colleagues

Dean Baker: Why Does Senator McCaskill Want to Bankrupt Our Children?

by Dean Baker on May 2, 2011

Huffington Post…

That is what people should be asking Missouri Senator Claire McCaskill along with her fellow senators who are advocated strict caps on government spending. The idea being pushed by Senator McCaskill, together with Tennessee Senator Bob Corker and several other prominent senators, would limit federal spending to 20.6 percent of GDP. It would require difficult to obtain super-majorities to exceed this cap. Spending would be cut across a variety of programs if the cap is not reached. This proposal is hugely deserving of ridicule for a variety of reasons. First, it operates from a blatantly wrong premise – that government spending has grown out of control. Those familiar with arithmetic know that government spending had increased by little as a share of GDP prior to the downturn caused by the collapse of the housing bubble. In 2007, the last year before the onset of the recession, spending as a share of GDP was 19.6 percent. That is 1.1 percentage points less than the 20.7 percent share 30 years earlier in 1977. So the idea that there is a long-term trend of out of control spending is simply not true, or what they call outside of Washington, a “lie.” Spending has risen in the wake of the downturn, but this was not due to a flood of new and expensive government programs. It was overwhelmingly attributable to the expansion of safety net programs like unemployment compensation and Food Stamps and a decline in GDP, which raises the spending-to-GDP ratio even when spending remains constant. If McCaskill and the other senators are upset about this recent rise in spending then they should be going after the incompetents at the Fed and Treasury who somehow could not recognize the $8 trillion housing bubble whose collapse wrecked the economy. This was indeed a horrendous mistake that has been devastating to the country, but it has nothing to do with government spending. Over the long term government spending is projected to rise, but this also has nothing to do with the profligacy of Congress. There are two reasons for the projected increases in spending. The first is an aging population. As a result federal programs that provide for elderly like Social Security, Medicare, and Medicaid will cost more money. The second reason is that health care costs are still rising out control. The United States already pays more than twice as much per person for health care as other wealthy countries. This disparity is projected to grow even larger in coming decades. If this proves true then it will both impose enormous costs on the private sector and lead to growing strains on the budget. By contrast, if health care costs were brought under control we would be looking at huge budget surpluses in the decades ahead. Of course controlling costs would mean confronting the insurance and pharmaceutical industries and other powerful lobbies. Unfortunately Senator McCaskill and her colleagues lack the courage to confront such powerful elites. In fact, McCaskill and her colleagues do not even have the courage to propose cuts for specific programs. Does McCaskill wants to cut Medicare, Social Security, Head Start, unemployment insurance? She won’t tell her constituents or the country. She just wants to cut generic spending. This one might sell well with the Wall Street crew, but it is incredibly bad policy. First off, any budget expert can quickly devise 100 ways to game spending caps, the most obvious being tax expenditures, where the government gives a tax break for items it wants to subsidize. This does not count as spending. More importantly, a strict limit on government spending that is binding would prove enormously costly because there are some things that the government does more efficiently than the private sector. Providing Medicare to retirees is one of the items in this category, according to the non-partisan Congressional Budget Office (CBO). CBO’s analysis of Representative Ryan’s plan for privatizing Medicare showed that having private insurers take over the Medicare program would add more than $34 trillion to its costs over its 75-year planning period, an amount that is almost seven times the size of the projected Social Security shortfall. CBO’s analysis implies that the Ryan plan, which was approved by the Republican House last month, would increase the cost of paying for retirement health care for someone turning 65 in 2022 (the first year the plan takes effect) by almost $170,000. This doesn’t count the cost transferred from the government to beneficiaries. This is pure waste associated with using a more inefficient private system rather than the public system. There is a similar story with Social Security. The administrative costs of privatized systems like those in the United Kingdom or Chile are 20-30 times as high as the administrative costs of the Social Security system in the United States. This would cost a typical retiree close to $40,000 in higher fees (which is income to the financial industry) that would come directly out of their retirement income. If Senator McCaskill and her colleagues really expect their caps to be binding then they must want to privatize either Social Security or Medicare or both. Arithmetic leaves few other options. By 2030, CBO projects that spending on Social Security, Medicare and Medicaid would take up 14.5 percent of GDP. If we assume, conservatively, interest payments of 3.0 percent of GDP, this brings us to 17.5 percent of GDP against a proposed cap of 20.6 percent. Any reasonable level of spending on the military, education, infrastructure, the environment and research and development would push the country far over the cap. This would leave little choice except to privatize Social Security and/or Medicare imposing an enormous and unnecessary burden on our children and grandchildren. The higher costs associated with privatized programs will leave all but the wealthiest workers struggling in retirement. Of course, the senators who want to impose this enormous burden on our children and grandchildren will mostly be enjoying a comfortable retirement themselves by the time the effects of their policy are being felt. In the meantime, they will have enjoyed the praise of the Wall Street crew and the elite media for having the courage to destroy the programs that the middle class depends upon. Welcome to Washington.

Read the original post:
Dean Baker: Why Does Senator McCaskill Want to Bankrupt Our Children?

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

Chip Conley: The Chief Emotions Officer

by Chip Conley on April 27, 2011

Huffington Post…

Executives execute. We don’t execute people as in life and death matters (although, sadly, we do “terminate” people when they’re no longer needed), but we have traditionally thought of business leaders as being emotionless technicians who just keep the trains running on time. But, timely trains didn’t make Southern Pacific or Santa Fe railroads into 21st century mega-corporations. In fact, the train industry missed its chance to expand into automobiles and airplane travel by thinking of their business a little too myopically. Maybe these train executives were a little too focused on the simple execution of being on time. While execution is still a fundamental skill of the best executives, we no longer are purely executing mechanistic, industrial organizations. In this knowledge era, execution is all about people: how to harness and inspire the potential of those we work with. And, at the heart of people are our emotions, the mysterious internal weather that either propels or penalizes us. After 24 years of being a CEO, I’ve come to realize that the best amongst us are truly Chief Emotions Officers as we are the “emotional thermostats” for our organizations with studies showing that a typical leader has 50-70% influence over the work climate of their team. There are three great pieces of empirical evidence that amplify this reality about 21st century leadership. First, Daniel Goleman has shown for 15 years now that emotional intelligence (EQ) represents two-thirds of the success of business leaders as compared to only one-third coming from either IQ or the leader’s transferable experience. And, yet, in 2010, less than 10% of the training and development dollars spent by America’s corporations went toward emotional intelligence or literacy training (often called “soft skills”). We know it’s important and, yet, we seem to be reluctant in investing in the skills to help our executives become Chief Emotions Officers. Secondly, Dr Matthew Lieberman at UCLA has proven that labeling our emotions reduces the intensity of these emotions in such a way that it maximizes our cognitive abilities just at the time when we most need to use the prefrontal cortex of our brain for better reasoning and judgment. By being emotionally literate about what we’re experiencing, executives can sidestep the 10-15 point drop in IQ that often occurs for those who are barraged by having to make decisions during times of emotional distress. So, maybe being a CEO is less about being able to predict the times of trains and more about being an internal weather forecaster. Finally, Harvard’s Nicholas Christakis, as well as a few other academics, has shown that our emotions are contagious. When we have the flu, our colleagues feel comforted that we stay at home in order not to spread the misery. Yet, when so many of us have caught the “fear” at work — especially in economically turbulent times — there’s no sane corporate voice warning us of the risks of how our emotions can spread and threaten the well-being of those in our organizational petri dish. The ultimate inoculation for fear is a great corporate culture and companies with great cultures have healthy psycho-hygiene. In other words, their leaders are emotionally attuned to what’s going on around them and they cleanse the company through transparent communication or other tactical means to help employees feel recognized and engaged. Any executive worth their weight understands the principle of accrued interest. If you have a loan and don’t pay the interest currently, it accrues and can compound and over a period of time. The cost of the interest can become staggering. This is an apt metaphor for organizational emotions that are not properly addressed in the workplace. Most companies — led by CEO’s who aren’t nearly literate about their own emotions — are actively disengaged in addressing the individual and collective emotions that are invisible predators of passion and engagement. From my own experience, I have learned the hard way. When I most have bottled up my emotions for extended periods of time, they have leaked out in other subversive ways that didn’t serve my purposes as CEO. And, yet, when I was most vulnerable and authentic in my emotional communication with fellow co-workers, ironically, I was told by these colleagues that I was more admired and they felt most comfortable to be all they could be at work.

