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Daniel Wagner: China-Bashing Is a Tiresome Sport in American Politics

by Daniel Wagner on February 11, 2012

Huffington Post…

China bashing has become as much a part of the modern American political tradition as criticizing foreign producers of oil, yet it seems few have actually stopped to think about whether it is justified. The American electorate has become accustomed to the predictable torrent of anti-Chinese rhetoric from politicians of a variety of political persuasions — in large part because of a subtle and uncomfortable recognition that China is beating the U.S. at its own game; Some would even say the Chinese are better capitalists than Americans will ever be. Indeed, China has made remarkable economic progress over the past twenty years — in large part because of its embrace of ‘socialism with Chinese characteristics’ — otherwise known elsewhere as capitalism. A decade ago, American politicians bashed China largely for political reasons. Today, it is for primarily economic reasons. With China having become the second largest economy in the world last year, and poised to overtake the U.S. in economic size in the next decade, it is no wonder American politicians are on the offensive. It should be no surprise that Americans may bristle at the notion that capitalism has helped China slowly dominate the global economy. China is, of course, not above criticism, just like any other country, and American politicians do raise some valid points in criticizing China. For example, the Chinese yuan is undoubtedly overvalued, given that it does not freely float in the foreign exchange markets. And the Chinese government does control large parts of the Chinese economy through state-owned enterprises, which distorts the domestic market and gives some Chinese companies unfair competitive advantages. But China must compete in the global marketplace like any other country and it pays a price for supporting companies that should otherwise fail as a result of being poorly run, inefficient, and bloated. If the U.S. does not like the way China does business, it is free to do business somewhere else. What goes left unsaid, however, is that China has become too important for the U.S. do that, and what U.S. politicians fail to acknowledge is that the U.S. is becoming increasingly irrelevant to the economies of Asia, while China has become the cornerstone of Asia’s fantastic economic growth. China’s trade with the ASEAN countries jumped six-fold between 2000 and 2009, to US$193 billion, surpassing that of the U.S. China’s share of Southeast Asia’s total commerce for the period increased to 11.3 percent from 4 percent, whereas the U.S.’s share of trade with the bloc fell to 10.6 percent from 15 percent. Another thing that gets left unsaid is how important China has become as a destination of U.S. exports. According to the U.S. Treasury’s own report, “in the second half of 2009, U.S. exports to China increased by 15 percent on a year-over-year basis, while U.S. exports to the rest of the world fell by 13 percent. In the first quarter of 2010, U.S. goods exports to China rose by more than 40 percent compared to the same period the year before, while U.S. exports to the rest of the world rose by less than 20 percent.” China’s rapidly growing middle class is the single most important factor for the success of President Obama’s Nation Export initiative. The U.S. not only needs to tap China’s vast foreign currency reserves ( in excess of $3 trillion — more than 10 times that of the U.S.) in order to finance its trade deficit and fiscal deficit, it also needs access to China’s vast market in order to sustain its economic recovery and create much needed jobs for American workers. When was the last time you heard a U.S. politician admit that? Of course, both countries have legitimate criticisms of the other, but they know they need each other, and neither country is going to disappear. So instead of following predictable (and boring) scripts, why not turn the page on Cold War-esque rhetoric and find ways to join hands with China so as to mutually benefit from each other’s comparative advantages? The fact is, China needs and wants the U.S. to succeed economically — as the largest holder of U.S. Treasury Bills — and the U.S. should want China to succeed, so that it has a long-term marketplace for its exports. We are not talking here about some starry-eyed vision of utopia, but rather, a realistic and sensible approach to future bilateral economic relations. Rather than bashing China, U.S. politicians would be well advised to forge a stronger relationship with China. President Obama gets it. Last year he said : “I believe there is much to be gained from a closer working relationship with China. Indeed there are very few global challenges, if any, we can address effectively without China’s active cooperation. They are a global economic power, and engagement with China’s government is an important step in stemming the financial crisis that has devastated economies around the world. Both of our nations seek to lay a foundation for sustainable growth and lasting prosperity. My Administration is also working with China on a number of security issues, including stopping North Korea’s nuclear program, rolling back the advance of extremists in Pakistan, and ending the humanitarian crisis in Dar fur. The United States and China share common interests on a host of issues — including energy security and climate change, food safety and public health, and nuclear non-proliferation and counter-terrorism. We want to work with them to address these issues in the years ahead. Improved relations with China will require candor and open discussion about those issues on which we may disagree. We must address human rights, democracy, and free speech. We must also work to ensure that our nations play by the rules in open and transparent economic competition. These important matters will be essential elements of our ongoing dialogue with China.” The only Republican candidate for president we heard that kind of approach from was John Huntsman, who unfortunately failed to connect with American voters. A sustainable economic recovery in the U.S. cannot be achieved by isolating China. The U.S. and China may seem like the odd couple: the leading proponent of democracy and most individually-oriented nation and the leading communist and most communal-oriented nation. But considering what we can achieve together and what we will lose if we are pitted against each other, forming a Sino-American strategic alliance is critical to the future economic viability of both nations. American politicians, and the American people, would be much better off recognizing this, rather than using demagoguery to sow divisiveness between China and the U.S. The 21st century has no place for tiresome dated Cold War rhetoric. President Obama has the right approach. * Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk consulting firm based in Connecticut (USA), Director of Global Strategy with the PRS Group, and author of the new book Managing Country Risk. Dee Woo is a lecturer in economics at the Beijing Royal School.

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Daniel Wagner: China-Bashing Is a Tiresome Sport in American Politics

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Check Your Statement: Citibank Users Found iPad App Payments Made Twice

by Emily Cohn on February 10, 2012

Huffington Post…

Customers who use Citibank’s iPad bill-paying app might want to pay closer attention to their bank statements: A technological glitch recently caused the app to charge an undisclosed number of customers twice for bank payments. As early as last summer, Citibank received anonymous complaints, sent to the Apple App Store, about the double charges, according to Andrew Brent, a Citi spokesman. Months later, in late December, the bank detected that its app was to blame for problem. Since then Citibank has alerted affected users and reimbursed them for extra charges and any fees incurred. Brent attributed the lag between when the company first found out about the issue (in July) and when officials began alerting customers (in December) to the small number of complaints involved. One user had anonymously reported in July that a charge was duplicated as a result of double tapping the screen, according to Brent. He added that there was nothing to suggest that the incidents were linked to the iPad app itself. Citi later discovered that the app had been programmed to reattempt any transaction disrupted by a network error on the first try. The bank launched an update to its iPad app on Jan. 31. The glitch was first reported by The New York Times on Thursday. The issue affected less than 2 percent of transactions made via the iPad app, according to Brent. He declined to disclose the number of customers who use the bank’s iPad app and how many people were affected by the glitch. “We take seriously the functionality of our products and services as well as the satisfaction of our clients,” Brent stated in an email. “Upon discovering a technical bug in our Citibank for iPad app had caused a limited number of clients to encounter duplicate payments and/or transfers, we immediately fixed the technical issue. Even more important, we have reached out to clients who were impacted to ensure their individual situations are resolved completely.” Citigroup — which aims to be “the world’s digital bank,” according to Bloomberg — has encountered a series of tech glitches in recent years. Two-hundred thousand Citibank credit card holders fell victim to a hacker attack last June that exposed customers’ personal data. In 2010, Citigroup admitted that the bank’s iPhone app stored users’ confidential information on their phones, making the data vulnerable, according to the Wall Street Journal . The bank subsequently released an updated version of the app that it said patched up the glitch. According to American Banker , 25 percent of all mobile banking apps earned a “fail” rating as a result of security flaws.

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Check Your Statement: Citibank Users Found iPad App Payments Made Twice

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Devon Swezey: Romer Misses the Mark on Manufacturing

February 10, 2012

A healthy manufacturing sector is essential to America’s economic prosperity in the 21st century. But you wouldn’t know that reading last Sunday’s New York Times , where former Obama Administration CEA Chair Christina Romer writes that there are no compelling reasons for U.S. manufacturing policy. According to Romer, the recent hubbub about manufacturing is due to the fact that people have a “feeling” that “making things” is important. In reality, she writes, consumers “value haircuts as much as hair dryers.” To be sure, all of us need haircuts, some of us more than others. But Romer ‘s argument that we should value all industries of the economy the same is just not true. It’s reminiscent of economist Michael Boskin, another former CEA chair, who said it doesn’t matter whether a country makes computer chips or potato chips. The fact is that some industries are characterized by high productivity and economies of scale that reduce costs and drive economic growth throughout the economy. As Clyde Prestowitz writes of Romer’s own example: Production of hair dryers can be done in large factories that produce economies of scale. Such scale economies lead to lower prices, lower inflation, higher productivity and thus higher wealth creation for the whole economy. In addition, producers of hair dryers invest in research and development to foster innovation of new, more efficient, less energy using, and easier to produce dryers. Investment in new product and process innovations is what drives economic growth over the long-term. And as we discuss in ” Manufacturing Growth: Advanced Manufacturing and the Future of the American Economy ,” manufacturing is absolutely central to innovation, something that many economists like Romer and economic commentators like Matt Yglesias don’t seem to understand. The manufacturing sector comprises two-thirds of the nation’s industry investment in research and development (R&D) and employs nearly 64 percent of the country’s scientists and engineers. But Romer doesn’t mention manufacturing’s importance to innovation in her article. Instead, she prefers to argue with what she sees as the common rationales for manufacturing policy — market failures, jobs and inequality — none of which she finds “completely convincing.” On the first issue, she writes that market failures in manufacturing — where positive spillovers mean that some benefits of a new manufacturing plant go to other companies in the area, thus providing a rationale for government investment — are small, citing two academic studies on the subject. But many other studies have found that manufacturing is a central component of regional industrial ecosystems, and that being near manufacturing can accelerate innovation and strengthen regional competitiveness. As President Bush’s Council of Advisors on Science and Technology wrote in 2004 , “design, product development, and process evolution all benefit from proximity to manufacturing, so that new ideas can be tested and discussed with those ‘working on the ground.’” Indeed, recent research suggests that losing high-tech manufacturing can imperil a nation’s capacity for future innovation. Harvard’s Carl Pisano and Willy Shih write that America’s “industrial commons” — the collective engineering, R&D and manufacturing capabilities that sustain innovation — are being hollowed out and the United States can no longer produce many high-tech products. Moreover, research and design are starting to follow high-tech manufacturing abroad, imperiling America’s historic advantages in innovation. Next, Romer writes that the impact of manufacturing on jobs relative to the employment needs of the economy is small and that we should focus on boosting aggregate demand instead: Unemployment today is high, but not because of a decline in manufacturing. That decline has been going on for 30 years — and for most of the 1990s and 2000s, the unemployment rate was less than 6 percent. Put aside that this obscures the fact that manufacturing employment generally followed the business cycle with only modest declines until 2000 when it fell off a cliff — declining by 5.5 million jobs from 2000 to 2008, or 32 percent. Romer understates the impact of manufacturing on jobs for two key reasons. First, she ignores the fact that manufacturing facilities have extensive backward linkages, generating output and employment throughout the economy. Indeed, manufacturing’s “multiplier effect” in terms of both output and employment is larger than any other sector of the economy. Specifically, studies demonstrate that every dollar in final sales of manufactured products supports $1.40 in output from other sectors of the economy. And the average job in manufacturing produces two to three spinoff jobs elsewhere in the economy. Even if employment on the factory floor never reaches levels of previous decades, when these effects are taken into account, manufacturing’s employment footprint is quite substantial. Second, Romer completely misses the connection between America’s persistent, massive trade deficits and our employment situation. In 2010 the trade deficit stood at nearly $500 billion, down from a record of $760 billion in 2006. With such large deficits, it’s difficult to see how more fiscal stimulus to boost aggregate demand, which Romer favors, will fill the jobs hole in the economy. It would certainly create some jobs, but much of that demand would be filled by imports, which creates jobs in other countries. Rather, eliminating the trade deficit would create millions of jobs in the United States. And the best way to close the trade deficit is by expanding manufactured exports. This is because the large majority of U.S. trade — nearly 70 percent of exports and 83 percent of imports — is still in goods. Manufactured goods in particular comprise 57 percent of U.S. exports. Can exporting services help reduce the trade deficit? Absolutely, and the United States enjoyed a $149 billion surplus in services in 2010. But it took 11 years for service exports to double to its 2010 level of $543 billion. The simple arithmetic shows that the current positive balance in services would need to quadruple to eliminate the deficit in goods. This is implausible, to say the least. What about inequality? Romer writes correctly that while manufacturing pays higher-than-average wages, it is no longer a source of high-paying jobs for less educated workers. Manufacturing is a technologically sophisticated enterprise and today’s manufacturing workers must have a wide array of abilities, including the production skills to set up and operate processes, design and development skills to continuously improve those processes, as well as proficiency in maintenance, repair and supply chain logistics. But then the policy response should not be to ignore manufacturing but ensure that workers have the skills for advanced manufacturing industries. Romer ends by implying that manufacturing policy is driven by economic nostalgia for an earlier age, writing, “public policy needs to go beyond sentiment and history.” To be sure, policy must account for the ways in which manufacturing has changed over previous decades. Some labor-intensive industries are likely gone for good, while the increasing use of information technology, robotics, and high-precision tools means that today’s factory workers must have much greater skills than previous generations. Fortunately, advanced manufacturing policy need not be about sentimentality or history, but about creating the next generation of advanced technologies that spur innovation, drive productivity, and power economic growth in the 21st century. It is about strengthening a sector that is a key catalyst of employment and economic growth. And it’s about ensuring the international competitiveness of the U.S. economy, closing the trade deficit and out-competing other nations whose governments rightly view high-tech manufacturing as a strategic industry. The good news is that the Obama administration has recently recognized that advanced manufacturing is critical for the future prosperity of the U.S. economy, even if its former chief economist does not. For more on the importance of advanced manufacturing to the U.S. economy, see ” Manufacturing Growth, ” a joint report by the Breakthrough Institute and Third Way.

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Fake Suicide Call Prompts Woman To Sue Big Bank

February 10, 2012

These days, debt collectors are putting some people through so much pain that it’s landing them in the hospital. Anne Sessions of Lane County, Oregon is suing Wells Fargo after one of its debt collectors reported to police that that the 85-year-old was threatening suicide, a claim she maintains was false, The Oregonian reports . After hitting financial trouble, Sessions says she arranged a payment plan for her credit card debt with Wells Fargo last year, but just days later she allegedly received a call from a debt collector who badgered her with a “contemptous tone,” according to the lawsuit. Sessions told the collector that such abuse may cause other customers to take their own lives, which allegedly prompted a line of questioning that included the collector asking Sessions: “But…if you did [commit suicide], how would you do it – hurt yourself?” Courthouse News reports . Within a half hour police arrived at Sessions’ door and forcibly took her to the hospital. She was released hours later after hospital staff said they “strongly” believed Sessions was not a threat to herself or others, ABC News reports . But the incident left Sessions stuck with a hospital bill worth $1,055, for which she is seeking compensation, as well as $250,000 in punitive damages. Sessions’ suit may involve one of the more puzzling instances of debt collector abuse recently, but harassment of its kind is far from uncommon. Complaints filed to the Federal Trade Commission about debt collectors rose to 140,036 in 2010, up from 119,609 in 2009 . The boost may be explained in part by the industry’s growth in a troubled economy that’s caused many Americans to delay debt payments. Over the next three years, the debt collection industry is expected to expand by 26 percent . Indeed, all the negative reports — collection agencies are responsible for the most complaints to the FTC of any industry — may be beginning to take a toll. The FTC has begun cracking down on illegal debt collecting tactics , including repeated calls to the debtors, failure to notify consumers in writing of their rights, misrepresenting the debt in question as well as using profanity or threats. Last month it settled with Michigan-based debt collection company Asset Acceptance for $2.5 million on charges of misconduct . It also took action against two California-based collection agencies last year, one for attempting to collect debts that didn’t exist and the other for threatening to kill debtors pets and desecrete the bodies of deceased family members .

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’99 Percent’ Protest CPAC

February 10, 2012

WASHINGTON — The Conservative Political Action Conference drew crowds of protesters on Friday, as members of the Occupy Wall Street movement and labor groups demonstrated against the annual confab as a powwow for the “1 percent.” (CLICK HERE FOR LIVE UPDATES) Inside the Marriott Wardman Park Hotel in Washington, D.C., students affiliated with Occupy silently interrupted a speech by GOP presidential hopeful Mitt Romney. The protesters, wearing “We are the 99%” stickers over their mouths and shirts that read “If money is speech, poverty is silence,” were escorted from the building by security. While leading figures in the conservative movement continued to meet inside, outside the hotel the atmosphere was more raucous, with several hundred people rallying at noon beneath a giant inflatable “fat cat.” They held signs, chanted, and set up a few tents at the bottom of the hotel’s winding driveway. But when protesters began marching up the driveway shortly after noon, several D.C. police officers impeded their path and instructed protesters — and members of the media — that they needed to move back. Police said the driveway was private property and that those still on it risked arrest. The protest began moving back down the driveway as CPAC attendees watched from the sidelines. Police continued to keep protesters and members of the media off the driveway but allowed the protest to spill off the sidewalk, blocking the street. The protest saw a number of outlandish attendees, from the Brooklyn “Tax Dodgers,” a faux baseball team who satirically support former Massachusetts Gov. Romney, to “Candidate Walmart,” aka Ben Waxman, who said he was standing up for a corporation’s right to run for president. It also drew a mix of Occupy protesters, union supporters and members of local groups. “We’re protesting CPAC’s propping up of policies that don’t force U.S. corporations to pay their fair tax share, and really promote obscene income inequality in this country,” said James Adams, a coordinator with Our DC , another group of protesters that focuses on jobs. “The dreams of Americans who make up the 99 percent are being squashed by CPAC and their poster boy, Mitt Romney.” Although protesters expressed concern on issues from hydraulic fracturing, or fracking, to foreign policy, most said they were focused on economic policy. “We’re trying to create more jobs here in the District, and we feel by holding Congress and big corporations accountable for not paying their fair share of taxes, they can create more jobs by doing so,” said Dwayne Devoe, another member of Our DC. “A lot of them are talking about creating jobs, but at the end of the day, what they’re saying doesn’t really relate to their message.” Jeanae Paul, a member of Good Jobs Baltimore, said she was trying to call attention to the plight of the jobless. “I’ve been unemployed for over a year now, and it’s been really hard,” Paul said. “I’ve been going on interviews, but there’s no jobs out there. They’re non-existent. And it’s hard to feed my family, it’s hard to buy clothes, to celebrate the holidays.” Paul said she made the trip to Washington because she wanted the Republican candidates for president to hear stories like hers. “It’s important to let them know that we’re people, too,” she said. “We want to be heard. You know, they need to know the real stories, instead of listening to what their 1 percent is saying. Because we’re the 99 percent.” Brendan Duke, a spokesman for the Service Employees International Union, an organization of 2.1 million members, told The Huffington Post that there were 600 protesters on hand, including 300 unemployed workers from the D.C. area. He said the protest was scheduled to last until 2 p.m. Most CPAC attendees simply walked around the rally, but several stopped to speak with protesters. Byron Sanford, a Catholic University student who supports Rep. Ron Paul (R-Texas), seemed sympathetic. “I agree with Occupy Wall Street on one of the things they stand for — I think corporations are ripping off the American people,” he said, admitting that he was actually more comfortable with the atmosphere outside the conference. “I feel much better out here.” Others were less impressed. “I’ve been to a couple of these things, and it’s pretty typical — it’s the same slogans,” said John Sexton, who writes for Verum Serum, CPAC’s 2012 Blog of the Year. “Individually, they can be very reasonable, but in groups, you’re not thinking.” Another protest outside CPAC is planned for Friday evening. Michael Calderone contributed to this report. CORRECTION: The original version of this story quoted James Adams and Dwayne Devoe as members of Occupy DC. They are part of the group Our DC.

