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Luxury Rickshaw: World’s Tiniest Four Wheeler Car?

by The Huffington Post on January 10, 2012

Huffington Post…

Over the years a slew of vehicles have fought for the title of “world’s smallest car.” The latest entrant on the scene is the Bajaj Auto’s RE60 , a new vehicle that fits four people and sports a 200cc, water-cooled, fuel-injected engine mounted in the rear. First unveiled at New Dehli’s Auto Expo 2012 , the company says the vehicle isn’t actually a car, but a four-wheeler designed to compete with three-wheel “autorickshaws,” the Economic Times notes. Logging an impressive 82 miles on each gallon of gas, the Indian-made compact urban passenger vehicle will save money on fuel and help eliminate eco-guilt thanks to its minimal carbon emissions of just 37.28 grams per mile , explains Zimbio. CNN takes a moment to compare what AutoDaily calls a “luxury rickshaw,” with America’s largest passenger vehicle, the decked out Cadillac Escalade. Weighing just 881 pounds, the RE60 is expected to cost 40 times less than the 7,100 lb Escalade . Depending on how you classify it, the RE60 now rivals the Nano, produced by India’s Tata Motors, for the title for world’s smallest production automobile.

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Luxury Rickshaw: World’s Tiniest Four Wheeler Car?

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CNN Host Talks New Show, GOP Candidates

by Rebecca Shapiro on January 10, 2012

Huffington Post…

Hosting a cable news show could be considered a taxing job in and of itself. For CNN’s Ali Velshi, it only takes up one of the 24 hours available to him in a given day. As CNN’s chief business correspondent, Velshi has been tapped to wear multiple hats for the network. His latest role? Hosting CNN International’s daily one-hour program, “World Business Today.” That’s in addition to his already demanding schedule at CNN’s American branch, where he reports every day and hosts “Your Money” on the weekends. Velshi served as an interim host for CNN’s former morning show, “American Morning,” before the network announced it would be dismantling the show at the end of 2011. CNN’s morning show ratings had been floundering for months, falling behind MSNBC’s “Morning Joe,” and Fox News’ dominent morning program, “Fox and Friends.” While Velshi served as co-host, the network decided to bring back former “American Morning” anchor Soledad O’Brien, and completely overhaul its morning programming. Velshi was given the CNN International show instead. In an interview with The Huffington Post, Velshi said that his new show has awarded him “a lot of real estate” across CNN’s platforms. In addition to the U.S., Velshi will now reach prime time audiences in India, China, and Japan. But while Velshi can boast a broader reach among CNN’s worldwide audiences, there’s still an elephant in the room: CNN International is not as high profile as the network’s American wing, and a morning slot is a coveted one at most networks. So does Velshi’s new role really work better for him? “I’m always game…If they need to fill a spot for a little while, I’m happy to do it,” Velshi said. “I didn’t dislike doing ‘American Morning’. I really enjoyed it, but this is probably more suited to the kind of personality I am.” While acknowledging that the schedule was challenging, he described his new gig as a dream situation for a business journalist. Velshi said he has the opportunity to go from discussing global financial issues in the morning on CNN International, to dealing with economic questions related to the 2012 presidential election during prime time. When asked which of the GOP candidates most effectively communicated international business issues to voters, Velshi had some surprising words about Jon Huntsmen. Velshi called his economic plan “the most solid,” and gave it a fair amount of praise. “Just evaluating [candidates] on their understanding of economics and globalization…Jon Huntsman has the greatest rap,” Velshi said, highlighting the candidate’s connection to China . Huntsman’s plan “has been evaluated…and endorsed by a lot of people.” Unfortunately for Huntsman, Velshi added that the candidate’s plan consists of “fairly sophisticated economic ideas, and that doesn’t make for good campaign signs or television ads.” While he follows the economic proposals set forth by the candidates, Velshi said his job was to point out when those plans contain false promises. Velshi said that both Democrat and Republican candidates are guilty of making claims about economic reform that are not grounded in reality. “I get frustrated by some of the things that candidates say when they’re running, but I think we’re all smart enough to know…that candidates say things while they’re running [for office] that won’t actually come to fruition. I wish they didn’t, but that’s part of my job at CNN – to continually point out, ‘This is not feasible. It’s not partisan, it’s just not feasible.’”

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Will This Windows Phone Reclaim Mojo for Microsoft, Nokia?

January 10, 2012

LAS VEGAS — Apple has its iPhone, Android has its Galaxy Nexus, and now, Windows Phone has the Nokia Lumia 900. Nokia CEO Stephen Elop took the stage at the Consumer Electronics Show here Monday and unveiled the Lumia 900, the premier smartphone running Microsoft’s Windows Phone mobile operating system and perhaps the greatest hope of redemption for Microsoft’s struggling mobile software. Badly trailing Apple’s iOS, Google’s Android and BlackBerry in the U.S., Windows Phone 7 was released in 2010 and has not yet been a hit with American consumers, despite glowing reviews from critics . When handset giant Nokia announced that it would begin manufacturing phones running Microsoft’s mobile OS , it was widely viewed as an excellent chance for Windows Phone to become a meaningful player in the U.S. and for Nokia to reassert its former dominance of the mobile marketplace. And so here is the Nokia Lumia 900, the top-of-the-line Windows Phone from Nokia that arrives almost a year after Microsoft and Nokia first teamed up. The Lumia 900 will go on sale “in the coming months,” according to a press release, and will be available exclusively on AT&T to begin. Elop emphasized the Lumia 900′s 4.3-inch AMOLED display screen, an 8 megapixel rear-facing camera with Carl Zeiss optics and a front-facing 1MP camera with built-in video calling capability. The Lumia 900 will ship with ESPN, CNN and Nokia Drive apps and features a built-in GPS that can be used for navigation without a SIM card. Along with the announcement and a press release, Nokia made available a YouTube video showcasing the newest member of the Nokia Windows Phone family: The Lumia 900 is not the first Nokia device to run the Windows Phone OS. Previously, Nokia outed the Lumia 710, an entry-level, $50 device that will be available on T-Mobile and AT&T, and the Lumia 800, a premium device not yet available in America (It’s coming soon, according to Nokia representatives). The Lumia 900 is, however, the first Nokia Windows Phone with 4G LTE, the faster mobile network that American carriers are racing to build. “The introduction of the Nokia Lumia 900 with AT&T is another significant milestone in the ongoing rollout of Nokia’s global smartphone strategy,” said Chris Weber, president of Nokia Americas, in a statement. “The Nokia Lumia 900 is designed specifically with the U.S. in mind and the announcement of this collaboration with AT&T, in addition to other recent announcements, signifies a new dawn for Nokia in the U.S.” Neither a price nor a release date were announced. Though the Lumia 900 represents to AT&T a powerful bit of ammunition for its budding 4G LTE campaign, the stakes may be much higher for Microsoft and Nokia. Microsoft is pledging hundreds of millions of dollars in advertising for its flagging Windows Phone OS, which currently sits at under 5 percent adoption in the U.S., trailing Android devices, the iPhone and BlackBerry handsets by wide margins. Nokia, meanwhile, announced in February 2011 its intentions to drop the Symbian and Meego operating systems from its phones in favor of an exclusive multi-billion dollar partnership with Microsoft. The Lumia 900 is the first real jewel of that partnership, a blue-ribbon smartphone tasked with competing with the likes of the iPhone 4S and the Samsung Galaxy Nexus in a crowded, well-entrenched smartphone market. If Nokia is to regain the massive market share it enjoyed in America in the early-2000s, or if Microsoft is to grab the mobile market share it currently enjoys in the PC business, then Nokia’s newest batch of Windows Phones handsets will have to catch the attention (and wallets) of Americans in a way that previous attempts have not. The Nokia Lumia 900 is perhaps the most significant attempt yet at gaining (or regaining) those crowns. Though the Lumia 900 will not be the final shot at denting the market, it will certainly be one of the loudest. For full product specifications for the Nokia Lumia 900, see the official Nokia website .

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Paul Ryan Changes Tune On Controversial Bill

January 9, 2012

Facing pressure from constituents, Rep. Paul Ryan (R-Wis.) came out against the Stop Online Piracy Act (SOPA) on Monday. In a statement released on his official website, the House Budget Committee chairman outlined why he does not support the bill, noting that the current openness offered by the web should stay as is. “The internet is one of the most magnificent expressions of freedom and free enterprise in history. It should stay that way. While H.R. 3261, the Stop Online Piracy Act, attempts to address a legitimate problem, I believe it creates the precedent and possibility for undue regulation, censorship and legal abuse. I do not support H.R. 3261 in its current form and will oppose the legislation should it come before the full House.” Mashable notes that a Reddit campaign may have played a role in Ryan’s decision. “Operation Pull Ryan” was introduced last month, directing criticism against the congressman over his then-pro stance toward the bill. Ryan has accepted hundreds of thousands of dollars from organizations that support the initiative. Rob Zerban , Ryan’s 2012 Democratic challenger , has been part of the Reddit thread . The Kenosha County Supervisor applauded Ryan’s change of heart as an example of social networking power. “This is an extraordinary victory,” Zerban wrote. “Reddit was able to force the House Budget chair to reverse course — shock waves will be felt throughout the establishment in Washington today — other lawmakers will take notice.” Back in mid-December, The Huffington Post’s Zach Carter provided some SOPA background , explaining how the bill has “the power to fundamentally reshape the laws governing the internet.” Passage of the act would give the federal government broad powers to eliminate web domains believed to be partaking in piracy-related activities. SOPA opponents have come out swinging against the legislation. Moves against the measure include creating boycott apps , filming protest videos and transferring domains from pro-SOPA sites. GoDaddy.com was among the victims of that movement, eventually releasing a statement expressing opposition to the bill.

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80 Percent of ‘Eligible’ Homeowners Can’t Be Helped By Federal Program

January 9, 2012

Less than 20 percent of homeowners who theoretically qualify for a government mortgage modification are actually eligible, according to data released Monday by the Treasury Department. Although roughly 4.6 million U.S. homeowners have missed at least two mortgage payments — making them technically eligible for Making Home Affordable, the federal government’s flagship homeowner assistance program — a whopping 80 percent of those borrowers cannot be helped by the program. According to the Treasury report, just 900,000 homeowners actually qualify for a loan modification under Making Home Affordable. Dean Baker, an economist and co-director of the Center for Economic and Policy Research, said that fact reflects the program’s low goals. “If 900,000 are eligible, and this is your main program for helping underwater borrowers, and we know that not all 900,000 can be helped, this doesn’t look very ambitious,” he said. The numbers reinforce just how far short the program, initiated by President Barack Obama with much fanfare in early 2009, has fallen short of its goals and fuel critics’ assertions that the program is largely ineffective. “This program, in its design, is set up to help a very small portion of people,” said Baker. (Under Making Home Affordable, homeowners who aren’t yet delinquent in mortgage payments but are at risk of imminent default might also qualify for loan modifications. The Treasury data did not include that population.) Borrowers are locked out of the federal program for a myriad of reasons, including the kind of loan they have and the property at issue. Not covered by the program: rental properties, “manufactured” homes, homes with Federal Housing Administration loans, and homes with Department of Veteran Affairs loans. Many borrowers can’t get help because their monthly mortgage payment is deemed affordable, irrespective of whether it actually is for the borrower. The idea behind the loan modification program is to make the monthly mortgage payment more affordable, defined as a payment that is less than 31 percent of the borrower’s total monthly debt payments (think car payments, student loans, credit cards, etc.). One-third of homeowners who would otherwise qualify are ineligible because they already have a mortgage payment that meets this criteria, according to the Treasury report. Borrowers who have abandoned their property are also ineligible, the assumption being that they are not committed to their home. “If you look at the large number of vacant properties, I think that speaks to the fact that, in many cases, the borrowers were reached too late in the game,” said Baker. “The borrower assumed they’d lose their home so they walked away. You could say those people aren’t eligible, but they might have been if we’d reached them earlier.”

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Police Reportedly Went Undercover At Occupy LA Encampment Prior To Raid

December 3, 2011

The Associated Press LOS ANGELES (AP) — Los Angeles police used nearly a dozen undercover detectives to infiltrate the Occupy LA encampment before this week’s raid to gather information on protesters’ intentions, according to media reports Friday. (CLICK HERE OR SCROLL DOWN FOR LATEST UPDATES) None of the officers slept at the camp, but tried to blend in during the weeks leading up to the raid to learn about plans to resist or use weapons against police, a police source told the Los Angeles Times. The source spoke on the condition of anonymity because the case is ongoing. The undercover work yielded information that some protesters were preparing bamboo spears and other potentially dangerous weapons in advance of an expected eviction by the LAPD, none of which were used, according to City News Service which first reported the story. Police downplayed the significance of the undercover work since Occupy meetings were public and easily tracked. LAPD Officer Cleon Joseph declined an Associated Press request for comment on the reports. Occupy L.A. protester Mario Brito told City News Service he was not surprised by the revelation, but said it was “tantamount to 1950s McCarthyism.” Meanwhile, the city attorney’s office filed criminal misdemeanor charges Friday against 27 more of the people who were arrested following the police sweep of the camp. In all, 46 of the 291 people arrested during the raid have been charged with misdemeanor crimes of failure to disperse from an unlawful assembly. Some also were charged with resisting arrest. The arrests came Wednesday during a pre-dawn raid on City Hall Park, where nearly 500 tents had been erected at the peak of an anti-Wall Street protest, City Attorney Carmen Trutanich said. Fifty-eight posted bail or were released by police, Criminal Division Chief Earl Thomas told City News Service. An additional 187 protesters were released without bail and without being charged, because they had no prior criminal records. Bail amounts ranged from $5,000 for most of the defendants to as high as $20,000.