Go here to read the rest:
Chip Conley: The Chief Emotions Officer

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

Alan W. Silberberg: America Sucks at Being "Service Economy"

April 25, 2011

I have just been on 10 airplanes over the course of 11 days. I was in seven different airports, each with stores, restaurants, etc. I have been in countless cabs and other forms of transportation between airports, meetings. All this frenzied travel had nothing whatsoever to do with customer service, nor was I pondering America as a service economy. But it slammed home all by itself. It. What it? That if America has shifted from an economy of making things to an economy of servicing things, then you would think we would be getting good at it. However the stark reality exists. People have become rude. Manners have fallen by the wayside. The economic strains and other societal forces combining with everyone’s head stuck to their electronic tether have created a downward spiral of customer “service.” At the 2010 Gov 2.0 LA Craig Newmark , the founder of Craigslist, and I had a discussion about bringing customer service best practices from business to government. But in light of the current state of things in the U.S., I now believe more is needed. If America is to be a service economy and succeed, and even innovate, then we need to buckle down and focus. People, if you have a job, be happy, do the best you can do, smile, and treat people the way you yourself would like to be treated. Plain and simple. Anything else just creates confusion, bad feelings and ill will towards your brand, or yourself. If your job is to service people, then remember that the people actually come first, not some script handed to you by a supervisor who could care less. Some of my colleagues at Constellation Research Group are the worlds leaders on customer experience having led some of the biggest brands to success. When you look at their research and other writings on these subjects, it becomes clear that if America is to succeed as a Service Economy, then we need to take seriously the training, human relations and communications components that make the difference between world class service and customer service failures. We need to be creating educational tools that start to train young people in schools. Maybe it might even be time to institute manners classes and help people manage expectations of their own behavior in a service environment. Certainly, if our future is service then we need to be raising the level of service all across our economy.

Read the full article →

Budget Deal Passes House Vote

April 14, 2011

WASHINGTON — A coalition of House Republicans and Democrats approved on Thursday legislation that would cut almost $40 billion from the budget for the rest of the fiscal year by a vote of 260 to 167. When the time for the vote expired, fewer than 150 members had voted yes, with scores waiting to see where their colleagues would fall before taking the plunge. Senate Majority Leader Harry Reid (D-Nev.) has vowed to quickly take up the House-passed legislation Thursday afternoon without further debate. ( SCROLL DOWN FOR LIVE UPDATES )

Read the full article →

Fed: Economy, Hiring Improving, Despite Energy Prices

April 13, 2011

WASHINGTON — The U.S. economy improved in every region of the country this spring, but higher oil prices remain a concern, according to a survey released Wednesday by the Federal Reserve. Factories were busier, consumers spent more and companies boosted hiring in all 12 of the regions surveyed by the Fed. But the report also found that high energy prices are putting pressure on businesses to raise their prices. And workers are seeing limited, if any, pay increases because they lack leverage in market where jobs are still hard to find. . Still, scant wage gains are a major reason Federal Reserve Chairman Ben Bernanke says inflation won’t spread through the economy this year. That’s limiting businesses ability to raise prices, even though many companies are facing higher costs for raw materials. The Fed’s report found that manufacturers are having an easier time increasing their prices to other businesses. But retailers have been more limited, fearing they might lose customers. Bernanke and a majority of Fed officials also predict that the surge in oil prices will lead only to a modest and short-lived increase in consumer prices. Consumer spending picked up modestly in most of the Fed’s 12 regions, despite the higher gasoline prices. Shoppers, however, focused on necessities and lower-priced goods. Auto sales rose and tourism also strengthened in most areas. Factories boosted production across most of the Fed’s regions, and many manufacturers increased hiring. Businesses remain mostly upbeat about future sales prospects, the Fed reported. Still, some said the earthquake in Japan could disrupt sales and production. Many U.S. businesses depend on Japanese companies for parts, particularly automakers and electronics manufacturers. The crisis could also temporarily limit Japanese imports of U.S. goods. The Fed’s report is based on information collected from its 12 regional banks before April 4. The information will be used when Bernanke and his colleagues discuss the economy at their next meeting on April 26-27.

Read the full article →

Supreme Court Hears Argument In Wal-Mart Sex Bias Lawsuit

March 29, 2011

WASHINGTON — The Supreme Court on Tuesday questioned a massive sex discrimination lawsuit on behalf of at least 500,000 women claiming that Wal-Mart favors men over women in pay and promotions. The justices suggested that they are troubled by lower court decisions allowing the class-action lawsuit to proceed against the world’s largest retailer. Justice Anthony Kennedy, often a key vote on the high court, said he is unsure “what the unlawful policy is” that Wal-Mart engaged in to deprive women of pay increases and promotions comparable to men. Billions of dollars are at stake in the case. Class actions create pressure on businesses to settle claims and create the potential for large judgments. Wal-Mart denies it discriminates against its female employees. But Joseph Sellers, the lawyer for the women, said that lower courts were persuaded by statistical and other evidence put forth so far in the 10-year-old lawsuit. Sellers said a strong corporate culture at Wal-Mart’s Bentonville, Ark., headquarters that stereotyped women as less aggressive than men translated into individual pay and promotions decisions at the more than 3,400 Wal-Mart and Sam’s Clubs stores across the country. “The decisions are informed by the values the company provides,” Sellers said. Justice Antonin Scalia said he felt “whipsawed” by Sellers’ description. “Well, which is it?” Scalia asked. Either individual managers are on their own, “or else a strong corporate culture tells them what to do,” he said. Theodore Boutrous Jr., representing Wal-Mart, said that the class-action nature of the case deprives the company of its legal rights because it is being forced to defend the treatment of women employees regardless of the jobs they hold, or where they work in the Wal-Mart chain. “There is absolutely no way there can be a fair process here,” Boutrous said. He pointed to a group of at least 544 women who serve as store managers who “are alleged to be both discriminators and victims.” Justice Ruth Bader Ginsburg said that at this stage of the lawsuit, the issue is not proving discrimination, but showing enough evidence to go forward. “We’re talking about getting a foot in the door,” Ginsburg said, a standard she called not hard to meet. The 78-year-old justice, who made her name by bringing discrimination claims, said it was possible that Wal-Mart could refute the claims at a trial. But several of her colleagues appeared to agree with Boutrous that even subjecting Wal-Mart to a trial would be unfair. A decision should come by summer. The case is Wal-Mart Stores Inc. v. Dukes, 10-277.

Read the full article →

A10 Capital Hires Veteran Commercial Real Estate Financier to Head Up Northwest and Arizona Markets

January 24, 2011

Another Top CMBS Producer Rejoins Colleagues at A10

Read the full article →

Preeti Vissa: The Film You Must See — or, We Told You So

November 18, 2010

A few days ago I joined a group of my colleagues from The Greenlining Institute to see the new documentary, Inside Job . I don’t normally go around telling people what to do, but seriously: Step away from the computer and go see this film. We had a special motivation for seeing Inside Job , which lays out in painful detail how the subprime mortgage meltdown happened and how it tanked the economy: Greenlining’s co-founder, Robert Gnaizda, is featured prominently. In a film that will leave any sane person furious and frustrated, he’s highlighted one of precious few who saw the crisis coming and tried to sound a warning. What filmmaker Charles Ferguson does — better than just about anyone else thus far — is connect the dots in a way that makes this very complex material understandable. He shows how a deregulated environment separated lenders from the consequences of their actions, producing a massive housing bubble that was built on a foundation of wishful thinking, speculation, inflated appraisals, bogus bond ratings and outright fraud. The result was a speculative frenzy in which lenders could make a fast buck (hundreds of millions of fast bucks, actually) by making subprime loans, often misleadingly marketed to gloss over hidden time bombs like exploding interest rates, quickly bundling them into securities called collateralized debt obligations (CDOs) and selling them to investors. Without any sort of meaningful oversight to ensure that increasingly complex financial instruments bore some connection to reality, financial operators simply made stuff up — from appraisals phonied up to make a loan seem viable when it really wasn’t to AAA ratings given to securities that close examination would have shown to be nearly worthless. Much of what happened was utterly mad: For example, borrowers were allowed to borrow 99.3 percent of value of their homes, meaning they had basically no investment in the house, and yet two thirds of the securities backed by these loans were rated AAA, as safe as government bonds. It was insane, but while home prices kept skyrocketing it was easy to ignore that the whole boom was built on air. Enter Greenlining’s Bob Gnaizda, one of the few who dared to say that trouble was brewing. In meetings with then Federal Reserve Board Chair Alan Greenspan and other officials, he warned of dangerous and dishonest marketing of subprime loans that was bound to lead to waves of foreclosures and trouble for the whole housing market. But regulators like Greenspan, ideologically opposed to regulation, refused to believe the market wouldn’t correct itself. And everyone in the jungle of lenders and speculators was too busy making piles of money to be interested in the long-term consequences. As we survey the ongoing wreckage — massive unemployment and millions more foreclosures coming if nothing is done — it’s tempting to say, we told you so . And we did, literally. But instead of gloating about predicting the last disaster, it may be more useful to talk about how to stop the next one, and that’s what I’ll be spending the next several weeks doing. More troubles are coming, but like the subprime crash, they’re preventable — if we chose to put aside the conventional wisdom. NEXT WEEK: What Inside Job didn’t show, and what it means.