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Obama’s Approval Rating Keeps Inching Up, Driven By One Factor

February 10, 2012

WASHINGTON — On Thursday, the Gallup Daily tracking poll marked a symbolic milestone. For the first time in more than a month and only the third time since last July, Gallup reported an approval rating for President Barack Obama (49 percent) that was slightly higher than his disapproval rating (46 percent). On Friday, the Rasmussen Reports automated tracking survey marked a similar landmark. It showed Obama’s approval rating at 50 percent or greater nationwide for the fifth consecutive day, a popularity not matched on the Rasmussen poll since January 2011. The two daily tracking surveys are not alone. National telephone polls released in the past week by Fox News , ABC News and the Washington Post , Ipsos/Reuters , and the Democratic Party-affiliated Public Policy Polling (also sponsored by the website DailyKos and the Service Employees International Union) have all found increases in Obama’s approval rating since October. Most of the increases range between 4 and 6 percentage points; the Ipsos/Reuters survey found a smaller rise. The improvement since the fall has also been evident in state polls, including such likely battlegrounds in the general presidential election as Ohio , New Hampshire , North Carolina and Virginia . Given the recent upward blip in the two national daily-tracking polls, some have looked for explanations in the events of the past week , particularly last Friday’s Labor Department report of a rising employment rate . While positive economic news is the most likely reason for Obama’s improving job rating, the upward trend in his ratings did not begin in February. In fact, most of the surveys have tracked a gradual increase in Obama’s ratings that began in late October. The HuffPost Pollster chart , based on all available public polls, shows a slow, steady rise of roughly five percentage points in the president’s job approval rating since it hit its all-time low in early October. The longer-term increase in Obama’s approval rating parallels five months of increases in several survey-based indexes of consumer confidence. Specifically: Gallup reported that its index of consumer confidence has risen for five consecutive months to its highest point since May 2011. The pollster also reports that 22 percent of Americans now say they are satisfied with the way things are going, “higher than at any point since last spring.” The Bloomberg Consumer Comfort Index rose to its highest level in a year this week. The Thompson Reuters University of Michigan Index of Consumer Sentiment was up in December for the fifth straight month. A preliminary estimate for January, based on a smaller sample, is slightly down , but confidence remained higher than in previous months. The Rasmussen Consumer Index stands at its highest level in over a year, although it’s down slightly from a peak earlier in the week. The Consumer Confidence Index of the Conference Board showed a slight decline in January, but its December and January measurements were still significantly higher than those of the three previous months . Of course, the overall economic mood remains gloomy. On the Gallup surveys , for example, far more Americans still say that economic conditions nationwide are getting worse (58 percent) than say they’re getting better (36 percent) — though the positive number has more than doubled, from 18 percent, since the fall. And despite big increases since October, the president continues to receive net negative ratings on “the economy” (44 percent approve, 53 percent disapprove) and “creating jobs” (44 percent approve, 51 percent disapprove) in the most recent ABC News/ Washington Post survey . The main point, however, is that the rising tide of consumer optimism directly parallels the upward trend in Obama’s overall job approval rating. That result underscores the promise and the peril for the Obama administration in 2012. Continuing economic recovery will likely further boost his approval ratings and his chances in the November election. Yet we have seen temporary increases in consumer confidence before — most memorably in January 2010 — that quickly ebbed in the face of later negative economic news. Either way, the economic trends of the next six to eight months are likely the most important factor in determining whether Barack Obama wins a second term in November.

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Mohamed A. El-Erian: "Half-Time in America" Highlights Our Political Dysfunctionality

February 10, 2012

Viewed as a standalone, the controversy generated by the Clint Eastwood Superbowl commercial is really silly. Yet it points to something profound that has and, if left unaddressed, will continue to undermine America’s ability to regain economic dynamism, create ample jobs, and deal with growing inequalities. In the event that you are one of the few who missed it, Clint Eastwood starred on Sunday in a commercial that NBC aired at half time. The message was powerful. Yes, America has stumbled, with people out of work, hurting and scared. But, by pulling together and acting as one, Americans will come from behind and win. “That’s what we do.” The concluding remarks were particularly potent: “This country can’t be knocked out by one punch. We get right back up; and when we do, the world will hear the roar of our engines.” Given that it was financed by Chrysler, the commercial’s direct reference was, of course, to the impressive recovery in Detroit’s car industry. But the intention, and the impact, went well beyond that. What Detroit has done, America as a whole can and will do. Coming on the heels of a series of favorable economic data releases — which will hopefully persist though this is far from certain unfortunately — the ad spoke to the hope that America is recovering and that our economy is building encouraging momentum. This is particularly important for the job market where we need to improve on the 243,000 positions created in January to meaningfully address our unemployment crisis, tackle the problem of long-term joblessness, counter the mounting obstacles to youth employment, and stop the worsening of income and wealth inequalities. You would think that this feel good message would be a unifying one for our political class. Far from it. Several Republicans complained this week that Clint Eastwood was implicitly supporting Barack Obama. After all, the commercial could be interpreted as suggesting that, under President Obama, America has turned the corner and is now embarking on a path to prosperity — something that most Republicans dismiss. Democrats were quick to counter. On the contrary they shouted. If anything, “Half Time in America” was pro-Republican. It could easily be viewed as implying the need for a change in game plan and personnel substitutions — similar to what a losing team would discuss in the locker room at half time in order to regain control of the game and win. This morning on CNBC’s Squawk Box , Clint Eastwood shared his views. His message was direct and unambiguous: Take the commercial for what it is — a message about Americans’ ability to overcome our problems and march forward to a better future. It is easy, indeed tempting, to dismiss all this political squabbling as indicative of the silliness that is inevitable during an election season. I certainly would like to do so. Yet I fear that it goes well beyond that. This is yet another illustration of the deep political dysfunctionality that continuously undermines DC’s willingness and ability to move forward with the much-needed revitalization of the economy. The longer this continues, the greater the costs and the harder the solutions. In the short-term, the cyclical economic bounce of the last few months — powered by large injections of global central bank liquidity and a once-for-all decline in the personnel savings rate — would end up suffering the same fate as in early 2010 and 2011: fizzling out rather than handing off to durable engines of investment, growth and jobs. In the longer-term, America would find it even more challenging to overcome structural impediments that, each day, are getting more deeply embedded in the construct of our economy. For the sake of both current and future generations, let us hope that Clint Eastwood’s “Half Time in America” commercial will be remembered for more than just igniting yet another round of political bickering and finger pointing.

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Awful Cover Letter To J.P. Morgan Laughing Stock Of Wall Street

February 10, 2012

It takes a lot to get noticed in this town, but there’s a right way and a wrong way to do it. An NYU undergraduate student named Mark has become the laughing stock of Wall Street after his awful cover letter to J.P Morgan made its rounds among NYU Stern alumni, the financial district, and then went viral online. A cover letter can make or break you in the job hunting game and Mark’s letter is a lesson in exactly what not to do. By boasting that he “managed to bench double [his] body weight and do 35 pull ups” while achieving a 3.93 GPA, young Mark invited the inevitable comparisons to the infamous Aleksey Vayner . There’s a fine line between convincing your potential employeer of why they need to hire you, and only you, and coming across as a pompous ass. There is no doubt Mark’s status as a triple major in Mathematics, Economics and Computer Science is impressive on its own, but throw in the fact that he held two part-time jobs, placed-out of two classes and managed to keep himself in top physical shape, and it’s safe to say he crossed the line. Mark’s cover letter also could have used an edit from an English major, who might have advised him to find a different way to express that he “can perform basic office functions with terrifying efficiency.” He ended the letter with a disclaimer asking J.P. Morgan to “Please realize that I am not a braggart or conceited, I just wanted to outline my usefulness. Egos can be a huge liability, and I try not to have one.” Nice. It’s a letter so obnoxious that it’s unclear if Mark sent it as a joke. According to Gawker, Mark is well aware bit of laughter he brought to the bankers on Wall Street. When asked if he’d gotten a job at J.P Morgan, he laughed, telling the website , “No, not at all. Didn’t you see my letter?” Joke or not, Mark is not alone when it comes to terrible cover letters. An applicant for a position as an API Engineer in New York City recently wrote : “I’m super awesome and have incredible experience compared to this — it includes the required experiences below plus I am trained in MMA fighting, am the mayor of multiple Chipotles, Starbucks, and locally famous restaurants in downtown NYC, and I type really fast.” And we can’t forget Roanald Dvorak’s cover letter for a office manager position, where he wrote : “Forget all the other candidates for Aviary, I am the BEST,” and listed his skills in bullet points: “Organizing shit? Check. Calling numbers and shit? Doublecheck. Customer support and shit? Mega-check. Faxing numbers and shit? MOTHERFLIPPING CHECK ALL OVER THAT.” At a time when even the most qualified applicants can’t find jobs , it’s questionable if sending over-the-top or ironic cover letters is a good idea — especially given the fact that there’s no expectation of privacy. Last year, Business Insider even posted 12 of the worst cover letters they received, redacting the names to provide some protection for those who made the list. READ THE COVER LETTER: 1/23/2012 J.P. Morgan Dear Sir or Madame: I am an ambitious undergraduate at NYU triple majoring in Mathematics, Economics, and Computer Science. I am a punctual, personable, and shrewd individual, yet I have a quality which I pride myself on more than any of these. I am unequivocally the most unflaggingly hard worker I know, and I love self-improvement. I have always felt that my time should be spent wisely, so I continuously challenge myself; I left Villanova because the work was too easy. Once I realized I could achieve a perfect GPA while holding a part-time job at NYU, I decided to redouble my effort by placing out of two classes, taking two honors classes, and holding two part-time jobs. That semester I achieved a 3.93, and in the same time I managed to bench double my bodyweight and do 35 pull-ups. I say these things only because solid evidence is more convincing than unverifiable statements, and I want to demonstrate that I am a hard worker. J.P. Morgan is a firm with a reputation that precedes itself and employees who represent only the best and rightest in finance. I know that the employees in this firm will push me to excellence, especially within the Investment Banking division. In fact, one of the supporting reasons I chose Investment Banking over any other division was that I know it is difficult. I hope to augment my character by diligently working for the professionals at Morgan Stanley, and I feel I have much to offer in return. I am proficient in several programming languages, and I can pick up a new one very quickly. For instance, I learned a years worth of Java from NYU in 27 days on my own; this is how I placed out of two including: Money and Banking, Analysis, Game Theory, Probability and Statistics. Even further, I am taking Machine Learning and Probabilistic Graphical Modeling currently, two programming courses offered by Stanford, so that I may truly offer the most if I am accepted. I am proficient with Bloomberg terminals, excellent with excel, and can perform basic office functions with terrifying efficiency. I have plenty of experience in the professional world through my internship at Merrill Lynch, and my research assistant position at NYU. In fact, my most recent employer has found me so useful that he promoted me to a Research Assistant and an official CTED intern. This role is usually reserved for Masters students, but my employer gave the title to me so that he could give me more work. Please realize that I am not a braggart or conceited, I just want to outline my usefulness. Egos can be a huge liability, and I try not to have one. Thank you so much for your time, and I look forward to hearing from you. Best, Mark

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Jed Kolko: The Robo-Signing Settlement: Breaking the Usual Rules of Housing Policy

February 10, 2012

The robo-signing settlement is the latest — and potentially the largest — piece in the U.S. housing policy puzzle. Even though it’s partly punishment for banks’ wrongdoing, it is also another answer by the government to the question of how it can help the housing market. Our own housing policy survey last December showed strong bipartisan support for two key elements of the robo-signing settlement: refinancing by underwater homeowners (82 percent of Democrats, 69 percent of Republicans), and loan modifications to reduce principal balances (74 percent of Democrats, 61 percent of Republicans). With the robo-signing settlement, as with any housing policy, I look at three questions: 1) Is it big or small? Relative to other housing policies, it’s big. It calls for much more money for loan modifications than HAMP has cost so far, and it could mean money or relief for close to two million current and former homeowners. HAMP and HARP have each helped roughly one million homeowners so far. But relative to the housing crisis, it’s small. The loan modifications could yield tens of billions in principal reductions for one million homeowners — but that’s a sliver compared with the 11 million homeowners today who are over $700 billion underwater. And the cash compensation of $1,500-$2,000 for up to a million people who lost their homes will hardly make them whole. 2) Who pays? Usually it’s good politics to keep quiet about who pays for housing policy, but not with the robo-signing settlement. It’s good politics for the government and the attorneys-general for everyone to know that the banks are paying for their robo-signing sins. In contrast, most housing policy announcements hide — or at least don’t broadcast — who is paying, whether it’s investors who implicitly bear the cost of refinancing or taxpayers who implicitly bear the cost of many other policies. 3) Does it reward risk-taking or bad behavior? Delinquency is a disqualification for refinancing but is almost a requirement for getting a principal reduction. The largest piece of the robo-signing settlement is for principal reduction for borrowers who are “either delinquent or at imminent risk of default.” This is opposite of the refinancing rules laid out in HARP and the State of the Union address , which require borrowers to be current on their payments because that shows they’re “responsible.” So much for a coherent message from the government to homeowners about moral hazard. This issue could be fuel for election debates on housing policy: Republicans are much more bothered by rewarding bad behavior than Democrats are. In our December survey of consumers, 61 percent of Democrats agreed that “helping people keep their homes is the right policy even if it helps some undeserving homeowners,” but only 38 percent of Republicans agreed.

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The Most HIlarious #FedValentines

February 10, 2012

Whoever said monetary policy isn’t sexy just doesn’t know what they’re talking about. In anticipation of Valentine’s Day, the twitterverse is abuzz with economics nerds tweeting sweet nothings using the hashtag #FedValentines , of course in reference to the Federal Reserve. You can’t blame them. With the Fed’s head, Ben Bernanke, constantly discussing stimulus tactics like quantitative easing, the urge for double entendre is hard to resist. The trend comes as Bernanke addressed the National Association of Homebuilders International Builders’ Show Friday, saying that the Fed’s efforts at spurring economic growth are being thwarted by obstacles to mortgage lending, according to Bloomberg. Tragically, the bearded, bald hearthrob didn’t offer his own #FedValentine during the speech, but rest assured we’ll update this post if that changes. That’s not to say the regional federal reserves themselves can’t have some fun on a Friday. According to its twitter feed , the San Francisco Federal Reserve is “going through extraordinary measures to increase your stimulus.” Check out some of our favorite #Fedvalentines, to get a sense of love in the time of near-record low interest rates:

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Alabama’s Largest City Looks For Alternatives To Payday Lenders

February 10, 2012

The biggest city in Alabama is putting its payday lenders on notice. Bankers and community leaders in Birmingham, Alabama met Thursday to discuss developing new financial resources for cash-strapped residents , according to The Birmingham News . The meeting was part of the city’s broader effort to relax the influence of payday lenders — small loan shops where borrowers can get quick cash, but often end up sucked into a cycle of debt thanks to the lenders’ high interest rates. While Birmingham leaders say they can’t force the payday lenders to close up shop, they are talking about adopting a program similar to San Francisco’s Bank On initiative , which aims to offer safe, non-exploitative resources — including financial counseling, online pay options and inexpensive checking and savings accounts — to people who are hesitant to use traditional banks. Nearly 8 percent of U.S. households are “unbanked,” or don’t have a checking or savings account, according to Federal Deposit Insurance Corporation data cited by The New York Times . Another nearly 18 percent of Americans have a checking or savings account, but still use alternative financial services. In Alabama, more than 20 percent of households have sought loans from payday lenders, according to the Associated Press. Birmingham’s pushback against payday lenders comes at a moment when a vast number of Americans are cash strapped, pushing them to turn to an off-brand loan shop. Thanks to high unemployment and flat wages, a growing number of Americans are struggling to simply put food on the table and cover other basic household expenses . Nearly half of all households in the U.S. are only one financial emergency away from the poverty line . Amid such a weak economic climate, payday lenders have thrived . But consumer-protection advocates are beginning to take a hard line against the industry. Richard Cordray, who recently assumed control of the Consumer Financial Protection Bureau, has put payday loan regulation front and center on his agenda, despite protests from lenders that they provide a valuable service to borrowers in a tight spot. Payday lenders have come under particular criticism for allegations that they target and take advantage of minority borrowers. A study by the Center for Responsible Lending found that in some regions, payday loan shops are clustered disproportionately in African-American and Latino neighborhoods , and that minorities form a large part of their customer base.

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Weil: A Trader Has To Be ‘A Total Numbskull’ To Get Caught

February 10, 2012

The guilty pleas last week by two former Credit Suisse Group (CS) traders, on charges of falsifying their company’s asset values, revive an age-old question: How dumb do you have to be to get criminally convicted for a fraud you committed while working at a bank deemed too big to fail?

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The Story Of Obama’s Brush With Political Disaster

February 10, 2012

Shortly after four o’clock on the afternoon of Wednesday, April 13, 2011, U.S. Treasury Secretary Tim Geithner walked down the hallway near his office toward a large conference room facing the building’s interior. He was accompanied by a retinue of counselors and aides. When they arrived in the room — known around Treasury simply as “the large” — four people were seated at a long walnut table on the side near the door. Geithner and his entourage greeted them, then walked around to the far side and took their seats.

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Lehman Brothers Suing Citi Over Huge Account

February 10, 2012

NEW YORK — Lehman Brothers Holdings Inc. and its creditors are suing several units of Citigroup Inc. to recover $2.5 billion the failed investment bank transferred to a backup account at Citi months before seeking bankruptcy court protection. In the complaint filed on Wednesday with the U.S. Bankruptcy Court for the Southern District of New York, Lehman claims that Citibank is wrongfully withholding the money as a potential source of funds in a dispute over derivative contracts. Lehman also is asking the court to disallow what it says are $2 billion of “inflated and legally unsupported” claims that Citibank has asserted against it. In a statement Thursday, Citigroup vowed to defend itself and its right to recover losses from Lehman’s collapse. It called the lawsuit unjustified and accused Lehman of trying to renege on its obligations and claw back assets to which it has no right. According to the lawsuit, Citi demanded on June 12, 2008, that Lehman transfer between $3 billion to $5 billion into an account to cover potential overdrafts by Lehman subsidiaries that were using Citi’s clearing and settlement services. Lehman agreed that same day to set aside $2 billion from its account at Citibank into a segregated account, on the condition that the bank would have no lien or other rights to the funds. In its statement, Citi said that it tried to help Lehman prior to its bankruptcy filing, but needed to obtain the guarantees and cash deposits from Lehman in order to protect its shareholders from potential losses. Lehman claims that by holding on to the $2 billion, Citibank is violating the U.S. bankruptcy code, state law and going against the conditions both agreed to when the funds were set aside. In addition, Lehman asserts that Citibank has refused to return another $500 million in cash that was transferred into its broker-dealer subsidiary just hours before Lehman filed for bankruptcy protection. Lehman’s bankruptcy filing in September 2008 was the biggest in U.S. history and triggered more than 75 separate bankruptcy proceedings. The company listed more than $600 billion in debts when it filed. Lehman Brothers Holdings is the company that controls what’s left of the investment bank’s assets. Citigroup shares ended regular trading down 57 cents to $33.66 on Thursday. The stock slipped another 8 cents to $33.58 in extended trading.

