albe Zakes, global vice president at the recycling company Terracycle. Zakes told The Huffington Post that though some of the problems under discussion had initially struck him as “unmanageable,” he left the talks “optimistic … that the answers do exist and the problems can be solved.” “EVERYBODY WINS” In a few weeks, the group will finalize and publish a mission statement — tentatively known as a Declaration of Innovation, in a nod to Thomas Jefferson’s most famous piece of writing. After that, it’s not clear what will happen. A summit attendee told HuffPost that once the Declaration is finished, its authors — a handful of participants from the original group who attended the summit — will try to circulate it among politicians, federal agencies, business leaders and anyone else who might be interested in a road map for generating economic growth and a culture of creativity. Some logistics have yet to be worked out. Everyone agrees, for example, that schools need to hire talented, dedicated teachers and equip them with top-of-the-line technology, but no one can say for sure where that money will come from. And the Declaration’s authors will have no way of knowing whether their recommendations will be heeded. Zakes told The Huffington Post that, while he believes the summit has already generated good ideas — ones that, “in a vacuum,” would “have a major, major impact” — he’s not sure the fractious and highly polarized federal government is “healthy” enough to put any of them into action. Still, the high achievers at the summit are likely to get some attention simply for who they are, and if Tyler Mathisen, the organizers and the participants are all right, the innovation agenda is one the country can’t afford to ignore. Millions of Americans are waiting for the economy to turn around, but that won’t happen by itself. “We must act, and we must do,” Thomas Skalak, vice president for research at the University of Virginia, told HuffPost. “Everyone wins if we get this collaboration right. And if we don’t get it right, then nobody wins.”

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Walmart Warehouse Under Investigation By California Labor Officials

October 14, 2011

WASHINGTON — Investigators in California have discovered numerous labor law violations at a massive warehouse handling Walmart goods, according to state officials. At the warehouse in Riverside County, Calif., operated by Walmart contractor Schneider Logistics, inspectors with the state labor department found that two of the temporary staffing agencies who supply manual labor have not been keeping track of how much money workers are owed. One firm, Impact Logistics, Inc., was issued a $499,000 fine for not providing itemized wage statements to the workers who unload and load products at the facility. The company was also issued a warning for failing to maintain time records, and another staffing agency, Premier Warehousing Ventures, was issued a similar warning. There are around 200 workers at the warehouse. Impact Logistics did not return a phone call seeking comment. Jim Pittman, chief operating officer of Premier, said the company plans on proving that it was actually in full compliance with the law. “My employees mean the world to me,” Pittman said. “It is our intent to abide by all of the labor laws whether it be in California or the other states we work in.” None of the workers in the warehouse are employed directly by Walmart, but labor department officials said the products inside were bound for Walmart stores. Dan Fogleman, a Walmart spokesman, said the company has reached out to Schneider to assess the situation. “This facility is run by a third party, and this is an issue involving some of their subcontractors,” Fogleman said. “Although we’re not involved in this matter, the contracts we have in place with third parties require that they follow the law, and that’s something we fully expect.” State Labor Commissioner Julie A. Su told HuffPost that many workers were not given proper pay stubs, and it appears that some may not have been paid for all the time they worked. Although many workers have already been interviewed on-site and off, she said the agency will be carrying out a fuller investigation in the coming weeks. Su added that the layers of subcontracting in warehouse work can make it difficult to enforce labor law. “Certainly that’s one of the challenges,” she said. “Warehouses are one example of the ever-increasing contracting out of labor. It’s difficult for enforcement, and in many instances it’s a deliberate effort to avoid compliance.” Wage and safety complaints are not uncommon in American warehouses. The Morning Call recently chronicled the sweatshop-like conditions for workers toiling in an Amazon distribution center in Pennsylvania. Workers there said the supervisors refused to open bay doors citing the possibility of employee theft, and the warehouse grew so hot on some days that ambulances waited outside at the ready to treat workers for heat exhaustion. Schneider, the Walmart contractor, was not cited in the California inspection, since the workers are employed directly by the labor staffing agencies and not by the warehouse company. A Schneider spokeswoman told HuffPost in a statement that the company has cooperated with the investigation: “We expect the agencies we work with to comply with all California and federal labor laws. We believe that we are in full compliance with applicable laws and regulations. We expect our vendors to fulfill their responsibilities as well.” The Riverside facility is one in a massive network of warehouses in California’s Inland Empire region. Many of the facilities receive clothing, electronics and other dry goods coming from China that are bound for retail stores throughout the United States. Some of the country’s biggest retailers use warehouses in the area, but workers in the warehouses are often employed through layers of subcontracting, blurring the lines of accountability. Sheheryar Kaoosji, research and policy director at the worker advocacy group Warehouse Workers United, told HuffPost that the allegations against the temp companies operating in the Riverside facility are common in Inland Empire warehouses. He said the mostly Latino workers are often hired on a temporary basis and end up earning around the minimum wage. Temp workers are more vulnerable to alleged abuses than direct hires, he said, and many of them are paid according to a confusing piece-rate schedule. “Workers don’t know how much they’re being paid — they’re not showed on their paychecks,” Kaoosji said. “Five or six years ago, there was a higher percentage of direct hires. That’s been slowly eroding. Every year there are more people employed through the agency.” In addition to the Riverside facility, Schneider Logistics operates an extensive Walmart distribution center outside Chicago, Ill. Earlier this year, workers at that facility filed a class-action lawsuit against Schneider accusing the company of violating labor laws. At the time, Robert Hines, who has worked on a temporary basis in Chicago-area warehouses for years, told HuffPost that he wasn’t compensated for what was often grueling work in the Schneider-operated facility. “I noticed after a couple of weeks that my checks didn’t match my hours,” said Hines, who claims he was shorted on overtime as well. “People are breaking their backs, trying to feed their families and be right.” Citing the California case, Su said that without proper pay stubs it can be impossible for a worker to know whether or not he’s been paid appropriately. “In this industry and others like it, this example makes it very clear that the failure to provide a wage statement is part and parcel of an effort to exploit workers,” she said.

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Barter Networks Becoming Increasingly Popular In Greece

October 1, 2011

VOLOS, Greece — The first time he bought eggs, milk and jam at an outdoor market using not euros but an informal barter currency, Theodoros Mavridis, an unemployed electrician, was thrilled. “I felt liberated, I felt free for the first time,” Mr. Mavridis said in a recent interview at a cafe in this port city in central Greece. “I instinctively reached into my pocket, but there was no need to.”

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Russell Simmons: ‘Every Single One’ Of My Employees Pays More Taxes Than Me

September 30, 2011

Famed investor Warren Buffett and Def Jam co-founder Russell Simmons have at least one thing in common: They both want the U.S. government to raise their taxes. “All my employees — every single one — paid more taxes than I did,” Simmons told MSNBC’s Martin Bashir on Thursday in a segment highlighted by Think Progress. “We need to make the rich pay their fair share.” This is the second time in as many days that Simmons, whose estimated net worth is $340 million , has called for the federal government to raise taxes on America’s wealthiest citizens. By doing so, he stands alongside Warren Buffett, the third-richest man in the world, who in August similarly called for raising taxes on the rich in a New York Times Op-Ed. Simmons also issued the request in a blog post on Wednesday. “I believe in a nation where everyone gets a fair share of the fruits of our labor and where everyone pays a fair share for what they receive,” he wrote on his site . “I am asking the United States government to raise my taxes and not allow the Republicans to use this economic recession as an opportunity to strip the basic programs that protect our most vulnerable.” Asked by MSNBC’s Bashir whether raising taxes on the wealthy would threaten an already weak recovery, Simmons was unfazed. “I hired based on pre-tax profit, not post-tax,” said Simmons, author of Super Rich: A Guide to Having it All . He continued: “We need to organize all the working class and underserved communities to go to work to fight off this money grab… that a great number of the [rich] corporations and individuals to undermine opportunities to give opportunity and resources to the poor.” Simmons has used multiple platforms to get across his message. On Wednesday, he joined the Occupy Wall Street protests in downtown Manhattan , according to Mogulite. And most of the country would seem to agree with the drive to raise taxes on the rich. In a recent survey, nearly three-quarters of all respondents — and two-thirds of Republicans — said they would support President Obama’s proposal to tax millionaire households at the same rate as the middle class. The rule was unveiled in early September as part of a larger package including other tax increases and spending cuts. If enacted, it would apply to roughly 60,000 people , according to The New York Times .

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13 Devastating Numbers About Poverty In America

September 14, 2011

It’s far from a secret that the U.S. economy is in trouble. A new report by the U.S. Census Bureau just puts numbers on what so many Americans already know. Across the country last year, the state of poverty, income and health insurance worsened. Indeed, 15.1 percent of Americans lived in poverty in 2010, the highest percentage since 1993, according to the U.S. Census Bureau’s Tuesday report on poverty . In total numbers, 2.6 million more people fell into poverty last year, bringing the total to 46.2 million nationwide. For a family of four, poverty is defined as living with an income of $22,314 or less. An increasingly stratified economy has taken its toll on income as well. The same report finds that inflation-adjusted wages for the median male worker are at lows not seen since 1968, as businesses begin to tailor product lines to account for a country with more rich and poor, and fewer middle-class. Health insurance benefits has also taken a hit. Many employers are beginning to suspend worker health insurance benefits or instead rely on part-time workers to cut costs. The Census Bureau reports that 1.5 million fewer Americans were covered by employee-sponsored health plans in 2010. Furthermore, the number of Americans with no insurance at all now sits around 50 million. Dire, indeed. Here are 13 devastating numbers from the U.S. Census Bureau’s report, compiled by the Economic Policy Institute :

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Gary Shapiro: We Can Handle the Truth: Our Government Is a Jobs Killer

September 13, 2011

There was a moment in President Obama’s speech to a joint session of Congress Thursday night when Candidate Obama returned to the limelight. Unfortunately, it was short-lived. Behind all the passion and eloquence that Obama was able to muster for one of the biggest speeches of his presidency, there was the same old stuff. And Americans should expect the same old results. While it’s not quite accurate to say that Obama double-downed on the failed economic policies of his administration — his $447 billion jobs proposal is half the 2009 stimulus — there was absolutely nothing to suggest that Obama is prepared to change course. All the lofty rhetoric couldn’t mask the president’s continued commitment to Keynesian economics and willful ignorance of the needs of job creators. The truth requires listening to those who create jobs. I represent more than 2,000 tech companies in my day job, but I also hear from lots of entrepreneurs and other business leaders. Since the early 2011 launch of my book, The Comeback: How Innovation will Restore the American Dream , I have traversed the country speaking to varied groups and after each talk I am surrounded by job creators with similar stories. The furniture maker in upstate New York; the couple with a landscape company, nursery and day care center in Michigan; the Virginia tech start up; the Oregon inventor and the Florida restaurant owner: they all are patriotic Americans who want to grow their businesses and help the economy. But none of them are hiring. Why? For very good reasons, many related to the tough economic environment but many — startlingly 0 — related to policies of our government. I ask why no one, especially those in power, raises these subjects. More often than not, the answer is some version of the famous retort by Col. Nathan Jessep in the movie A Few Good Men : Because Americans “can’t handle the truth.” Well, I think Americans can handle the truth, and I offer these unconventional views in the spirit that a healthy economy and jobs are vital to our future. Our anti-discrimination laws hurt new jobs creation . Our nation has tens of thousands of underemployed lawyers eager to take on the cause of any fired worker. Anti-discrimination lawsuits and EEOC complaints are easy to file, costly and time-consuming to defend. Combine this with our inability to take responsibility for our own failures and we have a litigation cocktail which discourages hiring. Of course discrimination against individuals based on suspect classification is terrible, but the laws aren’t helpful in encouraging new hires. We are not yet Europe, which makes every dismissal costly, but we can take advice from Laurence Parisot, the head of France’s largest employers’ union, Movement of the French Enterprises, who said , “We will hire more people if it’s made easier to fire them.” Two-year unemployment compensation discourages jobs . According to an analysis by the Federal Reserve Bank of San Francisco , the Obama Administration’s extension of unemployment benefits to 99 weeks increased the U.S. jobless rate as much as 0.8 percentage points. Or put another way, serious job seeking occurs when benefits are about to run out. As an employer, I have twice experienced job candidates asking to delay their start date until after unemployment payments end. I am not alone. In a recent article, The Wall Street Journal recently quoted an Alabama farmer looking to hire who was encountering “Americans who showed up to apply for jobs demanded that he pay them off the books so that they can continue to collect unemployment benefits.” As I’ve argued before , one way to end this fraud is to tie long-term unemployment benefits to volunteer work. The 2010 stimulus package did not boost the economy. The $787 billion stimulus package was divided into roughly three parts : a third to the states so they could avoid tough financial choices; a third to taxpayers in the form of barely noticeable reduction in taxes and a third for pork barrel projects, the so-called “shovel ready” boondoggles that replaced real infrastructure investment. What do we have to show for all this? An unemployment rate above 9 percent and anemic 2011 GDP growth . If the money had at least been invested in real capital infrastructure we would be better off. The same is true with the so-called “cash-for-clunkers” program, first-time homebuyers and other feel-good programs. Each one borrowed from our children so we can feel better today. Shameful! Our political leadership’s business antipathy and uncertainty on taxes, health care and spending discourage jobs creation. People running and owning businesses face political uncertainty in so many areas. They have no idea of how much and what type of taxes they will have to pay over the next few years. They face a new, far-reaching health care law that imposes new costs and may or may not be repealed by a new Congress or the Supreme Court. They fear a president who has no business background, few advisers with business experience, and who encourages an anti-business climate, higher taxes on wealth creators and class warfare. And they have the National Labor Relations Board telling companies in which states they can manufacture and seeking to make secret overnight unionization the status quo. High corporate taxes and pro-union protectionism discourages jobs creation. At 35 percent, the U.S. has one of the highest corporate tax rate in the developed world , which forces businesses to invest abroad. The United States also has not passed a free trade agreement in six years. Although the president talks a good game on free trade, he and his Democratic allies keep adding new conditions to the Panama, Colombia and South Korea free trade agreements that have been stalled for years. This means our job-creating exporters pay more than our competitors. Can Americans handle this truth? I think they can, but it will require leadership and responsibility from our elected leaders to do something about it. We need to stop with the little ideas, like lowering the tax withholding and even good ideas like Patent Reform, and go to the real issues — even if they are uncomfortable. Challenge Americans to accept responsibility, sacrifice for their children and contribute to society. The status quo is leading us down the path of decline. Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA), the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times bestselling book, “The Comeback: How Innovation Will Restore the American Dream.”

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Shocking Crowd Reaction At GOP Tea Party Debate

September 13, 2011

A bit of a startling moment happened near the end of Monday night’s CNN debate when a hypothetical question was posed to Rep. Ron Paul (R-Texas). What do you tell a guy who is sick, goes into a coma and doesn’t have health insurance? Who pays for his coverage? “Are you saying society should just let him die?” Wolf Blitzer asked. “Yeah!” several members of the crowd yelled out. Paul interjected to offer an explanation for how this was, more-or-less, the root choice of a free society. He added that communities and non-government institutions can fill the void that the public sector is currently playing. “We never turned anybody away form the hospital,” he said of his volunteer work for churches and his career as a doctor. “We have given up on this whole concept that we might take care of ourselves, assume responsibility for ourselves … that’s the reason the cost is so high.” The answer may have struck a truly libertarian tone but it was clearly overshadowed by the members of the crowd who enthusiastically cheered the prospect of letting a man die rather than picking up the tab for his coverage.

