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Neil McCormick, UBS Banker, Jumped To His Death After Snorting Cocaine

September 8, 2010

Neil McCormick, the head of UBS’s Asia Derivatives Unit, jumped to his death in London after ingesting cocaine at a party, according to the U.K.’s Daily Mail report of a court investigation into the death. (Hat tip to Business Insider. ) On June 21, Reuters reported that McKormick had died , based on a statement from UBS. McCormick, 36, had returned to London and was attending a party thrown in his honor, according to the Daily Mail’s account of the investigation. After walking around mumbling to himself, one attendee had this very grim description of McCormick’s death: I saw him vault between the window boxes and the balustrade, then there was a scramble. That’s the image I will probably have solidly with me forever. He steadied himself, and that was it.’ According to IFRAsia, McKormick worked at JPMorgan for more than 10 years prior to UBS and was a founding member of JPMorgan’s “exotics” team. Check out the full article at the Daily Mail .

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Ellen Galinsky: We Need Play-cations, Not Just Vacations

September 6, 2010

It’s Labor Day Weekend–the last weekend of summer before we plunge into fall. Hurricane Earl swept up the East Coast, missing us, but bringing cold biting winds that, even amid the bright sunlight, seemed a signal that summer–vacation season–is ebbing and it is back to work we go. That is, if we ever left work. Work, as we all know, can be all-the-time, every-place. A special study on overwork by the Families and Work Institute (FWI) reveals that that one in three of all U.S. employees can be considered chronically overworked. I know the facts about vacations from the FWI’s nationally representative study, the 2008 National Study of the Changing Workforce, and they tell an interesting story. Fact 1: Not all us have access to a paid vacation: 79% of American employees receive paid vacation time from their employers. Fact 2: On average, we are entitled to a little more than two weeks off (16 paid days). Half of the U.S. workforce receives fewer than 15 days. Fact 3: Even when we are entitled to vacations, not everyone takes all of the days he or she has: 39% of us don’t use our full vacations. Americans use an average of 13.5 days of vacation per year. Fact 4: The longest amount of time we take off at one time averages nine days. One in four of us (24%) takes five days or fewer for his or her longest vacation, while 23% take more than 13 days. Fact 5: Taking a longer vacation (13 consecutive days or more, including weekends or holidays) bodes well for our health. Those employees who take longer vacations are less likely to have minor health problems on a regular basis, depression, sleep problems or to feel stressed. These are the facts, but they don’t tell us much about what happens during vacations. Many of us work while on vacations. It seemed almost standard practice this summer to receive a bounce-message to an email I had sent that read: “I am on vacation and don’t have access to email and voice mail,” only to receive a response from that person within a few hours. Still others of us take work on vacations or plan vacations that can be viewed as an extension of our work. So over this past weekend–a busman’s holiday for me for sure–I asked a number of people: “what makes a vacation renew and re-energize you?” Here are some of their responses: They take us away from our usual lives. I know from my research on children for my book, Mind in the Making, how energizing having new experiences can be for children and adults–they heighten our senses; they stimulate our curiosity; and they make us want to explore. Even when that new place is a familiar place, being away from our daily routines is refreshing. For one woman I spoke with, it was not having to cook, do the dishes, go to work, and go to the gym: “it was permission to have fun.” They give us time to think and see things in new ways. A man took a vacation that was a workshop related to his work, but found that he had the time to learn new things so it felt differently than a similar workshop might have felt during the year. We have freedom to go with the flow: A woman who planned her vacation carefully for her husband and children loved the opportunity to change plans at the last minute and to follow their interests. They are pressure-free or at least pressure-different. Obviously, vacations can have their own pressures–the kids who say “Are we there yet;” the plans to go camping or to the beach that are thwarted by a storm; the schedule of activities that can seem rigid; or the car that breaks down and has to be towed. I have had all of these experiences, but it is a different kind of pressure than the daily pressures we face. One man talked about working very hard on his vacation, but still he felt free of the expectations he usually puts on himself or that others put on him. When my children were little, they always called vacations, “play-cations.” As I was listening to the people talk about what makes vacations renew them, I flashed back to my children’s word. Yes, the best vacations are like the best play of children–they give us an opportunity to explore, to have fun, to learn, to go with the flow, and to be in moment. So we need play-cations, not just vacations! An addendum: As I was writing this, I got an email from a friend. She was in an airport en route home from her vacation, which she said was beautiful. Then she wrote, “I really dread re-entering my life.” Her challenge is the challenge of so many of us. We need to find ways of bringing play-cations back from our vacations and keeping them–to whatever extent we can–in our regular lives at work and at home.

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Renata Sellitti: Unemployment Blues

September 5, 2010

My name is Renata, and I have a confession to make: I’m unemployed. I lost my job early last year, becoming part of the country’s 9.6 percent unemployment rate, and I’ve been a statistic ever since. This past year, I’ve learned when you lose your job you may very well lose your mind too. While millions of jobless Americans get resume tips, what we really need is awareness of the struggle we are about to stare down. I experienced something that I’ve come to identify as “the five stages of unemployment,” a playful-yet-serious incarnation of psychiatrist Elizabeth Kubler-Ross’ famed explanation of the five stages of grief. The jobless blues can be crippling and embody a similar loss of control at first. Then they eventually — and hopefully — lead to acceptance. Denial. Apart from carrying the contents of our desks out of the office, a job loss often doesn’t feel like a bonafide job loss. The initial week or two may even have been fun. We get to sleep late and watch all of the daytime television that we want, not realizing what total poison it may be. We don’t admit to ourselves that our foreheads have been branded unwittingly with a capital “U” that won’t wash off. Last summer, Gretchen Sodergren, 32, a corporate retail planner, got a call from her boss telling her, “This is the last paycheck this Friday.” Having worked from home, she was confused for weeks, asking herself, “What just happened here?” Sodergren became what she called, “The Coupon Lady,” clipping coupons to save money. As her bills accumulated, she learned to make macaroni dinners last for days and downgraded to drinking Miller Lite out of cans. Financial anxiety is the surest way to snap out of the denial. The length of this stage varies for everyone, but is always followed by its ugly stepsister, the second stage of unemployment: repetition. Repetition. I call this stage “one long Groundhog Day of rejection.” I spent endless days in blue Calvin Klein pajama pants and a pink shirt emblazoned with a picture of an angry chocolate chip cookie character and the moniker, “One Tough Cookie.” The slogan was ironic because, even though I sent my resume to everyone I knew, only to learn that most of them were also looking for work, I was falling apart. While worker bees buzzed outside my window on their daily commute, I turned to “Ellen” and “Oprah” to drown them out. I felt paralyzed by my inability to contribute to the world around me. By day, I hung out with Raymond and John, the doormen at my Murray Hill apartment building in midtown Manhattan, and bonded with the Hispanic housekeepers, while I did laundry in the basement. By night I begged my friends to go get drinks so I could actually leave my apartment. I cursed necessary tasks like calling the unemployment office. I wallowed my way right into stage three: Self-Improvement . The need for self-improvement sets in when even you become so disgusted with yourself and your appearance that you channel your frustration into exercise or grooming and wardrobe upgrades. Some months after losing her job, Sodergren, the corporate retail planner who suffered from denial threw away her stained white “Miami Beach” sweatshirt and the ill-fitting, light blue Old Navy pajama pants that she wore just about every day last year. “I actually convinced myself that because they matched it was somehow an outfit,” she says. Rob Nagel, an Indianapolis college admissions director who was unemployed for most of last year, walked his dogs Boss and Chick at Wadsworth, a local dog park, and rode his Gary Fisher mountain bike regularly because, he says, “Let’s face it. Mountain biking is free.” He lost 20 pounds. “People say that it’s a great opportunity to change career paths and all that stuff, but the only thing that really gave me sanity was exercise,” says Nagel. Rachel Stein, 28, a public relations manager in San Francisco, dealt with her unemployment last year by waking up early and packing her days with job searches and long walks. “I gave myself a routine,” she says. “I knew how important that was.” This past January, Stein launched a website, ” Tales from the Recently Laid Off .” But even discipline and all the exercise in the world can’t stave off the cruelest of the stages: Desperation. This is when all of the things that you previously shunned – like your mother’s well-intentioned-but-reaching job advice – suddenly don’t seem so ridiculous. You start actually entertaining them. Yikes. This is accompanied by a complete swallowing of your pride. Last spring, Michael Gargiulo, an unemployed freelance television producer in New York, got a call from his mother telling him that there was a news anchor with the same name on NBC4. She urged him to reach out to the “other Gargiulo” for a job. Initially, he resisted but after several months unemployed he sent “the other Gargiulo” an email explaining their many similarities – both work in broadcasting and both are from Brooklyn – and punctuated the email with a subtle plea, “In these tough economic times, us Michael Gargiulos have to stick together.” To Gargiulo’s surprise, the newscaster emailed him back the next day offering his home phone number and words of encouragement. Later, Gargiulo launched a Facebook fan page, “Michael Gargiulo Unemployed Genius,” to help navigate the job search because he says, “You have to have a little humor or you will go insane.” The final stage of unemployment is actually a road that forks into two possible choices, Surliness or Self-Help. Surliness happens when your frustration bubbles to the surface and you lash out. After getting a flurry of emails from Career Builder, an employment website, Nagel, the Indianapolis college admissions director who took up mountain biking, sent the website an email, “STOP F*CKING SENDING ME EMAILS.” He received a response threatening to ban him from the site and scolding, “I feel sorry for you however, because your temper & attitude is most likely why you can’t hold down a job! We suggest a good therapist to find out why your [sic] so angry at the world! We wouldn’t want a foul mouth like you working for us anyway!” Despite his desperation, Nagel was more amused than upset. Seeking help involves relying on support services or just deciding to be productive and determined rather than symbolically flipping unemployment the bird. Last November, Jayan Kalathil, an unemployed public affairs manager at MTV Networks published the book, “Generation Change,” taking on the task of self-branding and promotion to try and break back into the job market. “I think the biggest lesson I’ve learned,” he says, “is to say yes to different opportunities, invitations and everything that comes my way, something that I wasn’t as open to before I lost my job.” Early last year, Terry Drula began a support group in Westford, Mass., the St. Catherine of Alexandria Faith Works Unemployment Support Group, with ten members attending monthly meetings. About 25 members now attend. Drula says the group, comprised of a revolving door of chemical engineers, designers, software and marketing professionals, encourages members to identify career strengths and lets them network over coffee and cookies. It also organizes job search presentations to provide tools for reemployment. “There is a heck of a lot of quality people out there without jobs,” says Drula. As if losing your job isn’t bad enough, it seems as if unemployment may now actually kill you. Robert Leahy, director of the American Institute for Cognitive Therapy in New York and the author of the forthcoming book, Beat the Blues Before They Beat You , says that according to recent scientific studies, there is a strong link between unemployment and increased mortality rates, because of issues like increased stress, depression-related substance abuse and suicide. “Unemployment feeds into our worry, our pessimism, and is a major health problem,” he says. Leahy says after returning to work, the psychological effects that his patients suffer — like shame and isolation — don’t readily go away. Leahy encourages people to volunteer, exercise and restructure their daily routine and to avoid over-identifying themselves with their jobs. “What you do is part of who you are,” he says, but job seekers, “need to identify themselves as spouses, friends, fathers, mothers,” and other roles. In truth, many jobseekers say that they wouldn’t attend a support group meeting unless they were forced to attend, but there can be some merit to those measures. “Support systems can be very helpful if they go beyond complaining,” Leahy says. However jobseekers stay afloat despite the tidal wave of injured self-worth that threatens to crest over their heads daily, it is acceptance that most helps. This comes only after hitting bottom, though no one tells you that, either. And it looks different for everyone. For Sodergren, the “Coupon Lady,” bottom came when she tearfully realized she couldn’t even afford a $24.99 pair of shoes. For Stein, author of the blog, “Tales from the Recently Laid Off,” it came when she looked hard at the other folks vying for the same food service job she was considering. “It went from ‘I can’t believe I’m applying for this’ to ‘I can’t believe I’m competing for this,’” she admits. For me, hitting bottom came as I changed diapers and cleaned up Juicy Juice drink box spills while babysitting some of New York City’s privileged tots. I escaped the blues only after a total life overhaul. I went back to school and changed cities. Be warned: This method isn’t for everyone. Jobseekers can’t always convince their friends and family to understand their situation, but they can let go of their frustration while holding onto hope. Finding that peace will make things better. “I stopped blaming myself,” says Kalathil, author of “Generation Change,” “and understood that this is the nature of how things are right now. You never know what’s going to happen from day to day, so I just stay networking and stay optimistic because that sense of optimism is what gets you through it.” Still looking for work, I don’t wear my “One Tough Cookie” T-shirt anymore. I live it.

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

August 30, 2010

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

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James Rucker: Google, Verizon, and You

August 19, 2010

There was a time not long ago when it was easy to believe that Google was a different kind of company — one that considered the public good as well as the bottom line in making decisions. My, how a week changes things. Google had once distinguished itself as one of the strongest corporate proponents of openness and freedom on the Internet. These characteristics are guarded by a principle called network neutrality , which basically means that Internet service providers can’t slow down or speed up data that flows over their networks. But last week, the company turned its back on net neutrality — and the American public. In practical terms, net neutrality prevents AT&T, which provides high-speed Internet service to millions, from making a deal with Hulu.com to make its videos load five times faster than Youtube’s. It means that FoxNews.com couldn’t make a deal with Comcast, another major Internet provider, to block progressive blogs critical of Fox such as JackandJillPolitics.com or Daily Kos. And Myspace couldn’t cut a deal with Verizon to slow down Facebook’s traffic so that consumers would choose Myspace instead. In that way, net neutrality guarantees that the Internet remains an open platform for ideas and innovation, where anyone with a good idea and technical know-how can find success — just like Sergey Brin and Larry Page, Google’s founders. Last Monday Google reversed its historic support for net neutrality, joining Verizon — an Internet provider that has been working to weaken or eliminate net neutrality — in announcing a policy proposal which, if adopted as law, would spell the end of the Internet as we know it. There are tons of problems with this proposal for everyone.  But as is often the case, poor people and people of color will get the worst of it. It would divide the Internet into a network-neutral “public Internet” and a much faster “private Internet,” where broadband carriers could write the rules. But the devil is in the details — the public Internet’s net neutrality protections are so weak that most Internet providers would be able to go around the rules frequently. The other major problem here is that the private Internet would come to choke the life out of the public Internet. As more of the companies and organizations that wanted to take advantage of cutting edge speed and services merely stopped producing content for the public Internet, the Internet would become a pay-to-play enterprise. As io9′s Annalee Newitz put it : “The public internet? Yeah, that’s just for poor people. But guess what’s going to remain on the public net, the place where you go when you don’t have money? Certainly there will be educational resources like Wikipedia. But mostly it’s going to be advertisement-saturated free content from major entertainment companies…. Put in brick-and-mortar terms: There won’t be any produce markets on the public internet, but there will be plenty of liquor stores. Another disturbing aspect of the Google-Verizon proposal is its so-called “wireless carveout” — essentially saying that mobile Internet would not be subject to network neutrality rules. All the same reasons that net neutrality is important on regular wired networks apply to wireless networks, and it’s important for all Americans. Wireless broadband is the future of the Internet, and the telecom companies want to kill neutrality there to lay the groundwork for a profit bonanza. But it’s also true that changing trends in Internet usage indicate that many of the harms of a non-neutral wireless Internet would disproportionately fall on communities of color. According to The New York Times ,the percentage of African-Americans using mobile phones or other connected devices to share e-mail, exchange instant messages and access the Internet for information on an average day has more than doubled since late 2007, jumping to 29 percent, from 12 percent. By comparison, only 19 percent of Americans over all log on to the Internet on a mobile device on a typical day. And nearly half of all African-Americans and English-speaking Hispanics were using mobile devices to surf the Web and send e-mail messages, compared to just 28 percent of white Americans. Perhaps worst of all, the Google-Verizon proposal would leave the web without meaningful protection from corporate abuses. If, under this framework, an Internet provider were caught violating one of the few rules left in place, their maximum fine would be $2 million. But as law professor Marvin Ammori notes , Verizon makes that much money in revenue every 10 minutes, and $10 million in profit every three hours. They would have little incentive to ever do the right thing so long as the benefits of their actions outweighed the cost, and in fact, their shareholders would come to demand it. As Ammori later says: “If the punishment for bank robbery was $10, we’d have more bank robberies…. Verizon and Google have a duty to their shareholders to maximize profit. Their proposal essentially says that cheating on your taxes lets you keep the taxes, if you pay 5 bucks. Of course their shareholders will expect cheating; the law makes it profitable.” This is what happens when corporations write the rules they are supposed to play by — they win, and the public loses. The good news is that this scheme isn’t law yet, and the Federal Communications Commission still has the power to act for the public’s best interest. But it first must revisit a Bush-era decision to deregulate broadband. By revisiting this decision and reclassifying broadband as a communication service, the FCC can do everything it needs to do to protect American consumers. And in fact, the Chair of the FCC, Julius Genachowski, announced his intentions to do this. But he has backed away from this plan under intense pressure from the telecommunications industry, choosing to try negotiating a deal with them instead. That’s why it’s so important to speak out and demand immediate action to protect the Internet, and our future in this new digital century. When the banks wrote and enforced the rules on Wall Street, our financial system melted down. When BP and other oil giants wrote and enforced the rules for deep-sea drilling, the Gulf Coast suffered the worst oil spill in world history. It would be foolish to now entrust the Internet’s future to the profiteers in the broadband industry and their new ally, Google. The FCC has all the tools it needs to protect our interests and ensure the Internet remains a vital engine of information exchange and innovation. Genachowski must act now, before Google and Verizon’s bad idea becomes an even worse reality.