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U.S. Clamps Down On ‘Sex In The City’ Counterfeit Perfumes

February 10, 2012

The ladies of “Sex and the City” are still cool enough for China’s massive counterfeit market. Counterfeit perfume seizures by the U.S. Customs and Border Protection surged in the United States last year, jumping 471 percent to a total value of $9.4 million. And of all perfumes seized, the one most often found was called “Sex in the City,” a counterfeit variation on the HBO trademark. The surge in fake fragrance raids was the result of new partnerships between U.S. Customs and Border Protection and American companies like HBO trying to protect their trademarks, the agency said in a report . “The collaborative effort that we’ve had with Customs have been incredibly effective and we’ve been happy with the results,” said HBO spokesman Jeff Cusson of the seizures. U.S. fragrance companies have turned to law enforcement for help in battling counterfeits after nearly a decade of weak sales, which dropped 20 percent between 2005 and 2010, according to Euromonitor International , a market research group. While the recession is partially responsible, the groups says, top-level brands may no longer hold the same weight over imitations that they once did. “Fragrances have lost their mystique and become less ‘special’ and commoditised,” Euromonitor wrote in a May 2011 report . “With over a hundred new fragrance launches a year, the glut of fragrances in the marketplace has also created consumer confusion.” Or perhaps Americans are simply no longer willing to pay $100 for designer fragrances when cheap versions abound. The “Sex in the City” fake, for example, is sold all over the Internet for less than $10. Versions like Lust, Kiss, Love and Dream are currently available on Amazon.com , Overstock.com and many other beauty sites. Three of the four countries most often responsible for counterfeit perfumes seized in 2011 are located in Asia — China, India and Hong Kong — but the perfumes also often originated from Germany, according to Customs seizure data. Most fans of the fragrance likely don’t know that the “Sex in the City” perfume is a fake at all, especially since the HBO-approved scent was only

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The States Where Companies Are Hiring

February 10, 2012

From 24/7 Wall St.: Companies across the country are hiring more workers, at least if you ask their employees. In 2011, 31 percent of U.S. workers reported that their employers were hiring, according to Gallup’s Job Creation Index . Only 18 percent said that their employers were laying workers off. Of course, residents of some states report much higher rates of job creation than others. 24/7 Wall St. reviewed the Gallup Index, as well as a number of other economic indicators, and identified the eight states where residents think companies are hiring most. Read The Eight States Where Companies Are Hiring To develop the Job Creation Index, Gallup asked those surveyed whether companies are hiring or letting employees go. While the national score reflects that most states believe employers are hiring, 24/7 Wall St.’s analysis suggests that self-reporting by workers may not perfectly align with reality. These states are not experiencing the greatest recoveries — including in employment — as they have little to recover from. The states’ strong economies may be affecting their residents’ perception of the economy. Five of the eight states on this list are among the top nine states on another recent Gallup poll ranking states’ confidence in the national economy. Those who live in states that are doing well see the entire country as doing well. The majority of states where high percentages of workers reported job creation also have extremely low unemployment rates to begin with. Six of the eight states have among the 10 lowest unemployment rates in the country. North Dakota, the state where the largest share of workers reported that their employers are hiring, has the lowest unemployment rate in the country. And while unemployment rates are low, the majority of these states have had relatively low unemployment rates for some time. Most did not have particularly impressive improvements in unemployment last year. Other than Utah and West Virginia — the only states with exceptionally large drops in unemployment — the rest have had low unemployment rates since 2006 and throughout the recession. Housing markets in most of the states where respondents believe jobs are plentiful also have been stable. Seven of the eight states on the list are among the 15 markets that suffered the least from the third quarter of 2006 to the third quarter of 2011. Five of the states actually experienced increases in home prices over this period. These are the eight states where workers say companies are hiring, according to 24/7 Wall St. :

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Google’s $12.5 Billion Deal Expected To Be Approved

February 9, 2012

By Diane Bartz WASHINGTON (Reuters) – The Justice Department will approve Google’s $12.5 billion bid to acquire Motorola Mobility Holdings Inc, according to sources close to the antitrust review. The department is also expected to approve an Apple-led consortium’s bid to acquire a group of patents from bankrupt Canadian company Nortel Networks. Both deals are expected to be cleared early next week. Google, whose Android software is the top operating system for Internet-enabled smart phones, announced in August it planned to acquire phone-maker Motorola Mobility. The deal will give Google one of the mobile phone industry’s largest patent libraries, as well as hardware manufacturing operations that will allow Google to develop its own line of smart phones. The Apple-led consortium, which includes RIM, Microsoft, EMC, Ericsson and Sony, had agreed in July pay $4.5 billion for 6,000 patents and patent applications that telecom-equipment maker Nortel had put up for sale, including coveted 4G wireless technologies. The companies joined forces to outbid Google for the patents. Google, the world’s No. 1 search engine, has been under increasing regulatory scrutiny. The U.S. Federal Trade Commission and the European Union are both investigating Google’s business practices. The company faces accusations it uses its clout in the search market to beat rivals as it moves into related businesses. The Justice Department will likely continue monitoring patent litigation in the telecom space, according to the sources. The department of Justice, Google, and Apple did not immediately respond to requests for comment. (Reporting By Diane Bartz; Editing by Tim Dobbyn)

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Huge Scandal Rattles San Francisco-Based Snack Company

February 9, 2012

SAN FRANCISCO — Diamond Foods Inc. is replacing its CEO and chief financial officer after an internal investigation found that the company improperly accounted for payments to walnut growers and it needs to restate two years of financial results. The news, announced late Wednesday, sent shares of the San Francisco-based company plummeting more than 43 percent in after-hours trading. Diamond Foods, which makes Emerald Nuts and Pop Secret popcorn, has been embroiled in a dispute over the payments for several months. The company said that its audit committee found that the payments were booked in the wrong period. The payments – an estimated $20 million in 2010 and $60 million in 2011 – skewed the company’s financial results. Diamond Foods placed its CEO Michael Mendes and Chief Financial Officer Steven Neil on administrative leave. The company is looking for permanent replacements. In the meantime, it appointed Rick Wolford, a Diamond Foods director and former CEO of Del Monte Foods, as its acting CEO. Michael Murphy, of Alix Parners, will serve as acting chief financial officer. The deal could put Diamond Foods’ plans to acquire the Pringles brand from Procter & Gamble Co. in jeopardy. The deal, worth $1.5 billion when it was announced in April, would be the biggest acquisition ever for Diamond Foods and make it the second-largest snack maker in the nation behind PepsiCo Inc. The collapse of Diamond Foods’ shares also hurts its ability to finance the deal. Cincinnati-based P&G called the news from Diamond Foods “very disappointing.” It said in a statement that it is evaluating its next steps and keeping all its options open. “Pringles remains a valuable asset and it has attracted considerable interest from other outside parties,” P&G said. Shares of Diamond Foods were halted in trading earlier in the day but fell $15.88 to $20.78 in after-hours trading. Its shares have been on a downward slide since hitting $96.13 in late September. Diamond Foods said it takes the integrity of its financial statements seriously and is working to complete the restatements as soon as possible.

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Critics Say New Hampshire’s Right-To-Work Legislation Would Not Net Jobs

February 9, 2012

The nationwide anti-union push is moving to New Hampshire, where the state legislature is considering right-to-work legislation once again. The proposed legislation would significantly curtail unions’ power in the Live Free or Die state. And proponents of the measure in the state, like their counterparts in Indiana and elsewhere, tout the bill as a way to promote economic growth and deal with the state’s jobs problem. Yet, many experts, business owners and promoters of economic development say that the proposed legislation would be unlikely to create jobs or persuade new businesses to open in New Hampshire. In fact, some say, it could hurt the state. Hampshire is tied for having the the nation’s fourth lowest unemployment rate, at 5.1 percent. On Thursday a new right-to-work bill sponsored by Republican Rep. William Smith and others was debated in a hearing. ” This is not an anti-union bill — it’s a pro-union member bill,” he said. “I’m sorry to see it come back,” said Peter Church, who has owned and operated a printing shop in Manchester, N.H., for 21 years. “It’s not something that New Hampshire needs. It’s certainly not something that anyone operating a business in New Hampshire wants.” Last December, New Hampshire conservatives failed to overturn Democratic Gov. John Lynch’s veto of similar legislation . State Republicans call the veto a failure for job growth. “The many companies who have expressed their interest in considering moving new jobs to New Hampshire if we are a right-to-work will not bring relief to the nearly 40,000 unemployed workers across the state,” William O’Brien, the Republican speaker of the state House, said at the time, in a statement. “We have missed an opportunity to grow our economy and help our citizens.” The proposed legislation would prevent union contracts at private sector workplaces from requiring employees to pay dues. A slew of related bills are in the works that also seek to curb union power in the state. Supporters frame the issue as one of “freedom of choice” — that workers should be allowed to choose whether they want to pay dues to a union. But in New Hampshire, some employers don’t want the government dictating how they interact with their employees. “I really resent the state government spending all this time trying to come up with rules and regulations that tell me how I can or cannot negotiate collective bargaining with my employees,” Church said. Church, who employs 13 unionized workers, said there is nothing in the legislation that might encourage him to hire more. The main thing that would promote hiring is an increase in demand for products, he said. Some economic experts have raised concerns that a right-to-work law might slow economic growth rather than speeding it up, in part by cutting into workers’ earnings. A recent study by the Economic Policy Institute, a labor-backed research center, found that for both union and nonunion employees in right-to-work states, wages were $1,500 less per worker each year, after considering cost-of-living and other factors. A working paper by economists from the University of Nevada and Claremont McKenna College concluded that average wages for nonunion workers dropped 4.3 percent as a result of right-to-work legislation. The study looked at a right-to-work law’s impact in Oklahoma , which enacted such legislation in 2001. Right-to-work activists say that lower wages — and weakened unions — are part of the appeal of the law. “The unions typically demand higher wages, so this would provide companies more cost-effective opportunities to bring employees on,” said Dan Duncanson, president of Technical Employment Services, a New Hampshire-based staffing firm. Studies in Oklahoma have shown that lower wages have not spurred employers to hire more. In Oklahoma, employment in manufacturing has declined , even as manufacturing productivity has improved, according to Oklahoma Council of Public Affairs, a conservative think tank. A separate council study concluded that Oklahoma has been losing more jobs to out-of-state migration than it has gained since the 1980s. Those involved with the daily business of economic development in New Hampshire say that right-to-work laws fall very low on the list of reasons an employer might consider when decided to relocate. George Bald, commissioner of New Hampshire’s Department of Resources and Economic Development, says in his scores of conversations with business owners over the years — many who have been considering moving to the state — right-to-work measures have simply not come up. “I just never have had a company ask me about it or tell me that the issue of right to work is a major factor in relocating,” Bald said. Factors that Bald cited as considerations by employers include a state’s education system, the availability of qualified employees, the digital infrastructure, the tax structure and the quality of life. “We’ve never seen evidence that passing right-to-work legislation has been a job creator, and this is why we really see this as an attempt to undermine unions in general,” said Zandra Rice-Hawkins, director of Granite State Progress, a progressive advocacy organization based in New Hampshire. “They’re doing this for ideological reasons alone, and it would roll back workplace protections that we have fought for for decades.” Alan Tonelson, a research fellow at the U.S. Business & Industrial Council Educational Foundation, a nonprofit research organization with nearly 2,000 members including small- and medium-size manufacturers, said that the right-to-work issue has yet to come up as a subject of concern. Rather, high taxation is a frequent source of complaints. “There are many factors that affect the attractiveness of a particular state as a location for manufacturing, and the existence of right-to-work laws can be one, but it’s not the only one.” Rep. Smith could not immediately be reached for comment.

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The Greenest Car Of 2012 Is…

February 9, 2012

From Mother Nature Networks’ Melissa Hincha-Ownby: The American Council for an Energy-Efficient Economy (ACEEE) has published its 14th annual Greenest Cars List and for the first time an electric vehicle takes the number one spot. The new Mitsubishi i-MIEV bested the Honda Civic Natural Gas , which held the number one spot for eight straight years. A variety of environmental criteria are assessed when evaluating a vehicle’s green score, including the emissions created by the power plant used to provide electricity to the i-MIEV and other electric vehicles . The changing face of the eco-friendly automotive scene actually led to a few changes in the ACEEE’s methodology this year. “This year, a number of updates were made to the Green Book® methodology to more accurately estimate vehicles’ environmental impacts. These include improved emissions estimates for the vehicle manufacturing process, changes reflecting current natural gas extraction practices, and consideration of upcoming shifts in the generation mix for the electricity used to power electric cars.” Source: ACEEE One very prominent electrified vehicle is missing from this list, the Chevy Volt . According to CNNMoney.com , “That’s because the ACEEE uses vehicle weight as a criterion for scoring, under the assumption that a heavier vehicle causes more waste in production.” Unfortunately for General Motors, the Chevy Volt was their best chance for inclusion on the list. Instead, the Greenest Cars of 2012 list is dominated by Japanese imports. General Motors and other Detroit-based automakers are receiving unfavorable recognition on the Greenest List’s companion, the Meanest Vehicles for the Environment in 2012 . Both the Chevrolet G3500 Express Cargo van and its GMC cousin, the G3500 Savana tied with the Ford E-350 Wagon for the Meanest Vehicle of 2012 with a Green Score of 17. For those that cry foul, there are electric cargo vans on the market that are a viable alternative to these gas-hogging beasts. The 2012 Greenest List and each vehicle’s corresponding Green Score follows:

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Janet Murguía: Why the AG Settlement is Good for Communities of Color

February 9, 2012

This is a joint blog post with Marc Morial, President and CEO, National Urban League Today, state Attorneys General (AG) announced that they arrived at a $25 billion agreement with mortgage servicers in response to the “robosigning” scandal that broke 18 months ago. When New York AG Eric Schneiderman, California AG Kamala Harris, or Nevada AG Catherine Masto signed onto the agreement for their hardest hit states, it was a clear indication that this is a strong settlement for our families. We at the National Urban League (NUL) and National Council of La Raza (NCLR) celebrate this significant move as one in a series of enforcement steps that are essential to restoring the public’s faith in our housing system. The closure of these proceedings is incredibly important to healing our families and neighborhoods. The entire nation has felt the burden of the enduring foreclosure crisis. Black and Hispanic homeowners have been especially hard hit. One in four Black and Hispanic borrowers in the U.S. lost homes or are at serious risk of losing their homes, more than half the number of White borrowers. Asian, Black, and Hispanic families were 1.7, 3, and 2.2 (respectively) times as likely as White borrowers to receive subprime loans even after accounting for similar credit profiles. Through foreclosures, our families have battled substantial wealth loss, emotional distress, and an uncertain financial future. The AG settlement will bring relief to our families, with approximately $17 billion dedicated to principal reductions. Writing down principal has proven to be a win for both borrower and lender alike, especially when compared with the costs of foreclosure, property maintenance, and a sheriff’s sale for pennies on the dollar. Up until this point, however, servicers have not made it a priority. This settlement and a recent announcement to increase incentives for principal reductions should compel servicers to help families and clear the logjam on write-downs. Also, we are confident that rapid uptake of these new resources will soon generate the empirical information needed to convince naysayers that write-downs are vital to stabilizing the market. We are encouraged by the AG settlement and plan to do everything we can to ensure that affected families have access to these new resources. Finding homeowners is no small endeavor, especially finding those who have slipped through the cracks. Outreach will be an enormous undertaking in its own right and NUL and NCLR hope to deploy their housing programs to seek out eligible clients. Despite the challenges, we believe this AG settlement will set families up for success and will bring true accountability and systemic improvement to our housing market.

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Morty Lefkoe: Do You Have a Fear of Public Speaking?

February 9, 2012

If you fear public speaking more than going to the dentist, or even death, you are not alone. This fear is so common that surveys indicate that over 50 percent of the adult population of the United States experiences fear when speaking in public. As Jerry Seinfield put it quite accurately on one of his shows: Most people would rather be in the casket than delivering the eulogy. We have had a number of clients whose fear of speaking in pubic was so great that they turned down promotions rather than take a job that required them to speak in public on a regular basis. The saddest call we ever had was from a man who called to say his daughter had just announced to him that she was about to get married… and this news made him petrified. Why? Because he realized he was going to have to make a toast at the wedding. Interestingly enough, there is nothing inherently scary about talking to a few people who are there to hear what you have to say. And why does merely having to introduce oneself at a meeting lead many people to go to the bathroom just before it is their turn. What makes speaking in public so common and so frightful? If you’ve been reading my regular blog posts, you won’t be surprised to learn that my answer is: beliefs. In fact, after helping over 3,000 people eliminate this problem, we’ve discovered the specific beliefs that cause this fear. Let me tell you what they are and why they result in this widespread fear. Here are the beliefs that cause a fear of public speaking in most people: • Mistakes and failure are bad. • If I make a mistake or fail I’ll be rejected. • I’m not good enough. • I’m not capable. • I’m not competent. • What I have to say is not important. • People aren’t interested in what I have to say. • I’m not important. • What makes me good enough and important is having people think well of me. • Change is difficult. • Public speaking is inherently scary. To make it real that these beliefs could cause such terror in so many people, ask yourself this question: Imagine someone, whom you don’t know, who really had all the beliefs I listed above. Do you think she would be afraid to speak in public? In fact, wouldn’t you be willing to wager that she would have public speaking anxiety? Why these beliefs cause a fear of speaking in public I think most people would agree that anyone with these beliefs would fear public speaking. And here’s why: A belief is nothing more than a statement about reality that we feel is true. And if we think it is true that it is bad to make mistakes and if we do we’ll be rejected, and if our sense of importance is dependent on others thinking well of us — then we would have to be terrified when we stand up to speak in front of others because we could make a mistake, leading to rejection, and because we would feel less important if people thought less of us. But you might be thinking: I am afraid to speak in public but I don’t agree with most of these beliefs. Here’s a strange thing about beliefs: It is possible to intellectually disagree with a belief we hold. In other words, early in life we might have concluded as a result of interactions with our parents that it’s bad to make a mistake (because mom and dad got upset when we didn’t live up to their expectations). Now, today, we might realize that innovation is possible only if we are willing to try new things that might not work out. Mistakes are part of the process of doing something new and different. So we “know” that it’s okay to make mistakes and learn from them. But merely knowing that does not get rid of beliefs. If fear is not inherent in public speaking and if the fear is caused by specific beliefs, then eliminating the beliefs will eliminate the fear. Not reduce it or make it easier to deal with. Eliminate it. Research proves eliminating beliefs eliminates public speaking fear A study conducted by the University of Arizona several years ago determined that if the beliefs listed above (and a few conditionings) were eliminated, the mean level of fear of the subjects studied fell from 7 to 1.5 on a scale of 1-10, one being no fear whatsoever and 10 being terror. To prove this to yourself, get rid of three of the 11 beliefs that cause a fear of public speaking (and a bunch of other unpleasant feelings) by using a free belief-elimination process at http://recreateyourlife.com/free . Your fear of speaking in public is not due to “human nature.” You can rid yourself of that terrifying prospect once and for all.