Read the full article →

Alexandra Levit: The Corporate Freshman: If Something Is Needed, Create It

November 10, 2010

Some of you may recall that I was a complete dud in my first corporate PR job. My boss despised me, my colleagues thought I was overeager, and it took me two years to get a promotion that people with half my work ethic achieved in six months. The second company that employed me kindly spent a few thousand dollars sending me to a professional development course that changed my career and my life. I like to think that everything that the course taught me about developing a strong reputation at work, being diplomatic with colleagues, and driving my career forward was a good investment, because I was much more effective after that. The truth is, though, that not every college graduate has access to training like I had, and some really gifted people spend their post-college careers floundering because they aren’t given the chance to learn the skills and strategies that will meet with success. I got tired of waiting for someone else to fix this problem, so I worked with the Business Roundtable , the HR Policy Association , and Accenture to create JobSTART 101 , a free online course that prepares college students to meet and exceed employer expectations when they enter the workforce. It includes video and workbook components covering topics like how to establish your e-brand and how to problem-solve on the job — basically, all the information I wish I’d had in my back pocket when I was just starting out. If you’re a student or recent grad, I hope you’ll check it out for some decent advice, but more importantly, I hope each of you goes into work today and thinks about what’s sorely needed in your company and industry. And then if you can create it, go for it. The world — and your career – will thank you for it.

Read the full article →

Jim Lichtman: The Emperor’s New Clothes, Vers. 2.0

October 18, 2010

Once upon a time, in a country wide and beautiful, there was a very audacious and flamboyant financier who liked to wear very nice clothes. (Here he is in his gold tie and pinstripe finery.) One day, this very daring man saw a need in the housing market, and lo, with a skill for salesmanship and the help of the best money lenders he could find, he concocted a scheme by which many, many, MANY people were able to purchase a home for the unheard of price of… nothing down . At the time, the scheme came with the catchy industry title, “affordability products.” With the help of many, many, MANY others, they called this brilliant scheme… “subprime lending.” Well the people of the wide and beautiful country thought this was wonderful. “Now we can have the home of our dreams without worry,” shouted Jane and Joe Doe. And lo, the man with the scheme was able to buy more and better finery. He was even able to afford his own in-home spray-tan salon which he availed himself of, frequently. Such was the genius of this very bold man that citizens far and wide in this country would come and avail themselves of the scheme until lo, the man’s company became “a mortgage lending behemoth with $11.4 billion in revenue at its peak in 2006,” according to The New York Times (Oct. 16). Over an eight year period, this very extraordinary man became an Emperor in this new land of mortgage lending, and befitting his position, was richly rewarded to the tune of “$521.5 million, according to Equilar , a compensation research firm.” One day, however, the stylishly tailored Emperor was called to Congress to answer some very serious questions about how and why this scheme came about and the great burden it now placed on ALL the people in the country wide and beautiful. (Here he is testifying before Congress in his red silk tie and suit.) Finally, in 2009, a great and powerful overseer called The Securities and Exchange Commission sued the Emperor and his colleagues, accusing them of “hiding growing risks from investors.” (This, despite the fact, that the SEC chose not to look more closely until the scheme was well underway and many, many, MANY people were affected by the bad loans.) And what did the great and powerful SEC have in its possession as evidence of this risk hiding? A series of e-mails written by the Emperor himself showed that even he did not have much faith in the scheme. “In all my years in the business, I have never seen a more toxic product.” And, “[I have] personally observed a serious lack of compliance within our origination system as it relates to documentation in the quality of loans originated.” Well, with evidence like that, what could the Emperor do? And so it happened that four days before the Emperor and his colleagues were to appear before a jury in a federal court, the Emperor with the help of many, many, MANY attorneys settled fraud charges for $67.5 million. It was determined that the Emperor “would pay $22.5 million in penalties and $45 million in ‘disgorgement,’” of stocks returned to the company’s shareholders, according to The Wall Street Journal (Oct. 16). However, in agreeing to the settlement, the Emperor “and his colleagues neither admitted nor denied the government’s charges,” so we can only conclude that the Emperor offered the money as a one-time donation to promote the good work of the great and powerful overseer. And what of the people who had subprime loans and the citizens of the country wide and beautiful who continue to carry the burden brought about by the scheme? Well, they got screwed. And the Emperor? Well, he can never, ever, EVER serve on a public company again. BUT he does get to keep all his real nice clothes as well as a lifetime of security. Jim Lichtman writes and speaks on ethics. His commentaries can be found at EthicsStupid.com .

Read the full article →

Patricia Handschiegel: The New Power Girls: How Women in Business Are Taking It To The Next Level Despite The Economy

October 12, 2010

I suspect there have always been secret meetings and clandestine relationships among forces in business. The “Old Boy’s Club” didn’t get its name from having just one member, of course. People bond and create relationships with their colleagues, fellow CEOs, investors, etc. We get to know who is who at work. It evolves to grabbing lunches, drinks, hanging together at the holiday and industry parties. For Jenna, Sayeh, Meghan and myself, and many of the other women in the city, that’s the scene here as well. We work together, we play together. Business is talked over brunch, lunches, drinks, manicure/pedicures and shopping excursions. It’s like a New Girls Club – swap out the old guys with cigars, add in a group of fun, fearless female founders and executives who are gunning for big things in their lives and work. I’m not sure when we started more officially regularly meeting and getting together, but every few weeks or so we grab brunch, dinner or drinks, and talk about our projects. We all hang out individually all the time, but there’s nothing like getting together as a bunch. Meghan as you may know from reading NPG is a TV personality, author and expert with media brand. Jenna’s a health and fitness expert. Sayeh’s the youngest in the group, with an online boutique that she’s working to expand. And then there’s me – I’m a serial media and internet entrepreneur. I build and sell internet and media projects. I sold my first (Stylediary) in 2007, and am about to launch my next big thing. As we chatted over wine and snacks at the rooftop restaurant of the Hotel Angelino, I realized one thing: All of us were working to take our work to the next level. It got me wondering, can business owners still take their companies to the next level in what’s said to be one of the worst economies in history? And, more importantly, how? It’s something that women like the four of us, and many more beyond us, are doing today despite market conditions. One has an innovative marketing plan that works around the congestion in the media, which has made even the most seasoned publicists struggle with securing articles on clients. Another has put together a unique and unexpected approach to combat the saturation in her industry. A third is exploring financing options for future projects. Nobody’s letting the economy dictate what’s possible. As we noshed on dinner and wine, I couldn’t help but feel inspired. And as always, there’s value in collaborating. Meghan gave Sayeh two solid ideas, while I was able to share some insight into some areas of Jenna’s future plans. Sayeh had nothing but encouragement as I told about my current projects. And, Jenna reminded everybody that the number #1 sales tool was a belief in yourself and what you’re offering. One by one as we left dinner that night, all I could think was this: If life hands you lemons, don’t just make lemonade. You expand that into a lemonade empire. Partner with a lemon grower, and expand the brand across continents. That’s the way the women founders and executives I’ve met and know are approaching growing business in the down market: They aim for the sky no matter what the weather conditions may be.