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Disaster Insurance: Many Don’t Have Enough To Rebuild Home After Disaster

September 1, 2011

NEW YORK (Ben Berkowitz) – Nearly one in five homeowners does not have enough insurance to rebuild his home if it is destroyed in a disaster, market research company J.D. Power said on Thursday in its annual survey of insurance customer satisfaction. The survey comes just days after Hurricane Irene laid waste to tens of thousands of properties along the U.S. East Coast. The country’s largest home and auto insurer, State Farm, has already received more than 52,000 claims, and estimates suggest U.S. insurers will lose up to $6 billion from the storm. J.D. Power said 16 percent of the 9,100 holders of homeowners insurance it surveyed were undercovered. On a 1,000-point scale, customer satisfaction among that 16 percent was 40 points lower than among those who said they were sufficiently covered. People with flood insurance were also deeply dissatisfied. Though flood insurance is provided by the U.S. government, the policies are written and administered by private insurance companies. In many cases, homeowners sign up for their flood policy from the same carrier as their regular coverage. The average satisfaction rating for those with a flood policy was 735, a full 34 points below the industry average. People with earthquake coverage had much higher satisfaction ratings, suggesting the problem is unique to flood plans. The National Flood Insurance Program is billions of dollars in debt, with limited capacity for repayment, and reforms are caught up in congressional in-fighting over whether those debts should be forgiven. That debate is being magnified by the extensive flooding Irene caused. For the 10th year in a row, J.D. Power said privately held Amica Mutual was the highest-rated insurer, 25 points clear of its nearest competitor. Amica has also been the highest-rated insurer in J.D. Power’s auto rankings for 12 years running. One insurer, USAA, beat out Amica in the homeowners’ rankings, but it is not counted because it caters exclusively to military families. J.D. Power, perhaps best known for its surveys of automotive customer satisfaction, is a unit of McGraw-Hill Cos. (Reporting by Ben Berkowitz; editing by John Wallace) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Walsh Slams Buffet’s Tax Hikes, Appears On Chicago Tonight Wednesday

August 31, 2011

U.S. Rep. Joe Walsh’s (R-Ill.) scheduled appearance on WTTW’s “Chicago Tonight” Wednesday will cover the economy, debt and revelations about his personal finances–and will no doubt mention his inflammatory appearance on the Bloomberg news show “Inside Track” Tuesday where he attacked billionaire businessman Warren Buffet for his recent op-ed calling for a tax hike on the super-rich Buffet’s August 14 article in the New York Times highlighted proportional tax discrepancies that give breaks to America’s millionaires and billionaires and volunteered himself, and other “coddled” wealthy businessmen, for higher taxes. “I think Mr. Buffet needs a day job. He’s got too much time on his hands,” Walsh said on “Inside Track” Tuesday. (Scroll down for video) “This is ridiculous. He’s so disingenuous. He’s heating up his rhetoric because his support for the President is so desperate.” The Tea Party politician slammed Buffet’s claims that lower- and middle-class Americans pay a larger percentage of their income in taxes than the wealthy, especially in the case of capital gains and dividend “loopholes,” arguing that there are too few millionaires and billionaires for a tax increase of that group to make a difference. When asked if the Tea Party’s inexperienced politicians could have impacted the nation’s credit downgrade, he insisted that Tea Partiers weren’t the problem. “We lost our credit rating because this country is in debt,” Walsh said. “We lost our credit rating because this President has increased the debt $4 trillion in two and a half years. He knows that. Warren Buffett knows that. And that’s what the credit agencies told us. Look, the American people understand that if these troublesome Tea Party Republicans hadn’t gotten here, we’d erase the debt ceiling without even thinking about it. And we’d be spending away our kids’ future every single day.” Walsh will be on “Chicago Tonight” on WTTW Wednesday at 7:00 p.m. CT. Watch Walsh’s rant against Warren Buffet’s tax proposal:

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Jane D. Wurwand: Dreaming Is Fine, but Doing Is Better

August 31, 2011

The first day of school definitely inspires optimism for the future. Speaking as the mother of a young woman who will soon begin her freshman year in college, of course we have high hopes. And no guarantees. Americans have always been dreamers. For generations, Americans have promised their children that they can be brain-surgeons and rocket-scientists, cowboys and ballerinas, astronauts or the president of the United States. Part of this optimism springs from the faith of immigrants who flooded into America a century ago, and did, indeed, create success in ways which never would have been possible in their native lands. British people like myself tend to regard this level of optimism as a bit naïve — a cultural difference, perhaps. But given the current state of the world economy, we must temper “Dream big!” optimism with pragmatism. I have spent my entire career — 30 years — encouraging and motivating young women to achieve. My specific expertise is in professional skin care, and the creation and running of a skin care business. My skills are very tangible, and my approach has always been practical. And I have used my skills to help literally thousands of women succeed in this profession. Was I a dreamer? Dreaming sounds abstract to me now, and I was always more of a doer. I began working at 13, after being told by my own hard-working mother — she raised me and my three sisters on her own — that I needed to be able to “do” something to make money, so that I would never, ever have to rely upon a man for a place to live and something to eat. My upbringing was not especially future-minded, although Mum did teach me to save money for a rainy day (we certainly have plenty of those in the UK). The focus was on the here-and-now. Not lofty, and not so very dreamy. I quickly learned there is no shortcut around sweat-equity. As a “Saturday Girl” in the neighborhood salon, my sweat-equity began with sweeping up hair cuttings and sterilizing hair-pins. Although I consider myself a perpetual student, I did not pursue an academic education. I was trained and licensed in the craft of professional skin care, which is comparatively short-term. When I had my license, I went right to work, and I’ve never stopped. This feeling of hands-on, here-and-now is what drove me to launch joinFITE.org in January of this year. The women — we’re aiming for 25,000 — we will be empowering with microloans funded through this initiative may talk about dreams. These are dreams of putting food on the table, and creating a better life for their children in very immediate terms. I recently encountered a remarkable woman who represents both the dream and the willingness to work tirelessly to make it real. Her name is Rosa, and she is the owner of a shop called Native Hand by Hand in San Francisco. Rosa grew up in a family of gifted artisans in Ecuador, and her shop is filled with exquisite silver jewelry and clothes made by artisan cooperatives in her country. But in 2009, when she wanted to expand, she was deemed “unbankable” by major lending institutions, since she had no credit history. Her first microloan from Opportunity Fund allowed her to invest in inventory, and establish herself as a business. Now joinFITE has funded her second microloan, allowing her business to expand. Rosa’s so proud that her daughter has just graduated from high school, and you can get a glimpse of this success story here . Maybe it’s semantics, but I don’t know that I would call Rosa a “dreamer.” Instead, I see unrelenting doing, working, and sacrificing for a clear objective, which is to give her daughter the tools she needs for success. I am relentlessly upbeat, but I am about to send my oldest daughter off to college with this caveat: wishing and wanting will not make it so. The vision and the dream are just the first step. The sweat-equity is as important, maybe more so. For entrepreneurs like myself in particular, this sweat-equity means 12, 14, 16-hour days, and the potential of literally years without profit. The dream and vision, the wanting and the wishing, are what allow you to persist spiritually through the hardship. But I place wishing and wanting into the same category as Snow White warbling “Someday my Prince will come.” Maybe in a 1937 Disney cartoon, but I don’t advise any of this as a strategy for success. I was reminded of this by Susana, another woman I also met on my recent trip through Northern California. Susana received a joinFITE microloan for her daycare center called Happy Faces in San Jose, and word-of-mouth in the community has enabled her business to quickly grow to maximum-capacity. In fact, she is now sought out by mothers-to-be, who place their names on a waiting list. It’s worth mentioning that Susana, like Rosa –and like myself, at age 13 — had made her living sweeping and cleaning, before being licensed as a professional in her chosen field. For everyone starting a new school year, starting a new business or just looking for a job: there is no “secret.” Americans love the word “visualization” these days, and it’s the theme for countless books, seminars, success-coaches and self-professed entrepreneurism gurus who tell willing believers that if they just want something badly enough, it will happen. But the success of Rosa, and Susana, and of Dermalogica, too, are proof that this simply isn’t so: you just can’t skip the heavy lifting. Learn more about my recent trip to Northern California to meet Rosa and Susana .

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Afghanistan- Four children killed in Taliban car bombings

August 28, 2011

(MENAFN – Gulf Times) Four children were among seven Afghans killed yesterday by two suicide car bombings in the country’s volatile south, including one against police and soldiers collecting their …

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Perry To Feds: You Owe Texas Big Time

August 27, 2011

By APRIL CASTRO, ASSOCIATED PRESS (AP) AUSTIN, Texas — Texas Gov. Rick Perry has asked the U.S. Department of Homeland Security for nearly $350 million to cover the costs he says Texas has incurred incarcerating undocumented immigrants in state prisons and county jails. In a letter to Homeland Security Secretary Janet Napolitano, Perry reiterated a claim he’s often leveled against the federal government: that it’s not doing enough to secure the border with Mexico and as a result, has allowed undocumented immigrants to enter the U.S. and use taxpayer-funded resources, including the prison system. The letter was dated Aug. 10, three days before the Republican governor formally announced he is running for president. Reached after-hours Friday by phone, DHS spokesman Matthew Chandler said he wasn’t in position to comment and said he could not confirm that the DHS had even received the letter. Perry has been criticized by some fellow conservatives as being too lenient on undocumented immigration issues. Unlike fellow GOP presidential hopeful Rep. Michele Bachmann, Perry does not think the U.S. should build a wall spanning the entire Mexican border. Perry also has supported discounted tuition rates for the children of undocumented immigrants at Texas universities, and he has said Arizona’s tough-on-immigration law wouldn’t be right for Texas. As governor, Perry was one of the first to talk about immigration by breaking out the issue of border security, a move that has won him support from conservative Hispanics. But he angered Hispanic leaders in June by endorsing legislation that would have prohibited cities from adopting “sanctuary” rules for handling suspected immigrants. In his two-page letter to Napolitano, Perry described the formula used to come up with his $349.2 million bill, including $94.4 million to cover costs incurred by county jails. “During tough economic times, when communities are making difficult decisions about their own budgets, Texas counties are being asked to cover more than $94.4 million in direct costs related to housing undocumented immigrants while the state has been left to cover more than $254.8 million in such costs.” He included a memo from Comptroller Susan Combs in which she supports his calculations but warns that the estimates are conservative. “The longstanding failure of the federal government to secure our border with Mexico continues to burden local communities and resources in Texas,” Perry wrote. “Because there are not enough troops on the ground, undocumented immigrants are able to penetrate the Texas border every day and use taxpayer-funded resources.” Perry is not the first governor to try to bill the federal government for the costs of incarcerating undocumented immigrants. Arizona Gov. Jan Brewer, a Republican, sued the DHS in February seeking compensation for incarceration costs, among other things. And Napolitano herself, who preceded Brewer as Arizona governor, regularly sent the Justice Department invoices seeking such reimbursement before she became Homeland Security secretary.

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Naveen Jain: Tips for Entrepreneurial Philanthropy

August 24, 2011

Helping people get what they need most in life is at the heart of successful philanthropy. It is no coincidence that fulfilling peoples’ needs is also the foundation of a successful business. I see no contradiction between them. Any venture, whether it is commercial or philanthropic, should aim at improving the lives of as many people as possible. Both should use technological tools to overcome infrastructure barriers and build scale. And both must be self-sustaining to be considered truly successful. I want to share with you what I have learned about philanthropy as person who was born in modest circumstances, as a boy who learned to take advantage of opportunities, as a businessman seeking new ways to create something of value for others, as a philanthropist trying to overcome global challenges, and as a father who wants the best for his children. At each stage of my life I have found that the values that matter most are those of an entrepreneur . . . someone who takes a risk and makes things happen; someone who is not afraid to fail because there are lessons to be learned from failure; someone who is focused on a mission rather than a static. I am convinced that only by applying the values of an entrepreneur to philanthropy will you ever be able to meet the needs of the greatest number of people. I understand human needs. I grew up where far too many people lived day to day without elemental needs like food and shelter. Compared to them I was fortunate. My father was a civil servant in the northern Indian where I was born. As a boy I saw the dire effects of poverty and illiteracy, especially on women and children. It often seemed that the only thing separating me from them was luck. But my parents didn’t believe in luck. They believed in hard work and in preparing me to take advantage of opportunity. Like many parents, they taught me to be generous but never to depend on the generosity of others. Because I was poor I had one special advantage. When you are poor, and basic survival is your concern, you have no alternative but to be an entrepreneur. You must take action to survive just as you must take action to seize an opportunity. That’s not to say no one helped me. Many generous people helped me and my family when we needed them. And that motivated me too. I promised myself to work hard so I would never be hungry and work harder still so that I could replay my neighbors’ generosity many times over – not just with money but with a clear path out of poverty. In some places the path out of poverty is through sports or other fields of excellence. In India, the path is through education. My parents drilled into me the importance of an education. It was a gift they themselves never had. I remember how my mother quizzed me in mathematics first thing in the morning and would often demand, “Don’t make me solve it for you.” Little did I know that she couldn’t solve it because she had never been taught math in school. They made sure I had the advantages they never had. I studied hard and earned an engineering degree and then an MBA. Because of my education I was ready when business opportunities began to open for Indian engineers. I seized one and used that opportunity to create many more as the founder of Moon Express, Intelius and InfoSpace. Along the way I never forgot who helped me and what I owed to them and others like me. I promised myself that one day I would be in a position to help my fellow countrymen and women, as well as anyone who is held back by lack of education, or by sexism, and grinding poverty. Today, I am privileged to be able to do that but not simply by giving money away. That is a temporary fix. Rather, I am approaching philanthropy in a strategic and systematic way just as an entrepreneur approaches a new venture. That’s the only way to make a self-sustaining difference in the world. My experiences as a child in poverty, as a business creator, and as philanthropist have taught me that there are at least four key elements for philanthropic success Overcome the Infrastructure . Many of the problems of poverty and need are really problems of physical infrastructure — not enough hospitals, too few schools, insufficient roads, bridges, and a lack of tools. This is what makes traditional philanthropy so daunting. You could build a thousand new hospitals in some parts of the world and barely make a difference. But what if you could capture the expertise of the world’s best physicians and create software that can diagnose patients remotely? Then infrastructure no longer matters. By turning an infrastructure problem into a technology challenge, you can eliminate the physical constraints of time and space. Build Scale . Technology allows you to replicate knowledge cheaply and reach many more people with it than you could in the physical world. To continue the example above, with diagnostic software you can now diagnose patients in every town, village, or farm in India. And you can do so objectively without the biases that even the best human physicians harbor. Make it Self-Sustaining . The problem now becomes, how do get this valuable diagnostic software and the device it runs on into the towns, villages, and farms where it can do the most good? You could enlist a wealthy donor to buy the devices and distribute them widely. But then you are beholden to physical constraints again — and even worse, you are dependent on a lifeline of someone else’s money. Instead of giving away $200 devices, why not allow people in the villages to rent them for $20 per month so they can go door to door making diagnoses for $5 each? That way everyone has an incentive to achieve the mission of getting the proper diagnoses to the greatest number of people. Instead of managing the whole program on your own, the program takes on a life of its own. Live an Entrepreneurial Life . By understanding and harnessing the forces that drive human behavior, you can create a self-sustaining philanthropic effort that reaches millions of people. It begins with an entrepreneurial attitude: take an idea and execute on that idea. If it doesn’t work, learn why and build on what you’ve learned. And be mission-oriented rather than goal-oriented. That way, if you do the best you can, you will always succeed. This is not simply an approach to philanthropy; it is an approach to life. Philanthropists can learn important lessons from business entrepreneurs. They both spend their time solving problems. And to be successful they both must overcome physical challenges and create self-sustaining operations. And ultimately, they must allow people to take action for their own benefit. Growing up in India I knew all I needed to change the world was one good opportunity and I prepared myself for it. When that opportunity came I was ready. I couldn’t count on luck so I created my own. Today, I’m sharing my passion for giving back with my children. I know they’ll approach the problems they want to solve in ways I never imagined and over time, research shows, if they are committed to philanthropy when they are young, they will make philanthropy a central part of their lives for years to come. That’s sustainable philanthropy. And we’re not alone. Because of the work of entrepreneurial philanthropists there are more new opportunities than ever opening up all over the world for the people who are prepared to grab them. Together, we are creating our own luck on a global scale. Find Naveen Jain on LinkedIn Twitter Google Plus Huffington Post Forbes Blogs

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Verizon Workers Will End Strike Without A Deal

August 20, 2011

NEW YORK — Thousands of striking Verizon workers will return to work Tuesday, though their contract dispute isn’t over yet. The 45,000 employees, who have been on strike since Aug. 7, agreed to return to work while they negotiate with Verizon Communications Inc. on the terms of a new contract. The workers are employed in nine states from Massachusetts to Virginia in the landline division. Among the issues in dispute is the company’s move to freeze pensions and its demand that workers contribute to their health insurance premiums. The company argues that it has to reduce benefits as the landline business deteriorates. More Americans are forgoing such lines in favor of mobile phones. The employees’ unions say the company is profitable and can afford to maintain the benefits. For now, the two sides say they have narrowed their disagreements and have agreed on a structure for the negotiations. The workers will return to work under the terms of a contract that expired Aug. 6. “The major issues remain to be discussed, but overall, issues now are focused and narrowed,” the Communications Workers of America and the International Brotherhood of Electrical Workers said in a statement. Marc Reed, Verizon’s executive vice president of human resources, credited the company’s managers with “ably meeting the needs of our customers” during the 14-day strike. This enabled the company to “withstand the strike without significant disruption to customer service,” he said. The company said it will “quickly address any backlog in repairs and unfulfilled requests for service.”