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Occupy Y’All Street: Occupy Charlotte Activist Gambles Everything On The Movement

February 9, 2012

This is the fourth in a series of stories and short films on under-publicized Occupy sites. The first is here , the second is here , and the third is here . Stay tuned in the coming days for more from our road trip through the South. CHARLOTTE, N.C. — Vic Suter is looking for Ghost. She sloshes through the slick grass and soggy leaves matting the grounds of the Old City Hall. She and the rest of Occupy Charlotte have called the property home since early October. She knows every sign, every tent in this place. But it’s Ghost’s tent that she wants. A cold rain begins to fall steadily on a camp that’s all but deserted. Vic, 22, doesn’t care. Vic motors past tents sagging under layers of tarp and other jerry-rigged, middle-of-the-night weatherproofing. Dragging a cardboard sign with a bitten corner, she ignores all those tents before finally stopping at a giant beige orb, outfitted with a mesh enclosure that gives off a screened-in porch effect. There’s room for three chairs and what look like wind chimes. Ghost has his shit together. “Hey Ghost?” she shouts, a few feet from his tent. Vic leans into the orb’s entrance. Her face, curtained by her brown hoodie, is pale and expectant. Even at 11 a.m. in early November, she looks game. “Hey Ghost! You in there?” The orb shows no signs of life. “You got to Godzilla people’s tents — shake them, nag them to get up and go on a march,” she explains later. Vic lets out one long “Ghooouuuust!” in a nagging sing-song. She thinks this is funny. She stoner-laughs to herself. The rain sounds like it’s hitting the trees a little harder. Vic fiddles with the orb’s flaps. “Let’s see.” The tent is locked. “No, he’s not here.” Vic finally has to give up. She trudges past the orb in her untied black army boots — shitkickers her stepfather wore when he turned 18 in Vietnam. She says she’s worn them every day since high school. Instead of lockers and jocks, she has to stomp past an empty bucket, empty plastic chairs and more empty tents. Ghost is a memory. She’s looking for James and Bobby, and somebody named Peanut. Vic hits on the last of the tents located at the outer edge of the camp. They’re quiet, too. “Where is everybody?” she asks. A month earlier, the Occupy activists in Charlotte had drawn more than 500 to their first march uptown, a noisy success that included a stop at Bank of America’s North Tryon Street headquarters, where the throngs chanted up its 60 stories. The building — the tallest in the state and a dominant spear in the city’s skyline — had been a force for civic pride. But since the Great Recession, the bank has become one of the country’s great villains. The Wall Street of the South now had its own potent occupation. The early general assemblies could number in the hundreds. The meeting participants were drawn by growing income disparities, rising college tuition costs, the region’s environmental decay. They were among the metro area’s double-digit unemployment rate. They realized they were everybody. Vic had joined on the first night and had been charged with welcoming newcomers and teaching them the movement’s hand signals. Soon she began organizing three marches each day to one spot. This was her work week. Charlotte’s downtown had grown rich with examples of injustice wrapped in glass and outfitted with bad public art. Vic filled up to-do lists with ideas for future marches. For years, she had searched for her place. She tattooed “Restless” in black cursive script on her shoulder. But at Occupy, she thought she might have found her calling, and her very own tribe in the buckle of the bible belt. She fell hard. “When you’re throwing yourself into something,” she explained to us, “you don’t have a lunch break. You don’t have time off. You don’t get a vacation from a long-term protest.” The movement proved it could inspire people like Vic to produce Pastebin manifestos, YouTube gotchas, and a working kitchen. But a month or so in, Occupy began facing an important dilemma that they have yet to resolve. How does a non-hierarchical movement avoid arguing itself into oblivion? How does it sustain the true believers? As the days got colder, and inertia seeped in, the general assemblies got smaller and so did the press stories. Even before the big city camps were razed, a lot of activists had already burned out. But Vic never did. The problem for Vic was that the chants never got old. Vic wants Ghost and Peanut for a march that will begin in a half hour and lead her — and as many willing activists as she can cajole — from their camp, through downtown Charlotte to Duke Energy’s headquarters. Vic chose the energy mega-company for its planned rate hike ; its environmental record and its hold on power in the region and beyond — planners for the Democratic National Convention, to be held in Charlotte, rely on a $10 million line of credit from the company. She is still exuberant about this march — even if it means chanting in the rain to stone-faced security guards in Charlotte’s bank-building canyon. Not everyone in Occupy Charlotte is as charged up. Last night, Vic says she begged three fellow activists to get her up on time for the morning march. Her cell was dying and she couldn’t depend on its alarm. “None of them wake up,” she explains of her neighboring activists. “Thanks guys.” She ended up oversleeping. Vic trudges back toward the camp’s center, first stopping at the information desk’s uncovered table and filing cabinet. A fellow activist shows her his sign — it’s the state outline with a fight-the-power fist punching up through its midsection. Vic approves. “That’s awesome. Right on. Hell yeah.” A small group of guys are standing by a cluster of tents near the kitchen and storage spot where the activists keep their signs. Earlier that morning, the kitchen’s tent started collecting water and nearly caved in. It had to be held up by a broom. The guys watch her. As one of the only female campers, she stands out — a girlie gutter punk with piercings (tribal) and tattoos (personal), a sea-green streak manic-panicked through a mess of matted, light-brown curls piled high above her round face. You don’t want to mess with that. You want to follow that. The guys are waiting for her orders. One is wearing a dress. “You guys want to mic check?” she hollers down toward them. They want to mic check. “IF YOU’RE GOING TO MARCH, WE’RE LEAVING NOW!” Suddenly, stragglers appear and grab signs. They display them for Vic to sign off on. Vic asks for a cigarette. A guy rolls one for her. Vic asks for a light. She leans into the flame and exhales a fat cloud. She eats a banana that someone drops on the ground. She laces up her stepfather’s boots. She tells everyone that marching in untied boots is lazy. Fifteen Occupy Charlotte activists — all men — are ready to join her. And then Vic asks the question she’s been wanting to ask all morning: “Why are we still here?” * * * * * Occupy Wall Street’s most effective recruitment tools were not testimonials from the unemployed or income-inequality charts. The movement grew exponentially with each video that captured police actions against demonstrators. The mass arrest on the Brooklyn Bridge, the maiming of Iraq War Vet Scott Olsen in Oakland, the UC Davis cop pepper-spraying seated students — each jolted the movement’s sense of outrage, and gave the mainstream media fresh footage to endlessly loop. The resulting demonstrations were some of the bigger, more effective marches. None had more impact on Occupy than the videos capturing NYPD Deputy Inspector Anthony Bologna’s close-range pepper-spraying of a group of women penned behind orange police netting. One YouTube video of the incident racked up more than 800,000 views. Another attracted more than 1.5 million. Vic had seen the clips: the white-shirt official firing the stinging spray, the women cooped in, shrieking in horror before crumbling to the pavement. “It was just a catalyst,” Vic says. “It got me going. For the following week after that, I was just sitting there like obsessive at the computer just trying to find out more and more and more.” How long is this going to last? Are they serious? Vic wanted to know. Vic began calling around to the few activists she knew in Charlotte, hoping for any signs that a local occupation might be starting. The odds were against her. The city had no reputation as a rowdy place of political dissent. The big banks held sway over the local economy, the southern conservative mindset over the political discourse. Just days before the occupation started, Mayor Anthony Foxx, a Democrat, defended Bank of America against criticism for wanting to charge customers a $5 monthly fee for using its services: “People who live in this community know how generous our financial institutions have been.” Vic’s last activism had been a silent protest, helping with a letter writing campaign against Monsanto, an agri-business giant. She couldn’t remember the last time she marched or attended a rally. As soon as she heard that Occupy Charlotte would start, she put in her two-weeks notice at the earthy grocery store where she did food prep for $9 an hour. The first day that Occupy Charlotte began its encampment — Oct. 8 — was Vic’s last at the grocery. After her final shift, Vic said goodbye to the group house she’d rented for about $252 per month. Her roommate gave her a ride downtown. She forgot to pack a sleeping bag or pillow. But she did remember to stuff in her backpack a couple journals and books (Emma Goldman, George Orwell, Noam Chomsky, Nietzsche), a re-useable water bottle, extra clothes and a couple blankets. She also packed nonperishable food like granola bars and sunflower seeds, along with a few pieces of fruit. She did not plan on leaving. That first night, Vic joined maybe a dozen strangers. They formed a circle and introduced themselves: the high school dropout, the injured iron worker, the local musician, the college student. They talked about what the movement would mean to them. Vic said she was glad to see people in Charlotte finally not “turning a blind eye to things.” She says she didn’t go to sleep for two days. “It was awesome,” she says. “It came at a good point in her life,” says Vic’s stepfather, Danny Hill, 59. “She needed something to latch onto that would get her focused again … It was just get up and go to work. She didn’t really have much time for herself. This has been her passion all along but she just didn’t know how to go about doing it.” A month before she joined Occupy Charlotte, Vic wasn’t sure where she belonged. She wrote in her journal: “The world is changing quickly or maybe I’m not adapting fast enough. Maybe it’s not changing fast enough for me — or perhaps I’m not changing fast enough for me.” In Charlotte, Vic had a difficult time finding her way. Her beloved older brother Nick moved out before she hit middle school. Her parents put her in a small, private, Christian high school. She graduated an expert on what it felt to be shunned by your own peers. “Being the only out gay person in your school, being someone who graduated from a Christian school who never believed any of it, I was alone,” she says. She’d had to sit through Bible study every day for two years. Vic moved a little more than 90 minutes away, across the South Carolina border, and enrolled in Columbia College. But she quickly found that the all-women’s school wasn’t for her either. “All my peers were busy reading Vogue,” she says. “They were in school to meet their husband and their bridesmaids. I was starving to learn more.” Vic dropped out after her freshman year. For three months, Vic bounced around the Southeast: Athens, Atlanta, Savannah. “I’d hang around somewhere for a week, get bored and then leave,” she says. She’d walk or hitch or jump trains. In Tallahassee she joined up with a friend’s band. In Tampa, she squatted in a warehouse covered in black mold. Her itinerary ended with a return trip to her parents’ house. After a short stint at a community college, Vic enrolled at Winthrop University. But all that came to a chaotic end in October 2009 when she contracted swine flu. That December, she lost her grandfather. She felt overwhelmed and depressed. She decided to withdraw. Vic tried to re-enroll but says Winthrop wouldn’t accept all of her old credits. It became too much of a financial burden. “I was heartbroken that I couldn’t go back,” she says. Instead, she took the grocery job. “It was hard to live one block from my school and walk through campus on my way to work. It was a daily reminder.” Her mother Karen Hill says they couldn’t pay for Vic’s college; they had persistent health problems, and barely enough money to eat on their fixed incomes. Danny Hill has shoulder and lung issues, as well as post-traumatic stress disorder from his tours in Vietnam and the first Gulf War. It is hard for him to walk without having to catch his breath. Karen Hill handled baggage for US Airways, loading and unloading up to 20,000 pounds of luggage per shift, she estimates. After 23 years on the job, she had to have carpel tunnel surgery. She says her doctors soon rushed her back to work; she ended up with nerve damage in both hands. She never was able to get worker’s comp, she says. Her hands swelled up so bad, Vic had to dial for her and cradle the receiver. Vic had racked up her own share of medical debts. She had grown up with lungs weakened by a stubborn asthma that left her immune system vulnerable to attack. Hospital stays were common annoyances. In her journals, she taped a hospital bracelet from this past June. In the corner of the page, she wrote in black: “DIE YOUNG AND SAVE YOURSELF.” As the start of the occupation grew closer, she wrote in her journal: “Clean slate in front of me, bumpy road both behind and before — I’m bursting … I must become as strong as stone.” During the first week Vic lived at Occupy Charlotte, she says someone stole her clothes, her jacket and her ID. She eventually got a tent and a lock. She says she was afraid to leave the camp. She’d only leave for an hour or two a day. “I was always scared — What’s going to happen while I’m gone? What am I going to come back to?” she recalls thinking. “I was just scared that somebody was going to do something stupid and get us shut down and I was going to come back and tents were going to be destroyed.” Despite the setbacks, Vic confessed to her mom just how meaningful it all was. “She told me that this is the most important thing she’s ever done in her life,” Karen Hill says of her finally grown up daughter. “I had to let her go.” It was hard to fathom that this was the same daughter who had come out to her by handing her a note. Hill made sure to drop off an entire wardrobe of clothes. Hill couldn’t march, but she could open her home to her daughter’s new friends. As the seasons changed, she supplied the activists with vitamin c and cold meds. When they needed a break, she invited them over to the house for a hot meal and the use of their washer, dryer and shower. They hardly disturbed the household. “Usually, they would sit on the floor with their computers — and it was Occupy, Occupy, Occupy,” Hill says. But their victories went beyond blog posts and tweets. A group of Latino tenants were facing eviction when the camp decided to take up their cause. The landlord soon backed down. “That’s a concrete thing that they can point to and say ‘Look, this is what we did,’” says Mark Kemp, editor in chief of Creative Loafing, the Charlotte weekly. Luis Rodriguez , a former organizer with Occupy Charlotte, describes Vic as pivotal to whatever success the camp had. “She’s a big motivator,” Rodriguez explains. “She’s very charismatic and she has a way of rallying support to her … You look at her and you see the hair and the piercings and then you get to talking to her and she’s really, really passionate. She does not suffer idleness and she wants everyone else to be constantly moving.” The marches were addictive. Vic says she yelled so much that no one heard her real voice for long stretches. For the first three weeks, her voice was constantly hoarse. But it wasn’t powerful enough to silence the camp’s in-fighting that sometimes got physical. On a few occasions, people got caught bringing drugs into the camp. One leader left in a well-publicized dispute over the direction of the camp. Restraining orders were exchanged, the scope of which banned one of the main organizers from the camp and from participating “directly or indirectly” in general assemblies. There was a fight over who controls the camp’s website. The ousted activist turned one site into an anti-Occupy Charlotte missive. The remaining occupiers had to start a new site. General assemblies became a grind even for Vic. After a particularly intense session, Vic walked away in tears. She thought about quitting. She’d been occupying for about a month. She was tired of seeing too many activists sitting around. She’d sometimes had to barter with them to march: I’ll give you a cigarette if you get out of your tent . She and others even had to march on their own camp to motivate the laziest camp squatters. They’d tromp through the haphazard rows of tents shouting, “Out of the tents and into the streets!” More than once, Vic complained about the camp going slack. Not everyone appreciated her bluntness. Some tent dwellers had taken to calling Vic a “stuck-up bitch.” If an activist quit the camp, others blamed her. She didn’t miss the quitters. There was always the next march to organize. She didn’t care if she could only get a half dozen to march with her. They were an escape from the camp’s drama and bad vibes. The morning of the march on Duke Energy, one man sits in the rain in front of a chess board, expressionless. Later, an activist shouts down a young girl. She doesn’t look old enough to drive. She’d been at the camp before. She had runaway from home and ended up there. She left in a police car that time. The activist isn’t happy that she came back. He bellows at her loud enough for the whole camp to hear. He calls her a “fucking bitch.” The girl asks to borrow one of our cellphones. She needs to get a ride home. That night, the camp is partly illuminated by the city’s police headquarters across Trade. The Occupiers are only a short walk from the heart of downtown Charlotte’s decade-and-a-half building boom, but the tents feel a world away from the gleaming hotels and loud bars. One activist describes it as “a bubble.” It’s kind of quiet inside the bubble. There are no drummers, or old heads moderating debates over the ” Pedagogy Of The Oppressed .” Instead of a friendship circle, there are small cliques hanging by the information desk and around the kitchen smoking cigarettes. They all look young and tired, shivering in jean jackets and hoodies. At the previous night’s general assembly, several activists debated whether another should be allowed to wear a ball cap emblazoned with the words “Fuck the Police.” Zuccotti Park inspired more than a hundred camps just like this one. The tents and general assembly hand gestures may be the same. But camps like Occupy Charlotte’s have had to make their way very much in the dark, without the correctives that constant media attention can bring, without the steady flow of donations and celebrity cameos. Russell Simmons and Michael Moore have not stopped by. Here, it’s up to Vic and her ability to get Peanut to wake up and march. The night before Vic had sat at the information desk until 4:30 a.m. in the hopes of pitching the movement to any stranger that happened to stumble down to this darkened block of Trade. Tonight, she just wants sleep. Vic slinks away from her group and walks carefully past the tree line running along Trade and into the pathless dark, looking for her one-person tent. She unwraps her tent tarp and fiddles with the combination on her padlock. “The weather is ruining this lock,” she complains. Her voice is a rasp. It’s about 10 p.m. when she finally takes her boots off. After little sleep, she wakes up at 7:30 a.m. feeling sick. The first march to a military recruiting center to highlight the plight of veterans will have to be put on hold. Vic wants more sleep. At 10:30 a.m., Vic’s speech is groggy, her eyes bloodshot. “You’re catching me like just waking up,” she says, laughing. “Sorry.” She decided to join a friend’s tent for the conversation and the platonic body warmth. “When it gets cold, you make friends with your neighbors,” she says. “Body heat is a necessity.” Vic spies the camp from the tent’s entrance. Not a soul in sight. “I wish more people were up and moving about,” she says. She insists she will be ready for the next march: “Put my boots on and go.” Vic had one advantage over all the other Occupy activists: her older brother Nick. From an early age, he introduced her to Orwell and Zinn and radical punk bands like Crass and the Dead Kennedys. He’d stand in the doorway to her bedroom and roll his eyes at her record collection. “What is this except for a waste of record space?” he’d sneer. He was eight years older. He left home when she was 10. Even when he moved out to the Midwest, he made sure to heckle her long distance — pushing her toward more alternative culture. “I’ve always looked up to him,” Vic explains. “He never led me astray … He was always there to give me that hint.” Nick had been a part of the anti-globalization protests a decade earlier. He marched against the World Bank and the International Monetary Fund in Washington, D.C. While the movement’s message, tactics and global analysis animated the Occupiers, Nick’s generation faced an ambivalent public and brutal police. Pepper spray was the least of their worries. The press corps only seemed to accept the kettling tactics as a justified use of force. After one infamous mass arrest, The Washington Post headlined its editorial ” Hail to the Chief–and His Cops .” The preemptive roundup would ultimately cost taxpayers millions in civil-suit settlements . No activist got famous on Twitter or ended up as a talking head on MSNBC. Nick remembers the tear gassing and pepper spraying, the times when the police beat him with their nightsticks and stomped on him with their heavy boots. None of it ended up on YouTube. But he could share his war stories with Vic. “I guess I wanted to try to pass on values, a willingness to stand up for what you believe in,” he says. “I didn’t really want to pass on a lot of the stuff I was doing. Nightsticks hurt. And tear gas isn’t fun. I wouldn’t want her to experience that part of things.” Vic had sought counsel from her brother before her planned arrest. Nick recalls telling her to not piss off the cops. Make them work for her arrest but not too much. “Make them pick you up,” he told her. “Ride that fine line between being cooperative and resisting.” Five days after we met her, Vic and three others formed a human blockade in front of the entrance to Bank of America’s headquarters. They stretched out a banner that said “Bank of Coal.” The Charlotte cops didn’t really know what to do at first. The blockade lasted maybe five minutes. “But it felt like an hour,” Vic says. Vic and seven other activists were arrested for blocking the entrance and climbing the flag pole for another banner drop. Vic made sure, her mother says, to take off her piercings, so she’d look more respectable. But Nick had to call to critique her mugshot. “I was kind of let down she wasn’t smiling,” he says. “I thought she would have smiled for it. When I talked to her, I gave her a hard time about it.” He said he was surprised how easy her arrest went down, that the cops didn’t get rough. He had to admit, though, that he was impressed with her commitment — especially her decision to quit her job for Occupy. “I was actually pretty proud of that,” he says. “I wish I had been at a place where I could do the same and join her. It’s an admirable thing. You find something that means that much to you and you’re willing to give up what you have to be a part of it … It’s kind of her taking it to where I wanted to be.” The Bush Administration and its two wars would consume the energy of the U.S.-based anti-globalization movement. As Nick got older, he says the activists organizing the most aggressive actions appeared to migrate overseas. “It kind of hit a point where nothing was happening,” he recalls. “All the meetings started taking place in Europe. You got punk kid from Charlotte — you can’t go over to Italy or those places.” Especially not a punk kid with growing financial debts. Nick, 30, says he needed to find steady employment, which eventually led him to railroad work as a track laborer in Wisconsin. He currently is a train conductor based in Duluth, Minn. — far from his old activist friends. He’s getting married in June. The closest he gets to protesting is participating in union meetings, and calling and texting his sister. When Vic first started, Nick called with some advice. He still remembers the conversation, that he cautioned her not to let Occupy become all consuming. “I didn’t really know what all to say at the time,” he explains. “Just tried to tell her to be careful and don’t make it like work, like a job. I’d seen a lot of people … taking it to a point where it becomes too much work, too stressful.” When the activists deserted the camp during the Thanksgiving holiday, Vic insisted on remaining behind, her mother recalls. “Somebody had to be there,” Vic explains. “I didn’t trust leaving. I was scared. If I left and everyone else did, anything could happen.” What would the media say if they found a ghost town? she wondered. On Nov. 26 she wrote in her journal: “As of today I have been protesting for 50 days straight. Not one day I haven’t marched.” She had watched the camp grow from six tents to more than 40. In mid-December, Vic learned that a friend — not affiliated with Occupy — had died from a heroin overdose. She says she couldn’t handle the funeral. When word spread about a ride to Occupy DC, she took it. She left behind both her tent and an ambitious schedule of marches. She brought with her a backpack full of clothes and $3. Vic says she needed to step away from Charlotte’s small, intense group. She wanted to witness up close how a big city’s Occupy force handles things. She made sure to take a few Occupy Charlotte friends with her. Vic says she spent her first night with Freedom Plaza’s Occupy faction. There was no friendly circle, no introductions, and no all-night bonding session. “It was cold shoulders everywhere I went,” she says. “It was an ‘I’m too busy’ type thing. That was disappointing.” The next day, Vic and a friend moved their shared tent to Occupy DC at McPherson Square, just off K Street. She found a spot under a giant tarp that made up the neighborhood named after Malcolm X. She’d jump into people’s faces: “Hey, I’m Vic.” Vic’s voice eventually grew hoarse in D.C., too. She participated in marches against the National Defense Authorization Act — the recently signed law that allows for indefinite detention of American citizens. She screamed in front of the White House. She’d loved watching others do the same. “You could see it and it was beautiful,” she gushes, when we catch up with her in D.C. But there are fights at the camp nearly every night, she says. There are fights over missing money. There are fights over a missing laptop. There are drunken fights. Even worse than the fights — some days, there aren’t any marches at all, just rumors of marches. Sometimes, when they march, Vic says the organizers seem to get lost. We go to a used bookstore a short drive from the camp. She says she could spend hours there. She could fall asleep in a corner of the literature section. We walk around a bit, looking for a place to eat. Vic seems oblivious to the stores and restaurants. None of it matters. She isn’t protesting them. Vic admits that it had maybe been 24 hours since her last real meal. She is still an outsider at the camp, just an Occupy tourist. She only mentions one Occupy DC activist — a painter she had met on her first day. Her deeper connection is still with Occupy Charlotte. “I was really down about Charlotte and the state of things,” she says. “Coming here helped me get a little respect back for my hometown’s occupation.” Ten days into her stay, Vic develops a cough. “You lay down at night to go to sleep,” she explains, “and it’s just like a chorus of coughing.” We are sitting in a sandwich shop, the closest warm place to the camp that afternoon. Outside, it looks like it might rain. She admits: “I’ve been terrified … If I hear people coughing, I might put my bandanna up.” Vic gives her cough a funny name. She calls it her “Occu-Cough.” She thinks there’s another anti-NDAA march. Maybe it’s at 6 p.m. Maybe it’s at 8. She doesn’t know but she does want to join it. By 6:30, she texts: “No ones marching yet!,” then, “Im trying to see if anyones wanting to march at 8 against the ndaa.” Whatever plans there are wash away with the night’s heavy rains. We find her in her tent in the back of Fort Malcolm. A battery-powered lantern illuminates the small space filled with old clothes, half-empty sugar cereal boxes, and tangles of adapter wires. Vic would rather be marching. “Everybody’s pussing out, man,” she complains, curling up in a fuzzy blanket next to a new friend named Kiki. Even without the march, Vic has a lot on her mind — including her other Occupy Charlotte transplants. “My to-do list keeps growing,” she says. “I have to write three press releases. I have to call my lawyer tomorrow. I have to get Tate to call the lawyer tomorrow because he’s not doing it on his own, same with Jesse. Fucking babysit. I have to find out what’s going on tomorrow as far as marches. I’ve got two meetings tomorrow. It just doesn’t stop.” * * * * * Shortly before Christmas, Vic returns to Occupy Charlotte to address her court case and add a New Year’s Eve march to her to-do list. The planning hits a snag when police catch a couple activists burning American flags late one night and charge them with careless use of fire . One of the culprits claims that the flag burning was done as an attempt to motivate the camp. Instead, they receive a lot of bad publicity, and two well-attended but drama-filled general assemblies that fail to resolve the matter. A small faction of activists who don’t reside at the park walk into Occupy Charlotte and read a declaration that they are no longer working with the campers. Vic finds that the activists have done very little in her absence. They respond with laughter when she asks whether they had kept up the marches. “Is there a purpose in me doing this?” she worries. “I don’t know.” Vic was not on the scene at the time of the flag burning, but at her parents’ house. “We are the pissed off white kids. We need to be so much more,” she complains after hearing the news. “It’s now tarnished everything.” She then utters the previously-unthinkable: “I’m going later today to get my tent.” But Vic decides to keep her holiday march on schedule. She and about two dozen other activists read off her New Year’s resolutions in front of Wells Fargo, Bank of America and Duke Energy. They all begin the same way: “We the people of 600 E. Trade St. as a part of Occupy Charlotte, stand in protest of the injustices brought upon the city of Charlotte.” It is her last march through her hometown. Even before her return, she had planned her exit strategy, what she calls out her “Occu-Hop” — a nine-month tour of still-standing Occupy camps, with visits to friends and family along the way. The first stop would be a return trip to Occupy DC, then she’d travel to Chicago and maybe stop in on her biological father, and then to Duluth to see Nick. Eventually, she’d make her way to Oakland before returning east to Charlotte, in time for the Democratic National Convention in September. Before she leaves for D.C., her stepfather Danny Hill presents her with his Marine duffel bag, which he’d had since 1970. It fits with the boots and the Vietnam-era gas mask he’d given her. When she isn’t looking, he stuffs a $100 into her belongings. “It is different with her in D.C.,” Hill says. “You get a little more worried. You watch things going on there. You can tell it’s on a whole different level … We’d rather her stay here. But at the same time, we understand that’s what she was wanting to do.” On Jan. 4, Vic and her ride leave Charlotte. As they head out through the city, Vic stops at the Occupy site one last time. She still needs to get her old tent. She makes her rounds, too, saying her goodbyes. Some are sad, some are angry that she is leaving. They all tell her to “be safe.” Vic knows the camp may be gone by the time she returns. By the end of the month, it will be — police clear the site after the city passes an ordinance banning camping on public property. It is 1:40 p.m. when Vic finally gets going. “I’ll certainly be worried about the occupation as well as my family within and outside of it,” she texts, “but I’m ready for the road …”