Read the full article →

Ron Ashkenas: Hire Senior Executives That Last

August 4, 2010

Cross-posted from Harvard Business Online Not long ago a C-suite executive left a major corporation after being there for only a year. Although the official statement said that she left “for personal reasons,” in truth she was not a good fit with the company and had alienated many of her colleagues and demoralized the function she was leading. Most disturbing, however, was that this same executive had a pattern of similar failures in previous positions — but somehow that history was either missed or ignored when she was hired. Unfortunately this is not an uncommon situation. Studies peg the failure rate of executives coming into new companies at anywhere from 30% to 40% after 18 months. The costs of this failure rate are enormous — wasted and duplicated recruiting fees, missed business objectives, unproductive employees, and distracted colleagues. It’s a significant but mostly invisible drain on corporate productivity. So what can companies do to improve the odds of hiring successful senior managers? Let me suggest three relatively simple steps: To start, ramp up the due diligence process . Most senior management candidates come through executive recruiters, and we assume that they’ve done their research. However, search firms have a vested interest in placing their candidates, and often rely on the candidates themselves for references. If you’re involved in hiring, you should supplement these reviews with your own investigation. Identify people in the candidate’s previous companies and give them a call; talk to people in the industry or function about the candidate’s reputation; and find people in your own company who might have crossed paths with this person previously. The more data you can get the better — which will hopefully uncover previous patterns that might have gone unnoticed. Once you have a candidate that you want to consider, the second step is to go beyond the typical interviews . Most recruits are subjected to a series of one-on-one meetings with other senior executives, many of whom are not trained in effective interviewing techniques. So they end up having pleasant meetings, exchanging impressions, and in the end making a decision based on relatively little data. To make this process more robust and revealing, create other mechanisms for seeing the candidate “in action.” Ask the recruit to make a presentation; give the candidate a problem situation and ask her to develop a range of solutions and a summary memo; conduct a role play on how to deal with a difficult employee; or ask the person to facilitate a meeting with several other managers on a particular topic. The range of possibilities is really unlimited once you liberate yourself from the constraints of traditional interviews. The key is to see how the person thinks on her feet and how adaptable she is to the culture of your company — information that is difficult to uncover in a series of friendly peer interviews. Finally, the third step that you can take to increase executive hiring success is to reduce the number of outside hires . While it is certainly important to continually enhance your company’s gene pool with outside DNA, for most companies it should be the exception rather than the rule. If you have a strong and consistent succession and development process, you will have good candidates for top positions — candidates who already know how to succeed in your company’s culture. So when it is necessary to fill a senior opening, consider whether it makes sense to hire from within. None of this is revolutionary or the equivalent of organizational rocket science. But if you can put these steps in play it can have a huge impact on your company’s success. What’s your experience with outside senior hires?

Read the full article →

Julian L. Alssid: The Road to Tomorrow’s Jobs is Not Yesterday’s Training

July 21, 2010

A persistent unemployment rate of about 10% does wonderful things to focus national attention. Ranging from a cover story in The New York Times , to the bipartisan vote to pass the SECTORS Act , there is suddenly focused attention on the question of how we get unemployed American’s back to work. The New York Times piece hit a nerve among workforce professionals on Monday. The front-page article told the wrenching story of people who had undergone skills training only to be no better off. It also told another side of the story of how training programs tied to the needs of local industry have shown success. The bottom line–traditional general skills training doesn’t work; training tied to industries and local business needs does. An array of fellow workforce professionals jumped on the critique. The fear is that the baby will be thrown out with bathwater and all the federal dollars spent on retraining will be assumed wasted–making it useful electioneering fodder. “Vote for me and I will stop wasting your money on useless programs!” Many are citing a report also released this week by The Aspen Institute and Public/Private Ventures that shows positive outcomes such as ability to find employment, higher wages, and increased benefit among participants in the right kind of training. I agree whole-heartedly with my colleagues, but would argue that perhaps we are missing the point. The problem is not that we don’t know what works, but that so much of the federal money is being directed to exactly those programs that we know don’t. The traditional approach to workforce training has largely been to help job seekers polish generic skills and then send them off into the job market. Today, effective training is tied to high-demand occupations, developed in partnership with industry, and provides job seekers with industry-recognized credentials. The economy is changing and legacy models no longer works for automobiles, for the media, for medicine. Why would we still accept an outmoded model for workforce training? There is nothing nuanced about unemployment. It is personal and painful and binary–either you have a job or you don’t. The danger is that frustration with ineffectual training programs will produce a similarly black and white response–all training is either good or bad. It would be the wrong response and it won’t get Americans back to work any quicker.

Read the full article →

Sen. Blanche Lincoln: The Time Is Now

June 25, 2010

My constituents want Washington to work for us, not the special interests like Wall Street banks. That’s why I stood up for Main Street banks, small businesses and working families in my home state by proposing the toughest reforms for Wall Street of anyone in either party, including the administration. One of my reform proposals would make the $600 trillion over-the-counter derivatives market fully transparent where today it is completely in the dark, with no regulation, no oversight and no public disclosure. Early this morning, the Senate-House Conference Committee on Financial Regulation passed landmark legislation that included the most important provisions of my original proposal. When I first unveiled my plan in mid-April, it was dismissed by many as a political stunt that would never see the light of day. Well, I’ve been underestimated before. What matters to me, and to the retirees, small businesses and local bankers that I represent, is that we expose risky trading by the big Wall Street banks to the light of day. Now my colleagues in the Senate and the House need to know that you stand behind this reform. I have launched a petition and I hope you’ll add your voice to the growing chorus of Americans who support strong financial reform. When my committee, the Senate Committee on Agriculture, Nutrition and Forestry, adopted my bill with bipartisan support, the big banks sent hundreds of lobbyists to Capitol Hill. Most of them promised it wouldn’t be included in the overall Senate Financial Reform bill. When Senate reform became the Dodd-Lincoln Substitute with my derivatives provision intact, there were numerous articles predicting that my provision did not have enough support to defeat amendments to strip it from the bill. However, it’s most significant threat failed with only 39 votes. When the Senate passed comprehensive financial reform with my provision unchanged, the headlines predicted that it would be removed in the conference committee of Senate and House members. This morning, the conference committee ended an all-night session by adopting historic financial reform that offers unprecedented protections for consumers and includes the bulk of my provision. The riskiest trading practices by Wall Street banks that nearly blew up the world economy will have to be moved to an affiliate within two years. While we are changing the way Wall Street does business, the real story is how reform will benefit Main Street by helping families save for college, protect retirees, ensure that small businesses can get loans and most importantly create new jobs. We are not over the finish line. You may still hear opponents using the same tired claims and worn out, catch-all defenses of “unintended consequences” or “driving business overseas” in an attempt to stop our reform efforts. But with momentum on our side, the strong reform that America’s small businesses, community banks, and families need is within our grasp. It’s time we proved the naysayers wrong once again and pass historic financial reform. I hope you add your name to the petition today so that my colleagues in Washington know you want to change the financial system so families have the protections they deserve.

Read the full article →

Kerviel Gave Coherent Explanations When Confronted, SocGen Controller Says

June 17, 2010

By Heather Smith and Carol Matlack June 17 (Bloomberg) — Jerome Kerviel presented “coherent” explanations for his activities when questioned by internal controllers at Societe Generale SA , a former manager for the unit testified in court today. Marine Auclair, in charge of comparing traders’ reports with the bank’s accounts, said she contacted Kerviel and his superiors in April 2007 after finding a “mismatch” of 94 million euros ($116 million) between trades he reported and what was booked in the accounting system. Some of his trades “appeared fictitious, they didn’t have a real counterparty,” Auclair said at Kerviel’s criminal trial. He provided documents appearing to show they were genuine, she said. “He gave us explanations that seemed coherent, that corresponded to the situation.” Kerviel is on trial for faking documents, abuse of trust, and computer hacking related to the 4.9 billion-euro trading loss the bank incurred in 2008 after unwinding 50 billion euros worth of unauthorized positions. He admitted yesterday to the accusations, while insisting the bank knew of his actions. Auclair, when asked about Kerviel testimony earlier this week that his excuses were too “crude” to be believed, said “I’m not an idiot,” and that given the same circumstances again, she would still have believed what Kerviel told her. Auclair said she and her colleagues didn’t contact the bank’s back office to double-check the documents provided by Kerviel were genuine because “that wasn’t my job,” she said. Judge Dominique Pauthe opened today’s hearing saying Daniel Bouton , who stepped down as Societe Generale chief executive officer in April 2008, will be called to testify on June 22, the final day of witnesses in the trial. The hearings end June 25. To contact the reporters on this story: Heather Smith in Paris at hsmith26@bloomberg.net ; Carol Matlack in Paris at carol_matlack@businessweek.com .