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Bergdorf Goodman Hires Bedbug-Hunting Dog

August 13, 2010

NEW YORK — High-end New York city retailer Bergdorf Goodman has hired a beagle to hunt for bedbugs – just in case. Store spokeswoman Ginger Reeder says there have been no reported cases of the pesky bugs at the Fifth Avenue department store. She says it seemed prudent to go the extra mile, though. The beagle has been on the prowl for several weeks, working at night after the store closes. The bloodsucking pests have rapidly multiplied in recent years. They can slip into any tiny space, including floor cracks and wall outlets. Retailers that have reported cases include Victoria’s Secret, Abercrombie & Fitch and Hollister. ___ Information from: Daily News, http://www.nydailynews.com

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Goldman Sachs’ Abacus Investigations Continue

August 11, 2010

The $550 million settlement reached between Goldman Sachs and the Securities and Exchange Commission last month was not the end of investigations into the bank’s murky Abacus portfolio. Two more regulating bodies, the U.S.-based Financial Industry Regulatory Authority (FINRA) and UK-based Financial Services Authority (FSA), are still probing into the bank’s failure to disclose to its investors a Wells notice that the SEC had handed it in early 2009– an entire year before the SEC’s lawsuit in April 2010. News of the ongoing investigations was revealed in the bank’s regulatory filing on Monday (h/t The AM Law Daily ): As part of the settlement, GS&Co. acknowledged “that the marketing materials for the ABACUS 2007-AC1 transaction contained incomplete information. In particular, it was a mistake for the Goldman marketing materials to state that the reference portfolio was ‘selected by’ ACA Management LLC without disclosing the role of Paulson & Co. Inc. in the portfolio selection process and that Paulson’s economic interests were adverse to CDO investors. Goldman regrets that the marketing materials did not contain that disclosure.” Investigations of GS&Co. by FINRA and of GSI by the U.K. Financial Services Authority (FSA) concerning the ABACUS 2007-AC1 transaction and related matters (including the timing of notice to FINRA and the FSA relating to the SEC investigation) continue. For those confused by the difference between the SEC and FINRA, the former is responsible for protecting individual investors and is run by the government, while the latter is responsible for securities dealers and is funded by the industry. The SEC loosely oversees FINRA. In June, FINRA ordered Goldman Sachs to pay a $20.6 million fine for its role in the Ponzi scheme pulled off by Bayou Hedge Funds.

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Australian Economy Surges Currency Reaches 27Year High

August 10, 2010

The Australian economy is showing signs of robust growth with job growth and upbeat forecasts driving the Australian currency to a 27year high against the dollar according to The Daily Telegraph

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Wallace Turbeville: The Murky Realm of (Derivatives) Clearing

August 9, 2010

Matt Taibbi’s latest article in Rolling Stone appropriately characterized the financial reform act as neither an “FDR-style, paradigm-shifting reform, nor a historic assault on free enterprise.” While generally describing the act as a “cop out,” he identified the Fed audit requirement and the Consumer Finance Protection Bureau as positive developments. But he viewed the requirement that many derivatives be cleared as “the biggest win of all.” Alas, Matt may have been too generous, or at least premature. Mandating clearing was a convenient and simple approach for Congress. The idea was to shift the basic derivatives trading risks in an appreciable percentage of the market away from the banks to reduce systemic risk. The problem is that very few people are equipped to understand just how the mandate might work in practice. How much of the market? What are the consequences? I have not seen evidence that anyone on the government’s side can answer these questions effectively. This is not intended to demean anyone’s intellect. Clearing theory is complicated and arcane. It was always a backwater of finance and was taken care of by people at the clearinghouses and in the back offices of the banks. Clearinghouses were largely allowed to regulate themselves through a process of self certification. This limited the Commodity Future’s Trading Commmison’s practical involvement with the markets. Then clearing became the centerpiece of derivatives reform. We decided to concentrate the most dangerous financial risks in the galaxy in a couple of organizations. As fate would have it, I am one of the few people around who knows something about the clearing business and theory and is not employed by an investment bank or clearinghouse. At the end of my career on Wall Street, I was hired to perform a financial autopsy of the special purpose derivatives clearinghouse set up by California as part of an innovative power market structure. It had failed in the state’s power crisis of 2001-02 . Observing the tremendous systemic risk generated by using conventional clearing techniques for all but straightforward derivatives, I embarked on a seven year quest. I formed a company that designed a mathematical, IT and legal structure to provide a transparent and orderly system to manage the risks of those derivatives which shouldn’t be cleared conventionally. Sign up for weekly ND20 highlights, mind-blowing stats, event alerts, and reading/film/music recs . Imagine my surprise when the banks decided against using the system. They preferred taking advantage of the opaque and chaotic bi-lateral derivatives market. The profit potential of the shadowy chaos outweighed efficiency, transparency and sensible risk management. At least I can claim to have been ahead of the times. There are two dangerous forces at work in the endeavor to push derivatives into clearinghouses: 1) Concentrating risks only makes sense if the risks associated with the cleared derivatives can be adequately managed. There is no way to collect enough collateral to cover all potential losses if a derivatives trader defaults. The credit risk embedded in a derivative is, by definition, limitless. Clearinghouses use statistics to measure probable losses. They will require sufficient collateral so long as the statistical analysis reflects reality. The further a type of derivative strays from the standard, liquid markets, the less valid is the statistical measurement of risk. It appears that most people involved with the reform legislation thought “unclearable” transactions were only one-off deals with non-standard contractual terms. The far greater issue concerns commodity classes and financial indices for which statistical risk measurement is unreliable. Historical market data may be too meager or the daily volume may make predicted prices “untransactable.” For certain classes of derivatives, statistical risk measurement is simply impossible, not just unreliable. One might think that clearinghouses would only take on these types of derivatives if the risk of doing so were prudent. One would be wrong. A byproduct of financial deregulation is fierce competition among a handful of clearinghouses. Profit depends on volume. Even before the crisis, competition had already pushed clearinghouses to the edge of prudence and beyond. We cannot assume that clearinghouses will be rational or that the government, so invested in clearing as an answer to the derivatives dilemma, will enforce prudence. Sophisticated and well-capitalized banks recently evaporated because they transacted business that, in retrospect, made no sense. Why not clearinghouses? The risk is that we revisit the world of “Too Big to Fail.” 2) Dealer banks have enormous influence over clearinghouses because they can control volume. Of the two major US clearinghouses, the IntercontinentalExchange (ICE) and Chicago Mercantile Exchange (CME), ICE is more susceptible. After all, the banks created ICE, largely to compete with CME. But CME is under bank influence as well. ICE and CME raced to clear credit default swaps after the market collapse in September 2008. The ICE effort was successful, in part because the special purpose clearinghouse it set up agreed to give the banks a 49.9% share of the revenues. CME naively created a structure with a trading feature attached, assuming that real-time CDS price transparency would be an attractive add-on. The transparency feature angered the dealer banks, which were already inclined to prefer the ICE structure for obvious reasons. The dealers have largely declined to support CME’s massively expensive effort. Privately, CME has vowed never again to take on a project that the dealer banks don’t support. Clearinghouses may take on derivatives imprudently, but the banks may use their influence to limit clearing. These do not balance one another. The banks might well support clearing of some risky derivatives and, at the same time, use their influence to resist clearing of other derivatives which should be cleared. These pitfalls can be avoided. Regulatory implementation and oversight can establish defenses. However, the process must aggressively challenge conventional notions of how clearinghouses work. Most of all, the regulators and proponents of reform have to be aware that the banks and clearinghouses are not necessarily friends. The banks will try to use their superior knowledge, resources and influence to craft a structure that allows them to continue business as usual. I despair that there is no practical counterbalance to the banks, such as AFR and other public interest groups that were so effective during the legislative process. It turns out that this part of financial reform is a marathon, not a sprint. Cross-posted from New Deal 2.0 .

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Brian Clark Howard: The Business Behind Facebook [Infographic]

August 5, 2010

Social juggernaut Facebook continues to explode in popularity, particularly in the developing world. The site’s ad targeting strategies have proved successful , and a string of highly public flaps over privacy and the origin of the service have seemingly done nothing to slow its ascendancy. This new infographic from PhD Online details some of Facebook’s colorful history. Personally, I love Facebook and I use it a fair amount every day. I am definitely careful about what I post there: I wouldn’t post anything that I don’t think is PG-13 or that I think would really get me in trouble with work, family, etc. I joined back when I was in grad school, and it was open only to the .edu crowd. Since then I have progressively limited what I share on the site, and have unanswered a few of the categories on my info page. But for the most part, I try to be quite open, and I think the benefits outweigh the risks. What do you think? Click on image for full-sized version Source: PhD Online Embed this Image on Your Site: [Via: PhD Online ] More Fresh Links: Friend The Daily Green on Facebook 10 Saddest Emo Animals 10 Funniest Green Viral Videos Pets and 16 Other Things You Didn’t Know You Could Rent 100+ Amazing Wildlife Photos

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Damien Hoffman: He Said, She Said: Should We Believe Economic Data or Corporations?

August 4, 2010

Despite the temptation to oversimplify a complicated world by being a bull or bear, we are sticking with the  mixed bag theme we laid out for our subs many months ago. In an economy full of both positive and negative events, there is no other logical conclusion. One of the major confusions in a choppy economy is the differing perspectives from our primary information sources . Currently, we are seeing this play out on a weekly basis as macro economic data continues to flash warning signals while bellwether corporations offer a rosier view. For example, yesterday the Commerce Department declared consumer spending and income remained flat month over month. However, this morning I awoke to an earnings report from Toyota (NYSE: TM) stating global market conditions are improving and they are increasing their financial forecasts for the year. These are just two examples of the daily “he said, she said” between economic data reports in corporate earnings announcements. So, who should an investor believe? Only one opinion matters: Mr. Market’s. In the case of a choppy economy, savvy investors know that each piece of big information has the potential to move the markets. If you look at a chart of the S&P 500 (NYSE: SPY), you can see that we’ve basically been in a trading range for the past year: Notice how the markets took a spill from mid-April until earnings season started in early July. During that time, the sovereign debt crisis and other bleak macro economic data took center stage in the media. Then, as we all returned from 4th of July parties, surprisingly good and contradictory information came pouring out of companies such as Intel (Nasdaq: INTC) , FedEx (NYSE: FDX) , Ford (NYSE: F), Publicis , 3M (NYSE: MMM), Caterpillar (NYSE: CAT) , DuPont (NYSE: DD), and many more. This information was only a surprise to those who were not paying attention to guidance and comments coming out of corporate America. While there was no guarantees that earnings season on Wall Street would be decent, we knew we had to position ourselves as the spotlight switched to corporate earnings season. Blindly following an uber-bear like Robert Prechter or a perma-bull like Jim Cramer was simply bad for our health. As we have noted many times before, a pure play the bull market is when both the economy and corporations are humming along to the same tune. Conversely, a pure play bear market is when both the economy and corporations are screaming the same horrors. Apparently, we are not in a pure play market where we can simply go long or short and then “set it and forget it.” Therefore, the winners in this type of mixed bag environment will be those who use a strong combination of common sense, agility and the discipline to acutely listen to the message gaining the most attention in the moment. So, the question is not necessarily whether we should believe one set of data over another. Rather, the question is who has the bully pulpit of the moment and what are they saying.

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Chris Guillebeau: How to Conduct Your Own Business Audit

August 4, 2010

Last week I headed out for the Sunday morning long run, and my legs decided not to cooperate. After four miles, it was time to pack it in. Bummer–so I tried again a few days ago. The same thing happened… almost. At mile four I was ready to quit. Through an act of God and the new Josh Ritter album, I managed to pull it out and keep going. At mile six I was feeling great, and as I headed home, I was glad I didn’t quit. Eleven miles for the win! *** This post is for the entrepreneurs and business-minded ninjas of our community. It’s all about conducting your own business audit –which basically means “looking closely at stuff and making improvements.” As I transition from active business development to book tour mode, I’ve been taking a close look at how the Unconventional Guides business operates on its own. I want to make sure the store continues to operate well, even without a bunch of big launches and promotions. I should say first that I’m pretty bad at most optimization or efficiency efforts. I’m just not motivated to revisit things once they’re done. For better or worse, I almost never go back to something I’ve done before. I also believe that it’s better to focus on the future than the past–better to move on and do something new. This philosophy works… most of the time. But it’s also true that a good business needs nurturing and continuous improvement. I do this for life in general towards the end of the year in the Annual Review series . Now I’m doing a smaller version for my business this summer. An audit has a few different meanings. In this context, I think of it as: ” a thorough review of information .” In my case, I’ve been looking at the following questions in some detail. You may want to answer these yourself, and–even better–take action to create the improvements you identify. “Where do you make money?” In any given business, it’s very easy to get trapped into all kinds of things that have nothing to do with making money. The solution to this is simple: focus on the money . True, money isn’t everything, but in a business, the money is pretty important. In the audit, you’ll want to look at where the money comes from and determine what you can do to keep it coming. Sometimes new opportunities present themselves; sometimes there’s an easy fix you can make to turn on another tap. Here’s a big hint: if you have a range of projects, products, or activities, it’s almost always better to devote your efforts to the strong performers than to try and pull up the weak ones. Most people do the opposite. If your goal is for everything to be average, that’s the best you’ll ever get. “How good is your messaging?” If you do any kind of online marketing, go back to where you started and read the copy (text) carefully. Review each page of the sales material slowly, and then read it out loud. Does it still present the message that you want? When I started looking through all of my active sales pages and reference material, I found plenty of mistakes. Typos that were missed a year ago were still there on the page. A date I referenced six months ago is now four months in the past. Oh noes! Then I checked out the multimedia. When I first started making videos, I was terrible at them. One time someone suggested I “do another take” to improve. Little did they know that the published one was Take #11! It really is an acquired skill. I just kept going and putting them out, which is the right approach, but now that I’m better at it, the old ones need to be replaced. I’ve fixed two of them and will redo another couple of them this weekend. “Are your prices what they should be?” When was the last time you raised your prices? You can have a sale or give out discount codes from time to time, but like all businesses, you should also plan on raising your prices on a regular basis as well. The other day on Twitter someone suggested that prices should be “fair to everyone.” Sorry man, but trying to price for everyone is a business death trap. Don’t do it! I aim solidly for the middle of the market by design–no $10 ebooks, but no $2,000 courses either. It works well. Other businesses are set up to compete on either end of the range, and if it works for them, that’s great. Since entrepreneurs live by the free market system, the way you answer the question of whether your pricing is fair or not is by asking another question: are people buying what you sell? If yes, you’re probably on the right track. If no, you probably have a problem. “How are you marketing to existing customers?” One of the best things you can do is reach out to existing customers and find a way to meet more of their needs. Yet despite the fact that most of my customers buy more than one product, I do very little active marketing to them after the sale. Bad move, Chris! I’m fixing it, with improved follow-up messages in my autoresponder campaign and a postcard mailing drive for a third of the customer list. As part of this examination, you should also carefully check your post-purchase process. What happens after someone buys? Do they get sent to the right place; does everything arrive in their Inbox or physical mailbox as it should? If you sell consulting, do clients know exactly how to set up a time in your schedule? The easier you can make all of these things, the better. “Are you tracking, monitoring, or testing enough?” Until recently, I didn’t even have any analytics software installed on UnconventionalGuides.com. Oops–I’ve fixed that. I’m also starting to do some limited advertising, so the tracking will be critical in resolving the age-old advertiser’s dilemma: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Now I’ll know. The thing about testing is that you just don’t know what’s going to happen until you do it. That’s why you test! A while back I installed an upsell offer where customers could get a $50 gift certificate for only $25 after making a purchase. I thought it was a killer offer, but my customers didn’t think so–it was accepted only one out of twenty times (5%). A good upsell can convert much better than that, so out went the gift certificates offer. “Where are the big, missing opportunities?” Earlier this year I recruited a number of affiliate partners for a major Empire Building launch. I remember looking at the sales figures afterward and seeing a few surprises. A couple of people did very well, even with smaller online profiles. When I noticed this, I thought, “It’s a good thing I recruited them!” But then in the ensuing weeks as I processed my daily mail, comments, and Twitter messages, I noticed a number of people that I hadn’t thought of before. If I had asked them to get involved, the launch could have been even better. Just because you have a big opportunity doesn’t mean you should pursue it. I pass up a lot of things because they aren’t a good fit for my overall strategy. However, it’s good to know what you’re missing, even if you’re deliberately missing it. In my case, I made a list of opportunities I could pursue in my business. Here’s a short version of the list: Add a conference call or webinar series on a specific topic every month Create “side products” consisting of smaller versions of the main products Create an iTunes app with mini-versions of my products Schedule another $100 Business Forum with Pam Slim Arrange more joint ventures to promote the guides Recruit more “high-end” affiliates Create a physical version of the EBK Carefully introduce the regular sale of products on eBay Conduct a “Pay-what-you-will” event for one of the guides Conduct a Silent Auction (or a public auction) Improve the social media identity of the biz Hire a call center to take orders by phone Produce a TV commercial for $100 or less ( here’s how ) *** As I said, this is a short version of the list. As to how I evaluate which ideas to pursue at any given time, well, that’s a whole other discussion. In general, though, I follow the “maximalist” approach of trying out a bunch of things all at once and seeing what works the best. A friend of mine told me recently, ” If you love something, you have to protect it .” You could say all kinds of things about that brilliant advice–but in this context, it means that I’ve spent a couple of years constructing a business that supports a good way of life, and I need to take the right steps to protect it. That’s why an audit like this helps. The Unconventional Guides business won’t ever be huge, but it’s grown much more than I expected when I first sold the first “Discount Airfare Guide” two years ago. I regularly take steps like these to protect it, and to ensure it can thrive even as I travel overseas next week or visit all 50 states this fall. I still have a long way to go in making the project everything I’d like it to be, but I think I’m headed in the right direction. How about you–will you conduct your own audit? What can you improve?