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Foreclosure Settlement Reached: Largest Bank Payout By Far Since Financial Crisis

February 9, 2012

As early as Thursday the government is expected to announce a roughly $25 billion deal with some of the nation’s largest banks to settle charges of systemic and widespread mortgage fraud, according to multiple sources close to the negotiations. The deal would be the largest payout to date from banks in the wake of the financial crisis. The settlement, 16 months in the making, could bring significant relief to those in danger of losing their homes and also much needed stability to the long-suffering housing market. Those who already lost their home, however, would receive just the smallest fraction of the money: a one-time cash payment of about $1,800 as compensation. “Their entire lives have been turned upside down and changed,” said Philip Robinson, the acting executive director of Civil Justice, a Baltimore-based nonprofit that has worked with thousands of Maryland families fighting for their homes. “Does $1,800 sound fair? Does that seem like compensation for a financial and emotional tragedy?” The Department of Housing and Urban Development, one of the Obama administration’s lead negotiators on the deal, could not be reached for comment. Late Wednesday night, as the terms were being finalized, more than 40 states had signed on, including New York, which had been vocal in its opposition to any deal that was soft on the banks. A source close to the negotiations said that California also was on board, but a representative from Attorney General Kamala Harris’s office would not confirm its participation. The deal between federal officials, the state attorneys general and Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial is an attempt to close the book on a scandal that erupted in 2010, freezing the housing market as the legality of thousands of bank-initiated foreclosures were called into question. The announcement is expected to crank up the pace of bank foreclosures, which has slowed as government officials investigate whether some institutions have forfeited their right to repossess homes after forging key real estate documents. As part of the deal, participating states would agree not to pursue a variety of independent lawsuits against the banks. Some consumer advocates argue that the deal is inherently too lenient on banks because the administration chose to negotiate a settlement without first conducting a full investigation into the nature and magnitude of the banks’ alleged fraud. “Any partial settlement is fraught partly because we don’t know the scope of the damages,” said Robert Borosage, founder and president of the Institute for America’s Future, a left-leaning nonprofit organization. “If the banks get broad immunity, homeowners get screwed because the next investigation won’t be able to get around that.” Under the terms of the settlement, the banks would pay $25 billion to participating states. California is reportedly receiving a total of $6 billion to $15 billion in the settlement. Potentially more significant, the banks would agree to forgive some mortgage debt owed by struggling borrowers through what’s called “principal reduction.” The remedy is nearly universally hailed by economists on the right and left as a way to revive the ailing housing market and rescue the nation’s struggling underwater borrowers: More than 20 percent of mortgage holders in the United States owe more on their loan than their home is worth. Citigroup, Wells Fargo and Ally Bank declined to comment while requests for comment from JPMorgan Chase went unanswered. Bank of America declined to discuss the terms of the deal, instead saying, “We’re interested in finding a path forward with a comprehensive settlement that benefits homeowners and communities.” The settlement has the potential to prevent future wrongdoing through new bank guidelines that have been crafted as part of the deal. The effectiveness of these new rules will rely heavily on whether the states can enforce them. The Obama administration pushed forcefully for the deal to present it to voters in 2012 as evidence that the president is helping homeowners and getting tough on banks. Splitting a $25 billion deal between five banks, however, will amount to little more than the cost of doing business and is too small a penalty to deter future fraud, many housing advocates say. “Compared to what these [banks] literally stole, it’s just eyewash,” said Margery Golant, a Florida-based attorney who represents homeowners and formerly served as assistant general counsel at subprime mortgage giant Ocwen Financial. “These are such serious crimes and for everybody to get a pass like this, it just encourages them to think that they always will.” Also unclear is how far the agreement can go in helping borrowers who are trying to hold onto their home. In addition to granting principal reduction, the deal would offer struggling homeowners relief by changing the terms, or refinancing, loans. Those dollars amount to a pittance when you consider the millions of homeowners in need of help, Golant said. “If you do the math, that’s a few hundred million per state. That’s not enough to change anything.” Consumer advocates supportive of the deal argue that while the settlement dollars are small, the principal reduction piece is critical. A handful of lenders have already begun offering such assistance, but mortgage giants Fannie Mae and Freddie Mac have fiercely resisted such a move. “This settlement could be a starting point for principal reduction,” said Ira Rheingold, president of the National Association of Consumer Advocates. “Hopefully it will demonstrate how principal reduction can and should benefit homeowners. If it is done well, maybe it will shame Fannie and Freddie into doing what it should have been doing all along.” Economists are also excited about the potential for principal reductions to boost the housing market. “If $15 to $20 billion is devoted to principal reduction modifications over the next year, that would significantly reduce the number of properties that ultimately end up hitting the market in a distressed sale, thus supporting housing prices,” said Mark Zandi, chief economist at Moody’s Analytics. Included in the settlement are new rules designed to reform the policies and practices among the mortgage companies, mainly banks, that manage the loans on a daily basis and assist struggling borrowers. These new rules could finally shut down any excuses previously put forward by the banks for wrongful foreclosure — if the rules are adequately enforced, said Jared Bernstein, a senior fellow at the Center for Budget and Policy Priorities. “The fact that the settlement has the state attorneys general behind it means that we really should see an end to some of these nefarious mortgage servicing practices,” he said. The states’ ability to enforce the deal remains one of the great unknowns. Nearly four years ago, 11 states signed an $8.4 billion settlement with Bank of America over predatory lending practices by Countrywide Financial. (Bank of America acquired Countrywide in 2008.) Most housing experts agree that the deal has significantly underperformed in large part because the states didn’t have a good mechanism for holding the bank accountable. This settlement will be different because it has a “very robust enforcement mechanism,” said Patrick Madigan, Iowa assistant attorney general and one of the lead negotiators for the Countrywide settlement and the current deal. Banks will pay substantial cash penalties if they do not deliver the full amount of homeowner assistance agreed to under the deal, according to Madigan. North Carolina’s Banking Commissioner Joseph Smith will serve as the “independent monitor” to enforce the deal’s terms. “There’s no comparison between the enforcement and monitoring of this case and Countrywide,” Madigan said. It remains to be seen, however, if these enforcement mechanisms have any teeth. Settlement supporters have high hopes for the deal, though success has to be measured against very narrow expectations, cautioned Rheingold. “In the absence of sufficient federal action, sufficient regulatory action, sufficient congressional action, what we have left is a bunch of state attorneys general saying, ‘Our homeowners are getting hurt. We have to do something.’ “But the state resources are fairly limited, so you have to look at this in terms of what the attorneys general can accomplish within their own set of powers,” Rheingold added. “Does it provide the justice necessary? Clearly not. But will it provide an opportunity for homeowners to be treated fairly? I think it will.”

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American Airlines Rumored To Be Considering Huge Move

February 9, 2012

* AMR creditors committee open to exploring merger * Want merger-resistant managers to look at all options * AMR has exclusive right to submit reorganization plan By Soyoung Kim and Kyle Peterson NEW YORK/CHICAGO, Feb 8 (Reuters) – Some American Airlines unsecured creditors increasingly feel the bankrupt airline should explore a deal with US Airways Group or another carrier, after hearing parent company AMR Corp’s plan to remain independent, people familiar with the situation said. Members of the unsecured creditors committee — which includes banks representing bondholders, labor, vendors and the U.S. pension protection agency — are concerned about the third-largest U.S. carrier’s prospect of staying competitive as a stand-alone airline after sitting out the latest round of mergers. They want AMR management to explore other options that may lead to a better recovery of their claims, including a potential combination with another carrier, according to people who requested anonymity because they were not authorized to speak publicly on the matter. US Airways has said it is considering an eventual bid for its larger rival. While different creditors have different economic interests at stake, the sources said consensus is growing at the committee on the need to look at other alternatives. Even labor unions, which traditionally do not like mergers because they come with job cuts, want to explore how a deal with a rival carrier would affect their members even though they may not necessarily favor it, the sources said. AMR’s three largest unions — pilots, flight attendants and ground-workers — all have seats on the creditors committee. For now, AMR management has the exclusive right to submit its own plan to reorganize under bankruptcy court protection, and the airline has said it wants to emerge as a stand-alone company. But creditors could petition the bankruptcy judge to terminate that right to make way for competing plans, and the committee would ultimately also need to sign off on any reorganization plan. There is no offer on the table currently, and it remains to be seen if any merger proposal by US Airways or anyone else will require concessions less painful to creditors than what is sought by AMR management. But creditors’ frustration in the ongoing restructuring talks and their interest in exploring alternatives could provide the opening for a potential suitor to step in. AMR, however, has shown no interest in a merger with US Airways or anyone else. “AMR will continue to pursue the objectives of Chapter 11 to restructure and build a new, better, more efficient and profitable airline in the best interests of all of its economic stakeholders, passengers and the public,” the company told Reuters. Industry insiders say high anti-trust hurdles make Delta an unlikely buyer for AMR. They also question how US Airways would benefit American outside of the East Coast, where US Airways has a particularly strong route network. American already has plenty of cash, a strong domestic route network and service to Europe and Asia as well as related oneworld alliance partners in London and Tokyo. Labor troubles at US Airways dating to its 2005 merger with America West are also a red flag for heavily unionized American. NO DIRECT TALKS The creditors committee has not had any direct formal talks with US Airways or any other potential merger partner, the sources said. Aside from unions, the committee includes the Pension Benefit Guaranty Corp (PBGC), the government agency that protects underfunded pension plans; Boeing Co, Hewlett Packard ; and the banks acting for AMR bondholders — Wilmington Trust Co, Bank of New York Mellon Corp and Manufacturers & Traders Trust Co. Representatives for all these parties declined to comment. AMR’s unionized pilots, the Allied Pilots Association, would not comment on the prospect of a specific merger scenario. A spokesman for the group, Gregg Overman, said the union would review any proposal if “something comes up” and “we’ll evaluate it on the merits.” AMR’s flight attendants also declined to comment. But a source familiar with the group’s thinking said that while the union prefers to see the airline “grow and succeed” as a stand-alone company, it has so far not seen a business plan from management that would allow that to happen. The flight attendants’ union believes a merger with US Airways is “dicey at best” due to the fact that it has yet to fully integrate its labor groups after its 2005 merger with America West Airlines. The Transport Workers Union of America, which represents many ground-workers at American, is currently focused on examining AMR’s business plan released last week and will fully assess it before considering other proposals, the union said in a statement to Reuters. EXCLUSIVE RIGHT AMR filed for Chapter 11 on Nov. 29, citing a need to trim uncompetitive labor costs. The company told employees last week that it aims to cut expenses by $2 billion a year, slash about 13,000 jobs and terminate pensions. AMR also intends to generate $1 billion per year in new revenue. Delta Air Lines has hired advisors to explore its merger prospects with AMR, which would bring the No. 2 and No. 3 U.S. carriers together. US Airways is the fifth largest U.S. airline. AMR has the right to submit a reorganization plan without outside interference for 120 days after its bankruptcy filing. The judge can extend that right for up to 18 months. The exclusive period makes it difficult for an unwanted suitor to attempt a merger unless the creditors back such a move. US Airways has had a similar experience in the past. In January 2007 the airline withdrew its $9.75 billion hostile takeover bid for Delta, which was bankrupt then, after the creditors committee refused to support the move. Delta management convinced the panel the carrier would be stronger if it emerged from bankruptcy independent. Among the big carrier bankruptcies of the last ten years, only US Airways came out of Chapter 11 with a merger, and that was with smaller America West. Delta and Northwest aligned their restructurings and merged in 2008 only after each stepped out of bankruptcy. (Reporting by Soyoung Kim in New York, Kyle Peterson in Chicago and John Crawley in Washington, additional reporting by Caroline Humer; Editing by Phil Berlowitz)

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Pamela Yellen: Five Tips for Relationship Fiscal Harmony

February 9, 2012

Money is the leading cause of marital and relationship troubles.  40% of married couples have serious, recurring arguments about money, according to Matt Bell, author of Planning for Fewer Fights with Your Spouse . 49% of those battles have to do with what to buy or not buy, 33% are about debt and 26% about savings. According to a survey by American Express , 27% of those who responded have lied about the amount of a purchase to their partner, and 30% have hidden purchases from their partner. And would it surprise you to learn that some people admitted to knowing their partner’s weight but not their salary? How compatible are you and your partner when it comes to money and finances? Many couples have different values where money is concerned and neglect to take the time to hash out issues that can potentially ruin their relationship. Just in time for Valentine’s Day, I’ve put together five tips for improving the fiscal harmony in your relationship… Tip #1:  Hold a monthly financial discussion night Since so many couples don’t talk openly about money, when money issues do come up, it becomes a sensitive subject and leads to conflict. The solution is to sit down with your partner every month and go over your spending and savings plan.  Look at everything you bought during the past month and everything you’re thinking of buying soon, and ask yourselves, “Is this really a need or a want”?   Awareness is the key to taking control of your spending habits, and asking questions like this one is very powerful. Also discuss and update your long-term and short-term financial and savings goals, and then ask yourselves if the purchases you’re considering will truly move you closer to those goals. Tip :  If you have children over age 6 or 7, include them in your monthly family finance night — it’s a great way to prepare your kids to be financially successful and responsible adults. Learn more about how to teach teens financial responsibility .  Tip #2:  Share responsibility It’s common today for one partner to play the primary role in managing finances.  But both partners should be aware and involved.  Make all decisions about major purchases together. Trap :  Allowing the partner with the biggest income to make major financial decisions alone. Tip #3:  Eliminate debt to outside financial institutions Debt is deadly to many relationships, and a top priority should be to reduce and eliminate debt to banks and credit card companies. One way to speed up that process is to make your spending decisions more consciously.  (See Tip #1 above.) Another key is building an emergency fund that can help you weather life’s emergencies. For tips on creating a rainy-day fund, including how much you should be setting aside, see the video, The Secret to a Financially Stress-Free Life .  Tip #4:  Have a “Plan B” One topic to be sure to cover during your family finance discussion night is what’s your back-up plan if things change.  What if one partner loses their job?  Or what if one partner wants to go back to school?  What if one of you gets a job in another part of the country? Tip #5:  How to take the first step There’s no time like the present to start or deepen the money conversation with your partner.  And here’s a fun, non-threatening way to do that… Begin by taking our Love and Money Financial Self-Assessment . I encourage you and your partner to take the 3-minute assessment , either separately or together, and see how your money values differ from one another.  I think you’ll find this to be eye-opening! As a consultant to financial advisors, Pamela Yellen investigated more than 450 savings and retirement planning strategies seeking an alternative to the risk and volatility of stocks and other investments. Her research led her to a time-tested, predictable method of growing and protecting savings now used by more than 400,000 Americans. Pamela’s book, Bank On Yourself:  The Life-Changing Secret to Growing and Protecting Your Financial Future is a New York Times Bestseller. Learn more at www.BankOnYourself.com

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Dennis M. Kelleher: More Unconscionable Wall Street Whining