Read the full article →

Greenspan Says His ‘Friends’ Got The Financial Crisis Right – And Trades Barbs With Michael Burry (VIDEO)

April 5, 2010

In a New York Times op-ed yesterday, Michael Burry , the reclusive hedge-fund manager profiled in Michael Lewis’s best-selling “The Big Short,” lambasted former Federal Reserve Chair Alan Greenspan and his colleagues, claiming that they “either willfully or ignorantly aided and abetted the bubble.” Burry, who was trained as a medical doctor and suffers from Aspberger’s syndrome, placed huge bets that the subprime market would collapse and helped make his investors many millions. Greenspan responded to Burry’s op-ed in an interview on ABC News’s “This Week,” where he told Jake Tapper that while almost everyone failed to predict the implosion of the subprime market and while some people predicted it by chance, there was a “very small group, most of whom are my friends, who got it right, for the right reasons.” Burry, he said, may well have been one of those people: “I don’t know whether or not he is in that extremely small group… . I know four or five people who are really good. I don’t know six, seven, eight or nine.” In an appearance on Bloomberg Television last week, Greenspan insisted that Burry’s successful prediction of the subprime crisis was a “statistical illusion.” Burry, for his part, says that Greenspan “should have seen what was coming and offered a sober, apolitical warning.” But that’s not what happened. And, peculiarly, in the years since the subprime market imploded, Burry says policymakers have shown little interest in understanding how or why he was able anticipate the timing of the crisis with such accuracy. Rather than a simple dismissal of those who got it right, Burry argues: “Mr. Greenspan should use his substantial intellect and unsurpassed knowledge of government to ascertain and explain exactly how he and other officials missed the boat. If the mistakes were properly outlined, that might both inform Congress’s efforts to improve financial regulation and help keep future Fed chairmen from making the same errors again.” Watch Greenspan discuss Burry in this clip from his appearance on “This Week” yesterday:

Read the full article →

Robert Reich: The Obama Administration’s Approach To Financial Reform Will Do ‘Nothing’ To Change Wall Street (VIDEO)

April 4, 2010

Former Secretary of Labor Robert Reich blasted the Obama administration’s approach to financial reform on Sunday. After Obama’s top economic adviser, Larry Summers, said on ABC’s “This Week” that “reform is going to pass,” Reich responded as part of a roundtable that Summers and his colleagues have been part of the problem. “The fact of the matter is that Alan Greenspan and Larry Summers and Bob Rubin all — if any trio were responsible for deregulating this financial economy, whether you’re talking about getting rid of the Glass-Steagall Act that separated commercial banking from investment banking or you’re talking about saying to Brooksley Born at the Commodity Trading Commission, no, you may not regulate derivatives, it’s those three,” Reich said. “Now, this is my worry. Everybody is enthusiastic — or everybody who says that they’re looking at financial reform is enthusiastic about doing something about the too-big-to-fail problem. But when it comes right down to it, if you look at the details, there is nothing in the hopper right now that is going to fundamentally change the situation so that five or 10 years from now you don’t have a few big banks making wild bets with other people’s money and then expecting to be bailed out by the federal government.” WATCH:

Read the full article →

Video: Australia’s Joyce Hopes Rio Tinto’s Hu Gets Fair Trial: Video

March 18, 2010

March 19 (Bloomberg) — Barnaby Joyce, an Australian National Party senator, talks with Bloomberg’s Haslinda Amin from Sydney about the outlook for China’s criminal trial of Rio Tinto Group iron-ore chief Stern Hu and three of his colleagues, who are accused of taking bribes and infringing company secrets. Foreign companies that do business in China will be tracking the trial next week to see if politics plays as big a role in any conviction as the evidence, lawyers said. (Source: Bloomberg)

Read the full article →

Real-Estate Recovery Signaled by Homebuilders’ Surge as Fed Unwinds Credit

March 15, 2010

By Kathleen M. Howley and Rich Miller March 15 (Bloomberg) — The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006. Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth, according to forecasts by Dean Maki , chief U.S. economist for Barclays Capital in New York. “I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” said Karl Case , co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College in Wellesley, Massachusetts. An improving market would allay concerns at the Fed that sales will relapse after the tax credit expires. It would also give Fed Chairman Ben S. Bernanke and his colleagues, who meet this week in Washington, a freer rein to ultimately raise the interest rate for overnight loans among banks from near zero. “They’re going to be tightening credit sooner than people expect,” said Chris Rupkey , chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. He forecasts that the Fed’s first increase since 2006 may come as soon as June. Reflecting Optimism Homebuilders’ shares reflect the optimism. The 12-member Standard & Poor’s Supercomposite Homebuilding Index hit a five- month high March 9 on speculation the expanding economy will boost sales. The index has gained 14 percent this year, led by a 41 percent jump in Columbus, Ohio-based M/I Homes Inc. , a 31 percent increase by Standard Pacific Corp. in Irvine, California, and a 28 percent rise in Miami-based Lennar Corp. Recent housing data have been mixed. Sales of existing homes fell 7.2 percent in January, while housing starts rose 2.8 percent, according to statistics from the National Association of Realtors in Chicago and the Commerce Department in Washington. Employment is key to the outlook, according to Patrick Newport , an economist with IHS Global Insight in Lexington, Massachusetts. “When people get jobs, that’s when they move or decide to buy a bigger house,” he said. The U.S. may add as many as 300,000 jobs in March, the most in four years, thanks to an improvement in the weather, government hiring of temporary workers for the census and a growing economy, said David Greenlaw , chief fixed-income economist at Morgan Stanley in New York. Payrolls dropped by 36,000 in February, according to the Labor Department, depressed in part by East Coast snowstorms that closed many businesses. ‘Turning Positive’ “The underlying trend is turning positive,” said Bruce Kasman , chief economist at JPMorgan Chase & Co. in New York. The Senate last week approved a $138 billion measure that would extend unemployment benefits and provide additional aid to states. President Barack Obama praised the bill’s passage, saying it will help put the U.S. back on a solid footing. The economy is projected to grow 3 percent this year, according to the median forecast of 52 economists surveyed by Bloomberg News from March 1 to March 10. It expanded at a 5.9 percent annual pace in the fourth quarter, the most in more than six years, after a 2.2 percent increase in the third. Credit conditions may also be improving. A net 13.2 percent of banks surveyed by the Fed in January reported that they tightened standards on prime mortgage loans in the fourth quarter, the smallest percentage since the central bank began tallying such data three years ago. ‘Important Step’ “This is an important step in the right direction,” Peter Hooper , chief economist at Deutsche Bank Securities in New York, and his colleagues wrote in a report to clients last month. Mortgage originations for the purchase of a home will rise to $745 billion this year and $822 billion next year, the highest since 2008, from $740 billion in 2009, according to forecasts from the Washington-based Mortgage Bankers Association. Falling home prices and low mortgage rates have made homes more affordable. The median price was $164,700 in January, matching the year-ago level, which was the lowest since May 2002, according to the Realtors’ association. The trade group will report February housing data next week. The average rate for a 30-year fixed mortgage was 4.95 percent last week, up from a record-low 4.71 percent in December, according to Freddie Mac , the McLean, Virginia-based mortgage buyer. The average household had 177.8 percent of the income needed to purchase a property in January, the highest since a record 184 percent in April 2009, when mortgage rates tumbled to 4.78 percent, according to data from the Realtors’ association. First Hurdle The housing market’s first hurdle comes at the end of this month, when the Fed completes its program to purchase $1.25 trillion of mortgage-backed securities and about $175 billion of housing-agency debt. The move probably won’t have much impact, said Mahesh Swaminathan , a mortgage strategist at Credit Suisse Holdings USA in New York. Private demand will replace the central bank, keeping down the spread at which mortgage-backed securities trade to 10-year Treasury notes, he said. The spread on Friday was about 60 basis points. “We don’t anticipate a massive widening of spreads once the Fed stops buying,” he said. “It will be a few basis points here and there.” As a result, he sees mortgage rates remaining “about where they are now.” Mortgage-Backed Securities Much of the private buying will come from money managers who are underweight mortgage-backed securities in their portfolios relative to their benchmarks, said Ajay Rajadhyaksha , managing director of Barclays Capital in New York, who sees spreads rising about 15 basis points in the second quarter. Once the Fed completes its purchases, the next obstacle for the market is the expiration of the tax credit for first-time home buyers. The original credit helped boost existing-home sales by 4.9 percent to 5.16 million in 2009, the first increase since 2005, according to the Realtors’ association. The credit, which was slated to end on Nov. 30, was expanded and extended through April. The Fed’s Beige Book business survey released March 3 found that some contacts in the housing industry are “apprehensive about future sales” of homes once the credit expires, even though the extension hasn’t helped as much as the initial incentive. Potential Buyers “A lot of people moved up their purchases to meet the original deadline and that used up a lot of the pool of potential buyers,” Newport of IHS Global said. The credit of as much as $8,000 stimulated only 180,000 extra sales from December to April, said David Crowe , chief economist at the National Association of Home Builders in Washington. It was “certainly positive, but it has not fueled a huge increase in sales,” Ara K. Hovnanian , chairman and chief executive officer of Red Bank, New Jersey-based Hovnanian Enterprises Inc. , the nation’s seventh largest homebuilder by revenue, told analysts on March 3. The final challenge for the housing market this year is the supply of available properties and the prospect that it may rise. Foreclosures may increase to 2.2 million this year from a record 1.7 million last year, according to a forecast by Mark Zandi , chief economist for Moody’s Economy.com in West Chester, Pennsylvania. The number of vacant homes for sale rose to 2.09 million in the fourth quarter from 1.99 million in the prior period as banks seized property, the U.S. Census Bureau said Feb. 2. Excess Supply An improvement in the job market would spur household formation and help absorb the excess supply , said Thomas Lawler , a former economist with Washington-based mortgage company Fannie Mae who now is an independent housing consultant in Leesburg, Virginia. There may be 1.25 million new households in 2010 if the economy continues to expand, he said. The number has stayed below 1 million for the last three years as adult children lived with their parents and Americans generally conserved cash, he said. “If we get a rebound, you could see excess supply disappear very quickly,” Lawler said. “The underlying trend in home sales is for gradual improvement,” Maki of Barclays Capital said. “While activity will remain at low levels for some time, the housing bust is essentially over.” To contact the reporters on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net Rich Miller in Washington rmiller28@bloomberg.net