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Eric Haseltine: You’re More Clueless Than You Think: Becoming a Visionary in 5 Easy Steps

August 3, 2010

Insulting audiences with the opening line of a speech is a great way for a speaker to grab their listeners’ attention. I’m friends with a much sought-after dinner speaker, for instance, who gets big bucks for appearances where he starts with “You are all hopelessly clueless.” Fascinated by this speaker’s success–not to mention his healthy fees–I once asked several members of his audience why they enjoyed the insults so much. The answer was always more or less the same: “Well, it’s not really me he’s dissing, but the losers sitting next to me.” No one, it seems, thinks of themselves as clueless, but everyone around them falls short in the “clued-in” department. I’ve often wondered what would happen if my friend took his opening insult one step further, and said, “I know you all believe what I just said doesn’t apply to each of you personally, but it does. You,” he’d say pointing at a haplesslady in the front row, “and you and you and you,” indicating others in the audience, “are mind-numbingly clueless.” Well, this blog gives me a chance to find out. You, dear reader, yes you –and not some literary abstraction of all readers–but you who are sitting there right now reading these words with growing alarm and annoyance, are soooooo clueless! Why? Because your brain runs ancient scripts that hide important “clues” about the world from you. In previous blogs in this series I’ve shown that your brain–automatically, and without your awareness or permission– filters out information that It doesn’t expect Doesn’t want Isn’t focusing on in the moment Is about events beyond the immediate future As if this theft of vital information weren’t bad enough, your brain not only makes you clueless, but makes you clueless to the fact that you’re clueless. It covers its tracks so effectively that you need brain experts– such as me– to clue you in to your cluelessness. Let’s get down to business illustrating how you–yes YOU–are a victim of just one of your brain’s larcenies: robbing you of awareness of distant events that may one day loom large in your life. The ten questions below will establish your VQ (Visionary Quotient) for predicting the future. Simply mark down whether each statement is true or false, then check the correct answers. Your VQ is the number of correct answers divided by 10 (the number of questions). I dare you to take the test, especially if you haven’t read Long Fuse Big Bang , which has all the answers. 1) Predicting the future is impossible 2) Devoting time to the far future improves results in the near future 3) Identifying big wins in much harder than finding quick wins 4) Basic human nature– such as people’s resistance to change –is the biggest single obstacle to progress 5) Appealing to people’s emotions is more effective at selling your vision of the future than appealing to people’s logic 6) Successful visionaries place big bets on a single vision rather than many small bets on multiple alternative futures 7) The biggest obstacles to progress are often factors beyond our control, such as limited budgets, bureaucratic inertia and turf wars 8) The best way to win big with a new product is to ignore what customers say they want 9) Sitting on a big idea–as opposed to acting on it immediately–can be the best way to insure the idea bears fruit 10) The best way to predict the future is to invent it Answers 1) False. Phenomena such as Moore’s Law, (computers double performance at the same price every 18 months) allow accurate predictions based upon technology as far as 10 years into the future 2) True. Imagining the far future helps you discover near term opportunities that you wouldn’t have otherwise thought of. Relaxing assumptions about what is possible lets you stumble upon “impossible” opportunities that are, in fact, very possible 3) False. It takes no more effort to surface big, game changing opportunities than to identify small, near term wins. All that’s needed to spot big wins is to use simple tools such as “Blind spot” analysis–which uncover big opportunities hiding in plain sight– in the course of your normal way of doing business. 4) False. Major advances only occur when visionaries harness, vs. fight, human nature. For example, Jean Monnet slowly built the European Union by by cleverly appealing to tribal instincts of Europeans, persuading them to focus their “us vs. them” attitudes on non-Europeans instead of on intra European rivalries 5) True. People make decisions on emotion, not logic. Passionate arguments, especially those bolstered by rich visual and audio presentations, can move even conservative audiences to action 6) False. Although you can occasionally luck out with a single big bet, the surest way to build a big future, is to “fail fast” with many small, quick experiments. World Class innovators such as Wal-Mart and Proctor and Gamble do this to manage constant change in their businesses and uncertainty about future consumer needs. 7) False. Our own unconscious beliefs, perceptions and attitudes (such as learned helplessness) and aversion to “inconvenient truths” are the biggest obstacles to change. 8) True. The most successful products–such as I Phone- are inspired by innovators who follow their passions, not designers who follow consumer fashion. Henry Ford said “If I’d asked people what they wanted they would have said a faster horse.” 9) True. Big ideas are usually so disruptive that they are only accepted during crises. Waiting to pitch a radical idea until the right crisis comes along is often the best way to keep the idea from dying an early death. 10) True. The future is not cast in concrete, but is moldable. Apple, for example, decides what they want the future to be, then works hard to make that future real. Dr. Eric Haseltine is a neuroscientist, inventor and the author of Long Fuse, BIG BANG: Achieving Long-Term Success Through Daily Victories

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Stephen Colbert Compares Bush Tax Cuts To Digesting Bud Light Lime (VIDEO)

August 2, 2010

In a recent edition of his daily segment “The Word,” Stephen Colbert hilariously skewered, by turns, “trickle-down economics,” the GOP stance on the deficit and the Bush-Era tax cuts , which may repealed by Congress (Hat tip to The Big Picture ). The so-called “tax bomb” that will be unleashed by expiration of the Bush tax cuts for America’s wealthy has been the subject of concern by many on the right. Colbert’s advice was to exclaim: “A tax bomb! Quick, rich people, to your tax shelters!” Turning to the trickle down theory, Colbert compared the idea that tax breaks for the rich would stimulate the economy to, well, digesting a Bud Light Lime. We’ll let him explain further: “The bigger my tax cut is, the more money I can pour into the system,” Colbert said, taking a swig of the Bud Light. “Then very soon the benefits will work the way through the system and trickle down — I mean like a racehorse. Then the other 97 percent of poorer Americas are welcome to have as much of that as they can collect.” WATCH the segment: The Colbert Report Mon – Thurs 11:30pm / 10:30c

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Patricia Handschiegel: The New Power Girls: How Today’s Women In Business Are Making Money And Change

July 31, 2010

Lucques is one of the chic little restaurants that dot L.A.’s Melrose Avenue towards the west end. It’s tucked next to other local classics like Taste, Comme Ca and Ago, with Cecconi’s just a half mile or so ahead. As I take a seat across an old friend and entrepreneur in the social change arena, the scene is quiet and laid back. Couples and groups mingle and socialize over candle lit tables. A fireplace crackles despite that its August in the city. A few weeks ago, President Obama and his family dined here. “So what have you been up to,” I ask, digging into the basket of crunchy fresh bread. I’m as much of a carb-skipper as anybody but Lucques includes sea salt with the butter and its almost impossible to resist. My guest shifts in his seat and gets comfortable. He’s been one of the most innovative people I know on the social entrepreneurship scene. It was just that which brought us together years ago. I had just owned my first startup, Stylediary , and was eager to use business to help drive causes and change, he had been working to do the same with his own endeavors. As he shares the details on his latest work, I’m again amazed. “Green” business seems to be everywhere. The business world is learning that it can make money and drive social change. More than ever, women entrepreneurs are also tapping in. In fact, studies show that women founders are more likely to work to benefit causes and charities in addition to the bottom line of their business. From using sustainable products and working to empower small and mid-sized farmers to creating programs that give empowerment or give back, today’s new modern women entrepreneurs and executives are very active in using business to make a difference. It comes in companies and organizations of all shapes and sizes, from the Happy Baby Food company to Women 2.0. You name it. Power Girls know there’s value in giving back. “The ratio of women owned businesses in the green industry is about 50-50,” shared Eco Bold founder Steffany Boldrini, who creates and produces a web video show that helps consumers live green. Boldrini’s a bit like a Rachel Ray or Martha Stewart of eco-friendly lifestyle. Her videos are informative, fun and entertaining, popular among the site’s ten different video channels as well as ten different social networks. “Women seem to be more and more worried about what kind of planet they’re leaving their children. In fact, quite a few women that I’ve interviewed started their green companies right after having kids,” Boldrini added. It’s a trend that’s come a long way since the early days of sustainable t-shirt lines and companies using recycled goods. Today, green products are mainstream. Consumers can find and purchase items across dozen of categories and in most of the top stores both online and offline. It ranges from food to clothing to jewelry and virtually everything in between. Women-owned companies in the arena range from media and content businesses like Eco Bold and Your Daily Thread , to biomedicine and engineering. Most of all, they’re seeing success. More colleges and universities and government organizations are also supporting green entrepreneurship. They help aspiring founders cut through red tape, find financing and grants and business training on all aspects of running the business. Even female celebrities are starting to tap in. Stars like Alicia Keys, Barbra Streisand, Alicia Silverstone and dozens of others have cause-related efforts and organizations, all in the name of giving back. They join a growing number of male counterparts like Ed Norton and Brad Pitt. The new way of doing business is with an eye on the world — in addition to revenue. As I hop to make it to a friend’s birthday party at the Roosevelt hotel following dinner, I’m reminded that in a world that seems in it for itself, there is a growing chorus of founders who want the brass ring to give back. “I forgot how innovative you are with causes,” I text my friend from the back of the taxi ride. “It’s so inspiring.” With a greater ability — and awareness — that profit and good can be done together, more than ever business is.

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Robert L. Cavnar: 100 Days of "The Well From Hell"

July 28, 2010

During testimony before the Joint Investigation Committee last week, Mike Williams, Chief Electronics Technician on the Deepwater Horizon, testified that the well at Mississippi Canyon Block 252 that BP had struggled with since October 2009 was dubbed “The Well from Hell” by the rig crew. The well had been trouble from the start; drilling was actually started by Transocean’s Marianas semi-submersible, but had to be shut down in November 2009 after being damaged by Hurricane Ida. Drilling was recommenced by the Horizon in February 2010, and the trouble continued. Stuck pipe, lost circulation, side tracks, and kicks plagued the Horizon all the way down. As a geologist friend of mine often says, “Really good wells are really hard to drill,” and this one was no exception. Had this well not blown out, it likely would have been the largest discovery in the history of the Gulf of Mexico. The tragedy here, though, is that, in the deepwater, there is virtually no room for error. There is really no room for stupidity and bad design. Add hubris, and you get what we’ve been dealing with now for 100 days. Although the oil is finally stopped, the well is far from safe. BP has continued to rely on a badly damaged and leaking wellhead, and refused to open the well for containment on the surface, oddly claiming that the very same lines that pumped the top kill and will now pump the “static kill”, whatever that is, cannot handle the flowing pressure from the well, even though it’s lower. They have buffaloed US government representatives, led by a sea captain and yet another Nobel-prize-winning physicist, convincing them to allow them to cover the evidence and keep us from actually measuring the flow. By bullheading mud into the well before the top kill ( which does not lower the risk of the relief well ), BP is risking further damage, not only to the wellhead, but to the wellbore down below. The reason this well blew out to begin with was a lost circulation zone that required them to use a lower weight mud and light nitrified cement. Now they’re going to pump heavy mud from the top and that’s OK? I don’t think so. They’re going ahead with it, though, and the government is letting them, which makes no rational sense. A friend thinks that the Administration made a deal with BP that if they put up the $20 billion, the government wouldn’t force them to measure the flow from the well. I had at first dismissed that as conspiracy theory. I’m now beginning to wonder if he’s actually right. More on The Daily Hurricane Energy page .

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Jeffrey Epstein, Convicted Pedophile And Former Hedge Fund Titan, Now A Free Man

July 21, 2010

Jeffrey Epstein, the former hedge fund manager who pleaded guilty to soliciting an underage girl for prostitution, is now free of the year-long house arrest he’s been serving in his Florida home. At the Daily Beast, Conchitta Sarnoff has some startling new details of Epstein’s alleged interactions with young women. Sarnoff spoke to Micheal Reiter, the former chief of police in Palm Beach, Florida, who gave her exclusive access to a previously sealed deposition, which shows a disturbing pattern of allegations: “In March 2005, Reiter’s department, acting on a complaint from the Florida parents of a 14-year-old girl, launched an investigation that would eventually uncover a pattern of predatory behavior stretching back years and spanning several continents, knowingly enabled by Epstein’s associates and employees. Two or three times a day, whenever Epstein was in Palm Beach, a teenage girl would be brought to the mansion on El Brillo Way. (“The younger the better,” he instructed Haley Robson, a local teenager who was paid to bring other girls to the house, and who declared, on a police tape, that she was “like a Heidi Fleiss,” the infamous California madam.)” The new details, which suggest Epstein had 40 victims, including some whom he had flown in from South America and Europe, call into question why he would be given an 18-month jail sentence. (One former Florida prosecutor told the Palm Beach Post that he had never seen a sentence like Epstein’s before.) Which brings us to this incredibly embarrassing deposition, which Epstein’s legal team shut down immediately after the opposing counsel began with: “Is it true that you have what’s been described as an egg-shaped penis?” WATCH:

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Michael Rose: Drop Top Gorgeous: Mazda Miata Turning Heads for 20 Years

July 21, 2010

How did Mazda , a Japanese car company best known for using a funny named engine, the Wankel, reinvent the classic British sports car? They listened to a group of Southern California dreamers who lamented the loss of the “everyman” sports cars like MG, Triumph and Austin Healey. Since these cars were no longer being built, there were no comparable sales figures. When the Dreamer team was asked how many they’d sell, all they could do was shrug their shoulders. They needed a plan. “You have to be ready, if you prematurely get it out there it will be killed,” said Mark Jordan, one of the designers of the original Miata. “You have to guard ideas from corporate culture or they will be killed.” Fresh out of Art Center , Pasadena’s fabled auto designer launching pad, Jordan was brought into Mazda by Bob Hall, who was building a team of people who shared his dream of creating a sexy, fun to drive, good performing and affordable sports car. He charged his team with all the enthusiasm they needed to accept the challenge as if they’d been reading Margaret Mead’s famous quote, “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.” Hall may have been channeling Mead but he was smitten with Diana Rigg, the actress who portrayed Emma Peel in the television series The Avengers . He drove a Lotus Elan, “a duplicate of Emma Peel’s car.” He knew what he wanted, and watching the far away look in his eyes as he remembered those days, it’s possible he settled for the car. He decided to use the discretionary budget he had as head of Mazda’s North American Research Division to develop the design for his embryonic sports car. The Elan would be “used as a benchmark,” said Hall. “The project was more philosophical, we didn’t have approval,” said Hall. His plan was to go ahead and to move on if after two years it didn’t work. Tom Matano and Mark Jordan, Miata Designers Hall put Jordan together with fellow Art Center graduate Tsutomo (Tom) Matano and others to bring his dream to life. Excited by the prospects, the team started sketching, and while they didn’t know what it would look, like they knew what they wanted it to be. “I remembered when the Jaguar XKE came out in 1961, it was spectacular,” said Jordan. “We had to be timeless, we had to make a design that would endure.” Car design in the early 1980s was edgy and boxy; they wanted something that, “when you ran your hand down it you could feel the natural surfaces,” said Matano, gesturing with his hand as if describing Emma Peel’s shape. Clearly, the team was in synch. Hall liked the sketches of the curvy little roadster Jordan and Matano presented and went to Japan to get some money to build a prototype. A skeptical management said, “make it cheap.” They pulled all the favors they could from engineers in England and Japan, who figured out how to create an inexpensive two-seater with aspirations to be a Ferrari. Photo courtesy of Mark Jordan On a secret test drive through Santa Barbara’s Hope Ranch, where they thought no one would notice the pint-sized sports car, it turned heads. People came out gawking and pointing as they rolled past the local Porsche dealer. They couldn’t stick around and bask in the glory for fear of any spy shots leaking out, but they knew they were on to something. The trick would be translating the buzz of that moment into something that would cause the decision makers in Japan to give them a green light to build their dream machine. Photo courtesy of Mark Jordan Instead of making a typical product presentation at corporate headquarters, they decided to invite the decision makers to California for a road trip up the coast to Carmel. They assembled a stable of comparable sports cars, including the Peel-inspired Lotus Elan, a Triumph Spitfire, an MG Midget and a few others that the visiting execs could drive along with their new prototype. “We wanted to communicate the essence of the experience of a British roadster to management,” said Jordan. “That wind in your face, sun in your hair feel,” he said. The prototype’s light weight, its double wishbone suspension (like a Ferrari’s), 50/50 weight distribution, tight gearbox (modeled after the feel of a Jaguar) and peppy engine in the sexy, elegant body delivered all the smiles per mile they were hoping for. They got the go-ahead. When it was released in late 1989 as a 1990 model it caused quite a stir. Dubbed the MX5-Miata, it unleashed a flood of sporty roadsters from the world’s carmakers. Porsche introduced the Boxster, Mercedes had the SLK, BMW the Z3, Audi the TT, and others came along in rapid succession. Mazda showed the world that sports cars could once again be fun and affordable. The spirited new Miata harked back to the days of low-cost roadsters like the MG, and people snapped them up. “I think most car enthusiasts point to the Mazda Miata as the turnaround. Mazda reminded everybody what they loved about these little cars from the 50s and 60s and even if you didn’t own one in those days you could see the appeal of a little car that seemed to smile and would scoot around corners,” said Ken Gross, automotive journalist. Everyone wanted to get back into the game or improve what they had. This revived spirit was matched by advanced engineering that provided performance with decent mileage and emissions controls. And gas was cheap. It was a renaissance. “When people have some discretionary income, they want expressive fun, interesting cars, and the manufacturers, for once, were right on time,” said Gross. Being right has meant selling over 900,000 Miatas (or MX5s, as they’re known everywhere else) worldwide, with over 400,000 of those in the biggest market, the U.S. These special cars set hearts racing and pulses pounding. They put the joy back into driving and can even make the daily commute an adventure. While there are arguments to be made that we don’t really need sports cars, you should slip behind the wheel of one and see how you really feel. Seeing Hall, Jordan and Matano surrounded by Miata owners at a recent event for enthusiasts made it clear that there are no limits to what, “a small group of people who are on the same wave length can accomplish,” said Jordan. I bet Margaret Mead and Emma Peel would both approve.

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Conrad Black Granted Bail: Ex-Media Mogul Getting Out Of Jail

July 19, 2010

CHICAGO — Jailed former newspaper magnate Conrad Black was granted bail on Monday by a federal appeals court, weeks after the U.S. Supreme Court kicked his 2007 fraud conviction back to a lower court. The British baron and three other former executives from the media empire Hollinger International were convicted of swindling the company’s shareholders out of $6.1 million. It was not immediately clear when Black would be released from the federal prison in Florida. The conditions of his release would be determined by U.S. District Court judge in Chicago, according to an order from the three-judge panel. Last month, the Supreme Court weakened the “honest services” law that was central to Black’s fraud conviction. The justices left it up to a lower court to decide whether the conviction should be overturned. Black, who has served more than two years of a 6 1/2-year sentence at a low-security federal prison in Coleman, Fla., was also convicted of obstruction of justice after jurors saw a video of him carrying boxes of documents out of his offices, loading them into his car and driving off with them. The documents were sought by government investigators. A call to Black’s attorney, Miguel Estrada, was not immediately returned. A federal Bureau of Prisons spokeswoman said Black, 65, remained in prison on Monday and it was unclear when he might be released. Before the Supreme Court ruling, prosecutors had said Black should remain in prison because the high court’s decision wouldn’t affect the obstruction of justice count. A spokesman for the U.S. attorney’s office in Chicago said officials would have no comment. Hollinger International once owned the Chicago Sun-Times, The Daily Telegraph of London, The Jerusalem Post and hundreds of community papers in the U.S. and Canada. The “honest services” law has been criticized by defense lawyers as the last resort of prosecutors in corruption cases that lack the evidence to prove that money is changing hands. It also has been called vague, subjecting people to prosecution for mistakes and minor transgressions in the business and political worlds. But watchdogs consider it key to fighting white-collar and public fraud. The Justice Department said at the time of the Supreme Court ruling that prosecutors would continue to urge that honest services convictions for Black and others be upheld. The court’s decision made headlines all over the world, in large part because of the names of those sitting in prison as a result of the law, including Black, former Enron boss Jeffrey Skilling, disgraced lobbyist Jack Abramoff and California Congressman Randy “Duke” Cunningham.