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‘Jobs For Justice’ Rally Brings Thousands To National Mall

October 15, 2011

WASHINGTON — Thousands of Americans led by the Rev. Al Sharpton rallied Saturday against the backdrop of the Washington Monument, calling for easier job access and decrying the gulf between rich and poor before marching to the new Martin Luther King Jr. Memorial. The rally was intended to drum up support for President Barack Obama’s jobs plan, which died Tuesday in the U.S. Senate. But speakers used the platform for varied causes, including condemning state laws requiring voter identification at the polls and protesting the recent execution of Troy Davis, a Georgia man convicted of killing an off-duty police officer. Davis maintained his innocence until his death and attracted thousands of supporters worldwide even though courts repeatedly ruled there wasn’t enough evidence to exonerate him. Chanting for jobs and justice, many demonstrators carried banners for their labor unions and wore pins or T-shirts bearing King’s likeness. Obama is scheduled to speak Sunday at the dedication ceremony for the memorial, the first monument dedicated to a black leader on the National Mall. Sharpton, the featured speaker at the March on Washington for Jobs and Justice, blasted the Senate for its failure to pass Obama’s $450 billion jobs bill. The measure includes an extension of a payroll tax cut and unemployment benefits, as well as money to help local governments keep teachers and other workers on the job. Obama and Senate Democratic leaders plan to try to pass elements of the measure by breaking it into pieces. “If you can’t get the jobs bill done in the suites, then we will get the jobs bill done in the streets,” Sharpton said to cheers and applause. He told the crowd that King would have supported their cause “because he stood for those who were cast down and cast back.” King’s eldest son, Martin Luther King III, was also among the speakers. “Over 45 years ago, my father talked about a redistribution of wealth. In fact, that is probably why he was killed,” King said. “Because he said if America is going to survive responsibly, then it must have a redistribution of wealth.” Kathie Williams, a part-time administrator for the Howard County, Md., parks and recreation department. She’d like to find full-time work but has struggled to do so despite an active search. “No one has responded to me,” Williams said. Belinda Shade, 56, of Waldorf, Md., works as a special education school administrator but said the economy still makes her insecure. “Right now I have a job, but I don’t know what might happen tomorrow,” Shade said, later adding, “There are no jobs. People are really hurting. Everything is coming apart as a result.” District of Columbia Mayor Vincent Gray held a separate protest supporting greater autonomy for the district government – Congress must approve the local government’s budget – and joined in the larger gathering. Labor Secretary Hilda Solis and Randi Weingarten of the American Federation of Teachers were among the other speakers. Nonetheless, Sharpton said the rally was not intended as an overtly political statement or as part of the president’s re-election bid. “This is not about Obama,” he said. “This is about my mama.”

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Obama Administration Will Not Seek Appeal Of Atlanta Ruling Against Health Care Law

September 27, 2011

By PETE YOST, The Associated Press WASHINGTON (AP) — The Obama administration has decided not to ask a federal appeals court in Atlanta for further review of a ruling striking down the centerpiece of President Barack Obama’s sweeping health care overhaul. The administration’s decision makes it more likely that the U.S. Supreme Court would hear a case on the health care overhaul in the court’s term starting next month, and render its verdict on the law in the midst of the 2012 presidential election campaign. Justice Department spokeswoman Tracy Schmaler disclosed the administration’s decision. She declined to elaborate on next moves. The Atlanta circuit ruling sided with 26 states that had sued to stop the law from taking effect. In another case, the 6th U.S. Circuit Court of Appeals in Cincinnati upheld the individual mandate in June. A three-judge panel of the 4th U.S. Circuit Court of Appeals in Richmond, Va., rejected two lawsuits on technical grounds. In one, it ruled that the penalty for not buying insurance amounts to a tax and that a tax can’t be challenged before it’s collected. In the other, the panel said the plaintiff, the state of Virginia, lacked legal standing to file its lawsuit. In a ruling in August, a divided three-judge panel of the 11th Circuit Court of Appeals in Atlanta concluded Congress overstepped its authority when lawmakers passed the individual mandate provision that requires people to buy health insurance. The administration could have asked the full 11th circuit court to hear the case, potentially delaying high court review. The U.S. Circuit Court of Appeals for the District of Columbia, the fourth appeals court to deal with a case over the law, heard oral arguments last Friday but hasn’t issued a ruling. The Supreme Court is widely expected to have the final say on the law, especially now that the appeals courts that have considered the law have disagreed, and one of them has struck down a key provision. The real question has been over timing, which has political as well as legal ramifications. In order to hear and decide the case by late June, when the court wraps up its work until resuming in October, the justices would have to act by January to accept and schedule an appeal. It typically takes a couple of months or more from the time an appeal is filed at the court until the justices decide whether or not to hear it. In arguments leading up to the appeals court decision in Atlanta, the Obama administration said the legislative branch was using a “quintessential” power – its constitutional ability to regulate interstate commerce, including the health care industry – when it passed the overhaul law. Administration officials said at the time they were confident the 11th Circuit ruling would not stand. In that August ruling, Chief Judge Joel Dubina and Circuit Judge Frank Hull said that lawmakers cannot require residents to “enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.” In a lengthy dissent, Circuit Judge Stanley Marcus accused the majority of ignoring the “undeniable fact that Congress’ commerce power has grown exponentially over the past two centuries.” He wrote that Congress generally has the constitutional authority to create rules regulating large areas of the national economy.

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Paul Krugman: Compassion No Longer Fashionable In America

September 16, 2011

Back in 1980, just as America was making its political turn to the right, Milton Friedman lent his voice to the change with the famous TV series “Free to Choose.” In episode after episode, the genial economist identified laissez-faire economics with personal choice and empowerment, an upbeat vision that would be echoed and amplified by Ronald Reagan.

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Allied World, Transatlantic call off deal

September 16, 2011

By Ben Berkowitz (Reuters) – Reinsurers Allied World Assurance Co Holdings Ltd and Transatlantic Holdings Inc called off their merger on Friday in the face of overwhelming opposition, leaving the fate of Transatlantic uncertain amid two larger, unsolicited offers. Transatlantic said it would remain open to making a deal, while also increasing its share buyback program and naming a new chief executive. Its largest shareholder, which opposed the Allied deal, came out in favor of the new plan. Allied World said in a statement it would receive a $35 million break-up fee and $13.3 million in expenses from Transatlantic. Transatlantic would owe Allied another $66.7 million if it entered into another deal within a year. Allied World’s all-stock offer was worth $2.94 billion, or $47.05 a share, at Thursday’s closing prices and represented a roughly 5 percent discount to Transatlantic’s share price. Shareholders were due to vote on the agreement on Tuesday, but it was expected to be rejected. Three proxy advisory firms said Transatlantic investors should reject the deal and an Allied executive told a Barclays Capital conference last week that the deal was unlikely to succeed. CAPITAL MANAGEMENT Transatlantic sent a letter to stockholders Friday in which it noted “it will continue to entertain and evaluate any serious proposal or opportunity that offers its stockholders full and fair value.” In the interim, the company said it will increase its stock buyback program to $600 million, with a commitment to buy back half of that this year. Davis Selected Advisors, Transatlantic’s largest shareholder, endorsed both moves. “Davis Advisors applauds Transatlantic’s efforts to create value for shareholders with an intelligent capital management plan while at the same time remaining open to other strategic alternatives,” it said in the company’s statement. Transatlantic also said Chief Executive Robert Orlich would retire as planned and that chief operating officer Michael Sapnar would become CEO as of January 1, 2012. DEALS ON THE TABLE With Allied out of the picture, Transatlantic still has two suitors. It has been in confidential talks with a unit of Warren Buffett’s Berkshire Hathaway Inc about an unsolicited offer. But Transatlantic said Friday that no further talks were scheduled, and that Berkshire has said it is unwilling to increase its bid beyond the publicly announced $3.25 billion, or $52 a share, cash offer on the table. Transatlantic had been seeking a substantially higher bid. Meanwhile, Validus Holdings Ltd has taken its own hostile bid directly to shareholders. At Thursday’s close, Validus’s $3.02 billion cash-and-stock bid was worth $48.26 per share. Transatlantic said Friday that it remained willing to engage in friendly talks with Validus, though it said Validus’s bid was also inferior. Of the two, Berkshire’s all-cash bid is $230 million richer than the Validus offer. Allied and Transatlantic reached their all-stock deal in June, but Davis Advisors opposed the deal. About a month later Validus stepped in with its bid, only to be followed a few weeks later by Berkshire. Analysts had expected a bidding war for Transatlantic given the depressed valuation the Allied bid offered relative to the rest of the sector. All three offers stand at a discount not only to Transatlantic’s book value but also to the sector median valuation. (Reporting by Ben Berkowitz, editing by Gerald E. McCormick and Derek Caney)

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U.K.’s Brown: Without ‘Global Coordination,’ U.S. Could Face Decade Of High Unemployment

September 16, 2011

Europe and the United States could face 10 years of slow growth and high unemployment if a global solution for the euro zone debt crisis is not implemented soon, former British Prime Minister Gordon Brown said on Friday. “Unless there is global coordination…I foresee 10 years of low growth in Europe and America, I foresee very high levels of unemployment and I foresee a failure of coordination that will lead in the end to greater protectionism,” Brown told reporters and participants at the World Economic Forum in Dalian. The sovereign debt crisis gripping Europe has seen Greece, Portugal and Ireland forced to take bailouts, piled bond market pressure on Italy and Spain and raised fears of a banking crisis as wholesale funding evaporates on concerns about lenders’ potential exposure. The European Central Bank said on Thursday it would work with other major central banks to offer three-month dollar loans to commercial lenders to prevent money markets freezing up. However, some investors said more needed to be done, including more aggressive capital injections for banks that are overexposed to heavily indebted euro zone countries. “You cannot begin to solve the European problem unless you understand it is a banking problem, a growth problem, the inability of the European economies to grow out of a recession, as well as being a fiscal problem,” Brown said. Brown, who was finance minister for 10 years before becoming prime minister in 2007 and won praise for his handling of the early stages of the global economic crisis in 2008/09, said the crisis should be solved by having a “global agreement” on how the world economy should grow. Such an agreement would need to address the rebalancing of exports and consumption between developing countries, such as China and India, and developed countries, such as the United States. “You will need an international agreement, not just a euro area agreement, to sort out the problems that Europe now faces and the IMF will be involved in some stage in this in my view,” Brown said, adding that he agreed with the widely held view that the European Financial Stability Facility, Europe’s bailout fund, of 400 billion euros was insufficient. A growing number of policymakers, as well as market economists, are convinced it is only a matter of time before Greece, which keeps falling behind on fiscal targets agreed with its international creditors, will have to default. But British insurer Prudential’ s (PRU.L) Chief Executive Tidjane Thiam said he did not see a Greek default on the cards. “I don’t think they will default, I think the market thinks they will default. I don’t think they will because the consequences on the banks in particular are too significant, particularly to France and Germany,” Thiam said. (Reporting by Melanie Lee; Editing by Alex Richardson) Copyright 2011 Thomson Reuters. Click for Restrictions .

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HP execs misled investors before August stock crash: lawsuit

September 15, 2011

(Reuters) – Hewlett-Packard Co and top executives misled investors for months before unveiling a series of major decisions, such as the demise of the TouchPad, that hammered its shares, a shareholder alleged in a proposed class-action lawsuit filed this week. Shareholder Richard Gammel accuses the world’s largest technology company of concealing the fact that its existing business model was not working and that webOS — the operating software it inherited after buying Palm — was no longer central to its business model. On August 18, the U.S. tech giant stunned Wall Street by saying it was considering a spinoff of the world’s largest PC business, killing off webOS devices such as the TouchPad, and buying British software company Autonomy Corp for $12 billion. Shares of the company plunged 20 percent the following day, marking their biggest single-day drop since the Black Monday stock market collapse of 1987. The lawsuit, filed this week in U.S. District Court by Robbins Geller Rudman & Down, accuses HP executives including CEO Leo Apotheker and CFO Cathie Lesjak of misleading investors by making positive statements about the company’s performance that later proved unfounded. The lawsuit seeks to recover unspecified damages on behalf of any who bought into HP between November 22, 2010, and Aug 18 of this year, arguing that the lack of disclosure about potential issues means its shares were artificially inflated. HP did not respond to requests for comment. Lawsuits by shareholders seeking class-action status are common after major declines in stock prices. Investor ire against Apotheker has grown after a series of disappointments in quarterly results, capped by the August announcements. Some also say HP is overpaying for Autonomy. (Reporting by Edwin Chan in Los Angeles, editing by Matthew Lewis)

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What Else Can We Do For The Long-Term Unemployed?

September 5, 2011

WASHINGTON — When Steve Clark of St. Louis, Mo., lost his IT job in 2009, he intuitively knew that as someone older than 60, he’d have a tough time getting back to work. So he scrambled, compiling all of his professional contacts, drafting 13 different versions of his resume and meeting with anyone he could. A former client who owned an IT consulting business told Clark he could have hired him before the economy went sour, but not now. Still, Clark pushed ahead. “I knew his business because I’d been selling to him for 20 years,” Clark said. “I said, ‘I can come in and work in your office. I can answer the phone, I can dispatch your technicians. I’ll do it for free just because I want an office to go to, a place to work out of.’ ” Clark said the former client set him up with a desk and a phone. Clark got to work, and within three months, he said, he’d made himself so useful that he got hired in August, 2009. Now Clark, 62, is making a third of what he used to, but he’s grateful to have a job. “In a couple years, everything will be in place and I’ll retire,” he said. To confront the growing problem of long-term unemployment, the Obama administration may seek to put Clark’s strategy into practice on a national scale. The White House has signaled that it may replicate a program in Georgia that allows businesses to train jobless workers for two months without have to pay them. The program, called Georgia Works, is only open to workers receiving unemployment insurance benefits. Businesses have no obligation to hire participating workers, and the arrangement is voluntary for both parties. Its proponents say it lets workers get their foot in the door and that it reduces businesses’ hiring risks. Labor advocates are howling that Georgia Works exploits workers and violates federal labor laws, and they argue that it shouldn’t be tangled up with unemployment insurance dollars. (It could be that the White House is interested in Georgia Works, which is popular with Republicans, as part of a bargain that includes a re-authorization of federal extended benefits , which are set to expire in January.) But there is urgent need for an innovative solution to the problem of long-term joblessness. In 2007, there were 228,000 people unemployed for 99 weeks or longer, according to the Bureau of Labor Statistics. Now there are more than 2 million who’ve passed the 99 week milestone, which is the cutoff point for unemployment insurance in the hardest-hit states. The longer a person is out of work, the less likely he or she is to find a new job. Georgia Works isn’t the only way state innovators are trying to break the cycle. A unique public-private partnership in Connecticut, for example, targets people who have already exhausted 99 weeks of unemployment benefits without finding work. “I recognize that businesses don’t need to look at people who’ve been out of work two years because there’s a rich, rich field of people who haven’t been out of work that long,” said Joe Carbone, president of The Workplace, Inc., the company implementing the Connecticut initiative. “Unfortunately these folks are the sacrificial lambs of the Great Recession.” The brand new program, called Platform to Employment , puts workers through a four-week training period followed by an eight-week tryout at a participating business. During the tryouts, the workers’ wages are paid by The Workplace, which raised enough funds to support 100 jobs starting this fall. In December, Carbone’s team will evaluate the program’s success. “We’re giving a lot of advantage to business, but we’re also giving our candidates sort of an eight-week interview,” Carbone said. “It gets their foot in the door.” Yet another strategy would use public dollars to subsidize wages. Early in 2010, Sen. Al Franken (D-Minn.) pushed legislation that would have revived a wage-subsidy program that he said put 7,400 people to work within six months of its launch during the recession of the early 1980s. The plan, known as the Minnesota Emergency Employment Development (MEED) program, lasted from 1983 to 1987. A new version, called Strengthening Our Economy Through Employment and Development (SEED), would have used leftover bailout dollars to subsidize up to 50 percent of a workers’ wages for up to 12 months. “MEED was an incredibly effective program and created thousands of jobs in Minnesota, which is why I thought it had enormous potential to do the same on the national level and why I introduced the SEED Act in Congress,” Franken said in a statement to HuffPost. “I still think that SEED is a great model, but whether it’s this particular plan or another, my top priority is clear — we need to create jobs and get people back to work.” Instead of adopting Franken’s proposal to subsidize wages, Congress enacted the Hiring Incentives to Restore Employment Act , which gave businesses $13 billion worth of tax credits for hiring unemployed workers. The measure has not been evaluated. In Mississippi, Republican Gov. Haley Barbour revived a program this summer called Subsidized Transitional Employment Program and Services, which in its first incarnation was funded with stimulus dollars from a new emergency fund attached to the Temporary Assistance for Needy Families program (formerly known as welfare). Congress let the fund die in 2010, snuffing some 240,000 subsidized jobs , according to the liberal-leaning Center on Budget and Policy Priorities. According to the Mississippi Department of Employment Security, the new version of the initiative, known as Subsidized Transition Employment Program and Services (STEPS 2), will be funded with left-over stimulus dollars and will last from August to December. It initially covers 100 percent of an employees wages, gradually reducing the subsidy for every 160 hours worked. “Mississippi STEPS 2 is unique in that it is a program specifically designed to benefit both the employee and employer,” Gov. Barbour said in a statement. “We saw tremendous results with our original program, which created more than 1,800 permanent, private-sector jobs. I fully expect the STEPS 2 program to provide much-needed support to small businesses by enabling them to hire new workers, thus enhancing the economic engines of our local communities.” A Department of Employment Security spokeswoman said 80 companies have signed up for the program, and that 450 workers were expected to enroll. Of course, the best possible solution to long-term unemployment would be a stronger economy — but that option appears to be off the table for a while . Last week, the White House said it expected the unemployment rate will not come down to 6 percent until 2016. HuffPost readers: Participated in any of these programs? Tell us about it — email arthur@huffingtonpost.com . Please include your phone number if you’re willing to do an interview.