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FTSE Falls Again As ECB Economist Comes Out Against Eurobonds

August 19, 2011

The FTSE has slipped below the 5000 mark once again as investors talk of a growing crisis of confidence in the world economy and fears for another significant recession. By 10:00 on Friday in London the FTSE was down more than 2.5 per cent at 4960. At one point earlier in the morning it was languishing at 4880. Once again banking stocks were among the biggest losers. Overnight Japan’s Nikkei 225 Stock Average lost 2.5 percent, confidence not helped by another major earth tremor in the country triggering a tsunami warning. On Thursday evening the Dow Jones in New York finished down 3.7 per cent but the biggest losers yesterday were within the eurozone, with Germany’s Dax index down five per cent. This morning the Dax was down another 3.5 per cent – or nearly 200 points. Thursday’s panic selling was triggered by worse than expected manufacturing data from the US, coupled with Morgan Stanley cutting its eurozone growth forecasts . Investors appear to be losing confidence in part because eurozone leaders are seemingly unable or unwilling to reach agreement on how to curb the mounting debt crisis among member states. Earlier this week the German Chancellor and French President ruled out issuing eurobonds – which would involve eurozone countries clubbing together to borrow money as a bloc. Many analysts believe eurobonds are a necessary measure to bring Europe’s debt crisis under control, but it’s unclear whether the German Chancellor Angela Merkel has the political capital in her own country to agree to them. The European Central Bank’s chief economist announced on Friday that he was also opposed to the introduction of eurobonds . However many smaller European nations, including confidence-hit Italy, are very much in favour of them. Despite warnings from analysts several weeks ago that any further policy paralysis within the eurozone could be catastrophic, there is no outward sign that the eurozone leaders are any closer to a concrete agreement to resolve the crisis.

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JPMorgan Repurchases Soldier’s Home Same Day He Returns From Iraq

August 11, 2011

In America today, even men and women returning from war can’t expect their families to be exempt from the foreclosure crisis. On the same day that soldier Aaron Collette returned from a tour of duty in Iraq to his father Tim’s home in Bend, Oregon, that very house was bought back at auction due to foreclosure, local news KTVZ reports . According to ThinkProgess , a campaign by Senator Jeff Merkely (D-OR ) had delayed the foreclosure proceedings. But still, despite promising to work with the Collettes , JPMorgan Chase eventually went through with reportedly repurchasing the home. Aaron and his dad are no different from the millions of people who have been foreclosed upon due to a crisis that has seen also affected numbers of military personnel . “Average Joe, nobody special — even my situation isn’t special,” Collette’s father told local news KTVZ , despite his son’s status as an active-duty member of the military. Under the Servicemembers Civil Relief Act, active-duty soldiers are protected against foreclosure unless it is court-ordered, but Collette’s case would seem to imply that a parent’s foreclosure is not covered. Collette’s case if far from the first military-related foreclosure controversy. The Justice Department recently agreed to a $22 million settlement with a unit of Bank of America and Saxon Mortgage Services, a division of Morgan Stanley, to provide relief for more than 170 active-duty service members who were victims of improper foreclosure proceedings. Likewise, JPMorgan Chase will pay $27 million in reparations for overcharging around 6,000 active-duty military personnel on their mortgages, according to Businessweek . While Aaron will be returning to Iraq after his two-week leave, his father Tim, who could no longer afford mortgage payments after his construction business failed during the recession, will be facing an eviction notice soon. His lawyers are determined to fight the foreclosure. And for Aaron, that’s additional stress that he doesn’t need. “To have to worry about if he is going to be in a house when I come home,” Collete told KTVZ, “it’s just always worried me.”

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

August 11, 2011

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

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Jared Bernstein: A Mountain of Unemployment

August 10, 2011

Sometimes it’s useful to look at something in a different way — maybe you’ll shake loose a new idea. The picture below breaks the unemployment rate down into three flows into joblessness: Employment to unemployment: lose your job, start looking for a new one; Out of the labor force to unemployment: remember, you’re only counted among the unemployed if you’re actively looking for work. So this category counts folks who formally gave up looking but are now trying again, as well as new entrants; Unemployment to unemployment: not really a flow — just means you’re stuck there. Source: BLS Unsurprisingly, the largest contributor to the overall rate is unemp-to-unemp. The lack of job creation has meant millions stuck in long-term unemployment. In the last employment report, 44% of the 14 million unemployed had been seeking work for at least half-a-year. Flows from job losses into unemployment have been pretty steady. This is consistent with other evidence that our problem is not coming from layoffs as much as from weak job growth. There has been a little bump up in the flow from out-of-the-labor-force to unemployment. It’s small, so don’t want to read too much into it, but it’s important, because the share of the population in the labor force — either working or looking for work — is way down, as lots of folks have given up looking in such a weak job market. If they start coming back, and presumably, many can only stay out for so long, that part of the mountain will grow, and that means we’ll need more jobs to get the overall rate down. So, what are the policy implications of this? Clearly, we need to lower the budget deficit and cut, cut, cut!! Kidding… sorry… gallows humor. The big non-flow component — unemp-to-unemp — implies the need to extend Unemployment Insurance benefits for at least another year. The possibility that more folks are entering the workforce and falling right into unemployment, along with the big red chunk just discussed suggests that maybe a new jobs tax credit could be helpful right now. The idea here is to give employers a tax credit when they hire a new worker, as opposed to the much broader approach of something like a payroll tax credit (which is a credit for all employees, new and old). The new jobs credit is designed to give those employers considering a new hire an incentive to pull the trigger. Of course, the credit won’t help much if demand is so weak that employers simply won’t hire, even if we make it cheaper for them. Here again, more direct hiring programs, like FAST! can help. Also, UI benefits have a relatively large multiplier, so you actually scratch of couple of itches by extending those benefits. For the record, I’m well aware that this is all very analytical and logical in a world that is not particularly welcoming to such logic right now. But I plan to continue calmly proceeding down the eightfold path of enlightenment, asking others to join me along the way. It’s the best plan I know. This post originally appeared at Jared Bernstein’s On The Economy blog.

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Kathleen Gurney: Do You Have ‘Get Me Out’ Syndrome?

August 10, 2011

These are definitely challenging economic times. As investors, we’re living with great uncertainty of how the markets will respond to the global economic crises. In the US, it is also complicated by a dysfunctional political process. Are you tempted to call your adviser and yell “get me out”? GMO syndrome according to Larry Swedroe, Principle and Director of Research of Buckingham Family Financial Service) I hear that many people are wondering if they have the stomach once again for the risk roller-coaster ride. There’s always a penalty — emotional and financial — for spending beyond one’s means and we are certainly experiencing both the financial and emotional fallout from years of irresponsible budgets and spending. If we’re fortunate to be good money managers, we’ll be able to withstand the financial implications of these uncertain times since we’ve prepared ourselves financially for such uncertainties. But, preparing oneself emotionally is a very different matter and oftentimes requires a unique set of skills. The ability to withstand loss and tolerate the anxiety that accompanies such loss is a skill set that successfully disciplined investors have learned so they can “stay their course”. Unfortunately, they are in the minority and the herd will be jumping out again as they did in 2009 if the historical trends hold true. There are many things we can do to equip ourselves emotionally to be smart and disciplined in these times so that we don’t suffer unnecessary financial upsets and loss. First and foremost is to determine whether your current plan and strategy is valid for today. Get in touch with the professional who can help put that into perspective. If you are part of a company savings plan, ask your company plan representative to determine that answer with a consultation for you. If you have a personal investment adviser, reach out and get current on whether your strategy and plan still makes sense. Know your comfort zone for perceived risk and do what you can to increase your sense of control with understanding the value of planning for a greater sense of security. Your adviser may recommend tweaking your asset allocation and/or using funds instead of individual investment vehicles, so you are taking a more calculated approach to your exposure for risk of potential loss. If you know that you’re the type of investor who could potentially succumb to the “GMO syndrome” with hearing the potentially catastrophic predictions and bad news that sells media, avoid such bombardment of bad news. I’m not suggesting you totally isolate yourself, so stay in touch with those who can give you concrete and valid feedback about your individual situation. Lastly, it is always wise to understand yourself better and be aware of your attitudes and tendencies so you can incorporate that information into your financial behavior and planning, Choose and maintain suitable personal strategies that give you financial return as well as peace of mind. The downside of not knowing your tendencies is the likelihood of yelling “get me out” at just the wrong time.

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GOP Senator: ‘I’m Embarrassed By All Of Us… I’ve Never Seen A Worse Congress’

August 10, 2011

Sen. Olympia Snowe (R-Maine) talked to people in Saco, Maine about the debt ceiling negotiations Wednesday, and lamented the extreme partisanship that characterized the debate this summer. “I’m embarrassed by all of us,’’ Snow said , according to the Associated Press. “I’ve never seen a worse Congress in my whole political life.’’ Polls conducted after the debt ceiling deal have showed that Americans hold an increasingly negative view of Congress . A New York Times /CBS News poll last week showed Congress’ approval rating falling to 14 percent, with a record 82 percent of Americans disapproving of the way Congress is handling its job — the most since the Times first began asking the question in 1977. A CNN poll this week showed, for the first time in its history, that most Americans think their own representatives do not deserve reelection . Snowe, who served as Maine’s congresswoman from 1979 to 1995 and has been a senator ever since, is being targeted by the Tea Party for voting in favor of the debt ceiling deal despite that fact that it did not include a balanced budget amendment. “Just 25 days ago, Republican Sen. Olympia Snowe told us she would vote for a debt plan with a balanced budget amendment,” Scott D’Amboise, a conservative Republican who is challenging Snowe for her Senate seat, wrote in the fundraising letter just hours after the debt ceiling vote. “However, today Snowe betrayed us by voting with the Democrats for a debt deal that gives President Obama a blank check in exchange for only token spending cuts and no promise for a balanced budget amendment.”

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Whole Foods Responds To Ramadan Marketing Controversy

August 9, 2011

Whole Foods is the object of a growing controversy about the popular grocery chain’s treatment of Ramadan , the holy month of fasting for Muslims that started Aug. 1. On July 27, the retailer introduced a special promotion for the month of Ramadan on their blog, Whole Story , featuring special recipes and product giveaways for the month. This promotion also coincided with the introduction of a new halal-certified product line in Whole Foods stores. A day later, Fast Company posted an article highlighting Whole Foods’ online Ramadan campaign as a first for a major American food chain. The article presciently stated that although no major in-store promotions were planned, the Web and social media efforts were a bit of a risk in a U.S. marketplace that is often hostile to Islam. Unsurprisingly, the campaign garnered the notice of right-wing bloggers who promptly branded Whole Foods as “jihadist” and “anti-Israel.” The absurdity of this position may have been easily dismissed if not for the subsequent reaction by leadership at the company. On Tuesday, the Houston Press published a report revealing the text of an internal email circulated by Whole Foods executives to the chain’s stores. “It is probably best that we don’t specifically call out or ‘promote’ Ramadan … We should not highlight Ramadan in signage in our stores as that could be considered ‘Celebrating or promoting’ Ramadan.” The email went on to explain that the promotion previously announced on the company’s blog should not be misinterpreted to mean that the chain was celebrating or promoting Ramadan, saying, “The misinterpretation has generated some negative feedback from a small segment of vocal and angry consumers and bloggers.” Whole Foods’ apparent capitulation to an extremely vocal minority of Islamophobes has already drawn significant ire from bloggers and on Twitter . What’s your reaction to this story? Will this lead to significant trouble for the chain? UPDATE: Shortly after the publication of this story, Whole Foods publicly responded to the controversy on their Twitter feed , indicating the instruction to de-emphasize Ramadan was an isolated response by one of the company’s 12 operating regions and not indicative of company-wide policy. We are still carrying and promoting halal products for those that are celebrating Ramadan this month. We never sent a communication from our headquarters requesting stores take down signs or remove parts from this promotion. We have 12 different operating regions and unfortunately, one region reacted by sending out directions to promote halal and not specifically Ramadan after some negative online comments.

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Jared Bernstein: What’s Going on and What to Do About if You’re Barack Obama or Ben Bernanke

August 9, 2011

Got home yesterday and told my kid I’d had a busy day because the stock market dropped a lot. Her response: “Oh… is that bad?” The downgrade certainly played into the massive sell-off, so yet again, S&P’s fingerprints are all over a market crash. Could somebody please downgrade them ?! But the larger issues behind the crash are well-known at this point. At center-stage, we have weak growth prospects that continue to lag expectations — everybody thinks things are about to get better, and when they don’t, everybody has their economic hearts broken all over again. The typical forecaster predicts improvement in the next quarter or so, then a week later, moves that improved scenario another few quarters ahead. Note the magical thinking here. “Things will get better, I just know it.” Yet, both here and in Europe, policy makers essentially fumble around, unwilling to identify and go after the real culprit: weak aggregate demand here and insolvency (or near-insolvency) there. I’m not saying these are easy problems to diagnose or fix (well, the US demand problem is very clear — Europe’s is more complicated, because some countries (Italy) could likely resolve their debt burdens with strong liquidity injections, others (Greece), probably not). But what was the biggest, most time and media and attention-consuming economic debate in this country in recent months? Was it which are the best jobs measures to get America back to work? Was it how many more rounds of easing should the Fed undertake? No. It was whether to raise the debt ceiling or default. Enough already. Yes, there are many policy makers who either don’t understand these dynamics or are purely politically motivated. Some are cynically and solely driven to make the president look bad, with no regard for collateral damage. Others are acting on the belief that smaller government, and thus cuts and further austerity will allow growth to flourish, despite daily evidence that this is backwards. If you are Ben or Barack, in my honest opinion, you need to ignore them from here on in. Bernanke and the Fed can help, but they face two other constraints. First, the monetary version of premature fiscal austerity is the phantom menace of inflation. But to the contrary, one way to help both households and governments reduce the real level of their debt burdens is to print money and buy more long-term bonds — QE3, 4, etc. There’s little threat of core inflation accelerating with so much spare capacity in the economy, so helping these sectors to lower the liabilities on their balance sheets will help. But it might not help much. Constraint number two for the Fed is that interest rates are already low, both at the short and long end of the yield curve. And we know firms are highly profitable and sitting on trillions in cash reserves. So monetary policy faces a pushing-on-a-string problem. The real action is with the president right now. I liked his comments yesterday — they didn’t go far enough on the jobs front in a way I’ll suggest in a moment, but I liked the setup. He essentially said, “OK, I worked with the opposition — who recklessly used default as a bargaining chip — to do some deficit reduction. S&P didn’t like it — so what? They’re not exactly a beacon of light these days. But I think I’ve bought myself some running room on jobs… so that’s where I’m headed.” He then talked about renewing the payroll tax holiday, extending unemployment benefits, and infrastructure — specifically roads and bridges. The first two are already in the system — they should be renewed but let’s be clear: they don’t provide new stimulus. It’s keeping your foot on the accelerator, which is helpful, but not as helpful as pushing down further. The third — infrastructure — is great, but I’m worried “roads and bridges” don’t get it. They’re necessary, but a) they’ve become more capital intensive so you don’t create enough jobs (I think this is true, but need more research to be sure), and b) they don’t capture the imagination. I like FAST! and recommend he runs with that, or some other idea that meets these criteria: it can be stood up quickly, it’s labor intensive with a decent bang-for-buck re jobs, people get it and feel good abut it right off the bat (so, as much as I like the infrastructure bank idea, I’m not sure it works here). “But wait!,” you shout. We’re out of bullets — there’s no more money for such things — and Congress will refuse to add any of this to the deficit. How can you advise the president to block everything else out and call for measures Congress will refuse to consider?! That’s the kind of second guessing, negotiating-with-yourself that has us stuck in the mud. The president needs to decide what this economy needs, make sure it meets the above criteria, especially the one about the solution being easy to understand and feeling good, and fight for it nonstop from here until the unemployment rate starts to steadily decline. If the merchants of negativity and obstruction block him, then he has to tell the American people precisely who is standing between them and their jobs, their opportunities, their living standards. Tell them that their own and their children’s well-being is actively undermined by those who refuse to work with him to get America back to work. It’s that simple. This post originally appeared at Jared Bernstein’s On The Economy blog.