Read the full article →

House Republicans Eschew Election-Year Earmarks in Bid to Outdo Democrats

March 11, 2010

By Brian Faler March 11 (Bloomberg) — House Republicans announced they will not request any so-called earmarks in an election-year attempt to outdo Democrats in clamping down on the practice of adding money for pet projects to legislation. Republicans agreed to a moratorium in a closed-door meeting today, said Representative Jerry Lewis of California, the top Republican on the Appropriations Committee. Yesterday, House Democrats said they wouldn’t fund earmarks for defense contractors, energy firms and other companies. Critics say earmarks for companies amount to no-bid contracts for groups that contribute to lawmakers’ re-election campaigns. Both parties are attempting to turn what has been bipartisan support for the earmarking process into a partisan issue they can take to voters, who polls show are concerned about rising federal spending and deficits. Republican leaders issued a joint statement yesterday urging their colleagues to give up projects they called “a symbol of broken Washington.” Lewis, a prominent defender of the earmarking practice, told reporters earlier today he was supporting the moratorium because “you guys paint the picture one way — we’ve got to be responsive.” To contact the reporter on this story: Brian Faler  in Washington at   or bfaler@bloomberg.net .

Read the full article →

Lancet Retracts Wakefield’s Study Linking Child Vaccine to Autism Cases

February 2, 2010

By Michelle Fay Cortez Feb. 2 (Bloomberg) — The Lancet medical journal retracted a 1998 study that linked a routine childhood vaccine to autism and bowel disease after a U.K. investigation found flaws in the research. An investigation by the U.K. General Medical Council, which registers and licenses doctors, concluded in a report last week that three researchers led by Andrew Wakefield at the Royal Free Hospital in London carried out invasive, unnecessary tests, failed to act in the best interest of the children, and misused public funds. It also said Wakefield didn’t disclose a conflict of interest as he was involved in legal claims against the vaccine makers. “It has become clear that several elements of the 1998 paper by Wakefield et al are incorrect, contrary to the findings of an earlier investigation,” the editors of the Lancet wrote in a statement today. The original study , involving 11 boys and one girl aged 10 and under, found bowel disease and developmental disorders in the previously normal children. The parents reported symptoms in eight of the children after they were vaccinated for measles, mumps and rubella. Immunization rates plunged in the U.K. to less than 80 percent by 2003, as parents concerned about the possible health risks refused the vaccine, according to the Health Protection Agency. The paper was retracted from the published record, stripping it of its scientific claims. Wakefield oversees the research program at Thoughtful House, a treatment center for children with developmental disorders, in Austin, Texas. “The allegations against me and against my colleagues are both unfounded and unjust, and I invite anyone to examine the contents of these proceedings and come to their own conclusion,” Wakefield said in a statement provided by Thoughtful House today. To contact the reporter on this story: Michelle Fay Cortez in London at mcortez@bloomberg.net

Read the full article →

Mitch Ackerman: Sodexo: A Wolf In Sheep’s Clothing is Still a Wolf

January 25, 2010

Last week, Americans lashed out in anger at our politicians’ inability to hold corporate greed in check and address the tremendous suffering that it has caused. This week, at global food service company Sodexo’s annual shareholder meeting in Paris, France, this mounting frustration will play out on a different stage. While Sodexo’s top executives and investors celebrate record 2009 profits, hundreds of the company’s front line food service workers, from across the United States and Europe, are gathering to share a very different story . For the brave Sodexo workers from the United States, many of them travelling overseas for the first time in their lives, the trip to Paris is particularly critical. These Sodexo workers are coming to Paris to unveil the truth about dismal wages, unaffordable healthcare, and feelings of disrespect in the workplace that have trapped many of them into a cycle of poverty. For reasons that become all too clear when you hear their stories, these employees are fighting for their right to form a union and gain a voice on the job. Take Brenda Ezpinoza , a cafeteria worker at Doctors Hospital in Manteca, California. Despite working for Sodexo for over 10 years, Brenda faced termination last year, after a near tragic bout with stage three breast cancer forced her to use up her FMLA leave of absence. Luckily, Brenda was able to save her job–but it came at a significant cost. She had no choice but to go back to work while still recovering from surgery and facing frequent nausea from the chemotherapy. Today, Brenda is fighting for her right to form a union so that none of her colleagues ever have to face job loss at the same time that they fight for their lives. Then there is Marcia Snell from Columbus, Ohio who has worked for Sodexo at Ohio State University’s football stadium for 10 years. Marcia earns $10 per hour, but since she is classified as a “seasonal employee,” Marcia receives no benefits or sick pay. Before she got bumped up to $10 per hour, Marcia hadn’t seen a raise in six years. A few months ago, almost everyone working in the Ohio State stadium had the flu. With her wages so low, she faced the tough choice of continuing to work or missing a day of pay… In the end, Marcia’s flu turned into pneumonia and she was hospitalized for four days. Before she got sick, Marcia already struggled to cover the monthly $160 cost for her high blood pressure medicine. For her, forming a union is her only chance to get health insurance and a way out of poverty for her and her kids. Stories like Marcia and Brenda’s are all too common among Sodexo’s front line food service workers. Typically, these U.S. Sodexo workers earn between $8.27 and $10.54 per hour. But because of unpaid summer and holiday breaks, many of those workers are only allowed to work around 38 weeks per year–which would mean they are earning a paltry $12,500 to $16,000 per year. This means that a Sodexo employee working year-round and making $8.27 per hour would have to pay over one quarter of his or her annual income to afford the HMO health insurance plan that Sodexo offers. For workers like Brenda Espinoza, Marcia Snells, and the dozens of other colleagues who are joining her in Paris this week, these dismal numbers are all too real. But despite the facts, Sodexo is a champion of portraying itself as a socially responsible employer. In the U.S., they have made buttering up to lawmakers and local government officials a key piece of a broader public relations stunt to promote themselves as the company committed to ending hunger. In fact, Sodexo has long “committed” to ending poverty by delivering meals through the National School Lunch Program (actually paid for by U.S. taxpayers.) But according to a new SEIU report , the children of many of its employees would be eligible to receive free and/or reduced price meals through the very same program. Even a full time Sodexo worker who supports a family of four on $10.54 per hour–at the higher end of Sodexo’s wage scale for food service workers–would still be eligible for SNAP (food stamps), WIC, and school lunch funding. It’s time to unveil the real truth behind Sodexo’s smoke and mirrors. As our nation–indeed our world–struggles to recover from the brink of economic collapse, it is critical that we know our enemies from our friends. A wolf in sheep’s clothing is still a wolf; Sodexo is not a friend to the poverty movement and it is not a friend to workers. We’ll be listening this week as Brenda Espinoza, Marcia Snell and hundreds of their colleagues stand up to the global giant in Paris. We’ll join them to say: enough is enough. If Sodexo truly wants to be a partner in ending poverty in the U.S., it’s high time they raise standards and improve working conditions for the very employees that make up the company’s bread and butter.

Read the full article →

Chris Dodd And Judd Gregg Confident Of Bernanke Confirmation

January 23, 2010

“Based on our discussions with our colleagues, we are very confident that Chairman Bernanke will win confirmation by the Senate for a second term,” Senators Chris Dodd and Judd Gregg said in a joint statement.