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10 States With The Highest Unemployment Rates: BLS

July 23, 2011

Job creation in the United States has been weak, at best, in recent months. And for those states most devastated by the financial crisis, that truth truth has been particularly devastating. Indeed, the degree by which the unemployment crisis has affected communities varies across the country, with states like South Carolina and Florida particularly feeling the heat. Of them all, though, no state has a higher rate than Nevada, currently at 12.4 percent, according to a report released by the Bureau of Labor Statistics on Friday. Nevada’s fall from grace has been hard and fast. Devastated by the thunderous bust of the housing crisis, Nevada’s tourism has also suffered mightily, tumbling 11.9 percent at the onset of the recession, the Las Vegas Sun then reported. Other particularly hard-hit states include mega-states, like California with its 11.8 percent unemployment rate, and tiny Rhode Island, which currently has an unemployment rate of 10.8 percent. For both those states, hard times didn’t arrive alongside the financial crisis. According to the Seattle Times , Rhode Island has been losing jobs since as early as 2006. In California, on the other hand, many have yet to recover from the bursting of the 1990s tech bubble. The following are the ten states with the highest unemployment rates:

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Housing Recovery Begins When Foreclosures Turn To Closings

June 17, 2011

Before anyone starts talking about a housing recovery, the conversation needs to shift from foreclosures to closings. For months, the only “good news” out of the relentlessly stagnant U.S. housing market has been reports that foreclosures are slowing. On Thursday, for instance, RealtyTrac reported that foreclosure filings in May fell for the eighth straight month and are down 33% from a year ago. But that was inevitable given the fact that there is a finite number of homes in America and record numbers of foreclosures were filed in 2009 and 2010 as homeowners struggled to pay their mortgages during the worst of the recent financial crisis. Simply put, it was almost statistically impossible for the number of foreclosures to keep rising. The numbers eventually had to go down so there’s really nothing positive to glean from these figures. Barry Bramlett, president of Equity Depot LLC, which compiles real estate data in Georgia, compared the steady decline in foreclosures to an army that on each successive day of a battle loses fewer soldiers. “You start out with a large number of soldiers and on the first day of battle a large number are lost. The next day there are fewer soldiers to lose so fewer are lost, and so on and so on,” he said. A battle with lots of casualties seems an apt metaphor for the current housing market. And there doesn’t seem to be any end in sight for this war. Last week Ara Hovnanian , CEO of the giant homebuilder Hovnanian Enterprises (NYSE: HOV), sought during a conference call with analysts to ease concerns that the prolonged housing slump was taking a heavy toll on his business. He said at one point, “We remain confident that we have the liquidity to weather the remainder of this downturn, and will continue to position ourselves in preparation for the inevitable housing recovery.” But when is inevitable? No one seems to know. Jay Butler, an associate professor of real estate at Arizona State University, said it all depends on your definition of recovery. According to Butler, for many Americans recovery will mean that their mortgages are no longer ‘underwater,’ an increasingly common predicament in which homeowners have seen the value of their homes fall so much that they owe more than their home is worth. Underwater mortgages have been cited as a primary reason so many homeowners have defaulted on their loans, forcing foreclosure. The thought being, why continue to make monthly payments on a $400,000 mortgage when the house is now worth only $300,000?  Underwater mortgages have also cut into the housing market because homeowners who owe more than their homes are worth can’t sell without incurring significant losses. Butler said that, for others, the key to a recovery will be when “the housing market is driven by owner-occupants, not foreclosed properties.” “Typically, when one thinks of housing the main theme is people wanting to buy a place for their family. Now, foreclosures are the dominant force,” he said. Butler said recovery could be “many years down the line” in hard hit areas of the country such as Phoenix. In less beleaguered regions such as Texas, perhaps not as long, he said. There are many obstacles that need to be overcome, some of them specific to the industry itself as the pendulum has swung sharply from the lax lending standards of a decade ago to a markedly different lending environment today. Now, potential homeowners face increasingly tougher loan-qualification guidelines, lower limits on U.S. Federal Housing Administration-backed mortgages and higher down-payment requirements. While a common-sense approach to lending might have avoided the catastrophic fallout from last decade’s housing bubble, the sharp turn in the other direction is now acting as an impediment to lifting the housing market out of its doldrums.   The rest of the economy isn’t helping either. “It’s been two-and-a-half years and we’re still heading down,” said Steve Palm, president of Smart Numbers, an Atlanta-based real estate data firm. That trajectory isn’t expected to change if unemployment continues to hover above 9%. “Housing will not lead us out of this thing,” said Palm. “We’ve got to get businesses to start hiring.” A significantly reduced unemployment rate is widely seen as the lone economic index that could single-handedly affect the housing market. But in lieu of that unlikely scenario it will take jumps in a range of housing-related data points — sale closings, homes under contract, building permits, etc. — before anyone is convinced the housing market is turning around. Bramlett said none of those numbers is likely to move higher while a huge glut of housing inventory remains. “Nothing is going to change while there’s that glut,” he said. “Until that changes I don’t see anything driving any prices upward.” But jobs are the key. High unemployment bleeds across all sectors of the economy and has impacted housing in particular. Said Bramlett: “There is no mobility right now, people aren’t moving for jobs. It used to be that when you got a better job you got a better house. Now no one is getting that better job so they’re not moving into that better house. It’s unchartered territory at the moment.”

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Student Housing Gains Respect » Commercial Real Estate » FeedRE

May 31, 2011

The 28-year commercial real estate broker specializes in the sale and joint venture of retail, office and ground up development in Southern California. Algermissen… Investors Jump Back Into Rebounding Hotel Market …

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Beck Hires Harri Jarvenpaa as Senior Designer

May 23, 2011

  ATLANTA, GA (May 23, 2011) – The Beck Group’s Atlanta office said today that Harri M. Jarvenpaa (top right photo) , AIA, LEED AP, has joined the team as a senior designer. Harri has more than 15 years of experience in healthcare design and complex high-rise mixed-use construction. In his new role with Beck, Harri will manage pre-development services, conceptual design and facilitate meetings with municipal zoning and code officials. During his career, Harri has managed and designed projects in Georgia, Texas, Florida, Colorado, North Carolina and Virginia. The majority of these project budgets were between $50 million and $100 million. “Harri has extensive experience in healthcare design and construction,” said Fred Perpall (lower  left photo by KARL W. RITZLER/Special from Atlanta Journal Constitution) managing director of Beck’s Eastern Division. “This skillset will be a great asset to our design team.” Before joining Beck, Harri was a senior designer with The Peacock Partnership in Atlanta. His career has also included positions with The Preston Partnership and Smallwood, Reynolds, Stewart, Stewart and Associates. Harri is a member of the American Institute of Architects and the U.S. Green Building Council. He holds a Bachelors of Architecture from Mississippi State University. Dallas-based Beck is a full-service builder. Beck is in the business of devising solutions for clients needs through the development of real estate, the design of architecture and interiors and the construction of buildings.  Beck serves a wide range of industries, including arts, corporate, healthcare, entertainment, religious and education. Beck has more than 500 employees, many of whom are LEED-accredited professionals, working from a network of offices in Atlanta, Austin, Dallas, Denver, Fort Worth, Mexico City, San Antonio and Tampa. For more information, go to www.beckgroup.com .   Contact: Laura Dudebout O: 404.965.5023 C: 678.642.4301 ldudebout@wilbertnewsstrategies.com

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Cost Of Natural Disasters: ‘Ten Billion Dollars Would Be Conservative’

May 19, 2011

This year’s record-breaking tornadoes, floods, droughts and wildfires will cost the country tens of billions of dollars in economic losses — and these estimates are expected to climb as the Mississippi flooding and severe drought in Texas continue into the summer. Economists disagree about the precise figures — with the estimates varying by billions — but most agree that $10-15 billion in losses are conservative calculations. Severe weather in April alone — the month when record-breaking tornadoes tore through much of the Southeast and killed more than 300 people — cost the country $12 billion in economic losses, according to Steven Bowen, a meteorologist with the Impact Forecasting team of Aon Benfield, one of the world’s largest insurance brokers. The cost estimates for the flooding in Louisiana and Mississippi range from $3-9 billion, and the ongoing Texas drought, which began in November and has caused more than 10,000 wildfires across the state, has so far cost between $1.5 billion and $3 billion in crop and cattle losses. As the flooding and drought continue, government agencies say that it’s impossible to predict the long-term economic impact of the losses, which include thousands of homes and buildings destroyed by the tornadoes, casinos and ports along the Mississippi temporarily closed, millions of acres of grazing land scorched by the fires and 1 percent of the country’s cropland currently submerged in water. “It’s too early to say what effect this [the flooding] would have on the national economy,” the Department of Agriculture stated in a report on May 11. “Regardless, it probably will not be extensive given the estimated percentage of land affected.” But even as the long-term effect remains unknown, the short-term impact is clear: Individuals and small businesses are absorbing the bulk of these losses, as states, government agencies and insurance companies help foot nature’s bill. April’s tornadoes are expected to wipe thousands of mom-and-pop shops off the map. This region already had a high rate of small business failure, and before April’s disasters between 6,000 and 8,000 small businesses in Alabama, Tennessee, Mississippi and Georgia were expected to go under within the year, according to a report by Dun & Bradstreet, a research company that tracks small businesses. After the tornadoes, the number jumped to at least 10,000 shops. “Small businesses are definitely going to bear the brunt of this,” Byron Vielehr, President of Global Risk and Analytics division at Dun & Bradstreet told HuffPost in a telephone interview. The businesses won’t fail immediately, said Vielehr, but when they do it could produce a spike in unemployment and a loss of about a billion dollars in sales, just from these tornado-stricken small businesses alone. The situation of small farmers and ranchers in Texas is similar. After enduring the driest seven months on record, farmers and ranchers are being forced to abandon a cycle of wheat crop and sell off herds. Texas produces 20 percent of the country’s beef, and cattle ranchers are being slammed by the combination of scorched land unable to support grazing, and high feed and hay prices, both of which were driven up by the drought and the fires. “For a rancher, at this point he’s going to be losing about 30 percent of the income he would have averaged in the past,” said Bill Hymen, executive director of the Independent Cattlemen’s Association, the second-largest coalition of ranchers in the state. “And that’s not just this year but going forward because of dwindling seed stock,” he added, referring to the process of fewer cows leading to the birth of fewer calves in the future. As is the case in all industries, when a rancher has less pocket money, that creates a ripple effect in the local economy — with Hymen noting that ranchers, who know it’s likely that the drought will continue through the summer, are buying less and will ultimately pay less in taxes next year. Along the Mississippi and Atchafalaya rivers, a portion of small businesses and farms will likely follow the same course as the businesses that fell in the tornadoes path. Closed ports and casinos, too, are losing millions of dollars each day in lost river traffic, trade and gambling. Closing the Mississippi river itself causes even more economic damage. On Tuesday, the Coast Guard closed a 15-mile stretch of the Mississippi upriver of New Orleans by Natchez Port, a decision which could lead to losses of hundreds of millions of dollars each day, said Eric M. Holthaus, researcher at the International Research Institute for Climate and Society. The Coast Guard said that this closure is expected to last only a few days, but Holthaus also imagines a nightmare scenario in which the Port of New Orleans — the seat of our country’s agricultural exports and a handful of oil refineries — has to be closed. “I would be talking about trillions of dollars at that point,” he said. As long as the Port of New Orleans stays open, which it likely will, the Federal Emergency Management Agency, commonly known as FEMA, said that right now there is plenty of money in the $2 billion emergency fund to aid the states hit hardest by the natural disasters. FEMA has already approved about $38 million in future storm and tornado rebuilding assistance, including $9.4 million to Mississippi, $80 million to Alabama, $6.6 million to Georgia, $5.9 million for Tennessee and $16 million for Arkansas. For the flooding, FEMA has so far approved more than $11 million, including $1.4 million for Tennessee, $9 million for Missouri and $785,000 for Mississippi. As the flooding continues, the FEMA contribution is expected to rise, and these figures don’t include other public assistance that the regions will receive, either from the federal or state level. Insurance companies, too, are paying out, and April alone produced hundreds of thousands of insurance claims. Still, insurance companies and federal agencies aren’t feeling the hit of $10-15 billion in losses as acutely as individuals, towns and small businesses. “If you’re a small town in western Texas that’s lost anything, that town is going to suffer regardless of how much insurance money they get in the end. Less money in the community will mean that all unrelated jobs will take a hit,” said Holthaus, who said that the same holds true for communities affected by the tornadoes or the floods. “During a recession is a bad time for a disaster to hit,” he said.