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Howard Buffett: Poor Farmers No Threat to U.S. Business

August 8, 2011

The reasoning would almost be comical if it were not life-threatening to millions of people. James Henry, the Chairman of the USA Maritime coalition, recently expressed concern that poor farmers in less developed countries could threaten revenues of companies like ADM or Liberty Maritime Corp because of a program called Purchase for Progress (P4), initiated by the World Food Programme (WFP). These industries face a larger threat from increased commodity prices that have slashed U.S. food aid. In 2005, the U.S. provided 4,233,000 metric tons of food assistance; in 2010, it provided 2,914,401 metric tons, a 32 percent reduction. It is simple math; when corn and wheat double in price, the U.S. government buys less to send to disasters such as what is occurring in the Horn of Africa. For the past three years I have called for a doubling of our country’s commitment to food assistance just to stay even with our historical giving levels. Even this falls short of meeting the demand created by drought, floods, disease and earthquakes. With a billion people going to bed hungry every night and another billion on the edge of food insecurity, it is difficult to believe that we will run out of opportunities for Mr. Henry’s coalition to meet its revenue targets. It is also hard to imagine large U.S. companies being threatened by poor, small-scale farmers trying to feed their families and pull themselves out of poverty. P4P is the most innovative program I have seen; it is consistent with a business approach to solving poverty — something most CEOs of U.S. companies would and should applaud. As a businessman, it is the type of approach that I have searched for to incorporate into our charitable work. To date, it is the largest single investment our Foundation has made — and it is likely to become the largest overall, second only to our water programs. P4P provides training, access to credit and market access for poor farmers. The objective is to use WFP’s buying power as an interim step. It is expected that farmers will eventually forgo sales to WFP and in the future sell to companies who operate in their country like ADM, Bunge, Cargill, Maseaca or Tiger brands. Once these farmers learn about contracts, quality requirements and delivery obligations while building a credit rating, they have found a permanent way out of poverty. They can eat three meals a day and send their children to school. After a decade of funding 100 agricultural projects in 37 countries, P4P addresses two key concerns I have as a funder: it provides a permanent exit strategy for donor or aid dollars and it can be executed at scale. One point that seems to be missing in this discussion is that as countries work their way out of poverty, increase their GDP and overall wealth, they become consumers of goods produced from countries such as the U.S. Their purchasing power increases and they import our products — creating U.S. jobs and sustaining our industries, not threatening them, as Mr. Henry suggests. The idea that our strategy should be to keep people hungry and malnourished so we can ship them our commodities is absurd. I have personally seen the successes of P4P and talked with farmers who have had their lives transformed as a result of the program. I realize that stock options and profit are important to many of us in the corporate world, but I do not believe it is an either-or situation, and profit should not ride on the backs of hungry people. I think we can continue to do quite well in spite of these farmers increasing their income by a few hundred dollars a year. Of course, it is easy to say — neither Mr. Henry nor I have ever suffered from periods of hunger and we put our children to bed every night with full stomachs.

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Morna Murray: King Solomon and the Debt Deal

August 2, 2011

Remember the classic Old Testament story that demonstrates the true nature of maternal love — concern for the child, over and above herself? King Solomon was faced with deciding which of two women was the “real” mother of a baby. Both presented compelling arguments, and there was no way to prove who was telling the truth by their words alone. So King Solomon offered to cut the baby in half, so that each woman could at least get “half” a baby. One woman said that would be just fine. The other, horrified, told King Solomon to give the baby to the other woman. King Solomon, satisfied that the real mother was now revealed, gave the child to the woman who was willing to give him up to save his life. And so we come to Washington, living out this biblical parable to the bitter end of a debt ceiling marathon that Vice President Biden likened to negotiating with a gun to one’s head . With a debt limit/budget deal that will be carefully dissected and roundly criticized in the days to come, President Obama faced a choice that was just about as difficult as King Solomon’s. Allow the country to default, risking domestic and global economic crisis — or give in to rigid demands from a small group of radical ideologues that now controls the U.S. House of Representatives. As this group of recently-elected officials crows about its “power” to control the debate in Washington, and as criticism mounts about what has been given up in order to reach an accord, it is important to ask, what exactly could the president and Democrats — and other reasonable lawmakers — have done differently? Monday morning quarterbacks are always cocksure of what should have been done. The president should have been involved sooner, the president should have worked harder to ensure debt negotiations were not linked to spending cuts, the president should have insisted on revenue raising measures as part of any final deal. Except — the president, and Democrats, did all these things. Even Speaker Boehner was ready to compromise on some of these issues. But not the small group of radical ideologues who now control the U.S. House of Representatives. They were ready to cut the baby in half. In fact, some of them seemed to be looking forward to it. As Lawrence O’Donnell, former chief of staff of the Senate Finance Committee and current MSNBC talk show host, has pointed out on many occasions, many of these House ideologues seem not to know the difference between politics and governing. And that is a dangerous thing for our country. I do not like the debt deal. I am enormously concerned, gravely concerned, as a children’s advocate and former Senate staffer, that it will place children’s programs, and particularly programs that serve disadvantaged children , at risk. Our children are our future. Any action that purports to reduce the deficit by placing vulnerable children at risk is foolhardy. It is morally wrong and it will cost us more in the long run to treat the deficits these children will carry into adulthood. Those of us who work to protect children have our work cut out for us as the many complexities of this deal are implemented. But my serious concerns about the potential implications of this deal does not blind me to the impossible — and yes, dangerous — conditions that House ideologues were blithely willing to impose upon our country. They were willing to cut the baby in half. And the adults in the room were literally left with no choice but to give up a lot in order to keep that child alive. Like any good mother. Like anyone who understands the difference between partisan posturing politics and governing a country.

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Breakup Of Mega-Banks May Now Be A Feasible Option

July 27, 2011

What was made can be unmade. JPMorgan Chase and Wells Fargo may have venerable names, but they and the pseudo-venerable Citigroup and Bank of America are all products of countless mergers and agglomerations. There is no rule of markets that requires a financial system dominated by four cobbled-together, lumbering behemoths.

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Walton Family Foundation Gifts Teach for America $49.5 Million

July 27, 2011

NEW YORK — The Walton Family Foundation announced a $49.5 million grant Wednesday to help double the size of Teach for America’s national teaching corps over the next three years. Teach for America is a program for recent college graduates who sign up to teach in some of the nation’s most under-served schools for a period of two years. The Walton Foundation’s gift marks the single largest private donation to Teach for America in the organization’s more than 20-year history. Later this fall, the organization will send 9,300 corps members to 43 regions across the country. Over the next few years, half of the Walton Family Foundation grant will go towards growing that teaching corps to 15,000 by 2015. “With this critical investment, Teach for America will be able to develop more of our talented recent college graduates and professionals to become longterm champions of educational equity and excellence,” said Wendy Kopp, Teach for America’s founder and CEO, in a statement. “The support and partnership is a vital part of Teach for America’s effort to expand our network of corps members and alumni, who are dedicated to improving educational outcomes for children in our urban and rural communities.” In the world of education philanthropy, the donation solidifies Teach for America’s standing as the recipient of the most grant money directed towards the improvement of teaching and learning, according to a report released earlier this month by a team of researchers from the University of Georgia and Kronley & Associates focused on foundation giving to education. Between 2000 and 2008, researchers concluded that philanthropies donated $684 million specifically towards the improvement of teaching and learning. Of this money, 60 percent went towards 10 organizations. According to their analysis, Teach for America received the most, with more than $213 million in grant money. The report also concluded that 10 foundations accounted for exactly half of all grants given. In the world of education philanthropy, three foundations topped the list: the Bill and Melinda Gates Foundation, the Walton Family Foundation and the Broad Foundation. The Walton Family Foundation, which is overseen by Walmart founder Sam Walton’s three children, focuses the bulk of its giving on the issue of education reform. But it also funds conservative groups such as the Cato Foundation, Americans for Tax Reform and the American Enterprise Institute. In 2008, the foundation distributed more than $168 million in grants . Last year, it gave away $157 million. Since 1993, the foundation has donated more than $22 million to Teach for America. Besides helping to expand the organization’s operations, the other half of the new $49.5 million grant will go towards training and support for corps members in seven communities the foundation states are among its priority areas: Denver, Los Angeles, Milwaukee, Newark, New Orleans, Washington, D.C. and the Delta region of Mississippi, where the Bentonville, Arkansas-based foundation is headquartered. Dorian Warren, a professor of political science at Columbia University’s School of International and Public Affairs and author of a forthcoming book about Walmart, believes the seven communities the Walton Family Foundation is targeting with Teach for America are relevant for another reason: they are all potentially overlap with Walmart’s expansion plans. “Besides six of the seven communities being comprised primarily of people of color, I wouldn’t be surprised if these also happen to be their store expansion targets,” Warren told The Huffington Post. “A lot of their giving is related to their expansion efforts, but I don’t know for certain whether this is one of those instances.” Jim Blew, who leads the Walton Family Foundation’s K-12 education reform efforts, was unavailable to comment. Some wonder whether the Teach for America gift signals an ideological shift in the priorities of the Walton Family Foundation. Jeffrey Henig, a professor of political science and education at Columbia University’s Teachers College, sees a pattern of giving by the Walton Family Foundation. Its philanthropy, he says, while initially focused on hard-core conservative issues like vouchers and privatization has since expanded to include initiatives like charter schools. “While groups like Teach for America have done a good job of blurring partisan boundaries, I can’t help but think of this alliance as a pairing of strange bedfellows,” said Henig. “I keep waiting for what I expect are some serious disagreements on core principles to flare up and bring the implicit tension finally out into the open. But so far, it really hasn’t happened yet.” For Diane Ravitch, a New York University education historian and former U.S. Assistant Secretary of Education, the pairing raises more than a few alarm bells. “The Walton Family Foundation is the most conservative-leaning in the education philanthropy business,” she said. “Their giving is almost entirely to charters and vouchers. So now you have charters and vouchers and Teach for America — or the mainstreaming of their right-wing agenda.” But Rob Reich, a professor of political science at Stanford University, is less convinced that Teach for America is being influenced by Walton’s conservative-leaning stance. Rather, Reich wonders whether the size of the foundation’s donation marks a shift in its own giving trajectory — away from the promotion of vouchers and charters to instead devoting a large chunk of its resources toward developing a pipeline of highly effective teachers. “I see the size of their Teach for America donation as a clear departure from their typical grant-making pattern,” said Reich, who also co-directs Stanford’s Center on Philanthropy and Civil Society. “One way of thinking about the grant is that it’s a tacit admission that school choice as the lever for fundamentally changing education is politically fraught and they’re instead choosing to diversify their portfolio.” Sarah Reckhow, an assistant professor of political science at Michigan State University and a 2002 Teach for America corps member, noted that “of the top education funders, the Walton Family Foundation falls the farthest to the right.” But for Reckhow, the grant shows how well-legitimized an organization Teach for America has become, particularly among a certain sector of policymakers and education reformers. “Giving to Teach for America is now about as mainstream a thing as you can do,” she said.

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Tea Party-Backed Congressman Fights His Own Party Over Debt Ceiling Deal

July 27, 2011

WASHINGTON — When President Barack Obama complains about House Republicans unwilling to compromise on a deficit reduction package, he’s talking about Rep. Jim Jordan, a former wrestling champion from Ohio who is becoming a driving force in the debt debate on Capitol Hill. Jordan’s district is right next to Speaker John Boehner’s in the western part of Ohio, but ideologically, he is miles apart from the Republican leader. As Boehner and his lieutenants scrambled Tuesday for votes for the speaker’s latest debt bill, Jordan announced at a news conference that he opposed the package, and he boldly predicted the speaker didn’t have enough Republican votes to pass it. Tuesday night, GOP leaders postponed a vote planned for Wednesday as they worked to rewrite the package. “If you look at this, it’s about a $7 billion reduction in spending from what we’re currently at,” Jordan said. “We advocated something much more than that.” Boehner’s plan promised spending cuts in excess of $1 trillion over the next decade in exchange for raising the debt ceiling by a slightly smaller amount. It also would establish a committee of lawmakers to recommend additional budget savings next year in exchange for extending the government’s borrowing authority through 2012. “We also have real concerns about the commission, the idea that on a 12-member commission, six Democrats and one Republican decide they want to raise taxes, you can’t keep that off the floor,” Jordan said. “It comes to the floor, and then there’s a potential tax increase.” A member of the House for only four years, Jordan, 47, won the chairmanship of the Republican Study Committee, the conservative voice of the GOP caucus, after the party wrested control of the House from Democrats in last November’s election. With more than 175 members, the group includes a majority of House Republicans. Jordan has never been shy about pushing his party to the right. He gets high marks from conservative groups for his strong record of opposing abortion and higher taxes, stretching to his days in the Ohio Legislature. “It’s what Ronald Reagan is all about, it’s what our party’s all about: a strong defense, lower taxes, less spending, traditional values,” Jordan said in an interview. “That’s what we fight for every day.” He sees his role as helping Boehner and the entire House GOP stay true to conservative values. “I want to help the speaker,” Jordan said. “I think he’s got a tough job, and like a lot of Americans, we’re praying for him.” House Majority Leader Eric Cantor, R-Va., is often cited as the leader of the conservative wing of the House Republican caucus. His power, however, is bolstered by members like Jordan, who work daily to rally other conservatives, including an 87-member freshman class that is eager to make its mark. Jordan and his compatriots were a driving force behind the bill that the House passed last week that would slice federal spending by $6 trillion and require a constitutional balanced budget amendment to be sent to the states in exchange for averting a threatened government default after Aug. 2. The Democratic-controlled Senate quickly killed the measure with a procedural vote. Jordan’s unwillingness to compromise, however, rubs some fellow Republicans the wrong way. “My experience with things that don’t bend is that they break,” said Rep. Steven LaTourette, a fellow Republican from Ohio, who represents the northeastern corner of the state. LaTourette, who supports Boehner’s debt plan, said he admires Jordan for standing up for what he believes in. But, he added, “I think it’s harmful to the country and it’s certainly harmful to the speaker’s attempt to move legislation.” Jordan grew up in western Ohio and was a four-time state wrestling champion in high school, losing only a single match in four years. He went on to wrestle at the University of Wisconsin, where he won two NCAA titles. He’s not a big man – Jordan wrestled in the 134-pound weight class in college and doesn’t look like he weighs much more than that now. He’s outwardly friendly and quick with a smile, but he doesn’t back down from a political fight. “The reason I got into politics was to affect the things I care about, the things I think the families I get the privilege to represent care about,” Jordan said. “I’m going to fight for those things. I’m going to do it with a smile on my face, I’m going to do it in way that helps our party, but most importantly, I’m going to do it because I think it helps the country.” Obama says Republicans like Jordan are why the government is in danger of defaulting on its obligations next week. “History is scattered with the stories of those who held fast to rigid ideologies and refused to listen to those who disagreed,” Obama said in a national address Monday night. “But those are not the Americans we remember. We remember the Americans who put country above self and set personal grievances aside for the greater good.” Jordan shrugs off Obama’s attempts to vilify House conservatives. “I would look at it this way: If standing firm for a common-sense plan, if the president’s got a problem with that, we’ll, I don’t know how I’m going to help him,” Jordan said.