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Steve Parker: Exclusive First Drive! Nissan’s 2011 Leaf EV

July 16, 2010

We have driven the future, and you can, too, sometime after the beginning of the new year. We took some short road test drives recently and one of the cars we flogged was Nissan’s 2011 Leaf EV. And while Toyota’s Prius gas/electric hybrid has been the Official State Car of Santa Monica for some years now, Leaf is definitely worthy of taking a shot at the title and could well prove successful in its efforts. In fact, the latest Leaf press preview was hosted at the Sheraton Miramar Hotel, smack in the center of the beach town. The challenge to Toyota has been made, and it might get ugly. Turns out all the excitement isn’t so much about the car’s performance, technology, styling or even interior design. It’s the car itself — the fact that it comes to life at a time so many other EVs, hybrids, extended-range hybrids and alternative fuel vehicles are hitting the marketplace. Customers will have a lot of info, maybe too much, to sort through when making their next vehicle choice. It’s bound to be shunned by some of the “holier than thou” who think cars should be banned entirely. But Leaf will be embraced by others, especially the so-called “hyper-milers,” who spend their days coming up with ways to suck even more energy out of every last atom in their batteries. Leaf is, without doubt, a history-making car. In terms of performance Leaf is about what we expected but it’s still, by default, a revolutionary and historic vehicle, the first EV to be mass-produced by a major car company in the “modern era” (post-WWII) and sold worldwide. Weighing in at a hefty 3,500 pounds (the battery pack alone is 600), Leaf will begin its U.S. sales sometime around the end of this year. Nissan announced this past week that Leaf’s on-board battery will be warranted for 8 years or 100,000 miles, whichever comes first. Nissan, along with Japanese battery-maker NEC, has formed a new corporation specifically to make Leaf’s batteries in Japan. For model year 2013, Nissan has plans to officially open its own dedicated battery-making facility in Tennessee for cars built in the U.S. Using laminated Lithium Ion batteries (Li-Ons for short), these batteries have been highly-developed by Nissan engineers to keep Leaf going for 100 miles after a charge, with a top speed of about 94 miles per hour. Now sit down, listen and learn something. Sorry, just wanted to see if you were still paying attention. There are three different charging methods for Leaf including “portable” charging, which uses a standard 110-volt wall plug-in charger which comes with the car. The portable method takes about 18 to 20 hours to make Leaf’s battery go from 0 to 100 per cent filled. “Installed charging” is the second method. When buying the Leaf, customers can also order an installed home charging unit. This method, using a 220-volt receptacle, takes around 8 hours to fully recharge Leaf. The home unit costs about $2,200, installed, but there are rebates and tax credits which can pay up to $2,000 of the total cost to encourage this option. Now, just as in auto racing, how fast you want to go depends on how much you want to spend, and this next option will be expensive, especially for Nissan and Aerovironment, the company working with Nissan on charger development and installation. “Quick charging” plans call for Leaf’s battery to be charged up to 80 per cent of capacity in only 30 minutes. Nissan engineers envision these quick chargers installed in busy shopping mall and office building parking lots, on major routes between cities ala truck stops and wherever else there might be a burgeoning population of EVs and plug-in hybrids needing a little love from the electric gods. We’ve gone over some of these specs before so let’s get down to it: How is Leaf on the streets? The Leaf we drove delivered about what we expected. The car is very intuitive; Nissan knows what we’re thinking when we get into the driver’s seat. All controls are in familiar places and operate accordingly, though, as on almost all the hybrids we’ve driven so far, there are some gimmicky eco-gauges and -controls that don’t seem altogether necessary (one allows the driver to “build a tree” as their eco-friendly driving style continues and improves for a period of time). The battery is under the car, as near the center as possible to help locate the center of gravity and help with handling. Nissan was smart to do this because they are going to catch a lot of hell for the car’s heft; perhaps Valerie Bertinelli and Jason Alexander can take fellow Jenny Craig clients to meetings and help Leaf lose a little bulk, too. Nissan Leaf interior Our test Leaf was, Nissan told us, about 90 per cent of what the final production version will look, feel and sound like. And the news is good in those areas: the car has an extreme style and much of that comes from use of a wind tunnel to design the car and cut down on that nemesis of EVs, wind noise. For instance, the highly-stylized headlamps with curves and lines that appear to go every which way are functionally manipulating oncoming air so it goes above and below the side mirrors, not right smack into it as on most cars and trucks. Even the radio antennae is specially shaped to cut noise and add to the vortex pushing the car along from the rear. These little things pay off as Leaf is very, very quiet; it’s like the local library. It’s so quiet, Nissan engineers tell us, that they had to engineer-in a certain amount of noise so pedestrians know there’s a car coming their way. We’re not kidding. The interior has a surprising amount of head room and that makes the entire car seem taller and wider than it really is from a passenger’s point of view. It’s a nice visual trick. Both front and rear seats do not offer what we would call “generous” legroom, but by no means would you think you’d be calling the chiropractor after a trip to Las Vegas in any seat on Leaf. You’ll have to go to a dealer to see the instrument panel up close and personal. Words simply can not do it justice. It’s colorful, animated and I understand the next-generation Leaf will come with 3D glasses. Well, it isn’t really that involved, so let’s just say the dash is, uh, “busy”. A single center tunnel mounted joystick-like appendage keeps Leaf in or out of its single forward gear. Leaf uses Nissan’s start system which allows engine start/stop by touching the brake and pushing a dash-mounted button with the key still in your pocket (or pocket book). Fit-and-finish inside and out was better than in most prototypes we’ve seen through the years. And with our test car not being a complete, sale-able Leaf, that bodes well for the car’s quality when it does go into production. As another Nissan engineer told us, “We’re still not through with it yet.” Steering is electrically boosted and was a little light for my tastes. I like to feel more connected to the road. Brakes are four-wheel anti-lock discs and seem up to the job, at least on the streets of Santa Monica. It is a bit surprising, though, the first time in the car, that due to the car’s heavyweight stance, drivers have to hit the brakes harder than they might in their previous compact car to slow or stop Leaf. That ABS braking system also creates battery-charging power through regenerative braking. Leaf gets off the line well as do all EVs and gas/electric hybrids. That’s because electric motors exhibit all their torque instantly, while a gas engine has a “torque curve” which brings the torque up gradually as the revs get higher. So Leaf drivers, like Prius owners before them, know that at the daily “Stop Light Grand Prix” they can take-on and beat just about any other car on the road. For the first 200 feet, at least. The audio system is superior for a car of this size and price (after tax credits and etc.) and allows plugging-in your iPod and all the other latest gizmos. Leaf has everything from 3D nav (not kidding this time) to Bluetooth. Let’s talk price. There are two Leaf models, a base (SV) and a step-up model called SL. Because SL is only $940 more than the SV, it seems the best bargain of the two. The SV is $25,280 while the SL rings the bell at $26,220. For both cars, there is a one-time $7,500 federal tax credit available (do the math yourself; I’m terrible at it), and, in California, the State Air Resources Board makes available another $5,000 tax credit. Your state may also offer similar credits, so check with your local Department of Motor Vehicles before buying an EV or hybrid to see what’s available. And $2,000 of the $2,200 cost of the installed home charger can be deferred; your dealer will fill you in. Similar to what Toyota did when their Prius first went on-sale, Nissan is using the Web to take “reservations” (a $99 “down payment” holds one for you) and let you stay in-touch with Leaf enthusiasts, get the latest news on technical highlights and Leaf availability, etc. Check-out www.NissanUSA.com and cruise around until you find “Leaf”. Finally, there’s an anomaly which not only Nissan but all companies making any kind of plug-in EV or hybrid need to think about: after a car-maker sells 200,000 units of whatever plug-in they’re making, that federal tax credit goes away. It’s almost a given that the new Prius plug-in hybrid and certainly the Leaf plug-in EV will fall victim to this rule. Nissan assures us their top execs are brainstorming to come up with a solution, so the woman who buys a Leaf one day and gets the $7,500 credit finds that her friend who bought one the next day does not get that credit. Nissan’s Leaf, GM’s Volt, Toyota’s plug-in gas/electric hybrid Prius and several other zero- or ultra-low-emission cars are about to go on-sale, all within about a year of each other. It’s an exciting time for those who are fascinated by the technology of these cars as well as their future possibilities, and Leaf will not be the butt of jokes using the words “glorified golf cart,” Leaf is a real car which will generate intense interest among the public worldwide.

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Steve Parker: Exclusive First Drive! Nissan’s 2011 Leaf EV

July 16, 2010

We have driven the future, and you can, too, sometime after the beginning of the new year. We took some short road test drives recently and one of the cars we flogged was Nissan’s 2011 Leaf EV. And while Toyota’s Prius gas/electric hybrid has been the Official State Car of Santa Monica for some years now, Leaf is definitely worthy of taking a shot at the title and could well prove successful in its efforts. In fact, the latest Leaf press preview was hosted at the Sheraton Miramar Hotel, smack in the center of the beach town. The challenge to Toyota has been made, and it might get ugly. Turns out all the excitement isn’t so much about the car’s performance, technology, styling or even interior design. It’s the car itself — the fact that it comes to life at a time so many other EVs, hybrids, extended-range hybrids and alternative fuel vehicles are hitting the marketplace. Customers will have a lot of info, maybe too much, to sort through when making their next vehicle choice. It’s bound to be shunned by some of the “holier than thou” who think cars should be banned entirely. But Leaf will be embraced by others, especially the so-called “hyper-milers,” who spend their days coming up with ways to suck even more energy out of every last atom in their batteries. Leaf is, without doubt, a history-making car. In terms of performance Leaf is about what we expected but it’s still, by default, a revolutionary and historic vehicle, the first EV to be mass-produced by a major car company in the “modern era” (post-WWII) and sold worldwide. Weighing in at a hefty 3,500 pounds (the battery pack alone is 600), Leaf will begin its U.S. sales sometime around the end of this year. Nissan announced this past week that Leaf’s on-board battery will be warranted for 8 years or 100,000 miles, whichever comes first. Nissan, along with Japanese battery-maker NEC, has formed a new corporation specifically to make Leaf’s batteries in Japan. For model year 2013, Nissan has plans to officially open its own dedicated battery-making facility in Tennessee for cars built in the U.S. Using laminated Lithium Ion batteries (Li-Ons for short), these batteries have been highly-developed by Nissan engineers to keep Leaf going for 100 miles after a charge, with a top speed of about 94 miles per hour. Now sit down, listen and learn something. Sorry, just wanted to see if you were still paying attention. There are three different charging methods for Leaf including “portable” charging, which uses a standard 110-volt wall plug-in charger which comes with the car. The portable method takes about 18 to 20 hours to make Leaf’s battery go from 0 to 100 per cent filled. “Installed charging” is the second method. When buying the Leaf, customers can also order an installed home charging unit. This method, using a 220-volt receptacle, takes around 8 hours to fully recharge Leaf. The home unit costs about $2,200, installed, but there are rebates and tax credits which can pay up to $2,000 of the total cost to encourage this option. Now, just as in auto racing, how fast you want to go depends on how much you want to spend, and this next option will be expensive, especially for Nissan and Aerovironment, the company working with Nissan on charger development and installation. “Quick charging” plans call for Leaf’s battery to be charged up to 80 per cent of capacity in only 30 minutes. Nissan engineers envision these quick chargers installed in busy shopping mall and office building parking lots, on major routes between cities ala truck stops and wherever else there might be a burgeoning population of EVs and plug-in hybrids needing a little love from the electric gods. We’ve gone over some of these specs before so let’s get down to it: How is Leaf on the streets? The Leaf we drove delivered about what we expected. The car is very intuitive; Nissan knows what we’re thinking when we get into the driver’s seat. All controls are in familiar places and operate accordingly, though, as on almost all the hybrids we’ve driven so far, there are some gimmicky eco-gauges and -controls that don’t seem altogether necessary (one allows the driver to “build a tree” as their eco-friendly driving style continues and improves for a period of time). The battery is under the car, as near the center as possible to help locate the center of gravity and help with handling. Nissan was smart to do this because they are going to catch a lot of hell for the car’s heft; perhaps Valerie Bertinelli and Jason Alexander can take fellow Jenny Craig clients to meetings and help Leaf lose a little bulk, too. Nissan Leaf interior Our test Leaf was, Nissan told us, about 90 per cent of what the final production version will look, feel and sound like. And the news is good in those areas: the car has an extreme style and much of that comes from use of a wind tunnel to design the car and cut down on that nemesis of EVs, wind noise. For instance, the highly-stylized headlamps with curves and lines that appear to go every which way are functionally manipulating oncoming air so it goes above and below the side mirrors, not right smack into it as on most cars and trucks. Even the radio antennae is specially shaped to cut noise and add to the vortex pushing the car along from the rear. These little things pay off as Leaf is very, very quiet; it’s like the local library. It’s so quiet, Nissan engineers tell us, that they had to engineer-in a certain amount of noise so pedestrians know there’s a car coming their way. We’re not kidding. The interior has a surprising amount of head room and that makes the entire car seem taller and wider than it really is from a passenger’s point of view. It’s a nice visual trick. Both front and rear seats do not offer what we would call “generous” legroom, but by no means would you think you’d be calling the chiropractor after a trip to Las Vegas in any seat on Leaf. You’ll have to go to a dealer to see the instrument panel up close and personal. Words simply can not do it justice. It’s colorful, animated and I understand the next-generation Leaf will come with 3D glasses. Well, it isn’t really that involved, so let’s just say the dash is, uh, “busy”. A single center tunnel mounted joystick-like appendage keeps Leaf in or out of its single forward gear. Leaf uses Nissan’s start system which allows engine start/stop by touching the brake and pushing a dash-mounted button with the key still in your pocket (or pocket book). Fit-and-finish inside and out was better than in most prototypes we’ve seen through the years. And with our test car not being a complete, sale-able Leaf, that bodes well for the car’s quality when it does go into production. As another Nissan engineer told us, “We’re still not through with it yet.” Steering is electrically boosted and was a little light for my tastes. I like to feel more connected to the road. Brakes are four-wheel anti-lock discs and seem up to the job, at least on the streets of Santa Monica. It is a bit surprising, though, the first time in the car, that due to the car’s heavyweight stance, drivers have to hit the brakes harder than they might in their previous compact car to slow or stop Leaf. That ABS braking system also creates battery-charging power through regenerative braking. Leaf gets off the line well as do all EVs and gas/electric hybrids. That’s because electric motors exhibit all their torque instantly, while a gas engine has a “torque curve” which brings the torque up gradually as the revs get higher. So Leaf drivers, like Prius owners before them, know that at the daily “Stop Light Grand Prix” they can take-on and beat just about any other car on the road. For the first 200 feet, at least. The audio system is superior for a car of this size and price (after tax credits and etc.) and allows plugging-in your iPod and all the other latest gizmos. Leaf has everything from 3D nav (not kidding this time) to Bluetooth. Let’s talk price. There are two Leaf models, a base (SV) and a step-up model called SL. Because SL is only $940 more than the SV, it seems the best bargain of the two. The SV is $25,280 while the SL rings the bell at $26,220. For both cars, there is a one-time $7,500 federal tax credit available (do the math yourself; I’m terrible at it), and, in California, the State Air Resources Board makes available another $5,000 tax credit. Your state may also offer similar credits, so check with your local Department of Motor Vehicles before buying an EV or hybrid to see what’s available. And $2,000 of the $2,200 cost of the installed home charger can be deferred; your dealer will fill you in. Similar to what Toyota did when their Prius first went on-sale, Nissan is using the Web to take “reservations” (a $99 “down payment” holds one for you) and let you stay in-touch with Leaf enthusiasts, get the latest news on technical highlights and Leaf availability, etc. Check-out www.NissanUSA.com and cruise around until you find “Leaf”. Finally, there’s an anomaly which not only Nissan but all companies making any kind of plug-in EV or hybrid need to think about: after a car-maker sells 200,000 units of whatever plug-in they’re making, that federal tax credit goes away. It’s almost a given that the new Prius plug-in hybrid and certainly the Leaf plug-in EV will fall victim to this rule. Nissan assures us their top execs are brainstorming to come up with a solution, so the woman who buys a Leaf one day and gets the $7,500 credit finds that her friend who bought one the next day does not get that credit. Nissan’s Leaf, GM’s Volt, Toyota’s plug-in gas/electric hybrid Prius and several other zero- or ultra-low-emission cars are about to go on-sale, all within about a year of each other. It’s an exciting time for those who are fascinated by the technology of these cars as well as their future possibilities, and Leaf will not be the butt of jokes using the words “glorified golf cart,” Leaf is a real car which will generate intense interest among the public worldwide.