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Tom Coburn Was Debt Ceiling Deal Linchpin

May 19, 2011

WASHINGTON — Maybe it was all a pipe dream – the idea that a “Gang of Six” from across the Senate’s ideological spectrum could solve the nation’s deficit despite enormous obstacles placed in their way by President Barack Obama and leaders of both parties. The remaining five are opting to plug ahead, but they may just be marking time after the departure of conservative Oklahoma Sen. Tom Coburn, the crucial cog if the gang was ever going to be able to sell a deal. Coburn, one of the few Republicans with enough tough-on-spending “street cred” to wage a fight with anti-tax purists, provided vital political cover for Republicans even thinking about raising revenues as part of a bipartisan grand bargain that would include cuts in benefit programs that Democrats hold sacred, like Medicare and Social Security. So when he dropped out of the Gang of Six group on Tuesday – he says he’s taking a “sabbatical” and may rejoin it later – it was a major, perhaps fatal blow to hopes for a comprehensive approach tackling the deficit problem before the 2012 elections. “He makes it more difficult to gain the kind of broad support you would hope for on the Republican side because Tom Coburn’s highly regarded in our conference,” said Sen. Rob Portman, R-Ohio. Coburn exited after Democrats rejected his demand for about $130 billion more in Medicare cuts beyond the $400 billion already on the table. That prompted Coburn to pronounce the emerging package a bad mix of spending cuts to tax increases. The politics were lousy as well. It became apparent to Coburn that Democrats could get behind an emerging agreement a whole lot easier than Republicans could. The anti-tax sentiment in the GOP is simply too strong, while lots of Senate Democrats are eager to demonstrate they’re tough on spending. The Gang of Six, now down to five, was trying to craft a deficit-slashing plan along the lines of the 10-year, $4 trillion package that Obama’s deficit commission put together last year. Basically, the plan called for a dollar in higher taxes in exchange for every $3 in cuts to government spending and benefit programs. The nation’s $14.3 trillion debt would continue to grow, but at a much slower pace. The commission plan got good reviews from deficit hawks but a chilly reception from the White House and leaders in both parties. But the idea driving the Gang of Six was that an agreement within the group – whose members include a leading liberal in Dick Durbin, D-Ill., and one of the most prominent conservatives in Coburn – would provide the catalyst to swing dozens of more senators behind their work. “The Gang of Six … was designed to force the idle – not gridlocked – Senate, and then the House and the president, to enact a long-term deficit-reduction package,” Coburn wrote in a Washington Post op-ed on Thursday. One of the reasons the group was noteworthy was that its GOP members – Coburn, Saxby Chambliss of Georgia and Mike Crapo of Idaho – were willing to agree to revenue increases of about $1 trillion over the coming decade as the price for getting Democrats to accept cuts to Medicare, Medicaid and Social Security. If senators at the liberal and conservative edges of their respective parties could agree, the thinking went, a wide swath in the middle would follow. “Coburn and Durbin are the two key players in the group,” said former Sen. Judd Gregg, R-N.H., who retired from the Senate last year. “From a philosophical standpoint they represent polar opposites, and if they agreed on something … then you we have a real core for bipartisan action. So yes, (Coburn’s) critical.” The gang’s remaining five senators – the other two Democrats are Mark Warner of Virginia and Kent Conrad of North Dakota – pledged to soldier on without Coburn. But what was already an uphill climb seems to have gotten a lot more steep. The glass-half-full take on Coburn’s departure is that it could make it easier for the remaining five to get an agreement. Selling it without Coburn is another matter. For starters, both Senate GOP Leader Mitch McConnell of Kentucky and Majority Leader Harry Reid, D-Nev., have long opposed the Gang of Six approach. McConnell ruled out tax increases; Reid and Obama made it clear they have no appetite for tackling shortfalls in Social Security before the 2012 election. That opposition, coupled with the enormous difficulty in confronting the dangerous politics of taxes, Medicare and Social Security, may have doomed the group from the start. Instead, the leadership apparatus of both parties as well as Obama have embraced a working group led by Vice President Joe Biden to come up with spending cuts to attach to must-do legislation to allow a government that’s now borrowing 40 cents of every dollar it spends to continue to do so. “The Republican leadership has reservations, as does the Democratic leadership, about stepping onto these very highly charged political issues as we basically begin a presidential campaign,” said Gregg, who also was a member of Obama’s deficit panel. “The White House does too. They have not been too constructive in the exercise.” Meanwhile, the Group of Six Minus One meets again on Monday. Chambliss, R-Ga., said the group’s goal remains “to get a long-term deficit reduction plan that would work and that could be sold to 60 members of the Senate, period.” Chambliss, however, is in for more political heat now that Coburn’s out of the gang. He got a taste on Wednesday. “Together, their bipartisan plan will raise Americans taxes massively over the next few years and do nothing to solve the very real crisis of Social Security and Medicare,” conservative activist Erick Erickson wrote in a blog post. “Every once in a while the stupid party and evil party get together and do something both stupid and evil. They call it bipartisanship. It looks pretty much like what Saxby Chambliss is orchestrating.” ___ EDITOR’S NOTE – Andrew Taylor has covered Congress since 1990.

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The Return Of ‘Made In The USA’

May 5, 2011

NEW YORK (Nick Zieminski) – The “Made in the USA” label may be poised for a comeback, a new study argues. The next few years will bring a wave of reinvestment by U.S. multinational manufacturers in their home base, as rising wages and a strong yuan currency make China a less attractive production center, the paper by the Boston Consulting Group (BCG) predicts. The study, published on Thursday, says U.S. reinvestment will accelerate as the United States becomes one of the cheapest locations for manufacturing in the developed world. If it came to fruition, such reinvestment could speed up a delicate economic recovery that has yet to gain much traction. There is evidence the trend has already started: * Caterpillar Inc has repatriated manufacturing of construction excavators, boosting investment in facilities in Texas, Arkansas and Illinois. * NCR Corp brought back production of automatic teller machines to Georgia, creating 870 jobs. * Toymaker Wham-O moved production of Frisbees and Hula-Hoops from China and Mexico to the United States. More such announcements are likely over the next year or two, BCG says, citing conversations with clients. “If you work the math out using today’s numbers. you’d still say it’s a good idea to go to China,” said Hal Sirkin, a senior BCG partner and lead author of the study. “(But) around 2015, you get to a point of indifference between producing in the U.S. and producing in China.” Wages in China are still a fraction of what U.S. workers earn. Direct pay and benefits for production workers in the United States are about $22 per hour, versus only about $2 in China, roughly 9 percent of the U.S. cost. But that difference is expected to narrow, with the Chinese worker earning about 17 percent as much as his or her U.S. counterpart four years from now. Factoring in higher U.S. productivity rates, the weaker U.S. dollar and other factors, such as shipping costs, that difference could narrow further. “MADE IN THE USA” The study predicts China will remain a major global player — just less of an exporter to the United States. China will still export to Europe, whose workers are less able to move for jobs than U.S. workers are. U.S. wage advantages could eventually reach the point that European automakers will export U.S.-made cars to Europe, the study said. The appeal of a shorter supply chain and fewer headaches from issues like intellectual property will also help encourage jobs and production to come back to the United States, BCG said. Policy could also nudge manufacturers to make the move. High unemployment is driving state incentives to attract factories, while unions are becoming more flexible. Still, the study’s thesis is based on assumptions that may not play out. One is that supply and demand of labor in China are increasingly moving out of balance. Another is that demand from a growing Chinese middle class will raise costs, as factories shift to producing for domestic consumption and workers demand more pay to pay for goods that were out of reach before. Also, the yuan’s rally could reverse. Since China first loosened restrictions on trading the yuan, its value has steadily strengthened from more than 8 yuan to the U.S. dollar in 2005 to fewer than 6.5 per dollar now. The expected U.S. reinvestment, meanwhile, will affect some industries more than others. Shoes or clothing are work-intensive and do not require highly skilled labor. But higher-value goods made in lower volumes, such as home appliances and construction equipment, are more likely to bear the “Made in the USA” label in coming years — especially if they are large and expensive to ship. General Electric Co’s example supports the study’s contentions. GE’s appliance unit is in the middle of a four-year, $600 million plan to build up its manufacturing presence in Louisville, Kentucky, adding some 830 new jobs. “The default has been to say: ‘Let’s put the next plant in China,’” Sirkin said. “We’re saying: ‘Sit back and think through your options.’” BCG is a management consulting firm that advises large manufacturers on issues ranging from strategy to operations. (Additional reporting by Scott Malone in Boston, editing by Gerald E. McCormick) Copyright 2011 Thomson Reuters. Click for Restrictions .

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WATCH: The City That Privatized (Nearly) Everything

April 22, 2011

In 2005, decades after Sandy Springs first attempted annexation, the Republican-dominated Georgia state legislature allowed the affluent city, located 15 miles outside of Atlanta, to break off and become a largely autonomous, self-governing entity. Scrambling to ready themselves for the division, Sandy Springs effectively privatized the large majority of the municipal services by entering into a public-private partnership with CH2M HILL, a full-service operations company that now controls nearly all of the once-public sector, from road maintenance to cleaning up trash in the park. “Nobody likes change,” Sandy Springs Mayor and former economist Eva Galambos told Reason , a libertarian magazine. “But, if your city is fiscally bankrupt, there may have to be some change.” The city, sixth-largest in the state with a 2010 population of 93,853, wanted to separate itself from what it saw as wasteful government spending in surrounding communities. The city benefits greatly, though, from the number of Fortune 500 companies headquartered there, boasting an extremely high per capita income, with the median family household income, according to a 2008 census estimate, approximated at $129,810, and the average family income $169,815. Comparatively, the surrounding Fulton County has a median family income of only $58,573. The median national income is $49,777. Adding to that, only 3.1 percent of families — 7.9 percent of the entire population — live below the poverty line in Sandy Springs. The percentage of Fulton County families living in poverty, in comparison, is nearly four times higher at 11.5 percent. Without needing to provide to as many poverty-stricken families, who typically use more public services, Sandy Springs can more easily keep taxes at a lower, sustainable level. Not all of Sandy Spring’s public services have been privatized, however. Public safety continues to be handled by government police officers and firefighters, and the Fulton County School System still operates public schools within the city, something not noted in the below video by Reason magazine. Mayor Galambos also notes the city “made a clear decision” to not hand out “defined benefits” of any sort to police officers and firefighters, in order to keep taxes low and avoid future obligations. In light of municipal budget crises wreaking havoc across the country, the fiscally-conservative Sandy Springs government is proud of their radical decision, which they say has left them with no long-term liabilities. The $25 million they paid to CH2M HILL for one year’s work, Reason argues, is less than half what they would pay in a typical, government-run scenario. Since 2005, four surrounding Georgia cities have adopted the model. Watch Reason Magazine’s video on Sandy Springs’ privatization:

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Supreme Court Casts Doubt On States’ Global Warming Suit

April 19, 2011

WASHINGTON — The Supreme Court appeared deeply skeptical Tuesday about allowing states to sue electric utilities to force cuts in greenhouse gas emissions from power plants. Both conservative and liberal justices questioned whether a federal judge could deal with the complex issue of global warming, a topic they suggested is better left to Congress and the Environmental Protection Agency. The court heard argument over whether to end the lawsuit by six states, New York City and three conservation groups against four private companies and the federal Tennessee Valley Authority, the five largest emitters of carbon dioxide in the United States. The Obama administration has joined with the companies in asking the high court to throw out the lawsuit. The administration says EPA already is considering setting emission standards that would accomplish what the states are seeking. Why let the lawsuit go forward, when “the agency is engaged in it right now?” said Justice Ruth Bader Ginsburg. The lawyer representing the states acknowledged that the case was before the high court at a “peculiar moment,” but said the court should block the lawsuit only if the EPA actually issues regulations. In Congress, Republicans are leading an effort to strip EPA of the authority to regulate greenhouse gases, but that was not discussed at the court Tuesday. No statute or rule “currently regulates the emissions of existing power plants,” said Barbara Underwood, the New York solicitor general. Underwood said the plants operated by the companies and the TVA account for 10 percent of all carbon dioxide emitted annually in the U.S. “This court should not close the courthouse door at the outset,” Underwood said. Lawyers for the companies and the administration focused on the enormity of the climate change issue to argue against the lawsuit. “You have never heard a case like this before,” Neal Katyal, the acting U.S. Solicitor General, said. The term global warming, Katyal said, “tells you all you need to know.” The case is the second climate change dispute at the court in four years. In 2007, the court declared that carbon dioxide and other greenhouse gases are air pollutants under the Clean Air Act. By a 5-4 vote, the justices said the EPA has the authority to regulate those emissions from new cars and trucks under that landmark law. The same reasoning applies to power plants. Ginsburg was among the justices in the majority in 2007. Two others in that majority, Justices Stephen Breyer and Anthony Kennedy, also expressed doubts about the states’ case Tuesday. Breyer questioned whether a judge even would have the authority to issue the kind of order the states want. Until now, pollution cases in the federal courts typically have involved a power plant or sewage treatment plant that was causing some identifiable harm to people, and property downwind or downstream of the polluting plant. Peter Keisler, representing the companies, said global warming suggests a more complex problem in need of a comprehensive solution that includes an evaluation of the “way we use and pay for energy.” Courts are ill-equipped to make that determination, Keisler said. The private defendants in the suit are American Electric Power Co. of Ohio, Cinergy Co., now part of Duke Energy Corp. of North Carolina; Southern Co. Inc. of Georgia, and Xcel Energy Inc. of Minnesota. Eight states initially banded together to sue. They were California, Connecticut, Iowa, New Jersey, New York, Rhode Island, Vermont and Wisconsin. New Jersey and Wisconsin withdrew this year after Republicans replaced Democrats in their governor’s offices. Justice Sonia Sotomayor, who was on the federal appeals court panel that heard the case, is not taking part in the Supreme Court’s consideration of the issue. A decision is expected by late June. The case is American Electric Power Co. v. Connecticut, 10-174.

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WATCH: Church Group Prays For Lower Gas Prices

April 13, 2011

On Saturday, the Beacon of Light Christian Center in Dublin, Georgia will host a group prayer in an effort to bring down quickly-rising gas prices, according to local news station WMAZ . This is the third time, the station reports, that the congregation has organized to pray for lower prices. Church pastor Marshall Mabry hopes the event will become a monthly tradition. Gas prices in Dublin, Georgia currently sit at $3.65 per gallon. That’s still roughly 3 cents lower than the most recently-collected national average . Mabry hopes his prayer will drop prices by $1.50. But “if it doesn’t drop down to nothing but ten cents,” he says. “I’m happy with that.” “This is not a black issue or a white issue,” he told WMAZ. “This is a green issue.” Watch the WMAZ video here:

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Turkey Burger Recall Announced

April 3, 2011

The Jennie-O Turkey Store has recalled 54,960 pounds of frozen, raw turkey burger products, the U.S. Department of Agriculture announced . The recall was prompted by possible Salmonella contamination, according to the release . The affected product will have a use date of Dec. 23, 2011 and includes: “4-pound boxes of Jennie-O Turkey Store® “All Natural Turkey Burgers with seasonings Lean White Meat”. Each box contains 12 1/3-pound individually wrapped burgers.” At least 12 people in Wisconsin and nine in other states have reported illnesses, Milwaukee Journal-Sentinel reported , prompting the recall. According to WalletPop , illnesses have also been reported in Colorado, Ohio, Arizona, California, Georgia, Illinois, Mississippi, Missouri and Washington. For more information, read the USDA release here.