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Applications For Home Mortgages Slip After Sharp Jump

July 27, 2011

Applications for U.S. home mortgages slipped last week after a sharp jump the week before and as interest rates edged up, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 5.0 percent in the week ended July 22. The MBA’s seasonally adjusted index of refinancing applications lost 5.5 percent after a 23.1 percent jump the previous week. The gauge of loan requests for home purchases was down 3.8 percent. The refinance share of mortgage activity dipped to 69.6 percent of total applications from 70.1 percent the week before. Fixed 30-year mortgage rates averaged 4.57 percent, rising from 4.54 percent. (Reporting by Leah Schnurr; Editing by Leslie Adler) Copyright 2011 Thomson Reuters. Click for Restrictions .

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U.S. Credit Rating Downgrade Looking Likely Even If Debt Ceiling Deal Is Reached

July 27, 2011

NEW YORK — Could the U.S. lose its top credit rating even if a deal is reached to raise the debt limit? Market analysts and investors increasingly say yes. The outcome won’t be quite as scary as a default, but financial markets would still take a blow. Mortgage rates could rise. States and cities, already strapped, could find it more difficult to borrow. Stocks could lose their gains for the year. “At this point, we’re more concerned about the risk of a downgrade than a default,” said Terry Belton, global head of fixed income strategy at JPMorgan Chase. In a conference call with reporters Tuesday, Belton said the loss of the country’s AAA rating may rattle markets, but it’s “better than missing an interest payment.” Even with a deadline to raise the U.S. debt limit less than a week away, many investors still believe Washington will pull off a last-minute deal to avoid a catastrophic default. Washington has until Aug. 2 to raise the country’s $14.3 trillion borrowing limit or risk missing a payment on its debt. President Barack Obama and Congressional Republicans have failed to reach an agreement to raise the debt ceiling and pass a larger budget-cutting package. Politicians have tied raising the debt limit and spending cuts together. But at least one credit rating agency has already made it clear that unless that agreement includes at least $4 trillion in budget cuts over the next decade, the country’s AAA rating could be lost. Right now, the proposals under discussion cut around $2 trillion or less. Standard & Poor’s warned earlier this month that there was a 50-50 chance of a downgrade, if Congress and President Obama failed to find a “credible solution to the rising U.S. government debt burden.” S&P said it may cut the U.S. rating to AA within 90 days. Passing a $4 trillion agreement could prevent a downgrade, S&P said. The other chief rating agency, Moody’s Investors Service, said the U.S. government would likely keep its top rating if it avoids a default. Spokesmen from both Moody’s and S&P said they wouldn’t comment beyond their recent reports. JPMorgan’s Belton said clients have started asking how markets will respond if the U.S. loses its AAA rating. A drop to AA will mean permanently higher borrowing costs for the U.S. government, he said. And because government lending rates act as a floor for other lending rates, mortgages, student loans, corporate debt and other types of loans will become more expensive. Belton estimates that borrowing costs would rise between 0.60 to 0.70 points. That may not sound like much. But mortgage interest rates, which have hovered around 4.5 percent for the last several weeks, could rise by at least that amount, to more than 5.1 percent. And for the federal government, it eventually means an extra $100 billion in interest payments to Treasury holders like China each year. “That’s a huge number,” Belton said. That $100 billion a year that could be spent elsewhere on everything from education to infrastructure. An increase in interest rates could soon become a drag on other parts of the economy, experts say. State governments and insurance agencies would also be downgraded – and states are already having financial troubles. Business confidence could sink again, leading to prolonged high unemployment. But some investors aren’t unhappy about the thought of a U.S. debt downgrade. Don Quigley, manager of the $1.5 billion Artio Total Return Bond fund reasons that such a move could provide a buying opportunity. He believes that a downgrade would immediately send the yield of the 10-year bond up to 3.15 percent from its current level of about 3 percent. If the economy sinks further in part because of higher interest rates, investors would very likely return to buying bonds, Quigley said. That’s what they’ve done during the last several years both during the financial crisis and recession, and again the last several months as the economic recovery has slowed. Treasurys would keep their allure, in part, because there are few alternatives for large foreign buyers looking for a market big enough to handle massive investments. “The German market is not big enough and Japan has its own problems,” Quigley said. A cut to the U.S. credit rating could hit stocks harder than bonds. A study by Janney Montgomery Scott looked at rating changes to countries over the past decade. After Spain was downgraded in 2009, Spain’s stock market fell 8 percent in three months. A cut to Japan’s credit rating in 2011 knocked the country’s stock market down 3.4 percent in three months. The study, released in April, suggested the S&P 500 would fall 6 percent after a U.S. downgrade, erasing all its gains for the year.

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How Do You Like Them Apples? McDonald’s In Health Food Push

July 27, 2011

TORONTO – McDonald’s Canada is adding dairy and trimming some of the fat from its Happy Meals as part of a broader health push. By the beginning of next year, the children’s meal boxes will come with a serving of strawberry yogurt and a smaller, 31-gram serving of fries that contains 100 calories. The changes come as the fast food industry faces criticism from health officials and others, who blame the chains for childhood obesity and other health-related problems. Louis Payette, a spokesman for McDonald’s Canada, said the initiative will be tested in the fall and rolled out at the end of the year. “It’s all part of our menu evolution, which is an ongoing process,” said Payette. “We’re continuing to listen to our customers and trying to meet their needs. People are asking us for more variety, more choice, and we’re glad to provide it to them.” McDonald’s Corp. in the U.S. also announced changes to its Happy Meal on Tuesday. It plans to include a half-order of apples and a half-order of fries, with all fries or all apples available on request. Customers can already choose between apples and fries, but only about 11 per cent of U.S. customers were ordering apples, the restaurant said. Michelle Obama applauded the restaurant for taking a positive step toward solving childhood obesity. But critics wasted no time complaining that the U.S. changes don’t go far enough. Kelle Louaillier, executive director of a group called Corporate Accountability International, said McDonald’s is just trying to get ahead of impending regulations that will restrict the marketing of junk food to children and require restaurants to post nutrition information on menus, among other changes. “McDonald’s is taking steps in the right direction, but we should be careful in heaping praise on corporations for simply reducing the scope of the problem they continue to create,” said Louaillier. McDonald’s says the new directives are “absolutely not” related to impending U.S. regulations that will force the industry to curb the marketing of junk food to children and post nutrition information on menus. Rather, the changes are a response to what customers were asking for, said Cindy Goody, McDonald’s senior director of nutrition. “We’ve been in the nutrition game for over 30 years in providing nutrition information to our customers,” Goody said. “Now what we’re doing is we’re adding more food groups and … creating nutritional awareness.” McDonald’s in the U.S. is also launching a nutrition-focused mobile phone app and pledging to reduce sugars, saturated fats, sodium and calories in its menu items by 2020. By 2015, it will reduce sodium by 15 per cent. But the fast food giant did not provide details on how it will do so, saying only that it will use “varied portion sizes, reformulations and innovations.” The nutrition talk also has helped McDonald’s grab business from other fast-food restaurants, even as the recession forced people to cut back on eating out. McDonald’s has worked to paint itself as a healthy, hip place to eat, offering wireless access in restaurants and introducing smoothies and oatmeal, moves that other fast-food companies are now trying to replicate. Goody said the change is indicative of “incremental lifestyle modifications.” Asked why McDonald’s didn’t eliminate fries, she said that “all foods fit when consumed in moderation.” This isn’t the first time the world’s largest burger chain has tried to paint itself as an emissary of nutrition. In the ’80s it created a fitness program for middle schoolers featuring gymnast Mary Lou Retton. A decade ago, McDonald’s used spokesclown Ronald McDonald to encourage parents to get their children immunized and to tell kids to drink milk. In 2004, McDonald’s christened Ronald a “balanced, active lifestyles ambassador” and passed out pedometers to encourage exercise.

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Obama: Debt Ceiling Talks Fell Apart, Boehner Walked Out

July 23, 2011

WASHINGTON — Social Security and Medicare may have been saved by the Tea Party’s refusal to accept President Barack Obama’s “grand bargain.” On Friday evening, Speaker John Boehner (R-Ohio) walked away from the latest offer on the table by Obama, who is now summoning congressional leaders back to the White House on Saturday to figure out an eleventh-hour plan. The most viable option left for addressing the debt crisis, crafted by a bipartisan pair of Senate leaders, calls for much smaller cuts than the ones the president was willing to make. “No one wants to punt until default is the only other option,” a Democratic aide said Friday morning, before the Senate voted down a House offer that coupled a debt ceiling raise with a radical constitutional amendment. With the “Cut, Cap and Balance” bill out of the way, the lone obstacle to the debate’s conclusion was the talks between Boehner and Obama. The collapse in those grand bargain negotiations paradoxically move the broader debt ceiling negotiations closer to an end. And not a moment too soon: The White House has repeatedly said that July 22nd was the day by which Congress must have identified a path forward and begun work toward its passage. During a hastily called press briefing on Friday night, Obama said Boehner called him half an hour earlier and “indicated he was going to be walking away” from the compromise the two of them had been privately working on. A Democratic source told The Huffington Post that the president had called Boehner on Thursday evening to discuss the deal, but never heard back. The president tried again Friday afternoon. He finally got a return call at 5:30 p.m. The speaker, the source added, briefed the press about his decision to pull out of the deal before telling Obama. Speaking to a half-filled room of reporters, the president laid out just how dramatic the cuts to the social safety would have been in the deal he was trying to give Republicans. He said that he couldn’t believe Boehner walked away from the proposal he was offering: $3.5 trillion in spending cuts over 10 years, smaller tax increases than those laid out in a bipartisan Senate plan and cuts to entitlement programs, something Democrats have pushed hard against. It also didn’t include revenues that Obama has insisted be in a final package, namely via closing tax loopholes and ending subsidies for the oil and gas industry. “In other words, this was an extraordinarily fair deal,” Obama told reporters. “If it was unbalanced, it was unbalanced in the direction of not enough revenue.” Obama: Boehner Withdraws From Debt Talks The president appeared genuinely flummoxed at the talks falling apart, saying there “doesn’t seem to be a capacity for [Republicans] to say yes.” He said he couldn’t believe Congress would “end up being that irresponsible” as to impose a “self-inflicted wound on the economy at a time when things are so difficult.” The New York Times also played a major part in the breakdown of talks between Boehner and the White House, reporting Thursday that the pair had moved very close to a deal. Both sides spent the rest of the day knocking down the report, while Senate Democrats fumed that the White House was caving. Privately, Senate Republicans charged Sen. Charles Schumer (D-N.Y.) with orchestrating the debacle in an attempt to blow up the negotiations. The latest breakdown comes with about a week left until the Aug. 2 deadline, at which point the government is expected to run out of money to pay its bills. Even if a default is averted, the protracted debate over raising the debt limit has left the U.S. government dangerously close to having its credit rating downgraded. In that event, Americans could expect a spike in interest rates on their credit cards, student loans and mortgages, with ramifications felt through the U.S. and global economy. “We have now run out of time,” the president said. He said he told congressional leaders to come back to the White House at 11 a.m. on Saturday “to explain to me how we are going to avoid default.” In a press conference later Friday night, Boehner accused the White House of having “moved the goal post” in negotiations. “The president demanded $400 billion more” in revenues when the two of them met Thursday, Boehner said, which is “nothing more than a tax increase on the American people.” He said he and House Majority Leader Eric Cantor (R-Va.) were “very disappointed” by that demand. Boehner also sent a letter to House Republicans on Friday night explaining why he pulled out. “It has become evident that the White House is not serious about ending the spending binge that is destroying jobs and endangering our children’s future,” the GOP leader wrote. “A deal was never reached, and was never really close.” Boehner: No One Wants a Government Default At a briefing with reporters shortly after the president spoke, three senior White House officials laid out in detail their version of where the discussions fell apart. On the discretionary spending front, both sides had “identical offers,” said one of the officials. There would be $1.2 trillion in cuts over the course of ten years; $1 trillion in savings that would come from the draw-down of the wars in Afghanistan and Iraq; and $250 billion in savings in Medicare over the course of 10 years. Both sides had also agreed to attach a second piece of legislation, to be decided via the reconciliation budget process, that would have changed the retirement age for Medicare and changed the premium structure for Medicare Part B and D, while eliminating certain kinds of supplemental insurance. That bill would also contain changes to the way Social Security benefits were paid starting in 2015, with buffers put in to protect the lowest-income beneficiaries. There was, in addition, an informal agreement to try and extend Social Security’s solvency by an additional 75 years. How they would get there, however, remained a point of contention, with the president wanting a package of benefit and premium changes and Republicans focusing just on the benefit side. Unable to overcome that impasse, the two sides settled on vague language requiring them to meet that 75-year goal with future reforms. Where the two sides remained apart were on Medicaid cuts, with Republicans demanding tens of billions of dollars more in cuts than the president was comfortable making. White House officials described that difference as possible to overcome, however. The revenue component, in the end, remained unbridgeable. According to senior White House officials, each side had agreed to pass tax reform down the road that would result in $800 billion in revenue generated — the equivalent amount of savings that would be achieved if the top-end Bush tax cuts were simply allowed to expire. The administration wanted $400 billion in revenues on top of that. Republicans wanted zero, and in statements on Friday night GOP leadership aides insisted that the White House had changed the contours of the negotiations by making that demand in recent days. Obama offered to move off that $400 billion mark should GOP leadership lessen the type of cuts to entitlement programs they were demanding, White House aides said. In addition, the two sides could not figure out what to do if that aspirational tax reform package wasn’t achieved. The White House, at various points, proposed that the fallback option be the actual expiration of the Bush tax cuts for the wealthy. Republicans demanded that they have something as bluntly frightening to Democrats. On Thursday, GOP leadership proposed that the penalty for inaction on tax reform be the repeal of the health care law’s individual mandate as well as the newly created Independent Advisory Board, which has been set up to find cost savings in Medicare. The White House balked at the offer. “Our view was we are not going to put the individual mandate in a deficit reduction package,” said a senior White House official. “But we were open to other ideas and there are any number of formulations for us.” All of which does not mean that the big deal is now dead. In fact, White House officials made it abundantly clear that they would welcome GOP leadership back into those discussions. “The speaker withdrew from the talks. This offer is still available,” said one of those officials. Boehner, at his briefing, said he didn’t think his relationship with Obama, or debt talks, are beyond repair. He said he planned to go to the White House on Saturday with other leaders. At this stage, the most viable proposal left on the table appears to be a far less ambitious debt plan put together by Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.). Their proposal, dubbed a “fallback option,” calls for $1.5 trillion in cuts, generates no new revenues and would put the onus fully on Obama to raise the debt limit, without Congress. It would also require the president to raise the debt ceiling in three increments over the next year and a half — a politically driven requirement by McConnell aimed at making Obama take responsibility for all debt ceiling hikes ahead of the 2012 elections. The other potential remedy — for the president to exercise the so-called constitutional option and invoke 14th Amendment powers to raise the debt ceiling himself — was ruled out, once again, during the White House briefing. “There are no options other than a legislative solution,” said a senior White House official. A Democratic staffer familiar with Hill negotiations concurred that the Reid-McConnell plan appears the most likely resolution. The fight now heads to the trenches: The leaderships of both parties will cobble together coalitions in the House and Senate that can move the package through. In both parties, the wings will generally oppose leadership and the center will hold, if history is any guide. The same coalition passed the Wall Street bailout and the Obama-GOP tax cuts. “We are prepared to compromise consistent with our values,” House Minority Leader Nancy Pelosi (D-Calif.) said in response to the news. “Speaker Boehner’s ‘adult moment’ is long overdue. Our economy, our children’s education, our seniors’ security and our nation’s fiscal soundness require that we act without further delay.” Of course, there’s also the bipartisan Senate Gang of Six proposal, which would slash $3.7 trillion in deficits over 10 years and raise up to $1 trillion in new revenues through tax code reform. But that proposal has critics in both parties, and some say there isn’t enough time to turn it into a bill, send it to various committees for debate and pass it by Aug. 2. Frustrations are clearly high on both sides of the aisle. As Twitter blew up at the news of the Obama-Boehner talks crumbling, Cantor spokesman Brad Dayspring chimed in with a tweet knocking Obama for making it seem as if Republicans thwarted the process. “As if there’s really a question whether President Obama threw a tantrum at the White House last week – same guy just appeared,” Dayspring tweeted. Rep. Peter Welch (D-Vt.) said Congress had to move fast now that things have gotten hairy. He warned that the situation is nothing like the government shutdown narrowly averted earlier this year. “If you’ve got the speaker walking away from the White House — astonishing in and of itself — the next step is meltdown in the markets,” Welch said. “This is tempting the markets to turn, and when they do, it will be sudden and savage, then things will be out of control and the damage will be huge and irreversible.”