Read the full article →

Faber Says Dollar May Rise 5-10% Against Euro as Bearish Sentiment Recedes

December 28, 2009

By Deirdre Bolton and Ye Xie Dec. 28 (Bloomberg) — The dollar may appreciate 5 to 10 percent against the euro in the “near term,” according to Marc Faber , publisher of the “ Gloom Boom & Doom ” newsletter. U.S. equities and the dollar may keep rallying together, reversing a relationship that existed from March to November, Faber said in an interview on Bloomberg Television. “Sentiment on the U.S. dollar was really extremely negative over the last three months,” Hong Kong-based Faber said. “The other currencies are not much better. The dollar will appreciate against the euro by another 5 to 10 percent, and later on we’ll have to see, but that would be a near-term target.” The dollar has gained 4.2 percent to $1.4405 per euro this month, and was poised to end a five-month losing streak, on signs the U.S. economic recovery is gaining momentum. Investors need to be “very careful” holding U.S. Treasuries and cash, and U.S. stocks will rally as Federal Reserve Chairman Ben S. Bernanke and his colleagues may have to print more money to help the government finance its debts, said Faber. The Standard & Poor’s 500 Index “could go up 200 percent if it prints enough,” Faber said. “The worst investment, in the long run, will be U.S. Treasuries, and cash which has no return at present. This is the one reason that I am moderately positive about equities is that this money goes into leverage plays.” To contact the reporters on this story: Deirdre Bolton in New York at dbolton@bloomberg.net ; Ye Xie in New York at yxie6@bloomberg.net

Read the full article →

Marc Faber Says Dollar May Rise Another 5%-10% Versus Euro in `Near Term’

December 28, 2009

By Deirdre Bolton and Ye Xie Dec. 28 (Bloomberg) — The dollar may appreciate 5 to 10 percent against the euro in the “near term,” according to Marc Faber , publisher of the “ Gloom Boom & Doom ” newsletter. U.S. equities and the dollar may keep rallying together, reversing a relationship that existed from March to November, Faber said in an interview on Bloomberg Television. “Sentiment on the U.S. dollar was really extremely negative over the last three months,” Hong Kong-based Faber said. “The other currencies are not much better. The dollar will appreciate against the euro by another 5 to 10 percent, and later on we’ll have to see, but that would be a near-term target.” The dollar has gained 4.2 percent to $1.4405 per euro this month, and was poised to end a five-month losing streak, on signs the U.S. economic recovery is gaining momentum. Investors need to be “very careful” holding U.S. Treasuries and cash, and U.S. stocks will rally as Federal Reserve Chairman Ben S. Bernanke and his colleagues may have to print more money to help the government finance its debts, said Faber. The Standard & Poor’s 500 Index “could go up 200 percent if it prints enough,” Faber said. “The worst investment, in the long run, will be U.S. Treasuries, and cash which has no return at present. This is the one reason that I am moderately positive about equities is that this money goes into leverage plays.” To contact the reporters on this story: Deirdre Bolton in New York at dbolton@bloomberg.net ; Ye Xie in New York at yxie6@bloomberg.net

Read the full article →

Goldman Sachs CEO Lloyd Blankfein Named Financial Times Person Of The Year

December 25, 2009

Goldman Sachs CEO Lloyd Blankfein has been named Person of the Year by the Financial Times . The investment bank “not only navigated the 2008 global financial crisis better than others on Wall Street,” the paper writes, “but is set to make record profits, and pay up to $23BN in bonuses to its 31,700 staff.” But while the FT may agree that Blankfein is doing “God’s work,” others view the bank as indicative of exactly what is wrong with Wall Street. Indeed, Blankfein himself apologized last month for Goldman Sachs’ role in the financial crisis. And Goldman Sachs’s trading practices are currently under investigation by the federal government. In response to the FT ‘s decision to honor Blankfein, noted bank analyst Christopher Whalen has canceled his subscription to the paper. “Mr. Blankfein and his colleagues at Goldman Sachs, in my view, have done more to damage the reputations of global financial professionals than any other organization in 2009, yet you applaud them,” he wrote in a letter to the paper. “Not only is your suggestion ridiculous and repugnant, but it illustrates to me the fact that the FT is part of the problem in global finance, not as one would hope and expect, part of the solution.”

Read the full article →

Fujii Says Monetary Policy Key to Deflation Fight, Prodding Bank of Japan

November 23, 2009

By Toru Fujioka Nov. 24 (Bloomberg) — Japanese Finance Minister Hirohisa Fujii said monetary policy is key to fighting deflation, signaling the central bank should do more to stem a decline in prices that could impede the economic recovery. “Monetary policy plays a significant role to combat deflation,” Fujii said at a news conference in Tokyo today. “There’s no doubt that this deflation has been caused by weak demand, but fiscal spending won’t play a key role in addressing the problem under these circumstances.” The comments underscore a gap in the views of the Bank of Japan and Prime Minister Yukio Hatoyama’s administration over price declines and the economy. The government’s declaration last week that Japan is in a “mild deflationary phase” was a signal that it wants the bank to buy more government bonds to buttress the recovery, according to analysts including Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. Bank of Japan Governor Masaaki Shirakawa and his colleagues left the benchmark interest rate at 0.1 percent on Nov. 20 and said the economy is “picking up.” Shirakawa said people’s expectations for consumer prices remain stable. He said injections of liquidity alone won’t raise prices and policy makers need to find ways to spur demand from the nation’s companies and consumers. To contact the reporter on this story: Toru Fujioka in Tokyo at +81-3-3201-2158 or tfujioka1@bloomberg.net To contact the editor responsible for this story: Michael Dwyer at +65-6212-1130 or mdwyer5@bloomberg.net

Read the full article →

Nassim Nicholas Taleb: The IMF and Our Increased Dependence on Faux-Experts

November 5, 2009

I was in Korea last week with a collection of suit-wearing hotshots. On a panel sat Takatoshi Kato, IMF Deputy Managing Director. Before the discussion he gave us a powerpoint lecture showing the IMF projections for 2010, 2011, …, 2014. I could not control myself and got into a state of rage. I told the audience that the next time someone from the IMF shows you projections for some dates in the future, to show us what they PROJECTED for 2008 and 2009 in 2004, 2005, …, and 2007. They would then verify that Mr. Takatoshi and his colleagues provide a prime illustration to the “expert problem”: they serve as experts while offering the scientific reliability of astrologers. Anyone relying on them is a turkey. This allowed me to show the urgency of my idea of robustness. We cannot get rid of charlatans. My point is that we need to build a society robust to charlatanism and expert-error, one in which Mr. Takatoshi and his staff can be as incompetent as they want without endangering the general public. We need less reliance on these people and the Obama administration has been making us more dependent on the “expert problem”. Epilogue. At formal dinner, jetlagged (I was served red wine when my biological time was at 7 AM), I saw in horror that I was sitting next to… Mr Kato. He was somewhat nervous, but very polite.

Read the full article →

Bloomberg LP Acquires BusinessWeek

October 13, 2009

Bloomberg LP has agreed to acquire BusinessWeek from McGraw-Hill, the company announced Tuesday. The terms of the sale were not disclosed, though BusinessWeek’s Tom Lowry cites sources placing the deal in the $2-5 million range : Terms of the offer will not be disclosed by Bloomberg and BusinessWeek parent McGraw-Hill Cos. But knowledgeable sources say that Bloomberg’s cash offer is in the $2 million to $5 million range and that it has agreed to assume liabilities, including potential severance payments. The New York Times ‘ Stephanie Clifford reports that the magazine will now be named Bloomberg BusinessWeek, and that Bloomberg Markets will continue to be published. Bloomberg has been the frontrunner to take over the magazine for several weeks. Time Inc. and Wall Street Journal veteran Norm Pearlstein, who has served as Bloomberg’s Chief Content Officer, will become Chairman of BusinessWeek. “The BusinessWeek acquisition will yield huge benefits for users of the Bloomberg terminal, and for our television, online and mobile properties,” Daniel L. Doctoroff, president of Bloomberg LP, said in a release. “We couldn’t be more excited.” Doctoroff added, “BusinessWeek helps better serve our customers by reaching into the corporate suite and corridors of power in government, where news that affects markets and business is made by CEOs, CFOs, deal lawyers, bankers and government officials who typically are not terminal customers.” Bloomberg News Editor-in-Chief Matthew Winkler added, “BusinessWeek, with its extraordinary context and perspective on the economy and companies, presents a giant opportunity for the BLOOMBERG NEWS service to reach decision makers in the most important industries. We are thrilled to have such experienced journalists as our colleagues.” Developing…