February 8, 2012

I can barely write this as tears for the poor, picked-on Wall Street bankers fill my eyes as they are comforted by Obama’s campaign manager, who reportedly met yesterday with his big donors on Wall Street. Until we fix the sickening campaign finance system, I don’t like, but I understand that all fundraising politicians have to raise money and meet with donors and I understand why the campaign manager did, but how anyone on Wall Street could feel picked-on by Obama is beyond reason. Every single Wall Street bank would have been bankrupt, broken up and/or liquidated in 2008-2009 due to their recklessness, greed, incompetence and arrogance. The only reason that didn’t happen is because the US government, with taxpayer dollars, bailed them all out and, indefensibly, did so with no strings attached so they quickly began stuffing their pockets with billions in bonuses in mere months. Most of these “demoralized” Wall Streeters would have lost everything: their bank accounts, their multiple homes at the world’s hottest locations, their many sports cars, Italian designed wardrobes, yachts, club memberships, jets, helicopters, cooks and legions of house help and personal assistants and everything else they purchased with the tens of billions of dollars they sucked out of the economy as they created the bubble of toxic, worthless assets in the years before the financial collapse that they caused. True, they didn’t create it alone, but, in the hierarchy of those who caused the financial crisis, any fair-minded, unbiased list would put them at the top. That is particularly true if one looked at who benefited the most from the bubble and who was treated the best once the bubble popped. No one was treated better before, during and after the crisis that Wall Street. The government didn’t open the treasury and taxpayer pockets with no strings attached for anyone other than the financial industry (compare the demands and concessions forced on the auto industry). Anyone not directly or indirectly on the payroll of Wall Street or their ideological fellow travelers (who are almost all coincidentally also on the payroll) sees this and understands this. They see that no accountability only applies on Wall Street. They see that no-strings bailouts only apply to the already-rich Wall Street bankers. They see the unlevel playing field created and sustained by a federal safety net that looks a lot like a hammock for the filthy rich. (The Wall Streeters and their allies like to say such criticism is an attack on wealth, entrepreneurs and capitalism itself. That baseless, self-serving attempt to distract and distort the debate is laughable. No one is attacking Silicon Valley, Bill Gates, Apple, Caterpillar, Procter and Gamble, Hewlett-Packard, AT&A, IBM or the rest of the Fortune 500 — or celebrities, athletes or other super-wealthy people. No — the criticism is focused on the biggest Wall Street banks and bankers that enriched and engorged themselves at the expense of the rest of the country, that caused the crisis, got bailout out by taxpayers and just can’t stop claiming they are picked on, and that still benefit from a taxpayer-funded federal safety net that subsidizes their current too-big-to-fail operations.) It is also obvious to see that Main Street, not Wall Street, has paid and is paying for the costs of the financial crisis . They see a hollowed-out middle class struggling just to get by, having lost most of their stock value, home value, savings and retirement funds. These are the people living paycheck to paycheck with gnawing insecurity that at any moment it can all disappear and they too could join the ranks of the unemployed and, even, the homeless. Food stamp use is at an all time high and, most tellingly, the ramp up in use is in what used to be solid middle class neighborhoods. The same is true for free and subsidized school lunches. The distinction between the poor and the middle class is evaporating in far too many communities in America. Sadly, hope and the American Dream are also slowly receding from the horizons of too many hard-working American families. And, yet, in the midst of all this pain, suffering and wreckage, Obama’s campaign manager has to go to the oh-so-exclusive “Core Club in Manhatten” to reassure the bonus-bloated bankers that “Obama won’t demonize Wall Street as he emphasizes populist appeals in his re-election campaign ….” As if that wasn’t enough, this was reported to be “the latest in a series of hand-holding sessions.” It was also reported that one anonymous banker stopped going to these meetings because “the actual White House message of locking up fat cat bankers and raising their taxes never actually changes.” Er, ok, could anyone, please, identify a fat cat banker that got locked up? Nooooooooooooooo. There have been none. Not one. THAT actually is part of the problem . They are almost all still right where they were when they were creating the bubble or have departed Wall Street to the comfort of their billions or millions. (And, their taxes remain historically low.) Every single sane employed person on Wall Street should be sending a check to Obama — they would all be an empty shell of themselves but for him and the actions his administration took to stop the collapse of the financial system and our economy. Yet, ignoring all evidence and facts, Wall Street is reported to be “an industry that the White House has thoroughly and repeatedly demonized and demoralized” — what? That’s so ludicrous that it could be a “Seriously” skit on Saturday Night Live . Or an Onion headline. But, no, Wall Street, its bankers and its allies everywhere, including in the media, actually think that Obama has “thoroughly and repeatedly demonized and demoralized” Wall Street. Can they really be that thin-skinned? Can they really be that out of touch with reality? Can they really be that narcissistic to not see their “plight” relative to what is happening to the rest of the country ? Sadly, the answer to all those questions is yes. Wall Street and those who make fact-free assertions from their mahogany-line corner offices, 30,000 square foot mansions and spacious limousines about their plight live in a parallel universe that begins and ends in the mirror they gaze in and apparently mistake for the entire world. Until they look beyond their reflection in the mirror and until one of the titans on Wall Street actually becomes a statesman , then Wall Street’s whining won’t end and no amount of “hand-holding” meetings will satisfy them.

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Groupon Reports Earnings Results For First Time

February 8, 2012

NEW YORK — Groupon investors were expecting a better deal than the surprise loss the company delivered on Wednesday. The online deals site, reporting for the first time as a public company, said its fourth-quarter revenue nearly tripled, but it lost money and its shares fell sharply after hours. Groupon Inc., which went public in November, makes money by taking a cut from the online deals it offers on a variety of goods and services, such as restaurant meals, manicures and weekend getaways. Investors are watching whether this business model is sustainable and leads to growth over the long term – and whether the company can not only grow its customer base but make more from each subscriber. Groupon’s net loss totaled $42.7 million, or 8 cents per share, for the final three months of 2011. A year earlier, as a private company, it booked a larger loss of $378.6 million, or $1.08 per share. The company said its adjusted loss was 2 cents per share in the latest quarter. On this basis, analysts were expecting a profit of 3 cents per share, according to FactSet. Groupon said an unusually high international tax rate hurt the quarter’s adjusted results. Groupon’s revenue was $506.5 million, nearly triple the $172.2 million it reported for last year’s fourth quarter. Analysts, on average, had expected lower revenue $473.1 million, according to FactSet. For the current quarter Groupon expects revenue of $510 million to $550 million. Analysts are forecasting $501 million. CEO Andrew Mason called 2011 a “phenomenal growth year” for Groupon. But he stressed that the company wants to keep expanding and that will require continuing investment in technology. “While Groupon is the clear market leader in online local commerce, we estimate that we still participate in less than 1 percent of total local transactions,” Mason said. Groupon had 33 million active customers at the end of the quarter, nearly four times as many as a year earlier. It defines active customers as those who have purchased a Groupon in the previous 12 months. Customers spent $1.25 billion on all the Groupons the company sold in the quarter. That “gross billings” figure doesn’t include taxes or account for the money the company paid to merchants. Benchmark analyst Clayton Moran called the sharp share price drop unwarranted, though he noted that the stock has been “volatile, hotly debated” and “somewhat controversial” since its IPO. Nonetheless, he said Groupon’s first quarter as a public company was impressive and strong where it counts, notably revenue and other key metrics. Chicago-based Groupon’s stock tumbled $3.59, or 14.6 percent, to $20.99 in after-hours trading. The stock, which closed at $24.58 on Wednesday, has traded in the range of $14.85 to $31.14 since pricing at $20 ahead of its initial public offering on Nov. 4.

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The Big Price Of Somali Piracy

February 8, 2012

Though many first think of Johnny Depp when pirating come up, avoiding the real-life bandits of the sea is are multi-billion dollar problem for the shipping industry. Somali pirates cost various governments and the shipping industry up to $6.9 billion last year, according to the One Earth Future Foundation , a non-profit advocacy group. Piracy off the coast of Somalia is both lucrative and common due to its location near the Gulf of Aden, an oil shipping lane that sees about 20 percent of global trade, according to Bloomberg . As a result, the cost to the shipping industry of Somali piracy alone accounts for over half of the total $9 billion in extra costs each year, according to recent figures from the Indian National Shipowners Organization . In 2011, Somali hijackings actually fell 36 percent from the year before, the Financial Times reports . Still, Somali pirates cost the shipping industry billions. Shipping companies pay about $2.7 billion in additional fuel costs to speed up ships in particularly high-danger areas. One Earth Future Foundation reports that no vessel has been hijacked when travelling 18 knots — or about 20 miles per hour — or faster . There may be have been fewer hijackings last year, but piracy in the poverty-stricken west-African nation are still making headlines. Somali pirates have recently shifted tactics to kidnapping people on land , such as travel and surfing journalist Michael Scott Moore, who was kidnapped in northern Somalia last month . However, the tactic may be ill-advised. At about the same time as Moore’s capture, Navy SEAL team 6, the same squad responsible for the Osama Bin Laden’s death , rescued an American woman and Dutch man during a raid that resulted in deaths of eight of their captors. Still, employees working on oil tankers and cargo ships remain at substantial risk, so much so that employers pay an additoinal $195 million each year to compensate them for taking on the danger. Shipping industry workers also endure a variety of other dangers on the job. In addition to the risk of running aground — a danger that the workers on the New Zealand cargo ship Rena know all too well — workers also face the possibility of exploding shipping containers.

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Super Bowl: Online Viewership Ratings Are In

February 8, 2012

The 2,105,441 viewers who watched NBC’s first live stream broadcast of the Super Bowl discovered that the Internet experience still can’t entirely replace the television one. And that’s exactly what the network intended. Before NBC shared the ratings for the online broadcast, which set a record for a sporting event, NBC spokesman Christopher McCloskey told The Huffington Post that the live stream was meant to complement the traditional television broadcast, not replace it. Viewers tend to use the best screen in the house, and that’s usually the TV, McCloskey said, citing NBC research. “There’s a small number using [the computer] as a television,” he said. “That’s why we construct it as a two-screen experience.” Viewers watching NBC’s live stream of the Super Bowl got to see all the plays that took place during the game. But they missed out on the commercials that accompanied the network’s TV broadcast and couldn’t watch Madonna’s halftime show either. Given the numbers released Tuesday night, the online broadcast is not yet a threat to the televised version. NBC had little motivation to stray from its previous policy of offering alternative content in its live streaming of sporting events. The strategy reinforces TV’s primacy when it comes to mega-events such as the Super Bowl. It also gives advertisers exactly what they paid $3.5 million per 30 seconds for — the chance to reach a large television audience. NBC will not air the Super Bowl again until 2015, so McCloskey said he wouldn’t speculate on any changes the network might make in the future. Many news outlets reported less-than-satisfied reviews from critics and viewers who watched the Internet version . Instead of the much-hyped line-up of Super Bowl commercials on TV, online users got a running loop of five advertisers. They could, however, click on the TV commercials after their broadcast. “We know that the television commercials are part of the entertainment experience,” the spokesman said. “That’s why we have the on-demand component.” Rather than having the opportunity to view Madonna and M.I.A.’s wayward finger, Internet spectators got NBC Sports’ and ProFootballTalk.com’s Mike Florio, who hosted a halftime analysis show. Asked if NBC was prohibited by law from showing the regular roster of commercials as they aired, McCloskey reiterated that the network designed the streaming as a companion medium. NBC has followed the same online protocol in covering the Olympics, Notre Dame football and Sunday night NFL football, he said. The interactivity, on-demand video and social media connections available online are mostly designed to enhance the broadcast experience, McClowskey said. The idea of viewers using a computer monitor to watch the game because they don’t own a TV or don’t want to pay hefty cable bills is yet another matter that networks might have to tackle more aggressively in coming years. The Nielsen ratings indicated that 111.3 million viewers watched the broadcast of the New York Giants beating the New England Patriots. But in the future, the live stream of the Super Bowl could take on far more prominence. Said McCloskey: “It’s possible that one day the online stream will require its own production.”

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Dan Solin: Your Broker Has No Clue

February 8, 2012

I am fascinated by the way most people invest, because it is demonstrably wrong. Here’s how you probably pick your mutual funds. Your broker calls and tells you about a mutual fund he believes is right for your portfolio. The pitch usually involves a discussion of the stellar past performance of the fund. He encourages you to sell funds that have underperformed and buy ones with better performance. The process repeats endlessly. You fall for it every time. Does this make sense? In a thoughtful blog, Brad Steiman, a vice president of Dimensional Fund Advisors, discusses the many problems with this approach. Recent performance can be misleading Steiman notes that a few years of outperformance may not be indicative of skill. The fund manager could just be lucky. For example, a fund that had an average “alpha” (positive return above its benchmark) and a standard deviation (measurement of volatility) of 6%, would require a track record of 36 years before you could be 95% certain the fund manager was skillful and not just lucky. A 6% standard deviation of alpha is representative in the Morningstar data of actively managed US equity mutual funds. Just for fun, ask your broker this question the next time he recommends a mutual fund: How long a track record would I need in order to determine if the performance of the fund manager was evidence of skill? He won’t know the answer, but the blank look will be worth your effort. Finding the needle in the haystack may not be enough Let’s assume you have a terrific broker who has a modest understanding of statistics. The broker tells you he has found a fund manager with a long enough track record to indicate skill and not luck. Should you buy that fund? Probably not. According to Steiman, one out of 40 managers is expected to meet this criteria based on luck. He concludes that even with this impressive track record, “[T]here is still a 2.5% probability the outperformance was due to good luck, and the true alpha of the manager is zero.” The Fund Manager’s Skill May Not Persist It gets worse. Even with a statistically impressive past performance, Steiman notes that “…winners do not continue to win, and even when there is alpha in the extremes, it does not persist.” You can’t expect your broker to understand how to evaluate statistical data. They are salesmen (and women). But you can — and should — educate yourself with a basic understanding of how to determine whether the next “hot” fund manager shows evidence of skill or is the latest false prophet hyped by the financial media and the securities industry. I agree with Steiman. You need to get off “the manager selection merry-go round”. Dan Solin is a senior vice president of Index Funds Advisors. He is the New York Times bestselling author of The Smartest Investment Book You’ll Ever Read, The Smartest 401(k) Book You’ll Ever Read, The Smartest Retirement Book You’ll Ever Read and The Smartest Portfolio You’ll Ever Own. His new book, The Smartest Money Book You’ll Ever Read, was published December 27, 2011.The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

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Liz Ryan: How to Help a Hiring Manager Remember You After the Interview

February 7, 2012

“My gosh, Liz,” said my friend Kortney, “I’m six feet off the ground.” “What’s the story, Kort?” I asked, and she said “I just came from the greatest job interview ever. The manager and I really connected. He loved my thinking and vice versa. It was like interview nirvana.” “This is magnificent news!” I said. “Let’s write a thank-you letter right now. We want to imprint a huge KORTNEY message in this guy’s mind.” “Imprint?” she asked. “This manager and I are tight. We solved half the world’s problems in a two-hour interview. I’m sure I’m getting the job.” Kortney waited a week and heard nothing. She started to get antsy. On the 10th day after her interview — the conversation she had left with the boss’ words “I can’t wait to talk again” ringing in her ears — she called the guy. He picked up the phone. She told me later, “I got the worst feeling in the pit of my stomach as we talked and I realized he had no idea who I was.” There’s a happy ending — Kortney got back on track with the manager, and is moving through the process now. The incident jarred her into a realization she’d always understood deep down, but hadn’t thought about consciously before: namely, the realization that people are goldfish. Their minds are like steel traps sometimes, and like sieves the rest of the time. The same guy who spent a rapt two hours with Kortney completely forgot her name, her story, and her amazing problem-solving skills just a few days later. Let’s be easy on the guy: he had plenty of other fish to fry. Undoubtedly, he left the interview thinking Kortney was a terrific candidate, but the next day he met someone else, and then someone else after that. Too much data in too little time creates overload conditions, and when that happens, all bets are off. I’m looking at a hoodie right now. It’s draped over the back of my chair. I bought it last year at Target, for my eight-year-old. There’s absolutely nothing wrong with it; it’s a standard kid’s hoodie. I remember when I bought it. My 17-year-old daughter was with me. “Look at that hoodie,” I said to her that day. “Your brother would love that.” Target had just brought in some new Spring merchandise, and my son’s hoodie on the rack looked like something I couldn’t live without. The colors were bright, and different from the colors in the store at my last visit — Target had changed its lineup of Spring fashions. What fun! A year later, it looks like just another hoodie to me. “Mom, you are truly invertebrate,” scolded my daughter. “Look! Shiny colors! All Target has to do is put some bright-colored thing on the rack, and my mom throws it into her cart.” “Don’t hate,” I said, and snapped up some irresistible chili-red bath towels. People are limbic nerves wrapped in frontal-lobe’s clothing, and the sooner we realize it, the better. That hiring manager didn’t make a conscious decision to wipe all traces of Kortney’s existence from his mind. He just forgot. If we realize that the people who meet us and even brainstorm with us in the fast-paced interview pipeline are all but certain to forget us shockingly quickly, we won’t get affronted when the inevitable failure-of-recollection takes place. We can build it into our planning. It’s no big deal to be forgotten, as long as you’re ready for it and can adjust accordingly. It happens to all of us. I found one of my dearest summer-camp-mates on Facebook, and sent her a friend request. “Did we go to camp together?” she asked in reply. She couldn’t remember me. We slept in the same cabin with six other girls for five years running. My name is the same as it was then. That’s okay. I withdrew. A year from now, she’s likely to write “Say, did we go to camp together?” At times I struggle to put names to my own children, so how could I blame my old friend for a little memory lapse? In a job interview situation, we can’t assume that a great interview will lead to a job offer. We have to stay top-of-mind for a hiring manager. In a thank-you letter, the very first thing we must do is bring ourselves back to mind for the recipient. We do that by mentioning a specific conversation the two of us had (about model cars, or Beyonce’s baby, or who knows what). I’ve heard hiring managers confess “I just spent twenty minutes talking with a brilliant applicant, one of the four people I met last Friday. The whole time we talked, I was trying to remember which guy it was. He told me his name when he called, and I had his resume in front of me — but I couldn’t get the face back, or the guy in general. It was awful!” That unfortunate candidate spent twenty minutes on the phone, certain he was winning big points for his sparkling observations on the hiring manager’s issues. But he got no bounce from that pithy conversation, because the hiring manager couldn’t match the guy on the phone with the memory of a person he’d met the week before. It’s easy to overlook the fact that until the manager has you firmly back in mind (your face, your voice, and your back story) you can’t advance in the selection pipeline. You can’t even make points for brilliant observations on the telephone. Don’t take a hiring manager’s memory for granted. Keep your brand and story front and center in every interaction. Maybe the hiring manager made a comment about you at some point, or maybe you’ve noticed that he thinks of you in a certain way (“the ex-Navy guy” or “the guy with the supply chain background,” for instance). If so, use that. When you write to the hiring manager at any point in the selection process, start with “Dave Smith here — the Navy guy.” You’d be amazed how that quick descriptor cuts through the fog that plagues every overstressed hiring manager. Seeing yourself through another person’s eyes and helping the other person snap you back into focus isn’t just useful in job-hunting. It’s good training for lots of situations. As long as we’re living among goldfish disguised as humans, we may as well get used to communicating the way (or at least we’ve always imagined) our fishtank-dwelling fellow creatures do.

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Journalist Recovers Video Of Arrest After Police Deleted It

February 7, 2012

A Miami journalist has recovered video of police officers arresting him after it was deleted from his camera. The man was covering a police effort to evict Occupy Miami protestors. He plans to file a complaint with the police department and with the United States Department of Justice.

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Pregnant And Fired

February 7, 2012

Amy Zvovushe, 31, had a new job (as a senior program manager at a marketing company in Connecticut) and a new baby on the way. But instead of colleagues sending congratulatory cards and putting stork decorations on her desk, Zvovushe says that when she announced her pregnancy at work, she was asked to resign. The company didn’t offer her maternity leave because she had only worked there for four months, and the federal Family Medical Leave Act says employees must work for a full year to be eligible. After she got this news, Zvovushe had a later conversation with human resources. ABC News reports that she recorded this discussion without telling them, and caught several alarming statements on tape. For example, the executive said: “You don’t receive protection under FMLA so technically if you don’t come to work… it doesn’t matter whether you’re having you’re appendix out or you’re having a baby or you’re dealing with a sick person you didn’t show up for work on Monday.” Zvovushe’s attorney, Jack Tuckner, then contacted the company to straighten out the situation, and likely because Zvovushe had the HR rep’s harsh words recorded, they agreed to grant her leave to care for her baby. “Because they were able to fix it, they say no harm, no foul,” her attorney said to ABC. But Zvovushe is only one of many pregnant woman discriminated against at work. In the U.S., women are fired every day for being pregnant , Dina Bakst, a lawyer and founder/president of A Better Balance: The Work and Family Legal Center wrote in a recent Op-ed for the NY Times. She blames the gap between discrimination laws and disability laws for the injustice. Federal and state laws ban discrimination against pregnant women in the workplace. And amendments to the Americans With Disabilities Act require employers to provide reasonable accommodations to disabled employees (including most employees with medical complications arising from pregnancies) who need them to do their jobs. But because pregnancy itself is not considered a disability, employers are not obligated to accommodate most pregnant workers in any way. Considering three-quarters of the women who enter the work force will become pregnant, Bakst calls for action. She highlights New York State Senator Liz Krueger and Assemblywoman Aileen Gunther of Sullivan County who have introduced legislation that “would require employers to provide reasonable accommodations for pregnant women whose health care providers say they need them.” Some states have made significant progress. According to NY Times, “as of 2010, seven states, including California, had passed laws requiring private employers to provide at least some accommodations.” And many companies — including those on Working Mother Magazine’s list of top 100 companies for mothers — work to create flexible, supportive environments for pregnant women, even if the law doesn’t require them to. Jeannette Cox , a law professor at the University of Dayton, is also fighting for pregnant women’s rights in the workplace. She argues that pregnancy should be considered a disability. Though pregnant woman are covered under the 1978 Pregnancy Discrimination Act, some protections under the ADA don’t apply to pregnant women and Cox says it’s time for a change. The Equal Employment Opportunity Commission is scheduled to host a hearing about pregnancy discrimination this month, ABC news reports.