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Efforts To Lower Health Costs, Improve Care

July 15, 2011

At Utah-based Intermountain Healthcare, comparative research made physicians realize that inducing early childbirth in healthy women created unnecessary and costly risks for newborns. Artificially induced deliveries had become an accepted way to make childbirth fit busy personal schedules. The practice has health risks, but the average doctor saw only one or two cases a year wind up in a neonatal intensive care unit. “It was such a low number,” said Greg Poulsen, a senior vice president with the nonprofit system. “In the physician’s own practice, it would be impossible to identify a trend.” About four years ago, Intermountain started comparing data on births induced after a full 39-week pregnancy to births induced one to two weeks early. The results showed the need for intensive care in babies with respiratory problems were twice as high at 38 weeks and five times as high at 37 weeks. “Suddenly, the data was just very clear that we were putting people at risk by doing an induction prior to 39 weeks,” Poulsen said. “And once the docs saw that data, they said: Whoa! We had no idea!” The findings prompted Intermountain to limit induced births for healthy women before 39 weeks in the 18 hospitals with maternity wards within its system. Intermountain has 23 hospitals overall. As a result, about 500 newborns avoided breathing problems and the ICU over the following year, sparing parents the grueling sight of their infant on a ventilator and saving at least $1 million a year in unnecessary medical costs for families and insurers. Fewer inductions also led to fewer caesarean sections. That reduced risk and brought even more savings because C-sections, the most common surgery in the United States, can cost twice as much as vaginal deliveries and lead to medical complications for children. Intermountain, which has 360 doctors delivering babies, said the reduced C-section rate delivered about $46 million in savings compared with the national average in 2008. Poulsen’s story is just one example of the individual efforts to contain costs within the $2.3 trillion U.S. healthcare system. Employers, insurance companies and doctors nationwide are trying to find savings on medical services. But the effort is largely piecemeal so far. Policy experts say a systemic approach is needed to prevent these costs from sinking the economy. While a new U.S. healthcare law includes provisions that might lead to lower spending — such as a focus on preventive medicine and research grants to study the most effective forms of treatment — it’s main goal is to extend access to millions of Americans. Analysts say the country’s leaders are still years away from taking the job of reining in underlying health costs seriously, even as Republicans and Democrats argue over ways to cut government spending on healthcare in deficit talks. BEST HOPE FOR CHANGE “Everybody agrees, from right to left, that something has to be done. If the federal government doesn’t do something, the entire economy will be at risk,” said Susan Tanaka of the nonpartisan New York-based Peter G. Peterson Foundation. Neither lawmakers nor the White House are likely to undertake a new concerted effort to find a solution until after the 2012 presidential election. They are wary of the setbacks that Democrats saw in crafting President Barack Obama’s healthcare law and that Republicans faced after proposing changes to the Medicare program for the elderly. In the interim, the best hope for change might be strategies such as those employed at Intermountain, which seeks to coordinate care through medical teams whose job is to find the best practices for keeping patients healthy and curbing costs. Similar innovations have taken root elsewhere. An example is Group Health Cooperative, a Seattle-based nonprofit system that provides both health insurance and medical care. Its vertical integration — linking doctors, hospitals and insurance coverage in a single system — eliminates the fee-for-service incentives many blame for sky-high healthcare costs elsewhere. The cost of a C-section at a Group Health hospital can average between $7,100 and $9,400, compared with an average statewide range of $15,200 to $21,600, according to data compiled by the Washington State Hospital Association. Health insurance companies such as UnitedHealth Group Inc and Aetna Inc are building incentives for primary and preventive care and acquiring clinics and small networks of physicians to have full control over how healthcare services are delivered. “If we don’t change, it’s a bleak picture. There’s no question. But there are some glimmers of hope,” said Dr. Elliott Fisher of Dartmouth Medical School, a leading voice in healthcare reform. “A year or two from now, we will have a firm foundation to come back to Congress and say there are things you could do now to move further in this direction.” 2013 Healthcare costs make up 16.5 percent of U.S. GDP and are projected to equal more than one-quarter of the economy by 2035, according to the nonpartisan Congressional Budget Office. By contrast, healthcare costs were only 4.8 percent of GDP in 1960 and 9.8 percent in 1985. The CBO’s 2011 report, which notes it is difficult to make accurate long-term cost projections, warns that spiraling health costs would probably slow only as a result of higher costs, less access for most households and tighter state Medicaid eligibility for poor families, unless U.S. law is changed. Analysts say any deal to close the U.S. government’s $1.4 trillion annual budget deficit would also suffer repercussions if the government took no action to control rising healthcare costs that are driving growth in Medicare and Medicaid. “Failure to address healthcare will make the solution inevitably more painful,” said Paul Ginsburg of the nonpartisan Washington-based Center for Studying Health System Change. “It will mean more spending cuts in other areas. It will eventually, despite what Republicans say, lead to higher tax rates. Because the alternative is a bankrupt country.” The difficulty lies in attacking healthcare costs broadly without hurting individual patients’ access and quality of care. It also raises the prospect of a new showdown between Republicans, who see deregulation and market competition as the best lever for curbing costs, and Democrats who favor government intervention. When might those battles begin? “2013,” said Joseph Antos of the conservative American Enterprise Institute. “There’s going to be a hue and cry for somebody to do something. Even Republicans, who used to shy away from health, they’re going to be on this whether they’re the minority or not.” Copyright 2011 Thomson Reuters. Click for Restrictions .

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U.S. Credit Downgrade Could Spark ‘Turmoil’

July 14, 2011

Major credit rating agencies have called the reliability of American government debt into question, warning that they could issue a punishing series of downgrades if Congress does not increase borrowing authority by early August. A downgrade of U.S. credit, unthinkable not long ago, is now a real possibility. Even a brief debt default would prompt Moody’s Investors Service to dock the government’s sterling rating, the agency said Wednesday in a release. Another warning, issued privately to lawmakers by Standard & Poor’s and reported widely , was perhaps even more chilling: Even if the government stays current on its debt payments but halts spending on other items due to the lack of a timely debt deal, the agency might issue a downgrade. It’s a prospect that has left economists and financial executives wringing their hands, sketching out scenarios that involve widespread panic, a freeze in markets and even a return to a 2008-style recession. The pronouncements of credit rating agencies, despite their battered reputations in the wake of the housing boom and bust, influence global markets on a daily basis. If the United States government, whose creditworthiness has long been the lynchpin of the global financial system, gets its rating downgraded, the consequences could be disastrous, experts said. “Forget a recovery in housing,” said Nariman Behravesh, chief economist of the economic research firm IHS Global Insight. “You’d get a sell-off probably in U.S. bonds. It’s not a trivial matter. That would then influence corporate borrowing costs, it would influence consumer borrowing costs, it would influence mortgage rates.” Washington lawmakers remain locked in a debate over the terms of a debt ceiling increase, with Republicans insisting they will not vote to give the government more borrowing authority unless their demands for deficit-reduction are satisfied. Democrats and top economic officials, including Federal Reserve Chairman Ben Bernanke , have criticized that approach, arguing that it is irresponsible to threaten the full faith and credit of the U.S. as a means to trim the nation’s budget. If Congress does not raise the limit by Aug. 2, the nation will be forced to abruptly freeze spending, which could prompt a default, the Treasury has said. “We have no way to give Congress more time to solve this problem,” Treasury Secretary Tim Geithner said in remarks Thursday. Following through on a pledge it made in early June, Moody’s placed the triple-A bond rating of the U.S. government “on review for possible downgrade” Wednesday, saying the probability of a default is no longer “de minimis.” With negotiations seeming to grow only more contentious, the nation might not be able to do something as simple as pay its bills, thereby tarnishing its top rating. A downgrade, which would imply that U.S. debt is no longer “risk-free,” would likely send interest rates soaring as yields on Treasury securities would rise, economists said. That could freeze the flow of cash through the economy, as borrowing would likely be constrained. Worse, it’s not just the U.S. government’s rating that would be downgraded. The ratings of thousands of borrowers are tied to the federal government’s rating. Bonds issued by U.S. municipalities, the mortgage giants Fannie Mae and Freddie Mac and even by the governments of Israel and Egypt could have their ratings threatened, Moody’s said. Moody’s would dock the ratings of at least 7,000 municipal credits if it slashes the U.S. government’s grade, Bloomberg News reported . “There is madness in Washington,” David Kotok, chairman and chief investment officer of Cumberland Advisors, said in a recent note. “These fools and idiots we elect to represent us passed the programs and budgets that spent the money. The controversy over future spending has nothing to do with the existing debt ceiling.” Economists expressed exasperation at what some have called an “artificial” or “self-created” crisis. Although Moody’s noted in its report that it was concerned about the absence of a long-term plan to reduce the federal deficit, the more pressing need — the one that could prompt a downgrade if not done on time — is raising the debt ceiling, the agency said. “At this point, what we’re waiting to see is an actual raising of the debt limit, regardless of how they get there,” Steven Hess, lead U.S. analyst at Moody’s, told the Wall Street Journal . Despite the ongoing drama, Treasury securities seem to be hardly affected. Yields on 10-year U.S. debt are around 2.9 percent, roughly equal to the lowest value this year, which was reached in late June, according to Bloomberg data . An array of worrisome macroeconomic risks, including the sovereign debt crisis in Europe, has investors taking refuge in U.S. government debt, pushing down yields and increasing the value of their investments. “Despite everything that’s happened in Washington in the last day or two, most investors still think a settlement is coming and default will be avoided,” said John Richards, head of strategy at Royal Bank of Scotland in the Americas. But some investors are betting on default. The price of insurance contracts on U.S. debt rose nearly 8 percent on Thursday, reflecting an increased demand for those derivatives, the Wall Street Journal reported . Some economists said a U.S. sovereign downgrade ultimately would not cripple the economy, as markets would adjust. There’s no equivalent to Treasury securities, which serve a central role in the world’s economy, said Kevin Logan, chief U.S. economist at HSBC. For that reason, investors would eventually learn to live with a lower rating, Logan said. But in the short term at least, a downgrade could still cause disruptions, he said. Some entities are required to hold highly-rated securities, often to comply with regulations. “If the triple-A government debt is suddenly double-A one day to the next, what does the entity do?” he asked. “Sell all it has? And if it does, what does that do to interest rates on all that debt?” “It could create turmoil,” he said, “as everyone tries to figure out what’s the correct pricing for all this stuff.”

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Children Now Make Up Smallest-Ever Percentage Of U.S. Population

July 12, 2011

WASHINGTON — Children now make up less of America’s population than ever before, even with a boost from immigrant families. And when this generation grows up, it will become a shrinking work force that will have to support the nation’s expanding elderly population – even as the government strains to cut spending for health care, pensions and much else. The latest 2010 census data show that children of immigrants make up one in four people under 18, and are now the fastest-growing segment of the nation’s youth, an indication that both legal and illegal immigrants as well as minority births are lifting the nation’s population. Currently, the share of children in the U.S. is 24 percent, falling below the previous low of 26 percent of 1990. The share is projected to slip further, to 23 percent by 2050, even as the percentage of people 65 and older is expected to jump from 13 percent today to roughly 20 percent by 2050 due to the aging of baby boomers and beyond. In 1900, the share of children reached as high as 40 percent, compared to a much smaller 4 percent share for seniors 65 and older. The percentage of children in subsequent decades held above 30 percent until 1980, when it fell to 28 percent amid declining birth rates, mostly among whites. “There are important implications for the future of the U.S. because the increasing costs of providing for an older population may reduce the public resources that go to children,” said William P. O’Hare, a senior consultant with the Baltimore-based Annie E. Casey Foundation, a children’s advocacy group. Pointing to signs that many children are already struggling, O’Hare added: “These raise urgent questions about whether today’s children will have the resources they need to help care for America’s growing elderly population.” The numbers are largely based on an analysis by the Population Reference Bureau, a nonprofit research group in Washington that studies global and U.S. trends. In some cases, the data were supplemented with additional census projections on U.S. growth from 2010-2050 as well as figures compiled by the Annie E. Casey Foundation’s Kids Count project. Nationwide, the number of children has grown by 1.9 million, or 2.6 percent, since 2000. That represents a drop-off from the previous decade, when even higher rates of immigration by Latinos – who are more likely than some other ethnic groups to have large families – helped increase the number of children by 8.7 million, or 13.7 percent. Percentages aside, 23 states and the District of Columbia had declines in their numbers of children in the century’s first decade, with Michigan, Rhode Island, Vermont and D.C. seeing some of the biggest drops. On the other hand, states with some of the biggest increases – Arizona, Florida, Georgia, Nevada, North Carolina and Texas – also ranked in the bottom one-third of states in terms of child well-being as measured by the Kids Count project. The project calculated child well-being based on levels of poverty, single-parent families, unemployment, high-school dropouts and other factors. The slowing population growth in the U.S. mirrors to a lesser extent the situation in other developed nations, including Russia, Japan and France which are seeing reduced growth or population losses due to declining birth rates and limited immigration. The combined population of more-developed countries other than the U.S. is projected to decline beginning in 2016, raising the prospect of prolonged budget crises as the number of working-age citizens diminish, pension costs rise and tax revenues fall. Japan, France, Germany and Canada each have lower shares of children under age 15, ranging between 13 percent in Japan and 17 percent in Canada, while nations in Africa and the Middle East have some of the largest shares, including 50 percent in Niger and 46 percent in Afghanistan, according to figures from the United Nations Population Division. In the U.S., the share of children under 15 is 20 percent. Depending on future rates of immigration, the U.S. population is estimated to continue growing through at least 2050. In a hypothetical situation in which all immigration – both legal and illegal – immediately stopped, the U.S. could lose population beginning in 2048, according to the latest census projections. Since 2000, the increase for children in the U.S. – 1.9 million – has been due to racial and ethnic minorities. Currently, 54 percent of the nation’s children are non-Hispanic white, compared to 23 percent Hispanic, 14 percent black, and 4 percent Asian. Over the past decade, the number of non-Hispanic white children declined 10 percent to 39.7 million, while the number of minority children rose 22 percent to 34.5 million. Hispanics, as well as Asians, Native Hawaiians, Pacific Islanders and multiracial children represented all of the growth. The number of black and American Indian children declined. In nearly one of five U.S. counties, minority children already outnumber white children. “The `minority youth bulge’ is being driven primarily by children in immigrant families,” said Mark Mather, associate vice president of the Population Reference Bureau who co-wrote a report released Tuesday on the subject. “They are transforming America’s schools, and in a generation they will transform the racial-ethnic composition of the U.S. work force.” “Policymakers are paying a lot of attention to the elderly, but we have a large population of children who have their own needs,” he said. The numbers come as states around the nation are seeking to cut education spending and other programs – rather than raise taxes – to close gaping budget holes as schools districts run out of $100 billion in federal stimulus money that helped stave off job losses over the past two years. In Texas, for instance, the Legislature changed state law so it could slash education spending by $4 billion over the next two years to help make up for a $27 billion budget shortfall. The move is the first cut in per-student spending in Texas since World War II, even as the state has gained nearly 1 million children over the past decade, many of them Hispanic. The school cutbacks are expected to have a disproportionate effect on low-income communities which are less able to raise local school taxes. Advocates believe that could further widen the achievement gap between students of different races in states like Texas, where some of the fastest student growth is among those who are poor and whose primary language is not English. The resulting cuts will be far-reaching and surprising to many parents and communities, from teacher layoffs to reductions in extracurricular programs and ballooning class sizes, said Jenny LaCoste-Caputo, a spokeswoman for the Texas Association of School Administrators. “When people say, `Cut government spending,’ they don’t think about the impact on the school down the street, until local voters begin to see the harm later,” she said. “That’s when we will really see the backlash. The sad thing is we’ll have many kids suffer in the process.” Similar battles over education funding have played out in California, Pennsylvania, Ohio, Florida and Wisconsin. Other census findings: _Based on current trends, Florida could surpass New York as the third-largest state in overall population before the next census in 2020, part of a long-term migration of U.S. residents to the South and West. The most populous states are California and Texas. _While more than half of U.S. residents now live in suburbs, the number of people living in cities also has rebounded somewhat in the past decade, increasing by 3 percentage points. Roughly one-third of the U.S. population lives in cities, the highest share since 1950. ___ Online: Array Array Array