Read the full article →

Christopher Weber: Why the GM and Chrysler Bankruptcies Foreshadow Big Problems for the Gulf Cleanup

July 16, 2010

After BP’s financial travails — falling stock, mounting claims — financial analysts everywhere are uttering the dreaded B word. Incredibly, it seems that an energy company recently valued at $200 billion could go bankrupt. As BP executives reiterate pledges to pick up the tab for stained beaches and soiled pelicans, another messy industrial cleanup is unfolding a thousand miles to the north, in the Midwest’s auto-manufacturing belt. General Motors and Chrysler are the chief culprits there. The automakers own hundreds of contaminated properties where they once made cars and car parts. Like so many oil-stained communities along the Gulf, former auto towns throughout the Midwest are waiting for a thorough going environmental cleanup. And like the Gulf communities, they hope that cleanup will help bring about a full economic recovery. Some have been waiting for years, even decades, for GM and Chrysler to finish the job. Will the communities of the Gulf Coast ultimately fall into a similar state of limbo? Right now, the daily stress and uncertainty demands their energy, but in the months ahead, many may learn a lesson that Midwesterners have known for a long time: The difficulty of making a big corporation pay for its mess increases exponentially once it declares bankruptcy. Herein lies a cautionary tale for Congress, environmentalists, and the people of the Gulf Coast. As much as they want BP to pay through the nose, they should beware a bankrupt BP, which could use bankruptcy laws to shed its responsibility to pay for environmental cleanup. “If GM doesn’t pay, there’s a real danger that the cleanup costs will fall back on the taxpayer.” That’s Kevin Smith speaking. He’s the former mayor of Anderson, Indiana, a city of 50,000 that made millions of starting motors, horns, and headlamps for GM. Smith worked closely with GM to clean up nearly a dozen former plants, but work stopped when GM went bankrupt. Now, the city is seeking $9.2 million from the automaker to finish the job. The court handling GM’s bankruptcy may award the funds; it may not. Either way, someone has to clean up the polluted 90-acre field where that headlamp plant once stood. A former auto plant does not look much like a white-sand beach, but the net effect is the same: An asset converted to a costly albatross. An oily albatross, if you want to mix metaphors. Unlikely Pairing: A bankrupt BP might delay or seek to avoid paying for environmental cleanup along the Gulf Coast (below, AP), just as General Motors has left this contaminated factory site in Anderson, Indiana, untouched (above). “When companies leave huge environmental pollution from their operations, local governments suffer the brunt of the problems,” says Matt Ward. He’s the policy director for the Mayors Automotive Coalition, a group of 50 municipalities that have banded together to rebuild communities devastated by plant closures. “Local communities have to deal with the contaminated property as well as lost jobs, lost tax revenue, increasing foreclosures, demands for social and poverty services, and the stigma that drives away future economic development.” When the companies responsible go bankrupt, cleanup efforts are often put on hold, prolonging the crisis. “When the company has no resources, it is bad news for communities,” Ward concludes. BP is plenty different than the American automakers, of course. For one thing, it has no problem making a profit. And unlike GM and Chrysler, it never owned the waters and beaches its crude has fouled. But when it comes to the all-important question of who pays, a bankrupt BP may quickly start to resemble GM and Chrysler, which have been widely criticized for insufficiently funding their cleanup obligations. “We’re still trying to calculate the environmental cleanup costs that GM and Chrysler have left to be borne by the public,” notes Jackie Gardina, an attorney, professor at Vermont Law School, and authority on the environmental consequences of bankruptcy. If BP declares bankruptcy, its oft-repeated promise to “pay all reasonable claims” goes out the window. “If BP were to file for bankruptcy, the government will be unable to hold the company fully accountable for the as-yet-unknown costs of this unprecedented environmental catastrophe,” Gardina says. “Bankruptcy courts struggle to find a balance between the ‘polluter pays’ principle of our environmental laws versus the bankruptcy.” Gardina says that only Congress, not the courts, can truly make corporate polluters accountable. It can arrange liens on BP’s assets or revise the bankruptcy code to provide less wiggle room for corporate polluters. Moreover, she notes that the Obama administration can request a “security interest” in BP’s property to guarantee the costs associated with the spill. Bottom line, Congress and President Obama must close the loophole that makes bankruptcy so useful for BP and other corporate polluters. Otherwise, we may one day speak of the Gulf Coast as the new Rust Belt — the Tar Belt, if you will.

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Danny Wong: E-Commerce Clones: The Group Buying Case

July 16, 2010

In any market that has more than a $1 billion, or even a few hundred million, market cap, there are several notable players, and sometimes those players look exactly identical to each other. According to Pete Cashmore, the pretty boy of the World Wide Web and social media, group buying seems to be a multi-billion dollar web trend . In the group buying arena, there are the big hitters such as GroupOn and LivingSocial , who have raised millions of dollars in institutional investment and have truly innovated social shopping. GigaOM’s Liz Gannes published a nicely sized list of the players in the group buying space in GroupOn and the Wannabes . To be honest, I don’t see much differentiation in these businesses. In fact, I’ll make the bold claim to say that these businesses are exact clones of each other . But somehow, with little differentiation, GroupOn is the market leader. This is because of their great market penetration. When I surf the web I always see their banner ads, when traveling in the Boston subway system I see their posters, and the media doesn’t stop talking about them either. That was their competitive advantage, covering more ground than their competitors. How can they differentiate and provide a better service? I think there can be more personalization for users of group buying sites. Sure, there is the localization of offering unbeatable deals within your general area so you can get a $120 massage for only $50, or a nice dinner for two (valued at $80) for only $40, but what if I’m not that type of guy that wants a massage or a nice dinner which I can take a date on (I actually am that guy, but am hypothetically speaking)? These group buying sites have hundreds of businesses in their queue that want their product featured… why not hasten the process of featuring their deals by specially targeting which subscribers might be best qualified to snag the daily deal? For example, I am a new-age male, love to shop, love to eat out, but am not too excited about going to the spa, getting my nails done, or getting fancy theater tickets (unless there’s a lovely lady I know begging to see a show). I don’t want to see deals about getting a bikini wax or a mud bath, and I do want to see more deep discounts for the best local, no-name steakhouse and the coolest retail outlets with hip fashion. Perhaps the group buying businesses are too focused on being just as good as the next guy, and aren’t spending enough time thinking about how to actually be a better business. Businesses should s top looking sideways at their competition and should spend some more time innovating. Just a final note, perhaps I am not being fair to some of the group buying businesses that are a bit more niche by having more local penetration than others, which does make for some differentiation. Danny Wong is a co-creator of custom men’s dress shirts with Blank Label and likes to speak his mind about new things in e-commerce and exciting new web trends.

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Jessica DuLong: How to Make An Ethical American Job (Before It’s Too Late)

July 14, 2010

Just three days after the Obama administration recently announced a commitment to reenergize the United States’ manufacturing base, Intel co-founder Andy Grove released a compelling and widely-discussed piece, “How to Make An American Job Before It’s Too Late,” on the nation’s need to move away from dependence on overseas production and toward rebooting the domestic manufacturing sector in an effort to rebuild our economy. But as discussions about the toll that offshoring is taking on innovation and jobs continue, changes among China’s labor force are altering the economic landscape of the future. This leads me to wonder: How are these shifts going to affect the U.S.? Ethically speaking, what kind of industrial nation do we want to be? 
 Grove hints at similar questions when he challenges the pervasive common wisdom that “as long as ‘knowledge work’ stays in the U.S., it doesn’t matter what happens to factory jobs.” He recognizes how that assumption undervalues manufacturing’s role in the economy, and asks: “What kind of a society are we going to have if it consists of highly paid people doing high-value-added work — and masses of unemployed?” The numbers Grove cites speak volumes. The fact that the U.S. has fewer people employed in computer manufacturing today (166,000) than before 1975, when the first personal computer was assembled, paints a grim portrait of domestic production in this critical growth area. In Asia, meanwhile, computer manufacturing employs 1.5 million factory workers, engineers and managers. By allowing high-tech factory work to move overseas, U.S. businesses’ efforts to protect shareholders at the expense of workers has cut American labor — and the economy — off at the knees. And what about workers in China? Dire labor conditions there have drawn increased scrutiny, especially following the recent spate of suicides (and attempts) at Foxconn Technology , the world’s biggest contract electronics supplier. Meanwhile, labor strikes at Honda and Toyota Motor reveal that Chinese workers are not only recognizing their collective bargaining power, but being taken more seriously by their employers. As C. Cindy Fan, author of China on the Move explains : “Today’s youths, including those from the countryside, are much more savvy and aware of their leverage than their parents.” What makes these recent strikes different from earlier strikes is that employers have given in to labor’s demands, responding with wage increases, which in turn have encouraged more strikes. As a result, the cost of Chinese labor is beginning to rise. And as this trend continues, it remains to be seen which country will next fill China’s shoes, offering up its workers to the world — for cheap. Meanwhile, American consumers have big questions to ask ourselves about our culpability in supporting, through purchases, the poor labor conditions that the U.S. would never abide (well, I should say, never admit to abiding ) on native soil. According to Grove, “for every Apple worker in the U.S. there are 10 people in China working on iMacs, iPods and iPhones,” and a similar 10-to-1 relationship holds for Dell and other U.S. tech companies. While I love my iPhone and lust after the iPad, I find myself needled by a growing discomfort about the costs that workers (both the workers overseas who produced the goods, and the jobless Americans who never had the chance) have paid for my gadgets of convenience. Efforts to move the production of our daily goods back to this country can not only create jobs, but can — through worker protections and effective labor organizing — ensure fair working conditions for the people who make the products we consume. As one step toward a solution, I like Grove’s controversial idea of an “industrial commons” system, which has been described as a “tax on products made overseas, with the proceeds used to fund American firms’ ability to grow and build things right here.” Such a system, Grove explains , “would be a daily reminder that while pursuing our company goals, all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability — and stability — we may have taken for granted.” Not only will revitalizing our domestic manufacturing base create jobs and kick-start economic recovery, but by doing it right we can shift the very ethics of the nation and how we participate in the global economy. By integrating our high-tech knowledge with our skills for making things — and by demanding fair treatment for the people on every shore who make the world’s goods — we can move toward being a nation of greater independence, integrity, and innovation.

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Robert L. Cavnar: Deepwater Moratorium Becomes "Suspension," But Still Needed

July 13, 2010

In response to two losses in federal courtrooms in the last two weeks, the Department of Interior issued a new order yesterday to suspend the drilling of deepwater wells in the Gulf of Mexico.

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Robert L. Cavnar: Deepwater Moratorium Becomes "Suspension," But Still Needed

July 13, 2010

In response to two losses in federal courtrooms in the last two weeks, the Department of Interior issued a new order yesterday to suspend the drilling of deepwater wells in the Gulf of Mexico.

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David Isenberg: The GAO Transcripts, Part 6: Coordinating PSC Activities in Iraq

July 4, 2010

This is the sixth installment of the Government Accountability Office interview transcripts that were prepared pursuant to the July 2005 GAO report ” Rebuilding Iraq: Actions Needed To Improve Use of Private Security Providers .” This transcript describes the coordination of private security details. Although this interview is not about any one private security contractor the PSC that had overall responsibility for doing so is Aegis Defence. Standard disclaimer: I have put in ( _____ ) to reflect those words of phrases which have been blacked out in the transcript. I have also put in the underlining as it appeared in the original transcript. As in the transcript, I have left out letters from various words, even when it seems obvious what the word is. Prepared by: Kate Walker Index: Date Prepared: December 2, 2004 DOC Number: 1220820 Reviewed by: Carole Coffey 01/0705 DOC Library: Type library name here Job Code: 350544 Record of Interview Title Interview with _________ Purpose To learn about PCO PSC coordination and th _________ Contract Contact Method Conference Call Contact Place GAO HQ and Baghdad, Iraq Contact Date December 2, 2004 Participants _________ Bill Solis, Director, DCM, GAO Steve Sternlieb, Assistant Director, DCM, GAO Carole Coffey, Analyst-in-Charge, DCM, GAO Kate Walker, Analyst, DCM, GAO Tim DiNapoli, Assistant Director, ASM, GAO Gary Delaney, Analyst-in-Charge, ASM, GAO Comments/Remarks : _________ is the _________ or the Iraq Project and Contracting Office (PCO), formerly know as the Coalition Provisional Authority. The PCO is responsible for all activities associated with the program, project, asset, construction and financial management of the reconstruction effort in Iraq. _________ _________ security contractor for the PCO. _________ provides private security detail (PSD) for the PCO director and key members of the PCO staff. ________currently has 23 vehicle escort teams and static guards in one location. Within the PCO are seven operational centers (a National Center known as the Reconstruction Operations Center (ROC) and 6 regional ROCs) that provide situational awareness, information and intelligence, and serve as an interface between the military and the contractors including PSCs in Iraq. The national operational center is located in Baghdad at the PCO headquarters and the regional centers are located in Mosul, Tikrit, Ramadi, Baghdad-Camp Victory, Hillah, and Basra. director and key members of the PCO staff. operates these centers under the same contract used to provide security to the PCO. Currently ________ s is about 90% staffed. ________ sent us a brief giving the overview and readiness status of the cell. Genesis of the PCO and Contractor Participation The PCO was created in anticipation that the State Department/Department of Defense (DOS/DOD) Interagency Memorandum would be signed. The DOS/DOD Interagency Memorandum called for the creation of an entity to oversee movement and intelligence sharing in Iraq – the PCO. Currently, contractors participate with the PCO on a voluntary basis. ________ reports that the PCO is seeing increased participation every day. If the Interagency Memorandum is signed, it will require contractors to register with the PCO. ________ said that in some cases, contracts would have to be revised. ________ does not know if all new contracts include provisions for registration with the PCO. Contractors were informed about the PCO through a series of meeting with each of the prime contractors’ security managers. When asked about the concerns conveyed by several contractors we interviewed ________ conjectured that the contractors we spoke with might have viewed ________ a competitor. ________ reported that the CPA-IG had conducted an analysis of the contract award. Page 1 Intelligence Sharing The G-2 at the PCO gets information from the MNFI G-2. This information is then sent to the ROC where, once it is cleared, is sent to.PSCs for their use. Contractors can get information about movement security, etc. from the PCO via the ROC. Communication There are currently three methods for real time communication among PSCs and PCO. 1. Land-lines 2. HF Radios–direct link communications with regional operation centers 1 3. Internet, Centrix, SIPRnet To request aid or communication with the ROC or the regional operations centers, PSCs must radio their own headquarters’ dispatch center and that dispatch center would then contact the ROC. The ROC will then contact the regional operations centers if necessary . PSCs can contact the regional operation centers directly, but ________believes this to be a complicated process. He also doesn’t believe that the current method of contact causes too much delay . The PCO also has transponder units that plug into security vehicles. These units provide the location of the vehicle every four minutes and also have a panic button in the boxes that can alert regional operation centers if there is an emergency. ________said, however, that there were only a certain number of boxes that contractors could check out. Future PCO contracts will require that all prime PCO contractors purchase these transponder units. Transponders can be acquired on the commercial marketplace. This is not a problem; however, because typically only transmittal equipment is available in the market and translating equipment is proprietary to specific companies. In an emergency, vehicles or convoys without these transponder units can contact the PCO via cellular phone, but ________indicated that cellular phones were often unreliable in Iraq. In addition to contacts at the PCO, contractors are also given contact numbers for the embassy and local military operation centers. ________informed us that there is also a password protected website that ________ maintains that is also used to disseminate information. ________ is unaware of any communication between the PCO and OSAC. ________ encourages informal relationships between contractors, PSCs, and the military, but thinks that the PCO should be monitoring these relationships ideally. Movement Coordination A recent policy has been developed for handoffs between division boundaries, but________ is unable to verify that the policy has been implemented. ________ scribes the policy concept as one of a series of checkpoints through which convoys must pass. The checkpoints occur before the boundary changes. Contractors are supposed to get their march credits approved by the military before they begin their movement. March credits are then to be passed on to relevant division commanders. Page 2 QRF Should a PSC need help, the ROC is responsible for arranging quick reaction force (QRF) aid. After a PSC contacts the ROC and indicates that they need help, the PCO would in turn contact the regional operation centers. The regional reconstruction operation centers (RROCs) are co-located with the major subordinate commands’ operations centers, so the moment the ROC contacts the RROC, the G-3 can be contacted. QRFs are provided by the military on a not to interfere basis ________ reported that the QRF usually works, but there have been some instances were QRF has been delayed. After action reports are written about these incidents only when something goes wrong and there is a lesson-learned type scenario. Database of Contractor Personnel If the Interagency Memorandum is signed, the PCO will be responsible for collecting information on contractors. The PCO is not sure how to collect this data The PCO thinks that the Army’s Logistics Support Element (part of the Army Material Command) would best be able to collect information on DOD contractors. Weapons The types of weapons contractors may use are listed in CPA Order 3. Version seven of the Interagency Memorandum would make the PCO responsible for maintaining a list of those Contractors who have been approved to issue weapons and ammunition under Section III of the interagency guidance. ________ knows of several PSCs that have attempted to register with the Iraqi Ministry of Interior (MOI) and Ministry of Trade (MOT), but have found that the MOI and MOT do not have to capability to register them. Interagency Memorandum ________ would like to see the Interagency Memorandum signed. While the Memorandum isn’t perfect, he thinks the memorandum can be modified as necessary. The ________ is concerned that the “Interagency Memorandum” has been reduced to “Interagency Guidance” because he believes that guidance does not carry the same weight as a memorandum. The ________ believes that if State and DOD can not come to an agreement on the guidance, DOD should issue the guidance on its own. The ________ said that once the guidance is issued, MNFI will issue an order to the major subordinate commands in Iraq to provide the military assistance laid out in the agreement. Current Status in Iraq According to ________ , regional operation centers are not fully integrated and are not fully functional. He believes they will be in the near future. Commanders are not fully informed about PSCs. ________ is trying to educate commanders to get them to see PSCs as “blue forces.” In doing so, ________ hopes to convince commanders that PSC need to be given the same military support as other military units in Iraq. ________ says that he has personally briefed each division commander of PSCs and their issues. Chain of Command While the PCO is under the COM command, it is operating under CENTCOM Order #1. The SJA at CENTCOM, however, told ________ hat CENTCOM Order #1 is not applicable because the PCO falls under COM command. ________ would like the PCO to fall under MNFI for security matters. Page 3 Recommendations ________ only recommendation would be to get the Interagency Memorandum signed. He believes that even if the memorandum were less that perfect, it still would give authorities something to modify and improve. He thinks that there needs to be some overarching guidance on private security contractors. ________provided us with the following documents: o A ROC Overview o A Brief describing the PSC Association o The latest draft of the Interagency Policy Guidance o Contact Information for Lawrence Peters o ROC Daily Briefing o A Security Operations Briefing Page 4

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Sheldon Filger: Are European Banks on the Verge of Destruction?