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Bank Loan Rates Could Spike Following Money Market Rules

February 7, 2012

By Karen Brettell NEW YORK, Feb 7 (Reuters) – The cost for banks and other borrowers to raise funds in short-term markets could jump if regulatory proposals for money market funds result in large redemptions in the industry. The Wall Street Journal on Tuesday reported that the U.S. Securities and Exchange Commission was finalizing rules to stabilize the $2.7 trillion money-market fund sector, including a requirement that funds allow their net asset values to fluctuate. The proposals are vehemently opposed by the industry, which says they will effectively kill the business. “As soon as you introduce a floating NAV (net asset value), demand for the product is going to plummet,” said Mary Beth Fisher, an interest rate strategist at BNP Paribas in New York. “You have no additional security by being in a money market fund.” The new rules are designed to reduce risks of the large funds, which suffered an investor run after the collapse of Lehman Brothers in 2008. The run led one large fund’s share value to “break the buck,” which then intensified the crisis, leading to the SEC’s development of the proposed rules in 2009. Fund managers contend that allowing share prices to fluctuate will remove certainty from the investments and increase, rather than reduce, the risk of a loss of investor confidence. Money market funds provide billions in loans to banks through repurchase agreements, commercial paper and other loans. A pullback sparked by investor redemptions or from the funds simply closing down could have large market ripples. Fidelity Investments, the largest money-market fund manager, recently warned regulators that a floating NAV would result in large redemptions, “leading to unintended consequences for the financial markets and U.S. economy.” Shares of Federated Investors, one of the largest money fund managers, fell 3.9 percent on Tuesday on the report. The Pittsburgh-based firm’s Chief Executive Christopher Donahue told the Journal he would sue the SEC if the new rules affect Federated’s ability to do business. European banks were left scrambling for dollar-based funds in the last half of 2011 as money funds withdrew loans, a large factor that led to global central banks coordinating offers of low-cost loans to banks to fill the funding gap. Investors have pulled around $50 billion from money market funds since January 11, according to the Investment Company Institute. That in recent weeks helped increase the cost to finance overnight loans backed by Treasuries in the repurchase agreement market. The cost of overnight repo loans backed by Treasuries traded at around 10 basis points on Thursday after rising to the high 20-basis point area last week. “If there are further fund redemptions, overnight funding for Treasuries will probably go back up,” said Raymond Gilmartin, head of repo trading at Bank of Nova Scotia in New York. A key question is where cash will move if money funds become less attractive. Money funds have won investors who want a guarantee that their money will be returned. Other mutual funds that invest in short-term instruments but do not guarantee the full investment return could gain at least part of the funds. “There’s still a huge amount of demand for short-term liquidity, people will put their money in a T-bill fund instead of a money market fund and not pay the extra fees,” said BNP’s Fisher. Banks, on the other hand, have been reluctant to take large deposits from investors flocking to safety as they need to pay a fee to the Federal Deposit Insurance Corp to insure the deposits. An insurance cap of $250,000 per depositor per bank is also scheduled to come into force in December. “It is unclear how much of the ($1.6 trillion) institutional money held in money funds would ‘go elsewhere’,” Barclays Capital analyst Joseph Abate wrote in a recent report. “Banks are not eager to be on the receiving end of all this cash.”

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Huge Shakeup At Yahoo

February 7, 2012

SUNNYVALE, Calif. — Yahoo Chairman Roy Bostock and three longtime board members are leaving the troubled Internet company. The shake-up announced Tuesday continues a drastic makeover of Yahoo’s leadership during the past month as the company tries to win back investors frustrated with years of broken turnaround promises. Yahoo Inc. ushered in a new era last month by hiring former PayPal executive Scott Thompson as its fourth CEO in less than five years. Then Yahoo co-founder Jerry Yang resigned from the board. Bostock is departing along with Vyomesh Joshi, Arthur Kern and Gary Wilson. Many Yahoo shareholders have been clamoring for Bostock to step down since the company balked a $47.5 billion takeover offer from Microsoft Corp. in 2008.

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Coca Cola Benefits From Price Hike

February 7, 2012

NEW YORK — Coca-Cola reported an effervescent fourth quarter Tuesday, as the company sold more of its drinks globally and its earnings beat analyst expectations. Coca-Cola is benefiting from raising prices in North America, where consumer sentiment is slowly improving, and expanding in emerging markets including Africa and Latin America. “Compared to 12 months ago, there are very early indications that the consumer (in North America) is feeling a little better, with more mobility, travel and eating out,” said CEO Muhtar Kent in a telephone interview with the AP. “That all translates into better business for us.” Coca-Cola Co.’s fourth-quarter net income dropped 71 percent, weighed down by restructuring charges and a difficult comparison with last year’s fourth quarter, when the beverage maker had a hefty benefit from buying its bottlers. But the Atlanta company said Tuesday its adjusted results topped Wall Street’s expectations as it sold more drinks in the U.S. and abroad, particularly in emerging markets. “Even as we believe that global market volatility will continue in the near term, the breadth of our global footprint and the strength of our brands create a resilient business that was built for times like these,” CEO Muhtar Kent said in a statement. Shares of Coca-Cola rose 91 cents to $68.94 in midday trading. Coke also said it will start a cost-cutting program in 2012 to save $550 million to $650 million annually by 2015 in part to help offset continued high commodity costs. Coca-Cola, whose brands include Sprite and Minute Maid, earned $1.65 billion, or 72 cents per share, for the period ended Dec. 31. That’s down sharply from $5.77 billion, or $2.46 per share, a year earlier. But a year ago, the company had a one-time net gain of $1.74 per share, mainly related to buying a bottler’s North American operations. Removing restructuring charges and other items, earnings were 79 cents per share. Analysts forecast 77 cents for the company, according to Fact Set. Revenue increased 5 percent to $11.04 billion. It was helped by higher prices, strength overseas and solid results from the Coca-Cola brand, juices and teas. The figure just topped Wall Street’s $11 billion estimate. Coca-Cola sold 3 percent more of its drinks during the quarter, including a 1 percent gain in Europe and North America and a 4 percent gain in Eurasia and Africa and Latin America. Coca-Cola, which has more than 500 brands including Fanta, Sprite, Dasani and Minute Maid, has weathered the downturn by spending more on advertising, new products and plants. The company, like many, also has turned overseas for growth, particularly emerging markets like India and China. And in North America, it is raising prices and offering smaller package sizes. For the year, net income fell 27 percent to $8.57 billion, or $3.69 per share. That compares with $11.81 billion or $5.06 per share last year. Revenue rose 33 percent to $46.54 billion from $35.12 billion. Global volume grew 5 percent during the year, helped by strength in emerging markets such as Latin America. Coke’s chief rival, Pepsico Inc., reports results Thursday.

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Google Fiber Rollout Ready To Begin

February 7, 2012

It reportedly suffered a slight delay due to some disagreement with local officials over just how its thousands of miles of wires would be hung, but Google announced today that it’s finally ready to begin the rollout of its Google Fiber network in Kansas City, Kansas and Kansas City, Missouri.

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Ben Bernanke: Long-Term Unemployment Crisis Altering Job Market For The Worse

February 7, 2012

Federal Reserve Chairman Ben Bernanke said Tuesday that record levels of long-term unemployment will alter the U.S. job market for the worse for the foreseeable future. Bernanke said at a Senate Budget Committee hearing that the natural rate of unemployment — or the level of unemployment that results when the economy is supporting as many jobs as it can — has risen from about four percent in the early 2000s to more than five percent because so many Americans have been out of work for so long. In the process, they have lost skills and have become less likely to return to work. “We are concerned that over the past few years that there has been some modest increase in the sustainable long-run rate of unemployment,” Bernanke said. “I hope Congress will consider ways to address that problem.” Though the unemployment rate fell to 8.3 percent in January, many Americans have stopped looking for work and have therefore been pushed out of the workforce, perhaps permanently. The labor force participation rate fell in January to 63.7 percent — its lowest level since January 1982. More than 40 percent of those currently unemployed have been without work for more than six months, Bernanke noted. That’s roughly double the share during the housing boom of the early and mid-2000s, he said. That adds up to 5.5 million Americans who have been out of work for six months or more, not to mention three to five million more people who have dropped out of the labor force because they have given up looking for work. Bernanke said that the Fed’s Federal Open Market Committee estimates that the natural rate of unemployment is now between 5.2 and 6.0 percent. The actual unemployment rate in 2006 was just 4.6 percent, and in 2000 it was even lower at 4.0 percent, according to the Bureau of Labor Statistics. The long-term unemployed are in more danger of experiencing years of unemployment because it becomes steadily harder for a job-seeker to find work the longer they’re unemployed. Many employers ask for their applicants to be currently employed , a stipulation President Barack Obama is trying to make illegal. Firms also are less prone to hire the long-term unemployed because of the perception that their skills and professional networks deteriorate while they are out of work. Bernanke has previously warned about the prolonged economic harm of long-term unemployment. In September the Fed chairman called long-term unemployment a “national crisis.” “This has never happened in the post-war period in the United States,” Bernanke said in September. “They are losing the skills they had, they are losing their connections, their attachment to the labor force.” Bernanke said on Tuesday that the Federal Reserve can do only so much to bring down unemployment. “We’re only saying that monetary policy really can’t do much to bring unemployment in a sustainable way below those levels,” Bernanke said of the natural rate. Bernanke said that in order to bring down the natural rate of unemployment further, the U.S. government needs to focus on projects that provide the country long-run value, especially those focusing on education, worker skills, and research and development. “We don’t want to build useless monuments,” Bernanke said. With many more people no longer considered part of the workforce, Bernanke said that January’s 8.3 percent unemployment rate “no doubt understates the weakness of the labor market in a broader sense.”

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Businesses Accuse Cybersecurity Plan Of Overstepping Bounds

February 7, 2012

WASHINGTON — A developing Senate plan that would bolster the government’s ability to regulate the computer security of companies that run critical industries is drawing strong opposition from businesses that say it goes too far and security experts who believe it should have even more teeth. Legislation set to come out in the days ahead is intended to ensure that computer systems running power plants and other essential parts of the country’s infrastructure are protected from hackers, terrorists or other criminals. The Department of Homeland Security, with input from businesses, would select which companies to regulate; the agency would have the power to require better computer security, according to officials who described the bill. They spoke on condition of anonymity because lawmakers have not finalized all the details. Those are the most contentious parts of legislation designed to boost cybersecurity against the constant attacks that target U.S. government, corporate and personal computer networks and accounts. Authorities are increasingly worried that cybercriminals are trying to take over systems that control the inner workings of water, electrical, nuclear or other power plants. That was the case with the Stuxnet computer worm, which targeted Iran’s nuclear program in 2010, infecting laptops at the Bushehr nuclear power plant. As much as 85 percent of America’s critical infrastructure is owned and operated by private companies The emerging proposal isn’t sitting well with those who believe it gives Homeland Security too much power and those who think it’s too watered down to achieve real security improvements. One issue under debate is how the bill narrowly limits the industries that would be subject to regulation. Summaries of the bill refer to companies with systems “whose disruption could result in the interruption of life-sustaining services, catastrophic economic damage or severe degradation of national security capabilities.” Critics suggest that such limits may make it too difficult for the government to regulate those who need it. There are sharp disagreements over whether Homeland Security is the right department to enforce the rules and whether it can handle the new responsibilities. U.S. officials familiar with the debate said the department would move gradually, taking on higher priority industries first. “The debate taking place in Congress is not whether the government should protect the American people from catastrophic harms caused by cyberattacks on critical infrastructure, but which entity can do that most effectively,” said Jacob Olcott, a senior cybersecurity expert at Good Harbor Consulting. Under the legislation, Homeland Security would not regulate industries that are under the authority of an agency, such as the Nuclear Regulatory Commission, with jurisdiction already over cyber issues. “Where the market has worked, and systems are appropriately secure, we don’t interfere,” said Sen. Joe Lieberman, I-Conn., chairman of the Senate Homeland Security and Governmental Affairs Committee. “But where the market has failed, and critical systems are insecure, the government has a responsibility to step in.” The bill, written largely by the Senate Commerce, Science and Transportation Committee and the Senate homeland panel, is also notable for what it does not include: a provision that would give the president authority to shut down Internet traffic to compromised Web sites during a national emergency. This `”kill switch” idea was discussed in early drafts, but drew outrage from corporate leaders, privacy advocates and Internet purists who believe cyberspace should remain an untouched digital universe. While the Senate is pulling together one major piece of cybersecurity legislation, the House has several bills that deal with various aspects of the issue. A bill from a House Homeland Security subcommittee doesn’t go as far as the Senate’s in setting the government’s role. Still, it would require DHS to develop cybersecurity standards and work with industry to meet them. “We know voluntary guidelines simply have not worked,” said Rep. Jim Langevin, D-R.I. “For the industries upon which we most rely, government has a role to work with the private sector on setting security guidelines and ensuring they are followed.” Stewart Baker, a former assistant secretary at Homeland Security, said the government must get involved to force companies to take cybersecurity more seriously. Concerns about federal involvement, he said, belie the fact that computer breaches over the past several years make it clear that hackers and other governments, such as China and Russia, are already inside many industry networks. “They already have governments in their business, just not the U.S.,” said Baker. “For them to say they don’t want this suggests they don’t really understand how bad this problem is.” Industry groups have lobbied against the Senate bill’s regulatory powers and say new mandates will drive up costs without increasing security. They say businesses are trying to secure their networks and need legal protections built into the law so they can share information with authorities without risking antitrust or privacy violations. In a letter to lawmakers this past week, the U.S. Chamber of Commerce said any additional regulations would be counterproductive and force businesses to shift their focus from security to compliance. Liesyl Franz, a vice president at TechAmerica, which represents about 1,200 companies, said businesses would prefer to work with the government to enhance security rather than face more regulations. She said companies coping with the potential security risks, market consequences, and damage to corporate reputations, are defending against cyberthreats. Senior national security officials were on Capitol Hill last week to talk to senators about the growing cybersecurity threat. After the meeting, Sen. Susan Collins, R-Maine, said she’s always had a sense of urgency about it, adding, “I hope the briefing gives that same sense of urgency to members to put aside turf battles.” She said senators are reviewing concerns raised by the Chamber about the bill. ___

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You’ve Got… Personal Branding

February 6, 2012

TV Host and business guru Donny Deutsch discusses how individuals brand themselves in the digital age.

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Cassidy: Who Gets Counted In The Unemployment Rate And Why

February 6, 2012

I would like to respond to something many commentators, on this site and others, have picked up upon: a suggestion that the Labor Department’s Bureau of Labor Statistics (B.L.S.) cooked the unemployment rate by removing 1.2 million Americans from the labor force. Some critics claim that these people should have been counted, and the unemployment rate should be considerably higher than 8.3 per cent.

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BofA Investor Lawsuit Wins Class-Action Status

February 6, 2012

Feb 6 (Reuters) – Shareholders suing Bank of America Corp on Monday won class-action status for their lawsuit accusing the bank and various executives and directors of fraudulently misleading them about the 2008 takeover of Merrill Lynch & Co and size of Merrill’s losses and bonus payouts. U.S. District Judge P. Kevin Castel in Manhattan on Monday rejected Bank of America’s effort to deny certification, after the lender claimed that investors could not prove they suffered losses after relying on materially misleading statements or omissions. Bank of America had no immediate comment. Investors had faulted Bank of America for not timely disclosing the scope of Merrill’s soaring losses, which reached $15.84 billion in the fourth quarter of 2008, and for letting Merrill pay $3.6 billion of bonuses at the time. The case covers a variety of investors who owned Bank of America stock or call options between September 2008 and January 2009. Class certification lets plaintiffs pursue their case as a group, which can cut costs, and can lead to larger recoveries than if plaintiffs were to sue individually.

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Art Brodsky: The Jack Nicholson Answer to Hollywood Moguls on SOPA and PIPA: ‘You Can’t Handle the Truth’

February 6, 2012

Earlier today (Feb. 6), a most extraordinary group of people sent a letter to Capitol Hill, in the latest round of the fight over the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA), telling Congress it was time to reject the well-worn lobbying of the big media companies. More than 70 grassroots activist organizations and emerging Internet companies got up the nerve to show Congress that it was time to stop fooling around with bills that helped to generate the largest online protest in recent memory.  More than 100,000 Web sites participated in the Jan. 18 blackout day.  Tens of thousands of people called and visited their Congressional representatives, all with one message: These bills are dangerous, and shouldn’t be allowed to proceed. The letter, coordinated by Public Knowledge, said, “Now is the time for Congress to take a breath, step back, and approach the issues from a fresh perspective.”   The message that there were, and are, fundamental concerns coming from a wide and comprehensive communities is one that doesn’t come across in comments that big executives have made lately. It’s a shame that Hollywood moguldom didn’t get that message and instead is still playing make believe.  Lawmakers should realize that their constituency in Hollywood is lacking a grasp of reality and missing the mark by a mile. One hand, Viacom CEO Philippe Dauman was quoted by deadline.com as saying at a conference that Hollywood didn’t lose the SOPA/PIPA fight on the merits of their case.  It was, instead, because there was “a lot of misinformation” from Silicon Valley.  He blamed the ” mob mentality ” and “unfortunate rhetoric” for the bills’ troubles. Speaking at the same All Things D conference, Chase Carey, the number-two exec at Fox, said it was “the message getting twisted” by that nasty Interweb that caused the bills to go down.  Carey admitted he hadn’t read the bills, but rejected working with Silicon Valley on a solution.  That’s fine.  It really isn’t Silicon Valley’s place to work out a solution with Hollywood anyway. It boggles the mind that Hollywood, which exists to tell stories, thinks it has let its story get away.  Let’s define the issue in a way Hollywood would understand, with this adaptation and then quotation from A Few Good Men : Int.  THE COURTROOM We are in a courtroom, in a tense moment of a trial.  It’s a court-martial, and the participants are all in the military.  At the prosecution table is Navy LIEUTENANT JUNIOR GRADE DANIEL ALLISTAIR KAFFEE (Tom Cruise in the movie), who has been performing unevenly throughout the trial, but now is gaining confidence.  He’s questioning COLONEL NATHAN R. JESSEP (Jack Nicholson), a decorated Marine commander who looks down on KAFFEE as if he’s an inferior life form.  Back and forth they go, with KAFFEE asking and JESSEP grudgingly answering, until this, from the movie (as opposed to the play from which the movie was taken):   JESSEP   You want answers?   KAFFEE   I think I’m entitled to them.   JESSEP   You want answers?!  KAFFEE I want the truth.   JESSEP   You can’t handle the truth! That’s it in a nutshell, isn’t it?  Hollywood can’t handle the truth about SOPA and PIPA. First , they can’t handle that there were dangerous elements to the bills.  That was why so many people, the very people Congress left out of the discussion, were moved to get involved.  The bills were much more complex than “cracking down on overseas pirates,” and yet those pushing the bills either disregarded or didn’t recognize the threats to a free Internet.  Certainly their testimony before Congress didn’t give any indication that they did either.  When anyone brought up their objections, Hollywood executives and their legislative allies dismissed them.  Who cared what cybersecurity analysts, law professors, artists, human rights groups, public-interest organizations and others had to say?  Eventually the sponsors caved on the security issue, but only after a long-standing dispute. Unlike the moguls, the activist letter recognized: “A wide variety of important concerns have been expressed — including views from technologists, law professors, international human rights groups, venture capitalists, entrepreneurs, and above all, individual Internet users. The concerns are too fundamental and too numerous to be fully addressed through hasty revisions to these bills. Nor can they be addressed by closed door negotiations among a small set of inside-the-beltway stakeholders.”   Second , the executives didn’t recognize that the protest against the bills was not a product of classic special-interest lobbying.  It was not Hollywood vs. Silicon Valley.  As this article in PC World (and other publications) showed, Google did not create the protest against the intellectual property bills.  Rather a network of groups with substantive concerns worked with organizations from around the country, which, once informed of the dangers of the bills, spread the word to their members, and constituent organizations. Third , there really is some question about what “the truth” is in these cases.  The only numbers for “harm” come from the industry and haven’t been duplicated by anyone.  It’s time to find out what the “harm” really is. That time-out is necessary to “determine the true extent of online infringement and, as importantly, the economic effects of that activity, from accurate and unbiased sources, and weigh them against the economic and social costs of new copyright legislation. Congress cannot simply accept industry estimates regarding economic and job implications of infringement given the Government Accountability Office’s clear finding in 2010 that previous statistics and quantitative studies on the subject have been unreliable.” This is too important to hand over law making to one industry, as Congress did in the case of these bills.  Too much is at stake to try to rework the bills in a slapdash manner, behind closed doors.  That’s the truth.