Read the full article →

Darling Says Conservative Party’s Plans Risk `Crashing’ Britain’s Economy

October 4, 2009

By Gonzalo Vina Oct. 4 (Bloomberg) — Chancellor of the Exchequer Alistair Darling said the Conservative Party plans to cut spending and welfare programs risked “crashing” the British economy, his strongest attack yet on the opposition as the election nears. Darling said Conservative leader David Cameron’s plan to phase out the “New Deal” welfare programs built up by the Labour government would hurt the nation’s poorest people and that cutting the budget deficit now would threaten the recovery. “Proposing to end support for the economy and scrap the New Deal is entirely wrong and downright daft,” Darling told reporters in Istanbul today after attending a meeting of finance ministers from the Group of Seven. “Either he doesn’t understand what he is doing or he is not coming clean about what he is doing. Nobody else is advocating what he is proposing.” Ministers from Prime Minister Gordon Brown’s Labour Party and the Conservatives are vying to convince voters they’re the best to manage the economy. Brown, trailing in polls for the last two years, must call an election by June 2010. Cameron and George Osborne , the Conservatives’ lawmaker in charge of finance, earlier today said that the biggest danger to the economy is the government’s budget deficit, which at 12 percent of gross domestic product next year will be the biggest in the Group of 20 nations. ‘Get Moving’ “We would get moving on dealing with this deficit quicker,” Osborne said on Sky News from the party’s annual conference in Manchester. “We think this deficit crisis is a clear and present danger to the recovery. Taxes will go up if we don’t deal with it. That would cost jobs. We’ve got 5 million people living on benefits because for a decade we failed to reform welfare.” Cameron pledged to spend 600 million pounds ($1 billion) implementing a new system of welfare payments that would wipe away Labour’s program known as the New Deal . Implemented since Labour took office in 1997, the program provides tax credits and payments from government to workers on low wages, ensuring a minimum income to people who return to work. Conservatives , without giving details of their plans, are urging steeper and faster cuts in public spending to reduce Britain’s budget deficit. Darling seized on the comments as evidence that the opposition wants to slash spending at a faster pace and more deeply than Labour . He reiterated his own pledges to control the deficit. ‘Crashing the Economy’ “As you get borrowing down, you have to do it in a way that is not damaging to the economy,” Darling said. “You have to be careful you don’t end up crashing the economy .” Darling said he will “soon” meet cabinet colleagues to agree on how they reduce spending, putting pressure on them to find ways of saving money without hurting services. “I will be very robust with our colleagues,” Darling said. “At a time like this we have to ensure we take robust measures to get borrowing down and all my colleagues are fully signed up to that. “Our position has always been to support the economy now and, once recovery is established, we have got to make sure we live within our means” Darling said. “To make these cuts at the present time would be utterly mad.” To contact the reporter on this story: Gonzalo Vina in Brighton at gvina@bloomberg.net

Read the full article →

Leslie Pratch, Ph.D.: Job Fit IV: Maturation of Cognitive Capability

September 12, 2009

So far, I’ve described a static system. Individuals have a certain level of cognitive power. A job requires a person to have a certain level. Everybody is either at the right level, too high, or too low. But in fact, the system is not static. For one thing, jobs change. To be a CEO of Newco when it’s a local company may be a Stratum V job. But if Newco grows and becomes international in its distribution, the job of CEO may become a Stratum VI or VII job. More importantly, people change. Cognitive power changes over time. Obviously, the person who is able to run a division was not born with that ability. Jaques found that individual’s paths of development follow trajectories within distinct bands, which he called modes. Different modes rise at different rates. This growth proceeds gradually, as physical growth does, but the passages from one cognitive level to the next occur in discontinuities or spurts. When they occur, the individual’s time horizon increases so that he becomes capable of handling more responsibility in a job with a greater time span at a higher organizational stratum. A person’s developmental trajectory brings him or her to certain levels by certain ages. This is why we can’t learn a higher cognitive mechanism by study or practice. As with puberty or old age, we have to reach it when the time comes. Using Jaques description of these modes of development, it is possible to predict what a person’s work capacity will be in the future by measuring where the person has been at certain ages. The predictability of individual cognitive development takes much of the guesswork out of managerial and executive development. How Real Is Time Span? Time span is an objective measurement, like temperature. It can be measured for any task by asking the person responsible for overseeing the work, “What do you want done by when?” Too often, the target time of completion is left tacit or vague, creating anxiety and problems. But it can be measured precisely. Jaques and his colleagues found that time span distinguishes jobs from each other. In a number of studies, they questioned workers about the felt weight of responsibility — the feeling workers have about how “big” a job is or how much of a burden it is. Jaques found that workers’ sense of how big a job is varies directly with the job’s maximum time span, even when workers are not clear about the time span of their tasks. The farther forward in time the goal and accountability, the heavier the individual feels her responsibility to be. This contrasts with the conventional wisdom that a job gets bigger because one supervises more individuals or handles a bigger budget. Jaques and his colleagues also asked workers at all levels what they consider fair pay for the kind of work they do. The results consistently correspond to the time span of the work. Individuals apparently sense the time span of their job — even if it never occurs to them to think of it that way — and feel that it makes one job worthy of higher pay than another. This finding was first established in 1953 and has been repeated in 15 countries since then.

Read the full article →

Fortune’s Stanley Bing: Some Advice for Mr. Gorman

September 11, 2009

Hello, sir. I know you don’t start until January, and I’m sure there are a lot of people giving you guidance today, but I thought I’d offer a few tips as you prepare to ascend to the top slot at Morgan Stanley. 1. Say hi to people: Many guys suddenly get a big head on them when they become CEO, and forget all the little people who were their colleagues on the way up. Don’t be one of those. A nice “Hi, Bob!” in the elevator can make an executive vice president’s day. 2. Don’t make any sudden moves: Everybody’s going to be watching you very carefully as you try to steer Morgan Stanley out of whatever incipient mess your predecessor created with all the help of his good advisors, yourself included. Don’t satisfy your urge to shake things up right away. Listen to people. Then you can chop their ears off. 3. Eat a good breakfast: Breakfast is the most important meal of the day. Too many busy CEOs gobble a muffin before their 5:30 AM conference call and wash it down with a pot of scalding coffee. That’s no way to set up a successful 16-hour day! 4. Get a new wardrobe: True, you were already a co-President of the operation before this bump to ultimate power. But Presidential suits are not appropriate for a CEO. When you enter a room, the first thing people should say is, “Whoa. Nice suit.” I’m pretty sure they don’t say that now, because you had a boss who probably wanted that distinction for himself. That’s you now, sir! 5. DON’T give any interviews: Too many guys come in and start bloviating about what they intend to do. Then they have to do it. That’s most unfortunate, because people in business seldom do what they think they’re going to do even in the best of circumstances, and we’re not in those. Be quiet. If you must talk, talk to your hometown newspaper about your love of hamsters and go-carts. 6. Be inclusive: At the start of your term, people are going to be wondering who your “inner circle” is going to be. Don’t tip your hand. Of course, you’ll eventually execute a fair chunk of the remora who hung off the pelt of Mr. Mack. But you don’t want people to be too sure of where you stand for a while. This will make the entire executive team perky and nervous, which is a good thing during any transition. 7. Don’t say anything bad about the prior Administration: This may be difficult, since you’ve probably been seething one level below for two years, waiting for your opportunity to do something different. But people hate to see their leader questioning the actions of the guy who use to be in his chair. It makes them nervous about the whole lines of authority thing, and doubt the solidity of their reporting structure. 8. Don’t say anything GOOD about the prior Administration, either: Beyond everyday lip service. You’ve been put in there because it was time for a change. So stately recognition of the greatness of the past is fine. Enthusiastic embracing of the days of yore (i.e. last week) is not. 9. Be kind to small life forms: They may take a thorn out of your paw one day. 10. Have fun! It will all be over before you know it, you know. Make the most of it while it lasts. And stay away from those risky financial instruments! I mean it!

Read the full article →

White House Adviser Van Jones Resigns Amid Controversy About Statements

September 6, 2009

By Dick Schumacher and Gregory Viscusi Sept. 6 (Bloomberg) — Van Jones , an environmental adviser to U.S. President Barack Obama , resigned, following criticism from conservative commentators that he’d made derogatory remarks about Republicans. Jones was a “strong voice” for creating jobs that improve energy efficiency and use renewable resources, Nancy Sutley , the chairwoman of the White House Council on Environmental Quality, said in an e-mailed statement today. Conservative commentators said Jones had made derogatory statements about Republicans and signed a petition asking for investigations into whether high-level officials allowed the Sept. 11, 2001, attacks to happen. “They are using lies and distortions to distract and divide,” Jones said in his letter of resignation to Sutley. “I have been inundated with calls — from across the political spectrum — urging me to ‘stay and fight.’ “But I came here to fight for others, not for myself,” he wrote. “I cannot in good conscience ask my colleagues to expend precious time and energy defending or explaining my past.” Jones, a graduate of Yale Law School, wrote a 2008 book entitled “The Green Collar Economy.” To contact the reporters on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net . Dick Schumacher in London at dschumacher@bloomberg.net

Read the full article →

Chimpanzees in the Wild Do Get Sick from AIDS After All, Researchers Find

July 22, 2009

By Rob Waters July 22 (Bloomberg) — Chimpanzees, the closest animal relatives to humans, may sicken and die from a simian version of AIDS, contrary to scientists’ assumptions, researchers reported today in the journal Nature . The scientists followed 94 wild chimps for nine years at a national park in Tanzania and found that animals infected with a version of the simian immunodeficiency virus , or SIV, had a 10- to-16 fold higher risk of dying early than did uninfected chimps.

Read the full article →