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Jerry Chautin: The Five Cs of Lending Are Key to Funding Your Business

March 24, 2011

Capacity, capital, collateral, credit, and character are the “Five Cs” that loan offers learn in Lending 101. But to most small-business loan applicants in need of money, it is an esoteric exercise that makes them garner reams of paperwork without a clear path to funding. Financing a business “is based on a simple principle,” Charles Green says. He founded a community bank in Atlanta, Georgia, received a financial services award from the U.S. Small Business Administration for making lots of small business loans and recently published his third edition of The SBA Loan Book . The simple principle, he says, is “lenders always require the borrower to agree that the loan will be repaid.” If it were that simple, of course, all applicants would walk out of banks with wads of cash. Bankers want a comprehensive business plan supporting “your ability to repay the loan,” Green says. “The lender will expect you to provide realistic projections about how the proceeds of the loan will be invested to generate revenues for your business.” Furthermore, the revenues generated, less the business operating expenses, must be sufficient to make the loan payments. Additionally, lenders require a cash-flow cushion should revenues decline or operating expenses increase. The projections and an extensive narrative about how you arrived at your numbers is the crux of your business plan. Yet many loan applicants are stumped when it comes to projecting income and operating expenses. To help, most SCORE chapters are offering a course called, “Financial Projections.” It is part of their QuickSTART workshop series and explains how to project believable numbers. Believable means that your projections and financial ratios must pass muster with the bank’s underwriters. Moreover, the underwriters have to accept your narrative describing how you arrived at the projections. “The integrity and reasonableness of these projections are often the most important factors in granting loans approval,” Green says. Paradoxically, “The lender is not an expert in your field and may not recognize exaggerated revenue projections or inadequate expense estimates.” Even more perplexing for underwriters, small businesses within the same industry can be very different. That is why projecting your numbers and getting the lender to buy into them is as much an art as it is a science. The science is learning the lender’s acceptable range for key financial ratios in your industry. The art is doing impeccable market research and citing it as the rational for getting your projections to fit. In other words, you have to know the benchmarks that your lender uses. Then, extensive research and the resulting narrative will support your projections. Many lenders use the Risk Management Association’s “RMA Annual Statement Studies Users Guide” to glean average financial ratios by industry. Thus they will match your projections against others in similar businesses. Any variances from RMA need to be explained. Furthermore, your proficiency in explaining the variances can mean the difference between approval and rejection. The trade associations in your industry will likely have average and mean financial ratios in your industry. They may also segment businesses within the industry more definitively than RMA. You can find a list of trade associations in the Encyclopedia of Associations . Many libraries have it in their reference section or you can purchase a copy online. Green, the former banker, says, “The company may not compare well with RMA results because of extraordinary local reasons.” So get data from local chambers of commerce, business owners and franchise operators merchandising similar products and services. Interpret the data to explain how your company differs from RMA’s averages. I will write about the other Cs of lending in future columns. Jerry Chautin is a business columnist and SBA’s 2006 national ” Journalist of the Year ” award winner. He is a former entrepreneur, commercial mortgage banker, commercial real estate dealmaker and business lender.

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Michelle Chen: State Budget Battles Converge on Prison Labor Force

March 18, 2011

Prison isn’t just about doing hard time. For many, it’s about working full-time, too. These days, state governments seem ready to squeeze their captive workforces to plug budget gaps on the cheap. From the chain gang to the gulag, labor in the prison population predates our modern labor regulations and to this day, remains relatively untouched by the legal protections afforded to regular workers. So in most states, prison work has come to be seen as a hybrid between conscript labor and rehabilitation, putting otherwise “idle” inmates to work on farms, manufacturing plants, and janitorial jobs. The New York Times reports that in many areas, laborers in prison uniforms are a growing presence at public work sites, suggesting that they’re being used to alleviate fiscal pressures that are now eroding common public sector services: [O]fficials are expanding the practice to combat cuts in federal financing and dwindling tax revenue, using prisoners to paint vehicles, clean courthouses, sweep campsites and perform many other services done before the recession by private contractors or government employees. In New Jersey, inmates on roadkill patrol clean deer carcasses from highways. Georgia inmates tend municipal graveyards. In Ohio, they paint their own cells. In California, prison officials hope to expand existing programs, including one in which wet-suit-clad inmates repair leaky public water tanks. There are no figures on how many prisoners have been enrolled in new or expanded programs nationwide, but experts in criminal justice have taken note of the increase. As we reported in December, prison labor conditions have sparked some noteworthy revolts. A wave of strikes rocked several prisons in Georgia late last year, touching off a national campaign for the dignified treatment of prison workers. The uprisings shed light on how vulnerable inmates are when the prison-industrial complex operates not just as a warden and dictator but a boss as well, marshalling the labor of thousands with little oversight. The Georgia inmates drafted a list of grievances ranging from abusive treatment to work without wages. The inmates’ direct actions resonated with civil rights groups who have pointed out disturbing continuities between the era of slavery and the racialization of imprisonment, and by extension, the industries tied to it. The mass incarceration of black men, and their punitive deployment—explicitly sanctioned under the Constitution —in the dregs of industrial capitalism, speaks loud and clear to the theory of prison as America’s “ new Jim Crow .” Allegations that prison guards severely beat an inmate protester in retaliation underscore the inequality endemic to this labor system, even though the programs are typically endorsed as a form of rehabilitation and self-help . Of course, today’s prison labor is more regulated and considerably less brutal than the post-Civil War convict-lease system—a regression to slavery disguised as a criminal penalty. ( Some reforms were enacted during the Great Depression to prevent downward-spiraling competition between “free labor” and incarcerated workers.) Yet the institutional parallels are striking. From the late-19th through the early 20th century, southern states, including Georgia, turned to prison labor as a release valve for dealing with fiscal crisis. And the white supremacist power structure, through “leases” with the private sector, enabled forced labor, torture and abuse on a massive scale. How interesting, then, that in this latest economic crisis, states once again seem to be looking to prison as a resource for carrying out various government services. As an inexpensive “public” labor source, a cash-strapped bureaucracy might see inmates as a convenient alternative to, say, real public workers. Particularly the kind of workers who vote, and who have collective bargaining rights , which tend to get in the way of budget deals . Is there any way to get around the historically ingrained perverse incentives to exploit prison labor? A budding campaign in Canada could bridge the civil rights debate and the underlying labor struggle.

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Arizona Budget Cuts Target Potentially Life-Saving Care For Transplant Patients

March 6, 2011

PEORIA, Arizona (Reuters) – A pacemaker and defibrillator fitted to carpenter Douglas Gravagna’s failing heart makes even rising from the couch of his Phoenix-valley home a battle. But it is not congestive heart failure that is killing him, he says. It is a decision by Arizona Governor Jan Brewer to stop funding for some organ transplants as the state struggles to reduce a yawning budget deficit. “She’s signing death warrants — that’s what she’s doing. This is death for me,” says Gravagna, 44, a heavy-set man who takes 14 medications to stay alive. Gravagna is among 98 people denied state Medicaid funding for potentially life-saving transplants and at the forefront of a harrowing battle over the state’s public finances. The measure enacted last October by Brewer trimmed spending on Medicaid, the federal-state health insurance program, to help close a projected 2012 budget deficit of $1.15 billion. It eliminated coverage for transplants including lung, heart, liver and bone marrow after weighing the success and survival rates for certain transplant procedures. Two patients on the Medicaid waiting list have since died, although it is unclear if transplants would have saved them. In a statewide speech, the Republican governor singled out the Arizona Health Care Cost Containment System, as the Medicaid program is called in the desert state, as the greatest drain on state coffers. “At the deficit’s core is the explosive growth in Medicaid spending which, over the last four years, has soared by almost 65 percent and now consumes 29 percent of our state budget,” she said. “If we are to regain control of state spending, we must reform Medicaid and free Arizona from the fiscal manipulation of the federal government,” Brewer said. CUTTING RATES TO PROVIDERS Medicaid, which covers about 60 million Americans — poor adults and children, people who are elderly or have disabilities — is one of the top expenses for states. It makes up about 16 percent of state budgets, said Judith Solomon at the Center on Budget and Policy Priorities. It pays for more than 40 percent of all births in the United States and is the primary bill-payer for nearly two-thirds of the country’s nursing home residents, according to the Kaiser Family Foundation. In Texas the proposed budget would cut rates to Medicaid providers, including doctors, dentists, hospitals and nursing homes, by 10 percent, making it more difficult for patients to find healthcare providers who accept Medicaid. Other states, among them Nevada, Illinois, Mississippi, Nebraska, Colorado and South Dakota, have also proposed provider rate cuts. Proposed cuts range from limiting prescription and doctor visits in California to eliminating adult vision and dental services in Georgia, the center says. Brewer has proposed dropping about 250,000 Arizonans — mostly childless adults — from the program. Most states are not proposing to trim Medicaid rolls because the new federal health reform law requires that they maintain current Medicaid coverage. But the U.S. Health and Human Services Department has said Arizona can drop coverage because the state is providing it through a temporary waiver, and the new law does not require extending that. ‘OTHER PLACES TO MAKE CUTS’ Taking an ax to transplant funding is backed by many Republicans in Arizona, some of who sympathize with Brewer. “It’s a very difficult unenviable position to be in for her,” said Kathy Boatman, a conservative Tea Party activist in the Phoenix valley. “It’s not fun, it’s unpleasant, but when expenses have outpaced income, that’s what you have to do.” But opponents, including state Democrats, the families of desperately sick patients like Gravagna and some doctors say savings can be made without putting lives on the line. “There are other places to make cuts. We’ve cut taxes on the very rich, we have corporate tax loopholes,” said Bruce Madison, a doctor who spoke at a rally to restore transplant funding in Phoenix on Saturday. Madison received a life-saving heart transplant six years ago. State Representative Anna Tovar, a Democrat and former kindergarten teacher, received two transplants to combat a rare form of leukemia. She says Arizona stands to lose more than $3 million a year in federal matching funds for Medicaid to save $1.4 million a year by restricting transplants. “When you look at the big scheme of things, saving $1.4 million for 96 lives is not money well spent,” said Tovar, who has introduced four bills seeking to restore Medicaid funding for transplants. As he grows sicker after being denied a liver transplant last year, Francisco Felix, 32, says any savings from denying him the operation are in some measure a false economy. “If I got a transplant, I could get back to work … pay my taxes, and help Arizona to get back on its feet,” he said at the rally. (Additional reporting by Corrie MacLaggan; Editing by Xavier Briand) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Southern States Lack Union Bargaining Rights

February 27, 2011

JACKSON, Miss. — Whenever Mississippi Gov. Haley Barbour has asked lawmakers to weaken benefits for state employees, his proposals have met little resistance from workers. Mississippi is among those states – many in the South – where most government employees do not have the right to collective bargaining, the benefit that has caused a political upheaval in Wisconsin and has become a national flashpoint for those who argue that public employee benefits are too generous. Those states provide a snapshot of what life is like for government employees who do not have the same union clout that workers in Wisconsin and some other states are desperately trying to retain. “We’ve been holding on by a hair through the political process,” said Brenda Scott, head of the Mississippi Alliance of State Employees, which has no bargaining power but provides a voice for state government workers to air their concerns before the governor and Legislature. Across the South, governors like Barbour and state legislatures dominated by conservative lawmakers find it relatively easy to chip away at public employees’ benefits or eliminate government jobs because most state employees in the region – even when represented by a union – lack collective bargaining rights. Nine of the 10 states with the lowest percentage of public employees eligible for collective bargaining are in the South, according to data compiled by Barry Hirsch of Georgia State University and David Macpherson of Trinity University in San Antonio. Their research shows only about two in five public employees nationwide have the type of collective bargaining rights that have drawn fire in Wisconsin and other states. To be sure, government jobs are still seen as more secure and desirable than most private-sector jobs even in states where public employees do not have the right to collective bargaining. In Mississippi, one of the poorest states in the nation, state workers get 10 paid holidays a year, their sick days and vacation days can be rolled over from year to year, and they can retire after 25 years of service under a defined benefit plan. They also have a certain level of civil-service job protection. But those workers have fewer protections and generally less generous compensation and benefits than public employees represented by collective bargaining. While pay and perks vary greatly among states, the primary benefit is that governors and lawmakers cannot unilaterally impose changes, such as pension reforms, without going to the bargaining table, nor can they impose lay-offs without following union tenure rules. In California, where most state employees are covered by collective bargaining, negotiated labor contracts allow state workers to retire, collect their pensions and then return to work, allowing them to make more money than before. They also can purchase more lucrative pension benefits before they retire. Two independent government auditing agencies in California have recommended reforming the state’s pension system, even for current employees, but unions there have vowed to sue if the governor and Legislature try to enact reforms outside the bargaining process. Governors and lawmakers in states without collective bargaining can make such changes without consulting workers. Pensions for new public employees in Virginia, for example, were shifted last year from the traditional defined benefit – the type of pension that many governments say they no longer can afford without major changes – to a 401(k)-style system similar to that used in the private sector. The change was made with little fanfare and no organized opposition. In North Carolina, some state workers are represented by a local of the Service Employees International Union, but the group has no bargaining power. That leaves employees with no real say over how many jobs would be shed this year due to budget cuts – Democratic Gov. Beverly Perdue has recommended eliminating 10,000 state government jobs, 3,000 of them currently filled. In 2009, Perdue signed legislation that made sweeping changes to the state worker health insurance plans, creating higher premiums, deductibles and copays without having to get consent from an employee union. Barbour, a Republican with possible presidential ambitions, came into office on a promise to shrink Mississippi’s state government and reduce employee benefits. Unencumbered by union contracts, he has scored a number of successes. He persuaded the Legislature in 2004 to temporarily erase civil-service protections for corrections employees, which allowed the prison system to fire workers and trim the payroll. Mississippi lawmakers also voted last year to make public employees put 9 percent of their own pay into the state retirement system, up from 7.25 percent, and they’ve made government workers hired since 2006 pay more for their health insurance than their longer-serving colleagues. Barbour defends his actions as tilting the balance of power away from unions and toward the side of state taxpayers. He said he supports Wisconsin Gov. Scott Walker’s effort to eliminate most collective bargaining rights for government workers. “When they have collective bargaining in Wisconsin, on one side of the table there’s state employee unions or the local employee unions. On the other side of the table are politicians that they paid for the election of those politicians,” Barbour said. “Now, who represents the taxpayers in that negotiation? Well, actually, nobody.” In states without collective bargaining, public employees are “completely subject to the power of the governor” because lawmakers often don’t want to get involved labor disputes, said Ed Ott, who has been active in the New York labor movement for 42 years and is a former executive director of the New York City Central Labor Council AFL-CIO. “It’s really about a balance of power between employer and employee,” said Ott, a lecturer on contemporary labor issues at the City University of New York’s Murphy Institute. “Without any collective bargaining rights, you have no ability to say, ‘Whoa, why don’t we try something else?’” Maryland and Tennessee have hybrid systems. Some Maryland employees are represented by unions and have the right to bargain with the governor, but there is no binding arbitration and no right to strike. “We call it collective bargaining-lite L-I-T-E because they’re not as strong as what you see in a number of the northern states,” said Sue Esty, assistant director of the Maryland chapter of the American Federation of State, County and Municipal Employees. Teachers in Tennessee have the right to collective bargaining, but other public employees do not. That is still too much for Republicans in that state’s Legislature, who have wide majorities in both chambers and are looking to quash teachers’ bargaining powers. The Tennessee Education Association, which represents 52,000 teachers, has said the proposal is political payback by Republicans because the group has given more financial support to Democratic candidates over the years. Gov. Bill Haslam has not signed on officially to the movement by his fellow Republicans, preferring to focus on teacher tenure, expanding charter schools and other issues he says are necessary to improve academic performance. But he also sympathizes with their intent to give the Legislature as much leeway as possible to control costs without having to submit to union negotiations. “My job in the state of Tennessee is just like when I was running a company,” said Haslam, a former president of Pilot Corp., a family owned national truck-stop chain. “It’s to bring in the very best people to work, to provide the very best product we can, at the lowest price.” Like its neighboring states, Alabama does not allow public employees to bargain collectively, even though associations representing teachers and state workers have had some success working with the Legislature Lawmakers have approved cost-of-living raises and maintained health and retirement benefits that are better than those offered by most private-sector employers in the state. The two organizations, which traditionally have supported far more Democratic candidates than Republican ones, have come under attack since Republicans gained control of the Legislature in November. Since then, a new law has stopped the organizations from using payroll deductions to raise money for their political action committees and any other political activity, greatly reducing their influence. When the Legislature convenes Tuesday, one of the House Republican leaders will push a bill to provide state-paid liability insurance for education employees. Currently, the Alabama Education Association supplies this insurance as an incentive for teachers to join. “Obviously what they are trying to do is discourage members,” said Paul Hubbert, the association’s executive secretary. ___ Schelzig reported from Nashville, Tenn. Associated Press writers Bob Lewis in Richmond, Va., Gary Robertson in Raleigh, N.C., Brian Witte in Annapolis, Md., and Phillip Rawls in Montgomery, Ala., contributed to this report.