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Executive Accused Of Fraud: Ponzi Scheme Was Costing Him His Health

February 6, 2012

HOUSTON — Attempts to cover up a massive Ponzi scheme alleged to have taken billions from depositors at Texas tycoon R. Allen Stanford’s Caribbean bank grew increasingly frantic as federal authorities closed in on the fraud, the financier’s top money man testified Monday. Ultimately, all of the efforts to hide the more than 20-year fraud were futile, James M. Davis, the former chief financial officer for Stanford’s companies, told jurors during his third day of questioning by prosecutors in Stanford’s fraud trial. “The writing was on the wall,” said Davis, who has pleaded guilty in the case. Prosecutors claim Stanford bilked investors out of more than $7 billion in a massive Ponzi scheme centered on the sales of certificates of deposit, or CDs, from the bank on the island nation of Antigua. Stanford’s attorneys contend the financier was a savvy businessman whose financial empire, headquartered in Houston, was legitimate. They have suggested Davis, who worked 21 years for Stanford, is behind the fraud. Davis, the prosecution’s star witness who began testifying last week, told jurors Monday that by 2007, he wanted to quit working for Stanford, unable to handle the stress. “The fraud that I was participating in was killing me,” he said. Authorities allege Stanford used depositors’ money to operate his businesses, pay for his lavish lifestyle and bribe regulators and auditors. They also say he lied to depositors by telling them their money was being safely invested. Stanford is on trial for 14 counts, including mail and wire fraud, and faces up to 20 years in prison if convicted. At the end of 2007, the bank owed depositors $6.6 billion, Davis said, but it had only enough funds to pay back $1.5 billion. New sales of CDs had for years been able to cover withdrawals. In 2008, sales dramatically dropped and customers were withdrawing their CDs in droves, sparked by the Great Recession, he said. By December 2008, the bank had only $88 million in cash. Even as the bank was crashing, Davis said, Stanford was telling the holders of CDs in a December 2008 monthly report that he had put in more than $541 million of his own money into the bank to increase its value to more than $1 billion. He reassured investors that the bank was “strong, safe and fiscally sound,” Davis testified. “How concerned were you becoming?” asked prosecutor William Stellmach. “I was very concerned, probably near emotional and mental extreme stress level concerns,” Davis said. In an effort to hide the fraud, Stanford resorted to creative bookkeeping, Davis testified. Stanford spent $63.5 million for land in Antigua for an ultra-exclusive island resort he had been proposing, Davis said. The financier then inflated the land’s value to $3.2 billion as a part of a proposal to include that with the bank’s assets, he said. By January 2009, the U.S. Securities and Exchange Commission wanted proof of all of the bank’s assets and investments. Davis said by February he falsified documents that showed the bank had $6.3 billion in assets related to real estate and investments in private companies. “It was a lie,” he said. Davis testified that later that month, he threw a computer and thumb drive into a lake at his home in Mississippi in an attempt to destroy incriminating evidence. The evidence was later recovered by authorities. Stanford’s bank and other companies were seized by authorities later in February. Davis pleaded guilty to three fraud and conspiracy charges in 2009 as part of a deal he made with prosecutors in exchange for a possible reduced sentence. Stanford was once considered one of the United States’ wealthiest people, with an estimated net worth of more than $2 billion. He’s been jailed without bond since being indicted in 2009. ___ Follow Juan A. Lozano at http://www.twitter.com/juanlozano70

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Dennis Santiago: Banking 2012: Maneuvering to Survive the Desert Landscape of Zero Interest Rates

February 6, 2012

Maybe that Mayan calendar is right and the world will be ending shortly after the presidential election. You’d certainly think so by the furor of deck chair arranging going on in the banking industry. I’m told the buzz of the 2012 season of meetings is all about “Who’s buying whom?” and “Who’s for sale?” The stage seems set for a round of consolidations that will take America’s 7,500 plus FDIC insured institutions down to a much smaller number. The big will get bigger and consumer choices — and their ability to get decent financial terms — will get fewer. The root problem I hear about over and over is Zero Interest Rate Policy (ZIRP). Simply put, with zero interest rates pushing operating margins down to nothing, the only thing starving bankers have left to do to survive the drought is cannibalize the industry. It’s another sign of the handcuffed wealth of the U.S. economy. And it’s not for lack of money. As I pointed out previously in the article “Investors Stuff Mattresses and Wait for U.S. Economy to Find Direction” , there’s a glut of idled deposits distributed throughout the banking system. But the economics of lending are lacking in vigor. Bankers cope with this in two ways. Some have just abandoned lending and have given in to taking deposits and putting it into low yield government securities. They’ve effectively become conservative mutual funds. Yes that does mean we have a situation where consumers stuff their money into a bank mattress and then the banks in turn stuff another government bonds mattress. Talk about draining Main Street of energy… times two. For all you people who “Moved Your Money,” you might want to ask you banker or credit union if they are playing the “double stuffed mattress” game with your cash. If they are, maybe you need to make noise about moving again. Nothing says that grass-roots activism has to be static. The above “money parking lot” game can buy you time but it’s not an operational business proposition bankers like. Clearly they should not. Other more proactive bankers tenuously attempt to find productive uses for these deposits despite the difficulties of selling services under a cloud of doubt about the future direction of the economy. The “lending engine that could” conversations I hear from these large and small bankers have three distinct themes. Theme One: If there’s a good deal out there, we’re all going to bid on it and compete with as many incentives as we can pile in there to outmaneuver the competition. It is cut throat and it means thinner margins on fewer successful asset deployments. Theme Two: If it’s not a quality deal, we’re not touching it with a 10-foot pole. We just can’t do it. Not with the uncertainty about this economy. This is most true for banks fighting to regain solid footing for the asset quality portion of their CAMELS* ratings. It’s also, by the way, an area where I’m told the old sub-prime mortgage crowd is coming around trying to sell loans to sub-quality commercial and industrial borrowers. The people who laid waste to our mortgage market haven’t gone away. They’re morphing. Well at least they’re no longer unemployed. Is that a good thing? Theme Three: If it’s a big company, forget it. They complain the Fed’s ZIRP — there it is again — means it’s an invitation only game for the 1% club. The implication is that large C&I companies are being driven like sheep into the waiting arms of the cabal on Wall Street by U.S. fiscal policy. When I talk to corporate treasurers about the issue, they pretty much concur. The smaller bankers who live well off the radar screens of Wall Street also complain about one other insult to injury. They complain about role of “ratings” in impeding business. The big Nationally Recognized Statistical Ratings Organizations (NRSRO’s) aka the big ratings agencies — who are viewed as members in good standing of the Wall Street insider’s club — only cover the biggest banks who can afford their services for doing ratings on multi-billion dollar debentures. It simply costs too much for the smaller banks to go “buy” a rating from these companies. It hurts community banks two ways. First, they are sometimes forced to go through a TBTF to issue a standby line of credit (LOC) using their money to pledge to one of their direct clients. So when it comes time to issue an LOC to a corporate borrower, they too often have to send that money over to a big bank that acts as a credit facility manager — with service fees of course — to funnel the money to the bank’s own customer. It raises the cost of the transaction somewhere around 75 to 150 basis points. That’s actually a lot. To make the deal work, the smaller bank eats the cost which, of course, cuts in to operating margin and causes yet more systemic malnutrition. For these smaller banks it can happen for as few as 1 out of 20 deals to as many as all of them. Second, many corporations and funds now have risk management controls that specify that all deposits in financial institutions be insured. This includes super large deposits. The way that works is that the depositor buys a private insurance for the amount beyond the FDIC insured amount. The insurance companies in turn ask for a rating from an NRSRO which the smaller bank won’t have because the deposit size is nowhere near big enough to justify paying for such a rating so they lose the deal to one of the TBTF’s. That effect is very much in evidence when you look at how much deposit accumulation has happened at the big banks versus the smaller ones in the past two years. This is particularly macabre when you consider that in many cases, the smaller institution actually has better safety and soundness properties than the bigger one acting as a conduit or “NRSRO rated” recipient of the large deposit. We know this because other more specialized bank analytics companies that do analysis on the safety and soundness of the bank industry indicate so. IRA is one of those analysis providers. The company delivers ratings indicators on 100% of the active banking industry in a timely fashion for compliance, monitoring and counterparty evaluation purposes. IRA isn’t the only company doing so. There are others. Among IRA’s business niche cohorts, the analysis not only aligns well, the various services have nuances that when taken as a set provide users with far better illustration of the bank’s condition. The banks don’t hire these firms to make ratings. They assess all of them because that’s how you’re actually supposed to analyze an industry channel. It begs the question, if you can make more direct measurements and you don’t, who’s being the fool? Banks do argue that these alternative ratings are very valid because they know the numbers align with their regulatory examination CAMELS ratings. The bank regulators have had their own trouble with relying on NRSRO data by the way. The FDIC mandated that ratings agency data would no longer be used to computing bank insurance assessments last year and rules about stress testing under the Dodd-Frank Act say banks are not to rely on these external ratings going forward either. This, of course, asks the second question, “If bank regulators are in fact shifting to better objective standards to manage down future systemic risk, why are capital markets lagging behind?” So here’s the “think outside the box” finance policy question of the day. What if all those line of credit and large deposit deals relied on direct measurement analytics sources instead, bypassing the need to process LOC’s though an NRSRO rated manager or parking hard-earned deposits in a TBTF. How many basis points could this shave out of the economy’s systemic cost of capital? What would it mean in terms of creating vigor in the 7,000+ smaller banks in this country to be a greater part of America’s economic recovery? Will this help change the direction of discussions when bankers get together from starvation and consolidation towards competition and growth? I think these are questions worthy of the banking and the insurance industry exploring. Not a bad thing for policy makers and candidates to be pondering as well. Clearing the decks for Main Street of unneeded furniture is what I’m trying to explore here. Ultimately this is a search to find a way to bring our industrial system back into sustainable balance. I wrote about this last October in “Economic Recovery Means Learning to Export Unemployment” where I floated the notion that repatriating as little as five-percent (5%) of the U.S. industrial base would go a long way towards getting our corner of the world back to the good side of the systemic tipping point. I mention this in closing because President Obama also made this very point in his State of the Union address. He left it at encouraging business to “think about what you can do.” So I am. *CAMELS ratings are how bank regulators assign safety and soundness ratings to banks. The acronym stands for Capital Adequacy, Asset Quality, Management, Earnings, Liquidity and Sensitivity to Market Risk.

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Commentary: Was Chrysler’s Super Bowl Ad Pro-Obama?

February 6, 2012

For the second straight year in the Super Bowl, Chrysler took a big chance, spending millions of dollars to advertise a message that doesn’t have a lot to do with selling cars, but rather an idea, or ideal, and a message about the city of Detroit.

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Ex-Lehman Brothers Trader: Only On Wall Street Could You ‘Get Paid So Much For Doing So Little’

February 6, 2012

The fallout from the financial crisis has already changed the way much of America views Wall Street. It may also be changing the way the financial industry views itself. After years of huge paychecks and bonuses, financial industry workers are seeing their compensation capped and cut thanks to anxiety surrounding the global economy and oncoming regulations. But when a salary or bonus can serve as evidence of an accomplishment, it’s disappearance can also amount to an erosion of self-worth. “There’s no other industry where you could get paid so much for doing so little,” an ex-trader for Lehman Brothers told New York Magazine as part of a piece about the changing dynamics of Wall Street. You can read New York ‘s entire Wall Street piece here. Though the former Lehman trader may be one of the first Wall Street workers to express that sentiment in print, he’s echoing the views of others. The head of Britain’s top financial watchdog has said that what takes place on Wall Street is largely a “socially useless activity,” according to a 2010 New Yorker report. Some have argued that such high levels of pay create an incentive for bankers to prioritize short-term profits over a firm’s long-term health. Such is the reason for a Dodd-Frank financial reform law that requires firms to “claw back” pay in certain circumstances , like if the deal on which a bonus is predicated turns into a loss in a certain number of years. Paul Volcker, the former chairman of the Federal Reserve and the author of one of the more controversial measures in the Dodd-Frank financial reform law, told New York that Wall Street turned into a place that constantly needed to prove its greater utility . “Finance became a self-justification” he said. Paul Woolley, who founded a center at the London School of Economics that studies “capital market dysfunctionality,” put it even more bluntly to the New Yorker in 2010. “Why on earth should finance be the biggest and most highly paid industry when it’s just a utility, like sewage or gas?” he said. May the jig finally be up? Morgan Stanley capped its cash bonuses at $125,000 for 2011 and its top executives didn’t net any cash bonuses at all, according to The New York Times . At Goldman Sachs, bonus day was like a “bloodbath” one mid-level executive told CNBC; some bankers and traders learned they would be taking home no bonuses at all, while the firm halved the pay of some of its highest-level employees. Yet Wall Street will likely remain a top draw for America’s best and brightest for the foreseeable future. At Bank of America, a company that has struggled since the financial crisis , average overall compensation for an investment banking associate will likely remain in six-figure territory , even after preparations for pay packages an average of 25 percent smaller than last year. And they’ll still likely be making more than workers in many other high-paying professions with more tangible societal benefits. After 10 years of deal-making, a banker will have taken home more than ten times that of a cancer researcher during the same period, according to Bloomberg. Still, James Gorman, the CEO of Morgan Stanley , said earlier this month that employees upset with the drop in their pay need to have a reality check. “If you put your compensation in a one year context to define your overall level of happiness, you’ve got a problem that is bigger than the job,” Gorman told Bloomberg TV.

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Gun Seller: If Komen Won’t Take Our Donation, We’ll Give It To American Cancer Society

February 6, 2012

WASHINGTON — A gun seller thrust into the spotlight last week over its alleged ties to the Susan G. Komen Foundation is launching another production run of its pink “Hope” handgun and donating proceeds to a different cancer organization. Discount Gun Sales released an open letter on Monday clarifying that it never had a business partnership with Komen, which also vehemently denied such a partnership last week in the face of reports that said otherwise. The two have had a loose relationship, but nothing formal, said the gun seller. “In a statement to the press, Komen’s spokesperson explained that the foundation does not have partnerships with companies in the firearms industry,” the letter stated. “Discount Gun Sales and Komen are ‘teammates’ only in the sense that we support cancer research. We apologize to our customers and the Susan G. Komen Foundation for any confusion.” That doesn’t mean Discount Gun Sales never donated any money to Komen, however. And if it did, it won’t be doing it anymore. “We respect Komen’s decision to disassociate itself from the firearms industry, and we will instead donate the proceeds from our P-22 ‘Hope Edition’ to the American Cancer Society,” the letter said. “We have decided to produce a limited run of 250 units using the latest revision of the Walther P-22, the ‘Q Edition.’ The pistols will sell for $449.99, and Discount Gun Sales will donate $50 to the American Cancer Society for every one that is sold.” A Komen spokeswoman didn’t seem to have any hard feelings. “Like so many companies, Discount Gun’s owners and employees are hoping to end a terrible disease, and we’re thankful for their support of cancer causes,” said Komen communications director Andrea Rader. Andrew Becker, director of media relations for the American Cancer Society, said he had no comment on Discount Gun Sales’ plan since since he hadn’t even heard about it. “We have no knowledge of this announcement, and we have not been contacted by this company,” he said. It remains unclear whether Komen ever received donations tied to sales of the “Hope” handgun. Discount Gun Sales at least originally planned to donate proceeds from sales of the gun “to a charity that people would recognize, and Susan G. Komen is very well known in the Seattle area as a result of their ‘Race for the Cure,’” according to the letter. A source at Discount Gun Sales, who requested anonymity, told The Huffington Post that the company did donate proceeds from sales of the “Hope” gun to the Seattle affiliate of Komen a couple of years ago. “Yeah, yes, we cut them a check,” said the source, who said the company had donated a portion of the sales of 25 to 35 of those handguns, which were priced at $429.99 apiece. But representatives for Komen’s Seattle chapter and national headquarters say they have no record of any donation from Discount Gun Sales. “We checked our records again, and I can categorically state that the Puget Sound affiliate of Susan G. Komen for the Cure has never received a donation from Discount Gun Sales,” said spokesman Jim Clune. A customer service representative at Discount Gun Sales headquarters said Monday that no one was readily available to discuss providing a copy of the alleged check made out to Komen. Komen, the largest breast cancer charity in the nation, made waves last week for cutting off funding for Planned Parenthood, before ultimately reversing course on Friday and stating that the family-planning organization will remain eligible for grants. Emails later proved that Karen Handel, Komen’s staunchly anti-abortion vice president for public policy, was the main force behind the decision to defund Planned Parenthood and the attempt to make the decision look nonpolitical. The publicity surrounding Komen and the pink handgun has been a boon to Discount Gun Sales. An employee at one of the gun retailer’s stores in Seattle, who requested anonymity, said Saturday that he had been swamped with calls from people interested in the gun and had been collecting names in the event that Discount Gun Sales decided to make more of them. By Monday, the company announced it was launching a second production run after a gunsmith who survived Stage IV cancer read about the Komen dust-up and proposed making a new edition of the gun. Update : 4:50 p.m. — This story has been updated to reflect a response from the American Cancer Society.

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Amanda Feinberg: From EA to Anywhere: How to Get Promoted From Assistant-Level

February 6, 2012

We all dream of snagging a glamorous, high-paying job right out of college — not necessarily answering phones or scheduling meetings all day. But many of us do start our careers at the assistant-level, and if you think it’s a job that’s going nowhere, think again. I’ve found that starting your career as an executive assistant can be a great way to make connections, gain experience, and get promoted. All it takes is a little time, hard work, and willingness to step out of the box. Here’s how to make the most of your job as an assistant — and use it to get wherever it is you really want to be. See the Bigger Picture Your position as an assistant allows you to see an industry and a company at a higher level than many people in entry-level jobs get to. Use this to your advantage: Treat everything that comes across your desk as a learning experience. Take time to thoughtfully read the reports, projects, and memos that you handle. When you work with people from different departments, ask questions about what they do and what they’re working on. Think about career paths within the company you’d be interested in, and use your role to find out as much about them as you can. Be the Girl Everyone Wants to Know Depending on who you’re supporting, the exposure you get to people, places, and knowledge can be tremendous, and you can quickly become the person to know in the office. You have the authority to schedule meetings and make exceptions. You ultimately are the one who decides who gets face-time with the boss and who can wait in line. Use your power as the gatekeeper wisely. If you’re the reliable, responsive, and competent assistant everyone wishes they had, others will want to know you (or even poach you!). The more good contacts you can make, the better off you’ll be when you want to look for that next step. Prove Your Worth Chances are, your role will require you to frequently interact with a variety of people. Leverage this and offer to take on tasks outside your role to test the waters on different aspects of the industry or company. Ask to help with a project in an area that’s understaffed or to take the lead on a task no one else is keen on. Use your exposure to other teams as a key opportunity to augment your resume and to show your current boss and potential employers what you’re capable of. Become a Trusted Confidante Bottom line: Be the best employee you can be to your boss. You will likely be trusted with confidential projects or information — don’t betray that trust. Also, your role may occasionally blur the line between personal and professional — for example, selecting gifts for a spouse or family member, or helping out with a personal real estate acquisition. But instead of getting frustrated, look at it as an opportunity to become close with your boss — an opportunity that most people won’t get. If you think your boss is taking advantage and using you more as a personal assistant, then by all means, sound the alarm. But, start with the mentality that no task is too small or too big, and you’ll be seen as a team player. Working as an executive assistant can get you unique exposure to an industry and can be a great way to help set your career in motion. Think broadly, learn as much as you can, and establish a good relationship with your boss. The experience you gain can catapult you toward your dream job — or one you hadn’t even known about. This post was originally featured on The Daily Muse .

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