June 30, 2010

In February 2009, my blog referred to a story that appeared in The Daily Telegraph, a leading UK newspaper, headlined, “European bank bail-out could push EU into crisis.” The essence of the story was that The Daily Telegraph was shown a top-secret document, leaked from the European Commission, the executive body that oversees the 27-nation European Union, which warned that the EU’s banking system was contaminated by an ocean of toxic assets. Though the story was ignored by the rest of mainstream media, for the most part, I think it is timely to look again at this secret EU document in the light of the current European debt crisis and growing rumors regarding the insolvency of many leading banks across the continent. The confidential 17-page European Commission document warned that the European banking system could be holding as much as 18.6 trillion euros in toxic assets. Furthermore, in the wake of the European bank bailout that followed the collapse of Lehman Brothers, the document warned that the cost of a second Eurozone and U.K. bank bailout would exceed the financial capacity of the European Union. In other words, if Europe’s banking system enters a meltdown in the face of the sovereign debt crisis now plaguing European economies, the EU will be powerless to stop the implosion of the European banking and financial system. Reviewing what the European Commission warned about more than a year ago, it appears that the document’s authors had an impressively prescient ability to forecast the current European sovereign debt and fiscal crisis. In stark terms, the EU document warned that, “It is essential that government support through asset relief should not be on a scale that raises concern about over-indebtedness or financing problems … Such considerations are particularly important in the current context of widening budget deficits, rising public debt levels and challenges in sovereign bond issuance.” With Greece essentially insolvent, Spain in the grips of its own sovereign debt crisis and the U.K. and Italy teetering on the edge, not to mention Ireland, Portugal and Eastern Europe, it seems to me that the worst case scenario hinted at in the leaked document more than a year ago is no longer a speculative possibility, but unfortunately a chillingly realistic forecast of what may very soon be the next great global banking crisis.

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Debrahlee Lorenzana Asks Human-Rights Officials To Investigate Citibank (VIDEO)

June 28, 2010

NEW YORK (Associated Press) – It went viral as the ultimate example of being punished for circumstances beyond one’s control: a woman who said she was fired from her banking job because she complained that her male colleagues called her bodacious figure a workplace distraction. Then – after the tabloid headlines, the TV interviews, the New York Times column – came the disclosure that the buxom banker who said she couldn’t help the way she looked had, in fact, helped it a lot, through a series of cosmetic surgeries she had extolled on reality TV. When Debrahlee Lorenzana asked state human-rights officials on Monday to investigate her claims against Citibank – which the bank denies – her story had already become a crucible teeming with touchy subjects: sexual harassment, women’s workplace fashion, society’s obsession with beauty, Americans’ mixed feelings about publicity-seeking. It’s a morality play for the YouTube era. But as commentators ranging from legal analysts to comedians debate whether she’s a novel form of discrimination victim or a gold digger trying to cash in on male attention she courted, the 33-year-old single mom at the center of it all says she’s unbowed and trying to teach corporate America a lesson. She followed the bank’s dress code and tried to do her job, she says, and so what if she strove to look – in her own words – like a Playboy model? “There’s nothing wrong with that,” Lorenzana said at a news conference Monday. “One thing has nothing to do with the other.” Then she went off to work at her new job at another bank, dressed in a yellow sleeveless top, a form-fitting ecru skirt and tan stiletto peep-toe pumps. Lorenzana isn’t the first woman to take legal action over workplace dress requirements; famous examples include a Nevada casino bartender who unsuccessfully sued after she was fired for refusing to wear makeup. But many such cases revolve around claims that the woman was pushed to look more like a sex object – not less, as Lorenzana alleges. Her claim that she was dressed down by bosses who said she was too alluring to wear turtlenecks or pencil skirts seized the cultural moment because “it just sounded so sort of ‘Mad Men’-esque,” said Brenda Weber, a gender and cultural studies professor at Indiana University, referring to the AMC television series that often dwells on masculine privilege in a 1960s advertising firm. It’s no surprise the frenzy only intensified after the revelation of Lorenzana’s plastic surgery, Weber said. In a culture that cherishes ideals of genuineness and meritocracy, “there’s this sort of stripping of her authenticity that then, in an American context, we really sort of dislike,” she said, but “it doesn’t mean that we’re not fascinated.” Lorenzana began working at a Citibank branch in September 2008, in a job soliciting and opening up new accounts for businesses, according to her new complaint to the state Human Rights Division and a lawsuit she filed last fall. Managers soon began hassling her about her work wear, saying she looked “too distracting” for her male colleagues to handle, her lawsuit said. When she pointed out that some co-workers wore more revealing clothes than she, a manager told her that “your body is very different from them” and that because the others “are short or fat, it’s OK for them to dress like that,” her human-rights complaint said. She complained repeatedly to Citibank human resources officials and was transferred to another branch. After what she calls a deliberate campaign to keep her from meeting performance targets – including by giving her an out-of-the-way desk where customers couldn’t find her – she was fired in August, according to her complaints. Citibank, part of banking giant Citigroup Inc., says poor performance was the sole reason for her firing, and that the bank is confident it will prevail in the legal fights. “Her current attempts to gain personal publicity are as transparent as her legal claims,” Citibank spokeswoman Natalie Riper said in a statement Monday. The lawsuit, which seeks unspecified damages, is headed for arbitration. The human-rights complaint will trigger a separate investigation that could ultimately lead to a ruling from an administrative judge. The agency declined to comment Monday. The alternative newspaper The Village Voice first wrote about Lorenzana’s lawsuit June 1. Soon, fashion editors assessed her work wardrobe. Bloggers decocted the effects of beauty on the beholder and the holder. Newspapers from Canada to Florida weighed in, some calling the case a flashpoint for debate over workplace sexual harassment. Within days, Lorenzana made the rounds of network morning shows. Times columnist Maureen Dowd examined her case in light of studies on societal responses to people’s attractiveness. A panelist on NPR’s “Wait Wait … Don’t Tell Me!” pronounced her predicament “the most flattering way ever to get fired.” Then the Daily News disclosed that Lorenzana – who had told the paper, “I can’t help how I look” – had been featured in a 2003 Discovery Channel series called “Plastic Surgery New York Style” as she planned her fourth breast enlargement, to a size 32-DD. “I know men have a fantasy of having a Playboy Playmate – that’s what I want to be,” she says on the show, noting that she had also had a tummy tuck and liposuction. Lorenzana said Monday she was simply trying to restore her curves after breast-feeding, and that the show directed her comments. Discovery Channel representatives didn’t immediately return a call. The twist in Lorenzana’s story only sparked more dissection of whether she was standing up for women’s rights or setting them back. In one of the most curious debates, National Organization for Women President Terry O’Neill faced off against actor and radio personality Danny Bonaduce on CNN’s “The Joy Behar Show,” while Behar wondered aloud about whether women’s enduring concern for their appearance marked a failure of feminism. While Bonaduce lambasted Lorenzana as an attention-seeker, O’Neill says the banker shouldn’t have been subjected to the kind of attention Lorenzana says she got. “If a woman has breast implants, that really doesn’t justify inappropriate comments,” O’Neill said in an interview Monday. As for Lorenzana, she said Monday that the saga has left her more media-savvy but not sorry: “I don’t regret anything in life.”

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Dan Dorfman: Cures or Quackery?

June 25, 2010

Ask a doctor about a supposedly revolutionary medical discovery, and chances are you’ll get a quick thumbs up or thumbs down. I did just that the other day, ringing up a prominent New York physician, Samuel Mann, professor of clinical medicine at New York Presbyterian Hospital and a well-regarded specialist on hypertension. The reason: to solicit his thoughts on a supposed revolutionary product I heard about on Wall Street, where stories of companies with major medical breakthroughs are a dime a dozen, the overwhelming majority of which are strictly hot air — a clear danger for impressionable investors. I queried Mann on a drink alleged to have a number of major medical implications, basically a liquid product drawn from living algae grown in purified water. The water in which the algae are grown is then drawn off, filtered and bottled under the trademark ProAlgaZyme, or Paz for short, a drink that is supposed to elevate good cholesterol (HDL) and lower bad cholesterol (LDL). This cholesterol view is based on a study undertaken in 2007 by Paz’s owner, Health Enhancement Products of Scottsdale, Ariz., a low priced bulletin-board stock whose price has soared over the past year, ballooning more than 10-fold from $0.13 to $1.54. It’s currently trading at around $0.65, down sharply from its recent high, but still well above its 52-week low, indicating that a number of investors buy the story of the supposed medical pizzazz in Paz. The key results of the 2007 study, as reported in a medical journal, Lipid in Health and Disease, found that Paz lowered total cholesterol by 60 milligrams and raised good cholesterol by 15 milligrams. But that’s by no means the entire benefit of the drink, according to anecdotal stories making the rounds. Paz, it’s said by some large shareholders of Health Enhancement Products, or HEPI (its stock symbol), as some call it, can also aid people afflicted with HIV, diabetes, prostate cancer, inflammation and obesity, and has, in fact, helped some get rid of such diseases. Skeptical? How can you not be? If real, this product would have to be one of the great medical discoveries of all times. Every one would know about it, and doctors would surely be recommending it like crazy. Addressing the cholesterol aspects of Paz, which is said to have no side effects, Mann doesn’t give the product a thumbs up or a thumbs down, but rather views it as either “real or a fraud.” “This is not a fluke; there’s no middle ground,” he says. “It’s either wonderful or nothing.” Mann, who has published many articles in professional journals, questions the validity of the company’s 2007 study, noting it took place in Cameroon; likewise, the authorship of the article in Lipid Health and Disease, he says, is “highly suspicious” since it involved eight people, four from the company and four from the University of Cameroon. “I don’t believe the findings,” observes Mann, who notes there is no drug currently on the market that can raise HDL by 15 milligrams. Mann also raises the question of why the company, given the dramatic findings in its study, didn’t follow with a slew of additional studies to further validate the cholesterol managing abilities of Paz. Paz — which the company has owned for 10 years and was first marketed in Germany about 30 years ago — is HEPI’s chief product. It’s not sold in any store and can only be ordered directly from the company through the purchase of a 32-ounce bottle at $24.95 each That’s about an eight-days supply, what with the daily recommendation of four ounces — two in the morning and two in the evening. HEPI, essentially a health and wellness company, is principally engaged in the development of products comprised of pure, all-natural compounds that can be used as a dietary supplement and food additive. It reshaped itself in 2003 and went public early in 2004 at about $1 a share by merging into a shell. Later that year, the stock — there are presently 110 million shares outstanding fully diluted — hit a high of 7 5/8. HEPI recently announced that it was given a “notice of allowance” from the U.S. Patent and Trademark Office, after which, it said, a formal notice of patent issuance will follow. Once issued, the patent, according to HEPI, will provide intellectual property protection for the company’s proprietary algae extract, specifically as it applies to addressing a wide range of conditions and illnesses. Sounds good, but despite Paz’s supposedly wondrous medical benefits, HEPI’s bottom line has been abysmal. The company has been a consistent money loser and last year lost $6 million on puny revenues of just $70,000. HEPI doesn’t have a CEO, but I did chat with the head of sales, John Gorman, who is basically running the company. “We’ll get a new CEO when we have a marketable product,” he says. Asked why HEPI didn’t conduct a number of follow-up studies to the one conducted in 2007, Gorman blamed it on lack of funding. That still appears to be a dilemma, given a monthly burn rate of $70,000 to $75,000 and the fact that the company has less than that in the bank. Gorman did say, though, HEPI has a $675,000 line of credit that can be tapped at any time. In view of his comment that Paz helps people challenge such diseases as HIV, cancer, diabetes and inflammation, why, I asked, doesn’t he promote this message? Because, Gorman replied, “we’re limited in what we can say because of the Food & Drug Administration rules.” Gorman, incidentally, also mentioned his father had been diagnosed with prostate cancer in 2003, but he eliminated it in just 35 days as a result of drinking Paz during that period and initiating an organic diet. His father, now 66, is still alive. Our conversation, I’m sorry to say, was abruptly ended by Gorman, who told me he had to go to a meeting, We set a time when he said he would call back, but he never did. I tried calling him back, but he refused to respond. If I had gotten him, I would have posed such additional questions as why it took 30 years to discover Paz’s supposed medical benefits, his reaction to Mann’s ridicule of Hepi’s 2007 study, his strategy for growth and when, if ever, might Hepi have a marketable product? I would have also asked about some remarks I heard from Skip Davidson, a former broker at Oppenheimer & Co., who told me he holds a seven-figure stake in Hepi and described himself as very close to the company. “I jokingly call Paz snake oil,” Davidson says, “because how can you make any claims when you don’t know what’s in the product and what it does.” He also told me HEPI would go head-to-head with Lipitor, America’s leading anti-cholesterol drug, an action that seems highly dubious given the company’s meager finances. One other intriguing observation from Davidson — about four years ago his collie, Bart, developed a growth on his chest. He took him to a vet who told him Bart had lymphoma and suggested he put the dog away. One of Davidson’s friend was an official of Hepi, who suggested he feed the dog Paz. Davidson did that, and about three months later, he says, he took the dog back to the vet, who told him the lymphoma had disappeared. The bottom line here: Is Paz Rx or B.S? That’s the $64,000 question. What do you think? E-mail me at Dandordan@aol.com

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Scandi Daily 06.21

June 21, 2010

Scandi Daily 06.21

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Scandi Daily 06.21

June 21, 2010

Scandi Daily 06.21

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Scandi Daily 06.16

June 16, 2010

Scandi Daily 06.16

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Scandi Daily 06.15

June 15, 2010

Scandi Daily 06.15

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The DailyFX Economic Calendar

June 14, 2010

The DailyFX Economic Calendar

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Stocks, Commodities Rise as Yen Weakens on U.S. Sentiment Data

June 14, 2010

By Will McSheehy June 14 (Bloomberg) — Asian stocks climbed for a third day and commodities gained after a report showed U.S. consumer sentiment rose to its highest since January 2008. The yen weakened on signs the global recovery is gaining momentum. The MSCI Asia Pacific Index rose 1.4 percent to 113.97 as of 4:10 p.m. in Tokyo, with seven times as many shares advancing as declining. The Stoxx Europe 600 increased 0.9 percent to 251.76 at 8:10 a.m. in London. Futures on the Standard & Poor’s 500 Index rose 0.6 percent. Copper gained for a fifth day. Markets in China and Australia are closed today for holidays. “Investors have been concerned about a double-dip recession in the U.S. later this year,” said Tomochika Kitaoka , a senior strategist at Mizuho Securities Co. in Tokyo. “The report on consumer sentiment showed it is less likely to be the case as the economy continues to recover.” Americans are gaining confidence in the economy even as Europe’s debt crisis roils investors, according to the Thomson Reuters/University of Michigan index of consumer sentiment . The benchmark increased to 75.5, beating the median forecast of 65 economists polled by Bloomberg News, from 73.6 in May. Euro zone industrial output expanded 0.5 percent in April from March, according to a separate economist survey before the European Union publishes data today. Japan’s Nikkei 225 Stock Average climbed 1.7 percent, the biggest increase among equity benchmarks in Asia-Pacific, followed by Taiwan’s Taiex Index, with a gain of 1.2 percent. U.S. Sales Sony Corp ., the electronics maker that gets 21 percent of revenue from the U.S., climbed 1.6 percent in Tokyo. Posco, Asia’s third-biggest steelmaker, advanced 2.6 percent after the Seoul Economic Daily said the company plans to boost steel- product prices next month. Daewoo Shipbuilding & Marine Engineering Co., the world’s second-largest shipyard, advanced 2.1 percent after it received a $568 million order. Taiwan Semiconductor Manufacturing Co., the world’s largest custom-chip maker, advanced 1 percent on expectations a trade agreement with China will boost earnings. Three-month copper on the London Metal Exchange added 1.7 percent to $6,589 a metric ton. Copper in London capped its best week since April last week after government reports showed China’s exports jumped 48.5 percent in May from a year ago, surpassing all 32 estimates in a Bloomberg News survey of economists. Currency Forwards The South Korean won strengthened the most in a week after policy makers said they will give banks time to meet a new ceiling on forward contracts, holding off from imposing controls on capital flows. The won climbed 1.9 percent to 1,223.05 per dollar, while the Malaysian ringgit strengthened 0.6 percent to 3.2655. Singapore may report higher retail sales and exports this week, according to a Bloomberg News survey. “The data out of Asia is quite strong, including Singapore this week, and that encourages some fund inflows to the region,” said Akira Banno , a treasury adviser at Bank of Tokyo- Mitsubishi UFJ Bhd. in Kuala Lumpur. Japan’s currency weakened to as low as 111.90 per euro in Tokyo from 111 in New York on June 11 as demand for the currency as a safe haven diminished. The yen was at 91.88 per dollar from 91.65. The euro climbed to as much as $1.2208, the highest level since June 4. Energy Demand Crude oil advanced in New York for the fourth time in five days, rising 1.2 percent to $74.67 a barrel, on speculation sustained growth in the U.S. will boost fuel demand from the world’s biggest energy consumer. “Fundamentals are getting better and the euro is also driving the crude market,” said Ken Hasegawa , a commodity derivative sales manager at Newedge Group in Tokyo. Treasuries extended last week’s decline on diminished demand for the relative safety of government debt. The yield on the benchmark 10-year note rose 3 basis points to 3.26 percent in Tokyo, according to BGCantor Market Data. The cost of insuring Asian bonds with credit-default swaps declined, according to Royal Bank of Scotland Group Plc. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 6.5 basis points to 139 basis points in Singapore, RBS prices show. To contact the reporter on this story: Will McSheehy in Singapore at wmcsheehy@bloomberg.net

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Stocks, U.S. Futures, Commodities Advance on Economic Outlook Yen Weakens