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Banks Expect To Be Punished By Government

February 26, 2011

Three of the nation’s largest banks said Friday that they expect to be sanctioned by the U.S. government for their foreclosure practices, securities filings show. The disclosures come on the heels of reports federal regulators are nearing a multi-billion dollar deal to settle allegations that the biggest banks abused borrowers and illegally foreclosed on homes. The months-long federal probe found significant and widespread deficiencies in how firms service home loans, which involves collecting payments, modifying delinquent loans, and foreclosing on borrowers upon default. A “small number” of foreclosures should not have occurred, a top bank regulator told a Senate committee last week after his agency surveyed less than 3,000 loan files. The filings are the first acknowledgment by the targeted banks that they’re likely to face significant penalties arising from the investigations. Wells Fargo & Co., the fourth-largest bank by assets, said it is “likely” at least one government agency “will initiate some type of enforcement action against Wells Fargo, which may include civil money penalties.” The firm added that its litigation expenses could reach $1.2 billion beyond what it’s already set aside for lawsuits and investigations, according to its filing with the Securities and Exchange Commission . Wells Fargo handles $1.8 trillion in home loans, second-most in the U.S., according to Inside Mortgage Finance , a trade publication and data provider. Taxpayer-owned Ally Financial Inc., the nation’s fifth-largest handler of home mortgages, said in its annual report that it expects it “will become subject to fines, penalties, sanctions or other adverse actions.” “Any of these potential actions could have a material adverse impact on us,” the firm noted in its filing with the SEC . SunTrust Banks Inc., the eighth-largest mortgage servicer, said it expects regulators to fine the firm for its alleged abuses, according to its filing . The nation’s 15th-largest lender by assets also outlined a settlement agreement it expects to adhere to based on demands from regulators. SunTrust, along with other large firms, will likely have to acknowledge they improperly handled documents when trying to foreclose on homeowners; failed to devote sufficient resources when handling mortgages; and failed to develop systems to prevent such problems, the bank said in its filing. “We expect that such a consent order will require us to implement substantial additional operational processes and reviews within a certain time frame,” the firm said. “We also expect that such regulators may seek civil monetary penalties at a later time.” Separately, the Georgia-based lender said that it recently discovered that about 4,000 of its foreclosure cases, or 15 percent of active proceedings, contained various deficiencies, joining other large banks that found similar weaknesses after conducting such reviews last fall. Documents will have to be re-filed with various courts, the firm said, temporarily halting home repossessions. It added that it doesn’t expect the findings to have a “material adverse” impact. The three lenders are part of the federal probe into improper — and at times illegal — foreclosure practices that have roiled the housing market. About a dozen federal regulators, along with attorneys general in all 50 states, are conducting both civil and criminal probes into the banks’ mortgage practices. The Huffington Post reported Thursday that federal regulators could demand as much as $30 billion in penalties from the 14 largest mortgage firms. State regulators, who at present are only examining the five largest servicers, are looking to exact even heftier fines from the targeted firms. Bank of America and Citigroup, the largest and third-largest lenders by assets, respectively, disclosed in their annual reports that they, too, could face fines and other penalties associated with their handling of mortgage documents. Citigroup said the federal and state probes “could result in fines, penalties, [and] other equitable remedies, such as principal reduction programs,” according to its filing with the SEC . The company added that it could face “significant legal, negative reputational and other costs.” Citigroup handles about $602 billion in home mortgages, Inside Mortgage Finance data show. Bank of America, which handles $2.1 trillion in home mortgages, said the probes could “significantly adversely affect its reputation.” It’s the nation’s biggest mortgage firm, according to Inside Mortgage Finance. The investigations could result in “material fines, penalties, equitable remedies…or other enforcement actions, and result in significant legal costs in responding to governmental investigations and additional litigation,” Bank of America said in its report . It added it may be subject to additional lawsuits from borrowers and other parties. The bank, which temporarily suspended home repossessions last year after finding deficiencies in its foreclosure practices, said it expects to resume foreclosure proceedings in some states this quarter. However, it continues to re-file documents in those cases in which it found shortcomings, Bank of America said in its filing. ************************* Shahien Nasiripour is a business reporter for The Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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States Ignored Years Of Warnings On Unemployment Insurance

February 19, 2011

WASHINGTON — State officials had plenty of warning. Over the past three decades, two national commissions and a series of government audits sounded alarms about the dwindling amount of money states were setting aside to pay unemployment insurance to laid-off workers. “Trust Fund Reserves Inadequate,” federal auditors said in a 1988 report. It’s clear now the warnings were pretty much ignored. Instead, states kept whittling away at the trust funds, mostly by cutting unemployment insurance taxes at the behest of the business community. The low balances hastened insolvency when the recession hit, leading about 30 states to borrow $41.5 billion from the federal government to pay unemployment benefits to their growing population of jobless. The ramifications will be felt for years. In the short term, states must find the money to pay interest on the loans. Generally, that involves a special tax on businesses until the loan is repaid. Some states could tap general revenues, making it harder to pay for schools, roads and other state services. In the long term, state will have to their replenish unemployment insurance programs. That typically leads to higher payroll taxes, leaving companies with less money to invest. Past recessions have resulted in insolvencies. Seven states borrowed money in the early 1990s; eight did so as a result of the 2001 recession. But the numbers are much worse this time because of the recession was more severe and the funds already were low when it hit, said Wayne Vroman, an analyst at the Urban Institute, a liberal-leaning think tank based in Washington. The Obama administration this month proposed giving states a waiver on the interest payments due this fall. Down the road, the administration would raise the amount of wages on which companies pay federal unemployment taxes. Many states probably would follow suit as a way of boosting depleted trust funds. Businesses pay a federal and state payroll tax. The federal tax primarily covers administrative costs; the state tax pays for the regular benefits a worker gets when laid off. The Treasury Department manages the trust funds that hold each state’s taxes. Each state decides whether its unemployment fund has enough money. In 2000, total reserves for states and territories came to about $54 billion. That dropped to $38 billion by the end of 2007, just as the recession began. Over the next two years, reserves plummeted to $11.1 billion, lower than at any time in the program’s history when adjusted for inflation, the Government Accountability Office said in its most recent report on the issue. Yet benefits have stayed relatively flat, or declined when compared with average weekly wages. “If you look at it from the employers’ standpoint, they’re not going to want reserves to build up excessively high because then there’s an increasing risk that advocates for benefit expansion would point to the high reserves and say, ‘We can afford to increase benefits,’” said Rich Hobbie, executive director of the National Association of State Workforce Agencies. A review of state unemployment insurance programs shows how states weakened their trust funds over the past two decades. In Georgia, lawmakers gave employers a four-year tax holiday from 1999-2003. Employers saved more than $1 billion, but trust fund reserves fell about 40 percent, to $700 million. The state gradually has raised its unemployment insurance taxes since then, but not nearly enough to restore the trust fund to previous levels. The state began borrowing in December 2009. Now it owes Washington about $588 million. Republican Mark Butler, Georgia’s labor commissioner, said his state had one of the lowest unemployment insurance tax rates in the nation when the tax holiday was enacted. “The decision to do this was not really based upon any practical reason. It was based on a political decision, which I think, by all accounts now, we can look back on and say it was the wrong decision,” Butler said. “Now we find ourselves in a situation where we’ve had to borrow money and that puts everyone in a tight situation.” In New Jersey, lawmakers used a combination approach to deplete the trust fund. The Legislature expanded benefits and cut taxes, as well as spending $4.7 billion of trust fund revenue to reimburse hospitals for indigent health care. The money was diverted over a period of about 15 years and helps explain why the state’s trust fund dropped from $3.1 billion in 2000 to $35 million by the end of 2010. The state has had to borrow $1.75 billion from the federal government to keep the program afloat. “It was a real abdication of responsibility and a complete misunderstanding of how you finance an unemployment insurance fund – to make sure you have sufficient money in bad economic times,” said Phillip Kirschner, president of the New Jersey Business and Industry Association. “In good economic times you build up your bank account, but in New Jersey, they said, ‘Well, we have all this money, let’s spend it.’” California took its own road to trust fund insolvency. Lawmakers kept payroll tax rates the same, but gradually doubled the maximum weekly benefit paid to laid-off workers to $450. The average benefit now is about $300 and is paid for about 20 weeks. Loree Levy, spokeswoman for the California Employment Development Department, said lawmakers were warned of the consequences. “We testified at legislative hearings that the fund would eventually go broke and would become permanently insolvent if legislation wasn’t passed to increase revenue,” Levy said. California has borrowed $9.8 billion to keep unemployment insurance payments flowing. It owes the federal government an interest payment of $362 million by the end of September. In Michigan, unemployment insurance tax rates declined from 1994 through 2001. The trust fund prospered during those years because of the healthy economy and low unemployment rate. Then the recession arrived and reserves plunged. In response, Michigan lawmakers passed legislation that lowered the amount of wages subject to unemployment taxes from $9,500 to $9,000. They increased the maximum weekly benefit from $300 to $362. The trust fund dropped from $1.2 billion to $112 million over the next four years. In September 2006, Michigan was the first state to begin borrowing from the federal government. Other states held their trust funds purposely low as part of an approach called “pay-as-you-go.” Texas is a nationally recognized leader of this effort. Its philosophy is that, in the long run, it’s better for the economy to keep the maximum level of dollars in the hands of businesses rather than government. Texas had to borrow $1.3 billion in 2009. State officials have no regrets about their policy. “By keeping the minimum in the (trust fund), Texas is able to maximize funds circulating in the Texas economy, allowing for the creation of jobs and stimulation of economic growth,” said Lisa Givens, spokeswoman for the Texas Workforce Commission. The pay-as-you-go approach goes against the findings of a presidential commission that looked into the issue of dwindling trust funds in the mid-1990s. “It would be in the interest of the nation to begin to restore the forward-funding nature of the unemployment insurance system, resulting in a building up of reserves during good economic times and a drawing down of reserves during recessions,” said the Advisory Council on Unemployment Compensation, which President Bill Clinton appointed. Hobbie, from the association representing state labor agencies, said there’s no way to tell which approach is better over the long haul. He acknowledged that keeping reserves at the minimum in good times goes against one of the original aims of the program – to act as an economic stabilizer in bad times. That’s because businesses are asked to pay more in taxes, which leaves them less money to invest in their company. A survey from Hobbies’ organization found that 35 states raised their state unemployment taxes last year. Hobbie said he suspects that some states allowed reserves to dwindle out of complacency. “I think we just got overconfident and thought we wouldn’t experience the bad recessions we had in, say the mid ’70s, and then this big surprise hit,” he said. ___ Online: Treasury Department accounting of trust funds: http://tinyurl.com/6783qjj Government Accountability Office 1988 report: http://tinyurl.com/5t855fl GAO 2010 report: http://tinyurl.com/69mfc9f National Association of State Workforce Agencies: http://www.workforceatm.org/

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Bank Watch: First Credit Union Closure of 2011 Among Latest Financial Institution Failures

February 10, 2011

Four more financial institutions joined the list of failures this past week including two in Georgia and one each in California and Illinois. In Georgia, Renasant Bank in Tupelo, MS, acquired all of the deposits and substantially all of the assets of American Trust Bank in Roswell, GA, in a Federal Deposit Insurance Corp. (FDIC) assisted transaction. The acquisition gives Renasant Bank three new locations in North Georgia with branches in Roswell…

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3 More Banks Shuttered, 14 Failures Already In 2011

February 5, 2011

WASHINGTON — Regulators on Friday shut down three small banks in Georgia and Illinois, bringing to 14 the number of bank failures in 2011 following last year’s tally of 157 amid the sagging economy and mounting bad loans. The Federal Deposit Insurance Corp. seized American Trust Bank, based in Roswell, Ga., with $238.2 million in assets and $222.2 million in deposits; North Georgia Bank of Watkinsville, Ga., with $153.2 million in assets and $139.7 million in deposits; and Chicago-based Community First Bank, with $51.1 million in assets and $49.5 million in deposits. Renasant Bank, based in Tupelo, Miss., agreed to assume $147.4 million of the assets and all the deposits of American Trust Bank. BankSouth, based in Greensboro, Ga., is assuming $123.9 million of the assets and all the deposits of North Georgia Bank. Northbrook Bank and Trust Co., based in Northbrook, Ill., is acquiring the assets and deposits of Community First Bank. In addition, the FDIC and Renasant Bank agreed to share losses on $94.3 million of American Trust Bank’s loans and other assets. The FDIC and BankSouth are sharing losses on $120.1 million of North Georgia Bank’s assets. The agency and Northbrook Bank and Trust are sharing losses on $42.8 million of Community First Bank’s assets. The failure of American Trust Bank is expected to cost the deposit insurance fund $71.5 million. The failure of North Georgia Bank is expected to cost $35.2 million; that of Northbrook Bank and Trust, $11.7 million. The two Georgia banks brought the number of failures in that state this year to four. Georgia has been one of the hardest-hit states for bank failures amid an avalanche of bad loans – especially for commercial real estate. Twenty-one banks were shuttered in the state last year. Other states that have seen large numbers of bank failures are Florida, California and Illinois. The 157 bank closures nationwide last year topped the 140 shuttered in 2009. It was the most in a year since the savings-and-loan crisis two decades ago. The FDIC has said that 2010 likely would be the peak for bank failures. Already this year the pace of closures has slowed: By this time last year, regulators had closed 16 banks. The 2009 failures cost the insurance fund about $36 billion. The failures last year cost around $21 billion, a lower price tag because the banks that failed in 2010 were on average smaller. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three succumbed in 2007. The growing number of bank failures has sapped billions of dollars out of the deposit insurance fund. It fell into the red in 2009, and its deficit stood at $8 billion as of Sept. 30. The number of banks on the FDIC’s confidential “problem” list rose to 860 in the third quarter of last year from 829 three months earlier. The 860 troubled banks is the highest number since 1993, during the savings-and-loan crisis. The FDIC expects the cost of resolving failed banks to total around $52 billion from 2010 through 2014. Depositors’ money – insured up to $250,000 per account – is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July.