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Foxes Guarding The Henhouse? Auditors Criticize Self-Regulation Of Hedge Funds

July 11, 2011

Allowing the hedge fund and private equity fund industry to regulate itself might not be very effective, according to a new Government Accountability Office audit released Monday . Since the Securities and Exchange Commission lacks adequate resources to police the sector, the GAO was tasked under the Dodd-Frank Act with determining the feasibility of forming a self-regulatory organization to provide primary oversight of private fund advisers. Though such an SRO could supplement oversight, it presents challenges and trade-offs, according to the report. By “fragmenting regulation between advisers that advise private funds and those that do not, a private fund adviser SRO could lead to regulatory gaps, duplication and inconsistencies,” concluded the GAO. Some of the disadvantages of a private fund adviser SRO include its potential to (1) increase the overall cost of regulation by adding another layer of oversight; (2) create conflicts of interest, in part because of the possibility for self-regulation to favor the interests of the industry over the interests of investors and the public; and (3) limit transparency and accountability, as the SRO would be accountable primarily to its members rather than to Congress or the public. Treasury Deputy Secretary Neal Wolin offered a vigorous defense of Dodd-Frank in Politico, warning that to carry out the reforms effectively, “we need to make sure regulators have the resources they need to do their jobs.” Warren Heads Back Into The Lion’s Den Elizabeth Warren, the presidential adviser who temporarily heads the Consumer Financial Protection Bureau, heads back to the lion’s den on Thursday — to testify before the House Oversight Committee. At the close of her last appearance before the committee, Rep. Patrick McHenry (R-N.C.) accused her of lying during a YouTube-worthy exchange about how much time she would be testifying. As iWatchNews.com notes, the hearing to be led by Chairman Darrell Issa (R-Calif.) is ominously titled, “”Consumer Financial Protection Efforts: Answers Needed.” Elsewhere in the world of financial regulatory reform, Monday is the deadline for public comments on a proposal to set margin and capital requirements for swap dealers and traders, and on an SEC proposal to raise the threshold at which investment advisers can charge a performance fee. ‘Fracking’ Wastewater Ruins National Forest Wastewater from natural gas hydrofracturing — known as “fracking” — decimated a national forest in West Virginia, according to a new study by a U.S. Forest Service researcher. The fracking fluids killed more than half of the trees and caused radical changes in soil chemistry in a quarter-acre section of the Fernow Experimental Forest in the Monongahela National Forest, reported Public Employees for Environmental Responsibility . The study found the following effects of the application of 75,000 gallons of fracking fluids over a two-day period in June 2008: • Within two days all ground plants were dead; • Within 10 days, leaves of trees began to turn brown. Within two years more than half of the approximately 150 trees were dead; and • “Surface soil concentrations of sodium and chloride increased 50-fold as a result of the land application of hydrofracturing fluids…” These elevated levels eventually declined as chemical leached off-site. The exact chemical composition of these fluids is not known because the chemical formula is classified as confidential proprietary information. SEC Slow to Police Problems at U.S.-Listed Chinese Companies After the SEC promised to overhaul and beef up its enforcement in the wake of the Bernie Madoff scandal, the agency been caught flat-footed with mounting problems at U.S.-listed Chinese companies. Since March, more than two dozen companies have announced auditor resignations or accounting problems, reported Reuters . Yet the SEC has been slow to respond, say critics, taking too long to tighten oversight of U.S. shell companies acquired by Chinese firms through “reverse mergers,” which allow the companies to avoid initial public offerings. Part of the problem is that such mergers fall under state law. This week, SEC officials are in China trying to get Chinese auditors access to inspect such companies. How Big Pharma Cornered Market On Asthma Inhalers Today’s must-read: how pharmaceutical companies took advantage of the 1987 ban on the use of ozone-depleting chlorofluorocarbons to corner the market on CFC-free asthma inhalers — squeezing out competitors and raising prices. Mother Jones’ Nick Bauman reports: Many of the patents for the new inhalers won’t expire for another six years, so there likely won’t be any generics until then, unless the patents are challenged in court. The switch to the new inhalers will cost American consumers, insurance companies, and the government some $8 billion by 2017, according to FDA estimates. That’s money in the drug companies’ pockets. In 2007, a top market-research firm alerted investors that the US inhaler market “will soon change from low-value to significant.” Sure enough, at nearly $1 billion a year, sales of the market-leading inhaler, ProAir, now rival Viagra’s. The FDIC vs. Forbes After Forbes published a tough piece on the Federal Deposition Insurance Corporation’s outgoing director, Sheila Bair, the agency’s counsel penned a sharp retort, calling the editorial “more personal attack than commentary.” That of course prompted editorial co-author Vern McKinley to write his own reply to the reply. It’s not exactly as scintillating as the volleys between Nadal and Djokovic at Wimbledon, but here’s the back and forth . Meanwhile, Bair will have plenty of space to vent in her upcoming book for the Free Press. In a proposal obtained by the New York Times , she wrote: “I will share perspectives on the problems of regulatory capture and the continuing reluctance of bank regulators to fully acknowledge current problems in the financial sector, which are substantial.” The Goat Watching Over The Lettuce Patch A 14-year-old program in Puerto Rico that allows companies to regulate themselves on workplace health and safety issues may not be adequately protecting the workers, reported the Centro de Periodismo Investigativo. Since 1997, the program has resulted in only two findings of a serious nature — one involved a non-work-related death in a parking lot of a company and a second incident, which was resolved outside of court and is confidential. CPI reports : Think it sounds too good to be true? Well, maybe that is precisely the problem with the Voluntary Protection Programs (VPP) – that it contradicts its own definition because it leaves in the hands of employers the establishment of health and safety parameters, with the supposed participation of the workers, and far from the eye of the state’s regulatory agencies. All of this in exchange for less inspections and exemption from fines in the majority of cases.

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Obama Faces Tough Task In Making Case On High-Stakes Economic Issues

July 9, 2011

WASHINGTON — Immersed in an intense struggle to cut the national debt, President Barack Obama faces a dilemma that will stay with him even if he succeeds in striking a grand deal with Congress: convincing Americans that the entire effort will do anything to create desperately needed jobs. Obama ties deficit reduction to jobs, on the basis that trying to balance the nation’s books will promote economic stability and give businesses more confidence to hire. But that’s a tough sell to the millions of Americans out of work right now. And the communications problem just got harder. The latest snapshot of the economy, out Friday, was a body blow that showed employers added a meager 18,000 jobs in June. The leaders of the country, meanwhile, are consumed with negotiating a major debt-reduction deal built upon cutting spending and raising taxes. It is not directly aimed at boosting jobs. Obama’s challenge is to link all this in meaningful terms and to get faster results. At stake are the country’s economic recovery and his re-election chances. The debt is the urgent problem for Obama and a divided Congress because they have no choice. Reaching a deal has become the key to winning Republican support for raising the nation’s debt limit, a politically noxious vote that Congress must take by Aug. 2 to keep the nation from risking default for the first time ever. “There’s no question that this is a complex, almost impenetrable issue,” said David Axelrod, a longtime Obama adviser and now a senior strategist to the president’s re-election campaign. “It’s not just the issue of the potential default, but it’s the larger issue of what he’s trying to get at, the opportunity of trying to do something big about the deficits and the debt. Big things are at stake, but they’re hard to penetrate, so the process of dealing with them is painstaking.” Republicans, too, face the challenge of explaining and defending how cutting debt will create jobs in the short term. They won control of the House last year in large part because of voter anxiety about government spending and jobs. But it is Obama who bears the largest burden, as any president does. In addressing the dismal jobs report, Obama made plain he knows what the country is thinking. “The debate here in Washington’s been dominated by issues of debt limit,” Obama said. “But what matters most to Americans, and what matters to me most as president in the wake of the worst downturn in our lifetimes, is getting our economy on a sounder footing so the American people can have the security they deserve.” As an imperative unto itself, deficit reduction is embraced by all parties as vital for stabilizing the nation and shrinking the debt passed on to the next generations. And a failure to extend the nation’s borrowing limit could cause a kind of enormous economic breakdown that would only worsen the employment picture. Now under deadline pressure, Obama and congressional leaders of both parties were to hold a rare weekend negotiation session on Sunday on a debt-cutting package that remains far from certain. It could cut the deficit by roughly $4 trillion over 10 years or so, which even by Washington spending standards would be considered a big deal. Yet it is joblessness itself that cuts to the heart of the American struggle. Obama said people “pour their guts out” when they write him letters about it. So he is pushing jobs ideas distinct from the debt talks. The president is prodding Congress to pass three pending trade deals, create construction jobs by repairing the nation’s infrastructure, extend a payroll tax cut that could keep money in people’s pockets, and make it easier for entrepreneurs to get patents. But the debt discussion is taking up Washington’s bandwidth. And not everyone is so sure it will help speed job creation. “Washington seems tone deaf,” said Scott Paul, executive director of the Alliance for American Manufacturing, a sector of the economy Obama has been actively promoting. “The metric for President Obama and congressional leaders must now be the number of jobs we create, rather than the amount of deficit reduction we see.” The White House says the priority is both the deficit and jobs and that people understand that. A Pew Research Center poll in June found that more people favored cutting the deficit than spending to help the recovery. That mood varied widely, though, by political constituency. Independents, who will be key to Obama’s bid for a second term, favored deficit cutting over economic spending by 54 percent to 39 percent. “The key is making sure that you’re communicating the importance to the future of the country of dealing with our deficit, without slipping into inside-the-Beltway lingo,” said Dan Pfeiffer, Obama’s communications director. “If communicated incorrectly, it can feel removed from day-to-day life. On the other hand, there’s an element of common sense to why this is important that I think people in the country get that sometimes eludes folks in this town.” The debt limit remains an obscurity to people. An Associated Press-GfK poll in June found Americans divided on raising it or not. Obama has tried to make the case that calamity awaits without action by Congress. “I want everybody to understand that this is a jobs issue,” he pleaded in a news conference last week. “This is not an abstraction.” The struggle has drawn Obama again into a reality of his job: time-eating negotiations with Congress on matters that resonate little with voters. After a bruising midterm election season last year, he conceded that meeting his White House responsibilities cost him some connection with the people. The president has since made a point to get out of town more regularly. Not this month, though. He is expected to keep meeting with congressional leaders at the White House until a deal can be reached, just as he did, day after day and night after night, earlier this year on a budget deal that prevented a government shutdown. Irrespective of the jobs element, Obama stands to gain if he emerges with a package that genuinely shrinks the debt in a way most Americans think is fair. “What’s fundamentally at stake here are economic issues. And barring any surprises, that’s what the election will be about,” said Robert Shapiro, a Columbia University professor who studies public opinion. “Getting out in front is something that would play well publicly, if things fare well. Taking the lead on the economy is probably a very good use of his time.”

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Black Communities Struggle With Mass Joblessness

July 8, 2011

Friday morning Robert Drain got up, got dressed, turned on his computer, and then flipped on the television, tuning it to CNN. The news was awful: Once again, the unemployment rate was climbing. For Drain, 62, the news about the labor market carried special resonance: looking for a job has become his job. Moreover, he lives in a predominantly African American community in Nashville known as Bordeaux. Though much of the United States continues to suffer the strains of a jobless rate that reached 9.2 percent in June, African Americans have long confronted unemployment reaching to near-Depression levels — 16.2 percent last month. Bordeaux has long been the sort of community that African Americans have associated with middle class comforts, a neighborhood in which, in previous generations, black business owners, doctors and academics purchased and built homes — long before anyone ever heard the term sub-prime mortgage. But today in Bordeaux, while there are a number of comfortable retirees, there are also a lot of people just like Drain: people looking for work. In this community, Friday’s disappointing jobs report appeared to change little if anything, merely affirming an unmistakeable reality: a chronic shortage of jobs. “My friends, my neighbors, I’d say most of us are unemployed, deeply under-employed or expecting to be fired,” Drain said, “and by that I do mean laid off, any day. That’s our reality.” In Bordeaux, plenty of streets have mid-sized cars parked in driveways. Meticulously trimmed yards convey the impression that much is ordinary. Still, it’s not hard to spot a roadside sign planted by someone who claims their business can stop a pending foreclosure. The community also makes up the majority of a city council district where 394 households have requested $156,416 in utility assistance. That’s more than any other area of the city, according to local government data. All but one of the programs is reserved for people who have experienced an involuntary change in income, such as a job loss. Local officials are worried because the federal community services block grant program – which funds the utility, mortgage and rental assistance programs – is facing a 50 percent cut, depending on the outcome of budget talks. Back in Bordeaux, the lines to use public computers at the community library are long. There are a lot of people using them to look for jobs. Not too far away, at the C.E. McGruder Community Resource Center, demand for job search services is also intense. And, since the recession began, the number of men applying for food stamp benefits has come to nearly match the number of women. “Traditionally, we’ve had a lot of single moms who come in looking for that sort of help,” said Tracye Henderson, director of the center. While Henderson was out running errands on Friday, she was approached by a man. The man, in his 40s, had brought a relative into the center a year or so ago. Now, he was wondering if the community center still helped people apply for food stamps. He too had just lost his job. While signs of struggle aren’t hard to find in and around Bordeaux, many of the businesses that operated in a nearby historically black business district before the recession are still there, said Sharon Hurt, executive director of the Jefferson Street United Merchants Partnership. Today on Jefferson, most of the businesses are hanging on because they are accustomed to operating on shoe-string budgets or they are run by long-time business people who know how to handle an economic rough patch, Hurt said. Smith Funeral Home is still there, and the owner is leasing several of his nearby properties to other businesses. Nationwide Insurance has a storefront along with Dollar General, and at least two local attorney groups. The Garden Brunch Cafe has found its footing by opening its doors to weekend customers and staying closed much of the week. It isn’t easy for the businesses to thrive because too many of the homes nearby are vacant, Hurt said. However, Hurt’s organization has been able to place about 200 people in jobs, helping to build the city’s new and massive convention center. And, it has received federal funding that will allow the organization to rehab and sell about 40 area homes. The jobs and the homes should together do a lot for the community, she said. In 2008, the day after Obama was elected president, a parade formed on Jefferson Street. There is a trio of historically-black colleges located there. But it wasn’t just college students who came to Jefferson Street to celebrate the election of the nation’s first black president. There was music, there were convertible convoys, there were people with noisemakers and a lot to say about what was possible. There were people talking about their hopes for their children’s futures. “Yes, I do remain optimistic, in spite of it all because I know what is possible and because I believe in God,” Hurt said. “I know that miracles can happen and I know how many people are committed to making this community work.” Hurt isn’t alone. A Pew Center poll released in late June found that 15 percent of African Americans are expecting their financial situation to improve “a lot” over the next year, while just 5 percent of white Americans said the same. Another 48 percent of white Americans said their economic situation would improve “some,” compared to 54 percent of blacks. On Friday, Drain was in Hurt’s office hoping she might know someone who works for a company where he has just applied for a job. Hurt didn’t have an inside connection. Before the downturn, Drain worked as a teacher, then ran a thriving construction business and even helped a friend flip a series of homes. He can remember when the real estate agents attached to those flips used to stop by and harass him about wrapping up construction. The agents were always sure that they were on the verge of making a sale. By the spring of 2008, Drain’s bank told him it could no longer lend him most of the costs associated with his next project. This time, the bank said it could only give him 40 percent of the cost of the project, enough to get started but not finish. A few months later, when Drain drove by one of his earlier flips and saw that it was still on the market, he knew he was in trouble. After a year of looking for work and spending some time living in an Atlanta homeless shelter, Drain found a job managing a construction crew in Nashville, doing mostly stimulus-funded work. Drain and his crew worked retrofitting homes with energy saving widows, heating and cooling systems and rehabbing the houses of low-income owners who could not afford critical repairs. When Drain worked in other sections of Nashville, he heard terrible stories from homeowners who lost jobs. But in North Nashville, closer to home, Drain heard story after story about people who lost jobs and then developed serious health problems. “I think when you are already living with high blood pressure or have been told you are darn near diabetic, being out of a job can just put you over the top,” Drain said. “Stress isn’t any body’s friend.” Then, in March, Drain’s own layoff notice came.