June 14, 2010

By Will McSheehy June 14 (Bloomberg) — Asian stocks climbed for a third day and commodities gained after a report showed U.S. consumer sentiment rose to its highest since January 2008. The yen weakened on signs the global recovery is gaining momentum. The MSCI Asia Pacific Index rose 1.4 percent to 113.97 as of 4:10 p.m. in Tokyo, with seven times as many shares advancing as declining. The Stoxx Europe 600 increased 0.9 percent to 251.76 at 8:10 a.m. in London. Futures on the Standard & Poor’s 500 Index rose 0.6 percent. Copper gained for a fifth day. Markets in China and Australia are closed today for holidays. “Investors have been concerned about a double-dip recession in the U.S. later this year,” said Tomochika Kitaoka , a senior strategist at Mizuho Securities Co. in Tokyo. “The report on consumer sentiment showed it is less likely to be the case as the economy continues to recover.” Americans are gaining confidence in the economy even as Europe’s debt crisis roils investors, according to the Thomson Reuters/University of Michigan index of consumer sentiment . The benchmark increased to 75.5, beating the median forecast of 65 economists polled by Bloomberg News, from 73.6 in May. Euro zone industrial output expanded 0.5 percent in April from March, according to a separate economist survey before the European Union publishes data today. Japan’s Nikkei 225 Stock Average climbed 1.7 percent, the biggest increase among equity benchmarks in Asia-Pacific, followed by Taiwan’s Taiex Index, with a gain of 1.2 percent. U.S. Sales Sony Corp ., the electronics maker that gets 21 percent of revenue from the U.S., climbed 1.6 percent in Tokyo. Posco, Asia’s third-biggest steelmaker, advanced 2.6 percent after the Seoul Economic Daily said the company plans to boost steel- product prices next month. Daewoo Shipbuilding & Marine Engineering Co., the world’s second-largest shipyard, advanced 2.1 percent after it received a $568 million order. Taiwan Semiconductor Manufacturing Co., the world’s largest custom-chip maker, advanced 1 percent on expectations a trade agreement with China will boost earnings. Three-month copper on the London Metal Exchange added 1.7 percent to $6,589 a metric ton. Copper in London capped its best week since April last week after government reports showed China’s exports jumped 48.5 percent in May from a year ago, surpassing all 32 estimates in a Bloomberg News survey of economists. Currency Forwards The South Korean won strengthened the most in a week after policy makers said they will give banks time to meet a new ceiling on forward contracts, holding off from imposing controls on capital flows. The won climbed 1.9 percent to 1,223.05 per dollar, while the Malaysian ringgit strengthened 0.6 percent to 3.2655. Singapore may report higher retail sales and exports this week, according to a Bloomberg News survey. “The data out of Asia is quite strong, including Singapore this week, and that encourages some fund inflows to the region,” said Akira Banno , a treasury adviser at Bank of Tokyo- Mitsubishi UFJ Bhd. in Kuala Lumpur. Japan’s currency weakened to as low as 111.90 per euro in Tokyo from 111 in New York on June 11 as demand for the currency as a safe haven diminished. The yen was at 91.88 per dollar from 91.65. The euro climbed to as much as $1.2208, the highest level since June 4. Energy Demand Crude oil advanced in New York for the fourth time in five days, rising 1.2 percent to $74.67 a barrel, on speculation sustained growth in the U.S. will boost fuel demand from the world’s biggest energy consumer. “Fundamentals are getting better and the euro is also driving the crude market,” said Ken Hasegawa , a commodity derivative sales manager at Newedge Group in Tokyo. Treasuries extended last week’s decline on diminished demand for the relative safety of government debt. The yield on the benchmark 10-year note rose 3 basis points to 3.26 percent in Tokyo, according to BGCantor Market Data. The cost of insuring Asian bonds with credit-default swaps declined, according to Royal Bank of Scotland Group Plc. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 6.5 basis points to 139 basis points in Singapore, RBS prices show. To contact the reporter on this story: Will McSheehy in Singapore at wmcsheehy@bloomberg.net

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Asian Stocks, Commodities Rise on Improving Economic Outlook Yen Weakens

June 13, 2010

By Will McSheehy June 14 (Bloomberg) — Asian stocks climbed for a third day and commodities gained after a report showed U.S. consumer sentiment rose to its highest since January 2008. The yen weakened on signs the global recovery is gaining momentum. The MSCI Asia Pacific Index rose 1 percent to 113.54 as of 11:50 a.m. in Tokyo, with seven times as many shares advancing as declining. Futures on the Standard & Poor’s 500 Index rose 0.4 percent and copper gained for a fifth day. Markets in China and Australia are closed today for holidays. “Investors have been concerned about a double-dip recession in the U.S. later this year,” said Tomochika Kitaoka , a senior strategist at Mizuho Securities Co. in Tokyo. “The report on consumer sentiment showed it is less likely to be the case as the economy continues to recover.” Americans are gaining confidence in the economy even as Europe’s debt crisis roils investors, according to the Thomson Reuters/University of Michigan index of consumer sentiment . The benchmark increased to 75.5, beating the median forecast of 65 economists polled by Bloomberg News, from 73.6 in May. Euro zone industrial output expanded 0.5 percent in April from March, according to a separate economist survey before the European Union publishes data today. Japan’s Nikkei 225 Stock Average climbed 1.6 percent, the biggest increase among equity benchmarks in Asia-Pacific. South Korea’s Kospi Index rose 0.9 percent and Taiwan’s Taiex Index gained 0.7 percent. U.S. Sales Sony Corp ., the electronics maker that gets 21 percent of revenue from the U.S., climbed 2.3 percent in Tokyo. Posco, Asia’s third-biggest steelmaker, advanced 2.6 percent after the Seoul Economic Daily said the company plans to boost steel- product prices next month. Daewoo Shipbuilding & Marine Engineering Co., the world’s second-largest shipyard, advanced 2.4 percent after it received a $568 million order. Taiwan Semiconductor Manufacturing Co., the world’s largest custom-chip maker, advanced 1 percent on expectations a trade agreement with China will boost earnings. Three-month copper on the London Metal Exchange added 1.3 percent to $6,565 a metric ton. Copper in London capped its best week since April last week after government reports showed China’s exports jumped 48.5 percent in May from a year ago, surpassing all 32 estimates in a Bloomberg News survey of economists. Currency Forwards The South Korean won strengthened the most in a week after policy makers said they will give banks time to meet a new ceiling on forward contracts, holding off from imposing controls on capital flows. The won climbed 1.4 percent to 1,228.30 per dollar, while the Malaysian ringgit strengthened 0.6 percent to 3.2660. Singapore may report higher retail sales and exports this week, according to a Bloomberg News survey. “The data out of Asia is quite strong, including Singapore this week, and that encourages some fund inflows to the region,” said Akira Banno , a treasury adviser at Bank of Tokyo- Mitsubishi UFJ Bhd. in Kuala Lumpur. Japan’s currency weakened to as low as 111.90 per euro in Tokyo from 111 in New York on June 11 as demand for the currency as a safe haven diminished. The yen was at 91.87 per dollar from 91.65. The euro climbed to as much as $1.2208, the highest level since June 4. Energy Demand Crude oil advanced in New York for the fourth time in five days, rising 1 percent to $74.55 a barrel, on speculation sustained growth in the U.S. will boost fuel demand from the world’s biggest energy consumer. “Fundamentals are getting better and the euro is also driving the crude market,” said Ken Hasegawa , a commodity derivative sales manager at Newedge Group in Tokyo. Treasuries extended last week’s decline on diminished demand for the relative safety of government debt. The yield on the benchmark 10-year note rose 3 basis points to 3.26 percent in Tokyo, according to BGCantor Market Data. The cost of insuring Asian bonds with credit-default swaps declined, according to Royal Bank of Scotland Group Plc. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 6 basis points to 139.5 basis points in Singapore, RBS prices show. To contact the reporters on this story: Will McSheehy in Singapore at wmcsheehy@bloomberg.net

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Scandi Daily 06.04

June 4, 2010

Scandi Daily 06.04

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BP&rsquos Hayward Faces Downgrades, Investors as Spill May Cost Job

June 3, 2010

By Brian Swint June 3 (Bloomberg) — BP Plc Chief Executive Officer Tony Hayward faces rising speculation that the worsening oil spill will cost him his job as he grapples with worried investors, rating downgrades, U.S. politicians and public anger over the company’s inability to control the crisis. Hayward will address London’s investors and analysts tomorrow, spokesman Mark Salt said by phone. Moody’s Investors Service and Fitch Ratings downgraded BP today because the costs from the accident will hurt finances. Two U.S. senators said yesterday it would be “unfathomable” for BP to pay a dividend. Criticism of Hayward grew this week after BP’s failure to stem the flow from the damaged well caused the biggest share price drop in 18 years and raised the risk the London-based company may become a takeover target. Yesterday, he apologized for comments last week that he wanted his “life back.” “The pressure is on Hayward at the moment, primarily from politicians,” said David Paterson, head of corporate governance at the National Association of Pension Funds in London. “Investors clearly will want some answers in order to understand what the long-term future for the company is.” More than 40 billion pounds ($59 billion) has been wiped off the value of BP since the April 20 explosion that killed 11 workers on the Deepwater Horizon rig. Credit Suisse said yesterday the disaster may cost BP as much as $37 billion, almost double this year’s likely profit, risking a cut in dividends. Dividend Cut “There is a question mark over the chief executive officer,” said Colin McLean , of SVM Asset Management Ltd. in Edinburgh, which holds BP shares. “The dividend will continue but be cut. A quarter or a third is quite possible.” BP paid a dividend of 56 cents a share last year. If it maintains it, the ratio of dividend to the current share price would be 9.3 percent, more than any of the company’s 18 global peers, according to Bloomberg data. Irish bookmaker Paddy Power offered even odds that Hayward will leave his post by the end of year. The New York Daily News yesterday called him “the most hated — and clueless — man in America” for his handling of the crisis. “It looks increasingly likely that heads will roll, and Tony will be in the frame,” Dougie Youngson , an analyst at Arbuthnot Securities Ltd. in London, said in a Bloomberg Television interview. “The longer these things go on, the shakier things look for the company.” Under Fire Hayward, whose call tomorrow will be relayed on BP’s website, has come under fire from lawmakers after BP initially underestimated the size of the leak, starting with 1,000 barrels a day and then raising it to 5,000 barrels a day. U.S. Geological Survey and science adviser Marcia McNutt said May 27 the well may have been gushing 19,000 barrels a day. BP sheared away the riser from its leaking Gulf of Mexico well today, a precursor to the company’s attempt to lower a cap onto the leak and divert oil to ships on the surface. An attempt to plug the well with mud and debris failed last weekend. That means that the flow of oil from the well probably won’t be stopped until August, when the drilling of relief wells is scheduled for completion. Hayward apologized yesterday for what he called “hurtful” comments saying that he wanted the spill to end in order to get “his life back.” That followed comments in which he said that the environmental impact of the spill would be “very, very modest” and that the amount of oil and dispersant is tiny compared to the size of the Gulf. Improve Safety Hayward spent much of his first three years as CEO working to improve BP’s safety record after a series of accidents, including the deadly March 2005 Texas City refinery explosion that helped bring down his predecessor, John Browne . “Safety has been a major plank of Hayward’s tenure,” the National Association of Pension Funds’ Paterson said. Unlike Browne, Hayward didn’t attend Oxford or Cambridge, Britain’s most elite universities. The 53-year-old was born in Slough, England, 25 miles west of London and studied in Birmingham and then in Edinburgh, where he earned a PhD in geology in 1982. He joined BP the same year to work in the North Sea and worked in Asia, South America and the U.S. before becoming CEO in 2007. Hayward lowered BP’s operating costs and bolstered production, last year overtaking the output of Exxon Mobil Corp., the world’s biggest energy company. In March, he said the company would raise production by as much as 2 percent a year through 2015. “Hayward only just got his feet under the table and is highly regarded within the company,” said Peter Hitchens , an analyst at Panmure Gordon in London. “I don’t think Hayward will step down, but you can never rule these things out. BP is starting to be seen as a walking catastrophe.” To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net .

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BP’s Hayward Faces Ratings Downgrade, Investor Wrath as Spill May Cost Job

June 3, 2010

By Brian Swint June 3 (Bloomberg) — BP Plc Chief Executive Officer Tony Hayward faces rising speculation that the worsening oil spill will cost him his job as he grapples with worried investors, rating downgrades, U.S. politicians and public anger over the company’s inability to control the crisis. Hayward will address London’s investors and analysts tomorrow, spokesman Mark Salt said by phone. Moody’s Investors Service and Fitch Ratings downgraded BP today because the costs from the accident will hurt finances. Two U.S. senators said yesterday it would be “unfathomable” for BP to pay a dividend. Criticism of Hayward grew this week after BP’s failure to stem the flow from the damaged well caused the biggest share price drop in 18 years and raised the risk the London-based company may become a takeover target. Yesterday, he apologized for comments last week that he wanted his “life back.” “The pressure is on Hayward at the moment, primarily from politicians,” said David Paterson, head of corporate governance at the National Association of Pension Funds in London. “Investors clearly will want some answers in order to understand what the long-term future for the company is.” More than 40 billion pounds ($59 billion) has been wiped off the value of BP since the April 20 explosion that killed 11 workers on the Deepwater Horizon rig. Credit Suisse said yesterday the disaster may cost BP as much as $37 billion, almost double this year’s likely profit, risking a cut in dividends. Dividend Cut “There is a question mark over the chief executive officer,” said Colin McLean , of SVM Asset Management Ltd. in Edinburgh, which holds BP shares. “The dividend will continue but be cut. A quarter or a third is quite possible.” BP paid a dividend of 56 cents a share last year. If it maintains it, the ratio of dividend to the current share price would be 9.3 percent, more than any of the company’s 18 global peers, according to Bloomberg data. Irish bookmaker Paddy Power offered even odds that Hayward will leave his post by the end of year. The New York Daily News yesterday called him “the most hated — and clueless — man in America” for his handling of the crisis. “It looks increasingly likely that heads will roll, and Tony will be in the frame,” Dougie Youngson , an analyst at Arbuthnot Securities Ltd. in London, said in a Bloomberg Television interview. “The longer these things go on, the shakier things look for the company.” Under Fire Hayward, whose call tomorrow will be relayed on BP’s website, has come under fire from lawmakers after BP initially underestimated the size of the leak, starting with 1,000 barrels a day and then raising it to 5,000 barrels a day. U.S. Geological Survey and science adviser Marcia McNutt said May 27 the well may have been gushing 19,000 barrels a day. BP sheared away the riser from its leaking Gulf of Mexico well today, a precursor to the company’s attempt to lower a cap onto the leak and divert oil to ships on the surface. An attempt to plug the well with mud and debris failed last weekend. That means that the flow of oil from the well probably won’t be stopped until August, when the drilling of relief wells is scheduled for completion. Hayward apologized yesterday for what he called “hurtful” comments saying that he wanted the spill to end in order to get “his life back.” That followed comments in which he said that the environmental impact of the spill would be “very, very modest” and that the amount of oil and dispersant is tiny compared to the size of the Gulf. Improve Safety Hayward spent much of his first three years as CEO working to improve BP’s safety record after a series of accidents, including the deadly March 2005 Texas City refinery explosion that helped bring down his predecessor, John Browne . “Safety has been a major plank of Hayward’s tenure,” the National Association of Pension Funds’ Paterson said. Unlike Browne, Hayward didn’t attend Oxford or Cambridge, Britain’s most elite universities. The 53-year-old was born in Slough, England, 25 miles west of London and studied in Birmingham and then in Edinburgh, where he earned a PhD in geology in 1982. He joined BP the same year to work in the North Sea and worked in Asia, South America and the U.S. before becoming CEO in 2007. Hayward lowered BP’s operating costs and bolstered production, last year overtaking the output of Exxon Mobil Corp., the world’s biggest energy company. In March, he said the company would raise production by as much as 2 percent a year through 2015. “Hayward only just got his feet under the table and is highly regarded within the company,” said Peter Hitchens , an analyst at Panmure Gordon in London. “I don’t think Hayward will step down, but you can never rule these things out. BP is starting to be seen as a walking catastrophe.” To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net .

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BP Chief to Address Investors Amid Speculation He May Be Forced to Resign

June 3, 2010

By Brian Swint June 3 (Bloomberg) — BP Plc Chief Executive Officer Tony Hayward will address investors tomorrow as his handling of the worst oil spill in U.S. history prompts speculation he may be forced to leave the company. Hayward, leading BP’s effort to contain the spill in the Gulf of Mexico, will speak on a conference call with investors and analysts tomorrow, spokesman Mark Salt said in a telephone interview. Fitch Ratings downgraded BP to AA from AA+ today because the cost of dealing with the accident will hurt the company’s finances. Two U.S. senators said yesterday it would be “unfathomable” for BP to make dividend payments. Criticism of Hayward has mounted this week after BP’s failure to stem the flow from the damaged well caused the biggest share price drop in 18 years and raised the risk the London-based company could become a takeover target. Yesterday, Hayward had to apologize for comments last week that he wanted his “life back.” “The pressure is on Hayward at the moment, primarily from politicians,” said David Paterson, head of corporate governance at the National Association of Pension Funds in London. “Investors clearly will want some answers in order to understand what the long-term future for the company is.” More than 40 billion pounds ($59 billion) has been wiped off the value of BP since the April 20 explosion that killed 11 workers on the Deepwater Horizon rig. Credit Suisse said yesterday the disaster may cost BP as much as $37 billion, almost double this year’s likely profit, risking a cut in dividend payments. Dividend Cut “There is a question mark over the chief executive officer,” said Colin McLean , of SVM Asset Management Ltd. in Edinburgh, which holds BP shares. “The dividend will continue but be cut. A quarter or a third is quite possible.” BP paid a dividend of 56 cents a share last year. If it maintains it, the ratio of dividend to the current share price would be 9.3 percent, more than any of the company’s 18 global peers, according to Bloomberg data. Irish bookmaker Paddy Power offered even odds that Hayward will leave his post by the end of year. The New York Daily News yesterday called him “the most hated — and clueless — man in America” for his handling of the crisis. “It looks increasingly likely that heads will roll, and Tony will be in the frame,” Dougie Youngson , an analyst at Arbuthnot Securities Ltd. in London, said in a Bloomberg Television interview. “The longer these things go on, the shakier things look for the company.” Under Fire Hayward, whose call tomorrow will be relayed on BP’s website, has come under fire from lawmakers after BP initially underestimated the size of the leak, starting with 1,000 barrels a day and then raising it to 5,000 barrels a day. U.S. Geological Survey and science adviser Marcia McNutt said May 27 the well may have been gushing 19,000 barrels a day. BP’s latest attempt to contain the leaks stalled yesterday when a saw blade attached to a subsea robot snagged while cutting the pipe from the well. BP is trying again today to sever the pipe to install a device that will divert the crude to a ship on the surface. An attempt to plug the well with mud and debris failed last weekend. That means that the flow of oil from the well probably won’t be stopped until August, when the drilling of relief wells is scheduled for completion. Hayward apologized yesterday for what he called “hurtful” comments saying that he wanted the spill to end in order to get “his life back.” That followed comments in which he said that the environmental impact of the spill would be “very, very modest” and that the amount of oil and dispersant is tiny compared to the size of the Gulf. Improve Safety Hayward spent much of his first three years as CEO working to improve BP’s safety record after a series of accidents, including the deadly March 2005 Texas City refinery explosion that helped bring down his predecessor, John Browne . “Safety has been a major plank of Hayward’s tenure,” the National Association of Pension Funds’ Paterson said. Unlike Browne, Hayward didn’t attend Oxford or Cambridge, Britain’s most elite universities. Hayward, 53, was born in Slough, England, 25 miles west of London. He studied in Birmingham and then Edinburgh, where he earned a PhD in geology in 1982. He joined BP the same year to work in the North Sea and worked in Asia, South America and the U.S. before becoming CEO in 2007. Hayward lowered BP’s operating costs and bolstered production, last year overtaking the output of Exxon Mobil Corp., the world’s biggest energy company. In March, he said the company would increase production by as much as 2 percent a year through 2015. “Hayward only just got his feet under the table and is highly regarded within the company,” said Peter Hitchens , an analyst at Panmure Gordon in London. “I don’t think Hayward will step down, but you can never rule these things out. BP is starting to be seen as a walking catastrophe.” To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net .