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Vending Machines: The Latest Recession Victim

January 31, 2011

Vending machine thefts are rocketing, thanks to hard times. Criminal gangs in Georgia, South Carolina, Mississippi and New York are targeting vending machines according to the Wall Street Journal. Although vending machine owners factor in the assumption that 3 percent of sales will disappear thanks to sticky-fingered employees and petty thefts, the problem is getting worse, according to the WSJ , with criminals using welding torches and bolt cutters to break into machines. “My sense is that theft is on the rise as there are so many people in desperate times,” Mark Manney, chief executive of Loss Prevention Results Inc., told the WSJ . Vending machine operators told the WSJ that the trend was exacerbated by several instructional videos on YouTube offering vending machine-looting expertise. The snack attacks come as vending machine sales fall. According to figures from trade magazine Automatic Merchandiser , U.S. sales fell 10 percent, from $22 billion in 2008, to almost $20 billion in 2009. With razor thin profit margins of 1 percent, every theft makes a difference, and with thefts usually amounting to just a few dollars, cops stay away. The WSJ reports on vending machine owners who are responding with wireless security systems that can send mid-heist alerts. One such owner, Marcus Whitener, retrofitted 4,000 of his vending machines with wireless devices: When a vending door is opened at unauthorized times or power is cut, Mr. Whitener receives a text message and email. Within nine months of installing the systems, Mr. Whitener said, seven of his 25 route drivers quit or were fired. Five quit after he started asking questions about cash shortages.

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AP: Year Ahead Looms As Toughest Yet For State Budgets

January 15, 2011

SACRAMENTO, Calif. — If 2011 is hinting at a national recovery, there is little sign of it in statehouses across the country. States that already have raided their reserve funds, relied on borrowing or accounting gimmicks, and imposed deep cuts on schools, parks and public transit systems no longer can protect key services in the face of another round of multibillion dollar deficits. As governors roll out their budget proposals and legislatures convene this month, they do so amid a sputtering economic recovery and predictions of slow growth for years to come. State and local governments face lackluster revenue projections, worries from Wall Street over looming debt and the end of federal stimulus spending. In the first weeks of 2011, Republican and Democratic governors alike have begun detailing across-the-board pain for education, health care, transportation, public safety and other programs. Some say the year of reckoning for state and local governments is at hand, with calls for structural changes that could radically shift expectations of what services government provides. Many believe the months ahead will be the most challenging in memory, with consequences for millions who depend on government funding. “We need to send a message to the governor: We’re real, and we depend on all these services,” said Sergio Garibay, a 41-year-old Southern California resident who relies on state disability payments and recently protested deep cuts to Medi-Cal programs proposed by California Gov. Jerry Brown. “There are other alternatives to the budget. Why don’t we tax the rich, these corporations?” In releasing his budget proposal, Brown told California lawmakers “the year ahead will demand courage and sacrifice” as the state faces a deficit projected to hit $25.4 billion over the next 18 months. His proposal combines spending cuts to Medi-Cal, in-home services for the elderly and higher education with a five-year extension of income, sales and vehicle taxes. New York Gov. Andrew Cuomo proposed eliminating 20 percent of state agencies by combining duties, such as merging the Insurance Department, Banking Department and the Consumer Protection Board into the Department of Financial Regulation. It’s part of “radical reform” to pull his state out of its fiscal crisis. And Gov. Chris Christie in New Jersey skipped a $3.1 billion payment to the state’s pension system in a push to cut benefits for public workers, while proposing higher employee contributions and a boost in the retirement age from 62 to 65. In Illinois, lawmakers voted for a dramatic 66 percent hike in personal income tax, from 3 percent to 5 percent, in a bid to resolve a $15 billion deficit, which amounts to more than half of the state’s entire general fund. The tax increase will be coupled with strict 2 percent limits on spending growth. “It’s important for their state government not to be a fiscal basket case,” Gov. Pat Quinn in defending the major tax hike. And on and on it goes: _ In oil-rich Texas, where education and social service spending is relatively low and Republican Gov. Rick Perry has railed against government spending, hard times are looming. The shortfall is projected to be between $15 billion and $27 billion over the coming two-year budget cycle. _ In South Carolina, outgoing Gov. Mark Sanford has proposed a spending plan that would end funding for museum and arts programs, slash college funding and give many state employees a 5 percent pay cut. _ In Georgia, deep cuts appear to await the state’s popular HOPE scholarship program that provides public college tuition to students who earn good grades. Rising tuition and enrollment have outpaced the lottery revenues that fund the program and Gov. Nathan Deal has not proposed any additional state money to bail it out. Even as tax revenue in many states shows signs of a rebound, states are expected to collect 6.5 percent less than they did in 2008, according to the National Association of State Budget Officers. And any revenue gains could be more than offset by the expected loss of federal stimulus money. Most of the $814 billion stimulus program was designed to help states provide essential services and give a boost to the economy, but will start to run out this summer. A new round of stimulus funding is unlikely with Republicans controlling one house of Congress. Top GOP lawmakers say they will try to provide states with relief by reducing mandated programs, not by giving them more money. “States came into this recession with relatively large rainy day funds. Now that states have done the accounting gimmicks and the relatively easier stuff, each year gets harder and harder because those one-time things are gone,” said Nicholas Johnson, director of the state fiscal project at the Center for Budget and Policy Priorities, a think tank in Washington, D.C. Despite lower tax revenue since the recession began, the level of service expected from state and local governments remains, often creating a disconnect between public perception and the reality of the fiscal crisis confronting elected officials. Public schools face rising enrollments, more people are seeking government health care because they have lost jobs or their employers have dropped coverage, and millions of those thrown out of work are receiving unemployment checks. One possible solution is revising tax structures, even with an anti-tax mood persisting across much of the nation. In Georgia, some lawmakers are considering a 4 percent state sales tax on groceries and boosting the tax on cigarettes as part of an overhaul of the state’s outdated tax code. The increases would be paired with reductions in the personal and corporate income taxes. But any proposal for tax increases will run into opposition from Republicans, who were swept into office in large numbers last fall on a message of reducing the size and reach of government. Republicans picked up 690 state legislative seats Nov. 2 – the largest shift since 1966, according to data compiled by the national legislative group. The GOP now controls both chambers of the state legislature as well as the governorship in 21 states. “When you’ve got an unemployment rate at 10 percent, I don’t think that’s a good time for us to tell Georgians that we need more of their money,” Georgia House Speaker David Ralston said. “I’m going to resist that again this year.” As states struggle to balance their books, Wall Street is watching rising debt burdens, although analysts so far have not sounded many alarms. Federal law does not allow states to file for bankruptcy protection, but states can default on their debt if their financial condition worsens considerably. That move is extremely rare. Arkansas was the last state to default on its debt payments, a move it took during the Great Depression. Moody’s predicts that no state government will default on its debt in 2011. Moody’s Managing Director, Naomi Richman, said states generally borrow for long-term infrastructure projects. They don’t usually borrow to pay debt and fund operating budgets. Those that have, including California, Illinois and Arizona, already have been penalized with low credit ratings, which increases their borrowing costs. It’s possible, however, that more cash-strapped cities and counties could seek bailouts from states, as Harrisburg sought help from the commonwealth of Pennsylvania. “I think you’re more likely to see it cascade up, rather than down,” said Steve Malanga, a senior fellow at the Manhattan Institute, during a discussion about state budgets at George Mason University. Kail Padgitt, an economist with the nonpartisan, nonprofit Tax Foundation, said the states with the greatest concerns about their fiscal health are those with costly public employee pensions that are underfunded. Many public pension systems use overly optimistic rates of return and do not provide a true, long-term cost to taxpayers. Padgitt cited a recent study by the Pew Center on the States that found states face a $1 trillion funding shortfall in public-sector retirement benefits, but said that likely underestimate the problem. “The long-term outlook is quite bad,” Padgitt said unless states begin to make pension reforms. Matt Hanson, 50, a civil engineer who has worked for California’s transportation department for 22 years, said he understands that public pension systems could use adjustments but he believes pensions are fundamentally sound. For example, he said he’s open to contributing more to cover retiree health care costs, which have been rising. “If there’s some shared pain that has to be felt than I want it to be constructive,” Hanson said. “There’s a difference between going out for a run and feeling pain right after – at least you’ll be in better shape in the long run, rather than hitting your hand with a hammer. Pain for pain’s sake doesn’t make a lot of sense.” ____ McCaffrey reported from Atlanta. Associated Press writer Robert Jablon in Los Angeles contributed to this report.

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Ken Blackwell: Getting Our Fiscal House in Order

November 15, 2010

On November 2, the American people sent a resounding message to Washington D.C. that the era of reckless spending must stop. We all know a Balanced Budget Amendment is vital to stopping out of control spending. That’s why Senator-elect Mike Lee (R – Utah) and I launched Balanced Budget Amendment Now . Actually passing conservative measures such as this, though, will require making sure conservatives are in a position to lead. The good news is there are signs that Speaker-elect John Boehner and Majority Leader-elect Eric Cantor have gotten the message. For example, an unprecedented movement is afoot to appoint bona fide deficit hawks to the appropriations committee who will reign-in the out of control spending and slash our dangerous unsustainable deficits. (Part of the reason this opportunity exists is that so many appropriators have recently lost election, thus making it a less enticing committee for liberal Republicans to seek). As Politics Daily’s Matt Lewis recently noted, “Once thought of as a powerful committee for members wanting to ‘bring home the bacon,’ in today’s political environment sitting on an appropriations panel seems to be an albatross .” That may be true for “appropriators,” but what if real fiscal conservatives were to join the committee, thus changing the way the committee was run? Fiscal conservatives like Reps. Jeff Flake (R-Ariz.) and Tom Graves (R-G.A.) are gaining momentum within the Republican caucus as exactly the type of principled leaders needed to bring fiscal sanity to the appropriations committee. (The Club For Growth, where I sit on the board of directors, has endorsed both in their campaigns). Rep. Flake, of course, is well known to fiscal conservatives, but Rep. Graves is a rising star who is not yet widely known. Having won four races in less than one hundred days (including a special election and two run-offs) to fill the seat for Georgia’s ninth congressional district this summer, Rep. Graves wasted little time in becoming an outspoken opponent of earmarks. Prior to being elected to Congress, Graves was a leader in the Georgia General Assembly to cut $3.1 billion from Georgia’s budget, and authored legislation to implement zero-based budgeting to bring transparency and accountability to the state budgeting process In just his first month in Congress, Graves authored legislation to defund the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010. Republicans have an opportunity to change the way Washington works by putting proven conservative leaders in a position to lead by example. To help keep our Fiscal House in order, Reps Graves and Flake should be placed on the appropriations committee.

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Yvette Kantrow: George Bailey, the dark side

November 12, 2010

More than two years have passed since the financial system almost went up in flames, but a big question remains: What should we do about the banks? Nationalize them? Break ‘em up? Turn them into utilities? Bring back Glass-Steagall? These are tough issues, filled with endless complexities. But for a certain segment of the punditocracy, the answer is simple: When it comes to banks, small is beautiful. Arianna Huffington, for one, wants us all to withdraw our money from big, corrupt, bailed-out banks and put it instead into “America’s Main Street community banks.” Not only are we likely to get a better deal, she argues, but we’ll be sticking it to bankers who acted recklessly while rewarding those who didn’t. Elizabeth Warren, meanwhile, sees community banks as victims of big banks and their “phantom prices” that ripped off consumers. In an op-ed on Politico, she vows to help these banks “by streamlining regulations and eliminating outdated or ineffective rules.” Then there’s Simon Johnson, who continues to argue that big banks must be broken up. Writing in The New Republic, Johnson calls J.P. Morgan’s global expansion plans “the ultimate poison pill under the new regulatory regime.” In his view, going abroad is a “brilliant” and “terrifying” loophole being exploited by big banks looking to get around U.S. resolution authority. Johnson’s sidekick, James Kwak, meanwhile, recently told the website The Straddler that Bank of America “would be trivially easy to break up” and that “there’s no particular reason why a bank has to have branches in every state of the country.” Well, if that’s your view, there’s “no particular reason” why any business should operate in every state; maybe we should limit bailed-out General Motors to selling cars only in Michigan. To be sure, breaking up the banks would certainly solve our mammoth too-big-to-fail problem. But it could also touch off a liquidity crisis and wreak economic havoc. And a breakup is hardly trivial. But no matter. That small banks are better, more virtuous and capable of providing us with all the services we’ll ever need is now taken on faith. Small banks have become the proverbial little guy — a George Bailey-esque figure worthy of reverence and protection. Is that reverence warranted? Are all small banks forces for good, and are those that fail simply victims (like the rest of us) of greedy big banks? Time magazine decided to investigate. It went down to Cornelia, Ga., to chronicle the failure of its hometown bank, Community Bank & Trust, which for years was the picture of Bailey-esque benevolence. Not only did it support local schools and sports arenas, but “its hardheaded bankers personally inspected the local businesses they underwrote.” That all changed when the land boom hit and CBT’s longtime president died. “Headquarters stopped checking the loans its officers were peddling,” Time reported. The bank “renewed interest-only commercial loans every year, leading borrowers to believe the underlying debts would never come due.” CBT “kept terrible records, classifying home loans as business loans and vice versa.” Worse, some of the bank’s officers began lending money to “favored friends,” with at least one receiving kickbacks for fraudulent loans. Amazingly, this all went undetected by regulators until the Lehman Brothers failure forced them to become more diligent. By late 2009, CBT was on the brink of failure. In the end, the Federal Deposit Insurance Corp. stepped in and sold CBT to South Carolina Bank and Trust, a recipient of TARP funds. SCBT fired 120 CBT employees, foreclosed on 224 of its loans and classified 1,500 more as particularly troubled. It’s now being blamed for sending Cornelia down the tubes. “[SCBT's] really killing the town, and I blame the FDIC,” Donald Anderson, the city manager, told Time. “They’re giving them incentives to foreclose on properties.” Time notes, however, that SCBT has foreclosed on just 2.14% of CBT’s business loans and 1.75% of its residential mortgages, and that it’s not incentivized by the FDIC to do so. But Cornelians remain reluctant to badmouth their beloved CBT. “It’s like finding out an old friend has done something you don’t want to believe until the facts just smack you in the face,” Sally Yates, the U.S. attorney for the Northern District of Georgia, told Time. Yes, facts. That’s what Time supplied by going down to Georgia, rather than to simply opine on the virtues of small banks. CBT’s woes are by no means representative of all small banks. But they are worth remembering the next time a pundit starts muttering the “small banks are beautiful” meme. Yvette Kantrow is executive editor of The Deal magazine.