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Men Charged With Transporting Prostitutes To Vermont Farms

June 30, 2011

BRATTLEBORO, Vt – Federal prosecutors have charged two men with transporting several Hispanic women from New York to Vermont to have sex with farm workers. Alejandro Enrique Young-Hernandez, 53, of Hyde Park, Vermont, appeared Wednesday in U.S. District Court in Burlington on a conspiracy charge of intent to have the women, most in their early to mid-twenties, engage in prostitution at various farms, Assistant U.S. Attorney Heather Ross said on Thursday. According to the criminal complaint, Young-Hernandez, also known as Alex Young, met a Mexican man in October named Jose Tomas Flores-Rocha, also 53, who prosecutors said was in the country unlawfully. Prosecutors alleged that the men began working together to arrange so-called “tricks” for Vermont farm workers at $60 per sexual act, with Flores-Rocha bringing the handful of women from New York for that purpose. Flores-Rocha was arrested near a farm in Vermont on March 16 while traveling with a female illegal alien from Mexico who was working as a prostitute. Prosecutors said he also had a ledger with clients’ and prostitutes’ names, farm addresses, and dates and times of services rendered. Flores-Rocha pleaded guilty on June 14 to transporting the Mexican woman for prostitution and as part of a plea, admitted to having driven more than five women to Vermont for that purpose. He agreed to serve 18 months in jail, with his sentencing set for October 18. U.S. Magistrate Judge John Conroy set Young-Hernandez next court appearance for July 18. If convicted, Young-Hernandez faces up to 10 years imprisonment and a fine of up to $250,000. (Reporting by Zach Howard; Editing by Chris Michaud and Greg McCune) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Cost Of Childcare Has Skyrocketed In Last 50 Years

June 25, 2011

It cost $25,299 to raise a child from birth to age 18 in 1960. The amount rose to $226,920 last year. This may be one of the reasons many reasons Americans are having fewer children these days. Adjusted for inflation, the 1960 sum equals about $192,497 compared to $235,996 in 2010, about a 22% increase. Neither number paints a complete picture. Median household income rose 25% between 1960 and 2010. The cost of raising a child is, in comparison to income over the 50-year period, up very modestly.

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Rick Robinson: What the Groupon Cat Should Have Said, Were it Not Such a P*ssy

June 24, 2011

After a couple weeks of virtual waterboarding by just about everyone from mainstream media to “recovering journalists” to an army of bloggers , Groupon used its blog for something of a response . The critics filled the mandated Quiet Period with all kinds of noise about unhappy local businesses victimized by the Groupon model to deconstructed formulas demonstrating how the Groupon numbers add up to poorer local merchants and a very rich Daily Deals company. On the blog “Groupon the Cat, slouching majestically across a cloud of pure wisdom,” doles out wisdom to all the Goupies. The Cat meowed: The “Quiet Period” is the time right before a company “goes public,” during which it is legally prohibited from saying anything to the press that may make the company look “good,” “successful,” or “not currently on fire.” During this sensitive time, it is the duty of the press to force the adolescent company through a series of brutal hazing rituals, designed to desensitize it to public criticism. This tough love helps the naively optimistic company to thicken its skin, atrophy its soul, and finally grow up into a real corporation. Groupon the Cat mentioned several morsels of what companies in a quiet period can expect from people raining hate (or logic) while the company is tied and gagged by mandated silence. I’ve offered an interpretation: WHAT CAT SAID: Wait until the company is sleeping to smear scream-activated bees on its face. Lesson Learned: Don’t believe your company’s own “buzz.” WHAT CAT MEANT TO SAY: Take the names of all who belittle you and hide in the bush for right time to pounce and claw their bloody eyes out. WHAT CAT SAID: Photoshop the company’s logo to appear to be shaking hands with James Buchanan, America’s worst president. Lesson Learned: Everything you see or read about a company is true, if it’s on a computer. WHAT CAT MEANT TO SAY: Take pictures of all who belittle and Photoshop them inside Cat’s mouth, speared by bloody incisors. WHAT CAT SAID: Kick sand in the company’s face. Lesson Learned: If the company survives, it’s time to move on to sand’s close relative, powdered glass. WHAT CAT MEANT TO SAY: Take faces of all who belittle and grind them open-mouthed in the moist bloody center of Cat’s litter box. WHAT CAT SAID: Write disparaging articles about the company. Lesson Learned:That’s what they get for trying to be a company. WHAT CAT MEANT TO SAY: Never try. Instead, take a long afternoon nap and wait for someone else to invent stuff. Then claw their bloody fucking eyes out.

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David Isenberg: PMC und Drang in the Persian Gulf

June 24, 2011

This post was originally written June 5. It’s now been three weeks since the New York Times published its story on the United Arab Emirates business doings of Erik Prince, the man that lefty critics of private security contracting love to berate. So now that the reflexive PMC und Drang, to coin a phrase, has died down a bit, it is a good time to take a step back, draw a breath, and try to consider some the pros and cons of this latest development. Note, however, PMC und Drang is actually a useful phrase to keep in mind, as the protagonist in a typical Sturm und Drang stage work or novel is driven to action — often violent action — not by pursuit of noble means nor by true motives, but by revenge and greed. If you substitute free market enterprise or good old fashioned capitalism for greed — remember, as Gordon Gecko said, greed is good — then it seems entirely appropriate. For those who need their memories jogged, the May 14 NYT article ” Secret Desert Force Set Up by Blackwater’s Founder ” by Mark Mazzetti and Emily B. Hager detailed how Prince was hired by Sheik Mohamed bin Zayed al-Nahyan, the crown prince of Abu Dhabi and the de facto ruler of the United Arab Emirates, to put together an 800-member battalion of foreign troops for the U.A.E. The force is intended “to conduct special operations missions inside and outside the country, defend oil pipelines and skyscrapers from terrorist attacks and put down internal revolts, the documents show. Such troops could be deployed if the Emirates faced unrest in their crowded labor camps or were challenged by pro-democracy protests like those sweeping the Arab world this year.” While it is impossible to say for certain since I’ve not seen its documentation so far, the NYT story has, factually, stood up pretty well. Apart from using words like mercenaries, the worst thing that can be said about was an incorrect and somewhat derogatory reference to the old South African based Executive Outcomes. See the details here on Eeben Barlow’s blog So Prince has formed a new company called Reflex Responses (any resemblance to a malady like acid reflux is, I’m sure, entirely coincidental), complete with a nifty logo. He has reportedly hired Colombians, along with South African and other foreign troops that are trained by retired American soldiers and veterans of the German and British special operations units and the French Foreign Legion. Hmm, trained by Legionnaires; this could be the first Legion/PSC hybrid in history as Feral Jundi noted . What should we make of all this? Well, first, evidently Erik Prince has decided that of all the things he might or could do in the post Blackwater/Xe Services era, teaching history and economics to high school students is not one of them. Remember that was one of the things he said in early 2010 he might be doing when it was announced that he was leaving the United States and moving to the UAE. Somehow I think the UAE education establishment will weather this loss. Second, let’s consider some of the positives of this. Generally speaking, doing business in the Persian Gulf is a good thing. Why is that? For the same reason Willie Sutton robbed banks; because it is where the money is. Also, Erik has learned something from his past BW contracts in Iraq. BW, along with all the other PSC contractors, took a lot of PR grief for being protected by the old Coalition Provisional Authority immunity provision covering contractors. Although it was never the one hundred percent get out of jail free card critics claimed, it was enough to cast a cloud of suspicion and doubt over their activities. But that was then, this is now. RR’s contract with the UAE states: Article 17 Compliance with the Laws, Regulations and Bylaws The Second Party undertakes to comply with all the laws, regulations and bylaws in force in the State, and all provisions of the Decision of the Deputy Supreme Commander of the Armed Forces referred to hereinabove shall apply to this Contract, provided that the general legal principles in force in the State concerning contracts and contracting methods of the administration shall apply to any matter regarding which there is no specific provision in the said Decision or in this Contract. So if something wrong does happen you will have to take it up with the UAE legal system. Although it is unclear how responsive the UAE system will be to redressing any human rights violations. The latest annual State Department human rights report notes: Section 5 Governmental Attitude Regarding International and Nongovernmental Investigation of Alleged Violations of Human Rights The government generally did not permit organizations to focus on political issues. Two recognized local human rights organizations existed: the quasi-independent EHRA, which focused on human rights issues and complaints such as labor rights, stateless persons’ rights, and prisoners’ well-being and humane treatment; and the government-subsidized Jurists’ Association Human Rights Committee, which focused on human rights education and conducted seminars and symposia subject to government approval. And as Feral Jundi astutely noted , if things work this could be the start of a new financial empire for Prince. Call it Moycock II: Persian Gulf. Emirati military officials had promised that if this first battalion was a success, they would pay for an entire brigade of several thousand men. The new contracts would be worth billions, and would help with Mr. Prince’s next big project: a desert training complex for foreign troops patterned after Blackwater’s compound in Moyock, N.C. So will R2 be opening it’s doors for training to the world, much like how BW operated in the US? If true, I could see something like this becoming a multi-billion dollar project for Prince and company. Just because it would be located in the middle east and cater to all the OPEC nations. Furthermore, qualitatively speaking it is hard to accuse Prince of doing something new. As Strategy Page observes , just about all Persian Gulf states have, for decades, been using foreigners, either working directly for foreign governments or private sector civilians with that government’s approval to equip and train their military security forces. If one wants to accuse Prince of doing something bad one has to similarly accuse firms like Vinnell which has been training the Saudi National Guard for decades. On the negative side it is hard to see the initial force that RR is training as being for any other purpose than to deal with future internal unrest and dissent, as in cracking down on protesters. Training a force of 800 men to deal with a threat from perennial boogeyman threat Iran is farcical. The Iranian military may have its problems but it is clearly capable of overwhelming so few. Though as Nation reporter and perennial Erick Prince critics Jeremy Scahill noted : In a speech Prince delivered in late 2009, a copy of which was obtained by The Nation, Prince spoke of the need to confront Iranian influence in the Middle East, charging that Iran has a “master plan to stir up and organize a Shia revolt through the whole region.” At the time, Prince proposed that armed private soldiers from companies like Blackwater be deployed in countries throughout the region to target Iranian influence. If Prince, Sheik al-Nahyan, or U.S. State or Defense Department officials think a battalion is going to help with that, they are smoking something far more potent than Bill Clinton ever inhaled. In fact, the State Department probably deserves more blame than the Pentagon on this. Even though RR is a UAE majority owned company, Prince is still a U.S. citizen and subject to the International Traffic in Arms Regulations (ITAR) the regulation, and the law is the Arms Export Control Act (AECA). As such he needs to be registered as a Broker or as an Exporter of Defense Articles or Defense Services and would need approval from the Directorate of Defense Trade Controls (DDTC) at the State Department. Even commentators like military historian and foreign-policy analyst Max Boot, who has staunchly defended the use of PSC in the past, wrote : I am nevertheless slightly discomfited by news that Erik Prince, the former SEAL officer and founder of Blackwater, is now in the process of assembling a mercenary battalion for the United Arab Emirates. The UAE is a close American ally and by Middle Eastern standards relatively liberal. But there is no mistaking it for a democracy. It is run by a small number of ruling families which keep a tight lid on dissent–especially among the vast underclass of foreign-born workers who keep the emirates running but are denied citizenship or any of the other benefits that native Emiratis receive. Many of these workers belong to a more or less indentured class of laborers from the Indian subcontinent who live in squalid, miserable conditions. They are deported at any hint of labor organizing or any other attempt to redress their numerous grievances. If the New York Times account of Prince’s dealings can be trusted, he is recruiting Latin Americans and other foreigners, because Arabs cannot be trusted to fire on other Arabs. This suggests that his force is designed to be used for internal repression among other, more legitimate tasks. If that is the case then this is morally dubious undertaking. Again there is nothing inherently wrong with mercenaries but like any other military force they can be used for good or ill. It is not hard to imagine disreputable uses to which this new force could be put by the unelected rulers of the UAE. Likewise 800 men are also clearly inadequate to protect the UAE’s oil infrastructure. And when one looks at the UAE’s human rights record it seems, that while it is hardly the worst in the region, it is also not one inclined to tolerate things like freedom of speech and association. Thus training a force that could be used for “crowd control” doesn’t sound good if the United States wants to be on the side of democratic forces in the future. This raises an interesting potential question as the New Yorker pointed out : A document obtained by the paper describes “crowd-control operations” where the crowd “is not armed with firearms but does pose a risk using improvised weapons (clubs and stones).” After the Arab Spring, and what we have seen in Libya, that is an interesting business to be in. … If the U.A.E.’s R2 battalion ends up killing civilians, might we intervene? And would we do so with the support of private contractors from companies like Blackwater? Interestingly, but perhaps not surprisingly, Reflex Responses does not appear to be a signatory to the International Code of Conduct For Private Security Service Providers that came into effect last November. Perhaps it is because of provisions like this: 21. Signatory Companies will comply, and will require their Personnel to comply, with applicable law which may include international humanitarian law, and human rights law as imposed upon them by applicable national law, as well as all other applicable international and national law. Signatory Companies will exercise due diligence to ensure compliance with the law and with the principles contained in this Code, and will respect the human rights of persons they come into contact with, including, the rights to freedom of expression, association, and peaceful assembly and against arbitrary or unlawful interference with privacy or deprivation of property. Having to comply with UAE law, which doesn’t offer that much in the way of guaranteeing basic civil liberties, is one thing; having to incorporate basic international humanitarian law standards might be something else entirely. So what kind of grade do we give this? Actually, I see three. First, for Prince it is an A plus. Give him credit for knowing where to go to make a profit. For the United States it is a B minus. As long as nothing goes wrong, as in using the future force for breaking up a demonstration of oppressed workers or a continuation of Arab Spring protests in the UAE, the U.S. can sit back and twiddle its geopolitical thumbs and say Erik Prince, who’s that? But if and when some civilian gets killed by a RR employee it can forget about that attempt at plausible deniability. As for the PMSC industry itself, I give it a C. In recent years the PMSC industry has invested considerable effort and some resources to depicting itself as a highly ethical peace and stability operations industry. While a lot of it is rhetorical, some of it has been very real. It is not clear that Prince and RR are doing much to bolster the image that companies and trade groups have tried so hard to cultivate.

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