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BP Chief to Address Investors Amid Speculation He May Be Forced to Resign

June 3, 2010

By Brian Swint June 3 (Bloomberg) — BP Plc Chief Executive Officer Tony Hayward will address investors tomorrow as his handling of the worst oil spill in U.S. history prompts speculation he may be forced to leave the company. Hayward, leading BP’s effort to contain the spill in the Gulf of Mexico, will speak on a conference call with investors and analysts tomorrow, spokesman Mark Salt said in a telephone interview. Fitch Ratings downgraded BP to AA from AA+ today because the cost of dealing with the accident will hurt the company’s finances. Two U.S. senators said yesterday it would be “unfathomable” for BP to make dividend payments. Criticism of Hayward has mounted this week after BP’s failure to stem the flow from the damaged well caused the biggest share price drop in 18 years and raised the risk the London-based company could become a takeover target. Yesterday, Hayward had to apologize for comments last week that he wanted his “life back.” “The pressure is on Hayward at the moment, primarily from politicians,” said David Paterson, head of corporate governance at the National Association of Pension Funds in London. “Investors clearly will want some answers in order to understand what the long-term future for the company is.” More than 40 billion pounds ($59 billion) has been wiped off the value of BP since the April 20 explosion that killed 11 workers on the Deepwater Horizon rig. Credit Suisse said yesterday the disaster may cost BP as much as $37 billion, almost double this year’s likely profit, risking a cut in dividend payments. Dividend Cut “There is a question mark over the chief executive officer,” said Colin McLean , of SVM Asset Management Ltd. in Edinburgh, which holds BP shares. “The dividend will continue but be cut. A quarter or a third is quite possible.” BP paid a dividend of 56 cents a share last year. If it maintains it, the ratio of dividend to the current share price would be 9.3 percent, more than any of the company’s 18 global peers, according to Bloomberg data. Irish bookmaker Paddy Power offered even odds that Hayward will leave his post by the end of year. The New York Daily News yesterday called him “the most hated — and clueless — man in America” for his handling of the crisis. “It looks increasingly likely that heads will roll, and Tony will be in the frame,” Dougie Youngson , an analyst at Arbuthnot Securities Ltd. in London, said in a Bloomberg Television interview. “The longer these things go on, the shakier things look for the company.” Under Fire Hayward, whose call tomorrow will be relayed on BP’s website, has come under fire from lawmakers after BP initially underestimated the size of the leak, starting with 1,000 barrels a day and then raising it to 5,000 barrels a day. U.S. Geological Survey and science adviser Marcia McNutt said May 27 the well may have been gushing 19,000 barrels a day. BP’s latest attempt to contain the leaks stalled yesterday when a saw blade attached to a subsea robot snagged while cutting the pipe from the well. BP is trying again today to sever the pipe to install a device that will divert the crude to a ship on the surface. An attempt to plug the well with mud and debris failed last weekend. That means that the flow of oil from the well probably won’t be stopped until August, when the drilling of relief wells is scheduled for completion. Hayward apologized yesterday for what he called “hurtful” comments saying that he wanted the spill to end in order to get “his life back.” That followed comments in which he said that the environmental impact of the spill would be “very, very modest” and that the amount of oil and dispersant is tiny compared to the size of the Gulf. Improve Safety Hayward spent much of his first three years as CEO working to improve BP’s safety record after a series of accidents, including the deadly March 2005 Texas City refinery explosion that helped bring down his predecessor, John Browne . “Safety has been a major plank of Hayward’s tenure,” the National Association of Pension Funds’ Paterson said. Unlike Browne, Hayward didn’t attend Oxford or Cambridge, Britain’s most elite universities. Hayward, 53, was born in Slough, England, 25 miles west of London. He studied in Birmingham and then Edinburgh, where he earned a PhD in geology in 1982. He joined BP the same year to work in the North Sea and worked in Asia, South America and the U.S. before becoming CEO in 2007. Hayward lowered BP’s operating costs and bolstered production, last year overtaking the output of Exxon Mobil Corp., the world’s biggest energy company. In March, he said the company would increase production by as much as 2 percent a year through 2015. “Hayward only just got his feet under the table and is highly regarded within the company,” said Peter Hitchens , an analyst at Panmure Gordon in London. “I don’t think Hayward will step down, but you can never rule these things out. BP is starting to be seen as a walking catastrophe.” To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net .

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BP’s Hayward Will Address Investors Amid Speculation He May Be Forced Out

June 3, 2010

By Brian Swint June 3 (Bloomberg) — BP Plc Chief Executive Officer Tony Hayward will address investors tomorrow as his handling of the worst oil spill in U.S. history prompts speculation he may be forced to leave the company. Hayward, leading BP’s effort to contain the spill in the Gulf of Mexico, will speak on a call with investors and analysts tomorrow, spokesman Mark Salt said by phone. Moody’s Investors Service and Fitch Ratings downgraded BP today because the costs from the accident will hurt finances. Two U.S. senators said yesterday it would be “unfathomable” for BP to pay a dividend. Criticism of Hayward grew this week after BP’s failure to stem the flow from the damaged well caused the biggest share price drop in 18 years and raised the risk the London-based company may become a takeover target. Yesterday, he apologized for comments last week that he wanted his “life back.” “The pressure is on Hayward at the moment, primarily from politicians,” said David Paterson, head of corporate governance at the National Association of Pension Funds in London. “Investors clearly will want some answers in order to understand what the long-term future for the company is.” More than 40 billion pounds ($59 billion) has been wiped off the value of BP since the April 20 explosion that killed 11 workers on the Deepwater Horizon rig. Credit Suisse said yesterday the disaster may cost BP as much as $37 billion, almost double this year’s likely profit, risking a cut in dividends. Dividend Cut “There is a question mark over the chief executive officer,” said Colin McLean , of SVM Asset Management Ltd. in Edinburgh, which holds BP shares. “The dividend will continue but be cut. A quarter or a third is quite possible.” BP paid a dividend of 56 cents a share last year. If it maintains it, the ratio of dividend to the current share price would be 9.3 percent, more than any of the company’s 18 global peers, according to Bloomberg data. Irish bookmaker Paddy Power offered even odds that Hayward will leave his post by the end of year. The New York Daily News yesterday called him “the most hated — and clueless — man in America” for his handling of the crisis. “It looks increasingly likely that heads will roll, and Tony will be in the frame,” Dougie Youngson , an analyst at Arbuthnot Securities Ltd. in London, said in a Bloomberg Television interview. “The longer these things go on, the shakier things look for the company.” Under Fire Hayward, whose call tomorrow will be relayed on BP’s website, has come under fire from lawmakers after BP initially underestimated the size of the leak, starting with 1,000 barrels a day and then raising it to 5,000 barrels a day. U.S. Geological Survey and science adviser Marcia McNutt said May 27 the well may have been gushing 19,000 barrels a day. BP’s latest attempt to contain the leaks stalled yesterday when a saw blade attached to a subsea robot snagged while cutting the pipe from the well. BP is trying again today to sever the pipe to install a device that will divert the crude to a ship on the surface. An attempt to plug the well with mud and debris failed last weekend. That means that the flow of oil from the well probably won’t be stopped until August, when the drilling of relief wells is scheduled for completion. Hayward’s Apology Hayward apologized yesterday for what he called “hurtful” comments saying that he wanted the spill to end in order to get “his life back.” That followed comments in which he said that the environmental impact of the spill would be “very, very modest” and that the amount of oil and dispersant is tiny compared to the size of the Gulf. Hayward spent much of his first three years as CEO working to improve BP’s safety record after a series of accidents, including the deadly March 2005 Texas City refinery explosion that helped bring down his predecessor, John Browne . “Safety has been a major plank of Hayward’s tenure,” the National Association of Pension Funds’ Paterson said. Unlike Browne, Hayward didn’t attend Oxford or Cambridge, Britain’s most elite universities. The 53-year-old was born in Slough, England, 25 miles west of London and studied in Birmingham and then in Edinburgh, where he earned a PhD in geology in 1982. He joined BP the same year to work in the North Sea and worked in Asia, South America and the U.S. before becoming CEO in 2007. Hayward lowered BP’s operating costs and bolstered production, last year overtaking the output of Exxon Mobil Corp., the world’s biggest energy company. In March, he said the company would raise production by as much as 2 percent a year through 2015. “Hayward only just got his feet under the table and is highly regarded within the company,” said Peter Hitchens , an analyst at Panmure Gordon in London. “I don’t think Hayward will step down, but you can never rule these things out. BP is starting to be seen as a walking catastrophe.” To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net .

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BP’s Hayward Will Address Investors Amid Speculation He May Be Forced Out

June 3, 2010

By Brian Swint June 3 (Bloomberg) — BP Plc Chief Executive Officer Tony Hayward will address investors tomorrow as his handling of the worst oil spill in U.S. history prompts speculation he may be forced to leave the company. Hayward, leading BP’s effort to contain the spill in the Gulf of Mexico, will speak on a call with investors and analysts tomorrow, spokesman Mark Salt said by phone. Moody’s Investors Service and Fitch Ratings downgraded BP today because the costs from the accident will hurt finances. Two U.S. senators said yesterday it would be “unfathomable” for BP to pay a dividend. Criticism of Hayward grew this week after BP’s failure to stem the flow from the damaged well caused the biggest share price drop in 18 years and raised the risk the London-based company may become a takeover target. Yesterday, he apologized for comments last week that he wanted his “life back.” “The pressure is on Hayward at the moment, primarily from politicians,” said David Paterson, head of corporate governance at the National Association of Pension Funds in London. “Investors clearly will want some answers in order to understand what the long-term future for the company is.” More than 40 billion pounds ($59 billion) has been wiped off the value of BP since the April 20 explosion that killed 11 workers on the Deepwater Horizon rig. Credit Suisse said yesterday the disaster may cost BP as much as $37 billion, almost double this year’s likely profit, risking a cut in dividends. Dividend Cut “There is a question mark over the chief executive officer,” said Colin McLean , of SVM Asset Management Ltd. in Edinburgh, which holds BP shares. “The dividend will continue but be cut. A quarter or a third is quite possible.” BP paid a dividend of 56 cents a share last year. If it maintains it, the ratio of dividend to the current share price would be 9.3 percent, more than any of the company’s 18 global peers, according to Bloomberg data. Irish bookmaker Paddy Power offered even odds that Hayward will leave his post by the end of year. The New York Daily News yesterday called him “the most hated — and clueless — man in America” for his handling of the crisis. “It looks increasingly likely that heads will roll, and Tony will be in the frame,” Dougie Youngson , an analyst at Arbuthnot Securities Ltd. in London, said in a Bloomberg Television interview. “The longer these things go on, the shakier things look for the company.” Under Fire Hayward, whose call tomorrow will be relayed on BP’s website, has come under fire from lawmakers after BP initially underestimated the size of the leak, starting with 1,000 barrels a day and then raising it to 5,000 barrels a day. U.S. Geological Survey and science adviser Marcia McNutt said May 27 the well may have been gushing 19,000 barrels a day. BP’s latest attempt to contain the leaks stalled yesterday when a saw blade attached to a subsea robot snagged while cutting the pipe from the well. BP is trying again today to sever the pipe to install a device that will divert the crude to a ship on the surface. An attempt to plug the well with mud and debris failed last weekend. That means that the flow of oil from the well probably won’t be stopped until August, when the drilling of relief wells is scheduled for completion. Hayward’s Apology Hayward apologized yesterday for what he called “hurtful” comments saying that he wanted the spill to end in order to get “his life back.” That followed comments in which he said that the environmental impact of the spill would be “very, very modest” and that the amount of oil and dispersant is tiny compared to the size of the Gulf. Hayward spent much of his first three years as CEO working to improve BP’s safety record after a series of accidents, including the deadly March 2005 Texas City refinery explosion that helped bring down his predecessor, John Browne . “Safety has been a major plank of Hayward’s tenure,” the National Association of Pension Funds’ Paterson said. Unlike Browne, Hayward didn’t attend Oxford or Cambridge, Britain’s most elite universities. The 53-year-old was born in Slough, England, 25 miles west of London and studied in Birmingham and then in Edinburgh, where he earned a PhD in geology in 1982. He joined BP the same year to work in the North Sea and worked in Asia, South America and the U.S. before becoming CEO in 2007. Hayward lowered BP’s operating costs and bolstered production, last year overtaking the output of Exxon Mobil Corp., the world’s biggest energy company. In March, he said the company would raise production by as much as 2 percent a year through 2015. “Hayward only just got his feet under the table and is highly regarded within the company,” said Peter Hitchens , an analyst at Panmure Gordon in London. “I don’t think Hayward will step down, but you can never rule these things out. BP is starting to be seen as a walking catastrophe.” To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net .

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Scandi Daily 06.03

June 3, 2010

Scandi Daily 06.03

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Scandi Daily 06.02

June 2, 2010

Scandi Daily 06.02

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AIG May Have Public Offering of Asian Unit After Prudential Deal Collapses

June 1, 2010

By Hugh Son June 2 (Bloomberg) — American International Group Inc. ’s main Asia unit, with 320,000 agents and 23 million customers, may be too large for a rival to purchase, leaving a public offering the most likely route for divesting the business. Prudential Plc’s agreement to buy AIA Group Ltd. faltered after investors of the London-based firm balked at the $35.5 billion price and AIG rejected a reduced offer. AIG, which was rescued by the U.S. in 2008, could return to its earlier plan of holding a stock offering, the Treasury Department said May 26. “Without a doubt, the size of AIA magnifies the execution risk of closing a deal,” said Angelo Graci , managing director at Chapdelaine Credit Partners, a New York-based bond broker. “At this point it’s difficult to see another single buyer come in with a competitive price.” Prudential announced it is in talks with AIG to terminate the deal, and would pay a breakup fee of 152.6 million pounds ($224 million). AIG Chief Executive Officer Robert Benmosche , 66, may now rely on a public offering in Asia to divest AIA, which operates in markets spanning China to Australia and has more than $60 billion in assets. “Given how well known it is and the fact that the government has pretty much taken out all of the toxic assets, I’d say it actually stands a chance of doing pretty well,” said Jack Ablin , who helps manage $55 billion as chief investment officer at Chicago-based Harris Private Bank. Asian insurers have held the world’s two biggest IPOs this year, with Japan’s Dai-ichi Life Insurance Co. raising about $11 billion and South Korea’s Samsung Life Insurance Co. selling about $4.4 billion of shares. Price Too High Prudential CEO Tidjane Thiam , 47, sought to cut the price for AIA to $30.4 billion to appease shareholders who refused to fund a deal at the original terms. New York-based AIG rejected the deal in part because of concern that even at the reduced bid, Prudential shareholders might reject the takeover at a June 7 meeting, said two people with knowledge of the matter. Robin Tozer , a Prudential spokesman, declined to comment. At least 20 companies worldwide postponed or withdrew initial offerings in May as the European debt crisis sent the MSCI World Index of developed-nation stocks down 9.9 percent. “If they tried to bring it today, it’d be a problem,” said Michael Holland , who oversees more than $4 billion as chairman of Holland & Co. in New York. “The markets will have to heal a little, but the markets also have a very short memory, particularly the IPO market.” AIG, which is selling assets to repay its $182.3 billion rescue, has “several options” for AIA, Benmosche said in a letter to staff yesterday, without specifying what they are. Repaying Government Taking AIA public may delay repayment of the bailout because an offering may be several months away and would probably be done in stages, said David Havens , managing director at Nomura Securities International Inc. in New York. “The net effect is that the Federal Reserve will probably retain exposure to AIG for a longer period of time than we would have thought a few months ago,” Havens said. The Fed agreed last year, as part of AIG’s fourth bailout, to allow the company to pay down a $60 billion credit line with an equity interest in AIA and another non-U.S. life division, American Life Insurance Co., known as Alico. The plan reduced pressure on AIG to sell units in early 2009 when potential bidders were hobbled by losses and an inability to raise funds. AIG slipped $1.13, or 3.2 percent, to $34.25 yesterday in New York Stock Exchange composite trading . Prudential surged 6.3 percent in London. AIG said in a statement that it will “not consider revisions” to the March terms. MetLife MetLife Inc. , which is larger than Prudential by market value, agreed about three months ago to pay $15.5 billion for Alico. AIA operates in faster-growing economies including China while Alico gets most of its revenue in Japan. Thiam had said Prudential would double profit in Asia within three years after an AIA takeover, and the unit’s value may increase 80 percent from the acquisition price in that time. AIA had about $1.44 billion in operating profit in 2009, down from $1.59 billion in 2008, Prudential said in a March filing. “The market is still somewhat excited about the growth in Asia, particularly for the demand for insurance, and deregulation that’s going on in the insurance industry in Asian countries,” said Reena Aggarwal , a finance professor at Georgetown University in Washington. AIG had planned to use $25 billion in cash from the AIA sale to pay down a Fed credit line that expires in 2013. That sum includes $16 billion that AIG committed to the Fed as part of the March 2009 deal to lower its borrowing. Attracted Interest AIG announced it would divest AIA in October 2008 and last year said it would seek a public listing on an Asian stock exchange. The unit attracted interest from Manulife Financial Corp. , Prudential and Temasek Holdings Pte, with all seeking to buy a stake, people familiar with the matter said in May 2009. AIA may be valued at slightly less than $30 billion in a public offering, according to an analysis done by Graci of Chapdelaine before the purchase agreement was announced in March. AIG is considering talks with Temasek and a Qatar sovereign wealth fund as investors in conjunction with an IPO, the Daily Telegraph reported. A spokesperson for Singapore-based Temasek couldn’t immediately be reached for comment. Manulife, based in Toronto, declined to comment, said spokesman David Paterson . Prudential Plc has no relation to Newark, New Jersey-based Prudential Financial Inc. and operates in the U.S. through its Jackson National Life Insurance Co. unit. To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

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