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Video: Jekyll Island Forum Prompts Fed to Consider History

November 8, 2010

Nov. 8 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke and other current and former officials met this past weekend in Jekyll Island, Georgia, to discuss the Fed’s origins and decisions and, at times, their relevance to the more-recent financial crisis and last week’s expansion of record monetary stimulus. Bloomberg’s Michael McKee reports. (Source: Bloomberg)

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U.S. Banks Failing At Fastest Pace In 2 Decades

November 6, 2010

MARCY GORDON, Associated Press WASHINGTON — Regulators shut down four more banks Friday, bringing the 2010 total to 143, topping the 140 shuttered last year and the most in a year since the savings-and-loan crisis two decades ago. The Federal Deposit Insurance Corp. took over K Bank, based in Randallstown, Maryland, with $538.3 million in assets, and Pierce Commercial Bank, based in Tacoma, Washington, with $221.1 million in assets. The FDIC also seized two California banks: Western Commercial Bank in Woodland Hills, with $98.6 million in assets, and First Vietnamese American Bank in Westminster, with assets of $48 million. M&T Bank, based in Buffalo, N.Y., agreed to assume the deposits and $410.8 million of the assets of K Bank. First California Bank, based in Westlake Village, Calif., is acquiring the assets and deposits of Western Commercial Bank. Heritage Bank, based in Olympia, Wash., is taking the assets and deposits of Pierce Commercial Bank, while Los Angeles-based Grandpoint Bank is assuming the assets and deposits of First Vietnamese American Bank. In addition, the FDIC and M&T Bank agreed to share losses on $289 million of K Bank’s loans and other assets. The FDIC and First California Bank are sharing losses on $83.9 million of Western Commercial Bank’s assets. The failure of K Bank is expected to cost the deposit insurance fund $198.4 million. That of Western Commercial Bank is expected to cost $25.2 million; Pierce Commercial Bank, $21.3 million, and First Vietnamese American Bank, $9.6 million. Like these four financial institutions, the banks that have failed this year are smaller, on average, than those that succumbed in 2009. That has meant the deposit insurance fund has suffered a milder loss, which has reached about $21 billion so far this year, compared with $36 billion in 2009. Still, banks, especially small community institutions, are falling as soured loans have mounted and the economy has sputtered. The wave of closings points to the lingering power of the recession more than a year after its official end. Florida, Georgia, Illinois and California have each seen bank failures in the double digits this year. Some communities in those states are still reeling from the financial meltdown that brought an avalanche of bad loans, especially for commercial real estate. The closures have compounded the problems in areas already straining under high unemployment, foreclosed homes and vacant malls and office buildings. The pace of failures has accelerated as banks’ losses on loans for commercial property and development have mounted. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers. The 2009 total of bank failures had been the highest annual toll since 1992, at the height of the savings and loan crisis. More than 1,000 banks went under in the savings-and-loan crisis of 1987-1992. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three succumbed in 2007. The growing bank failures have sapped billions of dollars out of the FDIC’s deposit insurance fund. It fell into the red last year, and its deficit stood at $15.2 billion as of June 30. The FDIC expects the cost of resolving failed banks to total around $52 billion from 2010 through 2014. Depositors’ money — insured up to $250,000 per account — is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July.

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Video: Saakashvili Says Meetings With Kuwait, UAE ‘Going Well’

October 27, 2010

Oct. 27 (Bloomberg) — Georgian President Mikheil Saakashvili talks about Middle East investment in Georgia and the outlook for the economy. He speaks on the sidelines of the World Economic Forum in Marrakech with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

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Migration Bust: Fast-Growing U.S. Areas Show Big Income Drop, Census Reports

October 13, 2010

WASHINGTON — Call it the migration bust: Many of the fast-growing U.S. areas during the housing boom are now yielding some of the biggest income drops in the economic downturn. That could have broad impact on the political map in the coming weeks. Voters discontent over the economy and related issues such as immigration head to the polls on Nov. 2 to decide whether to keep Democrats in Congress. Whites and blacks have taken big hits since 2007 in once-torrid Sunbelt regions offering warm climates and open spaces, including Florida, Colorado, Arizona and Nevada, according to 2009 census data. Hispanics suffered paycheck losses in many “new immigrant” destinations in the interior U.S., which previously offered construction jobs and affordable housing, such as Tennessee, Georgia and North Carolina. The few bright spots: Washington, D.C., San Jose, Calif., San Francisco and Boston. Their household incomes remained among the highest in the nation last year partly due to steady demand for government and high-tech work. “As a whole, the income changes represent a sharp U-turn from the mid-decade gains,” said William H. Frey, a demographer at the Brookings Institution who reviewed the household income data. “The last two years have left those who couldn’t move stuck in place with lower incomes.” In December, the Census Bureau will release 2010 population counts, which trigger a politically contentious process of divvying up House seats. In all, Southern and Western states are expected to take seats away the Midwest and Northeast. But last-minute shifts could affect a handful of states hanging in the balance, including California, which is hoping to avoid losing its first seat ever, and Arizona, which may now gain just one seat rather than two based partly on slowing Hispanic population growth. The census data show that Hispanics, the nation’s largest and fastest-growing minority group, are helping drive growth in several Southern states. Five states have seen their numbers double over the last decade – South Carolina, Tennessee, Alabama and Arkansas in the South and South Dakota in the Upper Midwest. Other big gainers include Georgia and North Carolina. Several of those states, South Carolina, Georgia and possibly North Carolina, stand to gain House seats based partly on that fast growth. At the same time, the Latino population remains a relatively smaller share of the population in those states, numbering about 8 percent or less. There, they also tend to be disproportionately low-income workers who lack a high-school education, speak mostly Spanish and don’t vote in elections, which analysts say may be driving some of the tensions over immigration and jobs. In recent months, the rhetoric has ranged from a call for English-only policies in states and localities that wish to minimize the use of Spanish and other languages, to a call to strip birthright citizenship for illegal immigrants. “Hispanics’ recent growth and sharp disparity with existing white populations may have something to do with the anti-immigrant backlash now being observed in large parts of the country,” Frey said. Hispanics had the highest income in metro areas such as Washington, D.C., Baltimore, Dayton, Ohio, and Virginia Beach, where they also were more likely to have a college degree. Lower-educated Hispanics also had strong earnings in San Francisco and San Jose, Calif., two areas with high costs of living where more-affordable immigrant labor tends to be in greater demand. Nationally, the government reported last month that median household incomes dipped to $49,777, the lowest since 1997, with the sharpest drop-offs in the Midwest and Northeast. Broken down by race, blacks had the biggest income losses, dropping to $32,584. They were followed by non-Hispanic whites, whose income fell to $54,461. Asian incomes remained flat at $65,469. Income among Hispanics edged higher but lagged whites significantly at $38,039. The findings are part of a broad array of 2009 data released over the past month that have highlighted the impact of the recession – from soaring poverty and a widening gap between rich and poor to record levels of food stamp use. On Tuesday, the Census Bureau posted additional 2009 findings. Among them: _Declining home values. Median values for owner-occupied homes dropped 5.8 percent last year to $185,200. They ranged from a high of $638,300 in San Jose, Calif., to a low of $76,100 in McAllen, Texas. In all, five of the 10 highest property values were located in California, with the rest in New York, Washington, D.C., Boston, Seattle and Baltimore. _Increased welfare payments. About 2.6 percent of U.S. households, or 3 million, received government cash payments for the poor, up from 2.3 percent in 2008. States whose residents received the most aid were Alaska, Maine, Washington and Michigan. _Growth of college sciences. About 36.4 percent, or 20.5 million, of college graduates in the U.S. had a degree in the science and engineering fields. Five states – California, Maryland, Massachusetts, Virginia, Washington – as well as the District of Columbia had science and engineering degrees above 40 percent. The 2009 figures come from the Census Bureau’s Current Population Survey and the American Community Survey, which gathers information from 3 million households. The surveys are separate from the 2010 census. ___ Online: http://www.census.gov

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7 Electric Cars You’ll Be Able To Buy Very Soon — Chevy Volt, Nissan Leaf, Tesla & More (PHOTOS)

September 17, 2010

We’ve all heard it before: electric cars are the future, albeit a future that never seems quite near enough. Though electric vehicles are nothing new , a combination of limited range, speed, inefficient charging methods, and higher prices have kept electric cars from achieving mass appeal. Thanks, in part, to advances in technology and increased consumer demand for alternative fuel vehicles cars, automakers like Nissan, GM, and Daimler are now in the process of readying electric cars for the mass market. Thanks to strong demand, GM is doubling its production capacity for the highly anticipated Chevy Volt. Nissan has even taken a $1.6 billion U.S. Department of Energy loan to modify an existing US plant to manufacture the Leaf. And some manufacturers are hoping to appeal to customers’ aesthetic sensibilities. Tesla has recently hired a retail expert George Blankenship , who has worked with GAP and Apple, to bolster its retail presence. The following cars are either in production or will soon be in production and available for sale in the United States within a year or two. None of the prices include the $7,500 federal tax credit for electric cars. State tax credits vary by state from as much as $5,000 in Georgia to $36 in D.C. Which early entrant into the electric car field is the most appealing? Check them out and vote below:

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Lloyd Chapman: Obama Refusing to Back Private Sector Jobs Bill

August 24, 2010

President Barack Obama is refusing to back a bill that could create millions of jobs in the private sector. The bill, the Fairness and Transparency in Contracting Act, H.R.2568, was introduced by Georgia Congressman Hank Johnson last May . The American Small Business League (ASBL) wrote the original draft of H.R. 2568. The bill is designed to stop the federal government from diverting over $100 billion a year in federal small business contracts to Fortune 500 firms and many of the largest businesses in Europe. Since 2003, a series of federal investigations have found billions of dollars a month in federal small business contracts have been diverted to firms like Lockheed Martin, Boeing, Northrop Grumman, Raytheon, General Dynamics, Bechtel, Dell Computer and Xerox. Corporate giants from around the world that have received U.S. government small business contracts include Rolls-Royce, British Aerospace (BAE), French giant Thales Communications, Ssangyong Corporation headquartered in Seoul, South Korea and Finmeccanica SpA, which is located in Italy and has 73,000 employees. A recent investigation by Stars and Stripes Magazine found the federal government had awarded over $41.6 billion in small business contracts to “miscellaneous foreign contractors.” H.R. 2568 would stop the federal government from reporting contract awards to publicly traded firms and foreign owned companies as small business awards. The bill is based on language in the Small Business Act, which states that a small business must be “independently owned” in order to receive federal small business contracts. If President Obama were to sign H.R. 2568 into law, or pass by executive order, over $100 billion in existing federal infrastructure spending would be redirected to legitimate small businesses in the private sector. Since the bill requires no new spending or tax increases, it is deficit neutral. The Obama Administration had estimated that for every billion dollars in infrastructure spending, 40,000 new jobs would be created . Based on those projections, if H.R. 2568 were to become law, over four million new jobs could be created. The ASBL points to H.R. 2568 as being far superior to the Obama Administration’s $30 billion small business lending bill. As opposed to a one-time infusion of $30 billion in loans, H.R. 2568 would inject over $100 billion a year in federal contracts into the small business economy for decades to come.

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Inder Sidhu: Easy and Safe: The Next Frontier in Cyber Security

August 23, 2010

17,134 years. That’s how long experts from the Georgia Institute of Technology say it would take a hacker to decode your computer password if you adopted one with at least 12 characters. Your current one that uses just five or six letters? Thanks to new technology, a properly trained and equipped crook could unravel your computer password in less time that it takes to eat lunch and make a quick stop at the dry cleaners. In particular, experts at the institute have been studying new and advanced Graphics Processing Unit (GPU) chips, which, for a few hundred dollars, provide the processing power of technology that cost tens of millions of dollars only a decade ago. The arrival of these new chips, which hackers can put to use to decode security passwords, is significantly altering the security landscape, they believe. The implications for billions of technology consumers worldwide couldn’t be more important: today, everything from personal communications to family finances to medical records are potentially at risk. Because of this, working professionals and consumers alike should take stepped-up measures to protect themselves. The experts from the institute, for example, recommend passwords with at least a dozen characters. The more varied, the better. “A computer keyboard contains 95 characters, and every time you add another character, your protection goes up exponentially, by 95 times,” explains Joshua L. Davis, a Georgia Tech Research Institute scientist . Unfortunately, most consumers do not choose strong passwords due to the perceived hassle. A recent UK study of computer passwords found that one in five consumers choose a pet’s name as their password. Another study by Imperva reveals that 20 percent of all users use one of just 5,000 words as their password. An astonishing number use either “12345″ or “iloveyou” to protect themselves. As the experts see it, these consumers are making a foolish tradeoff–choosing convenience over security–that few can afford to make. “Everyone needs to understand what the combination of poor passwords means in today’s world of automated cyber attacks: with only minimal effort, a hacker can gain access to one new account every second ,” says Imperva CTO Amichai Shulman. Rather than make a false tradeoff between convenience or security, technology users would be wise to prioritize both equally. Contrary to conventional wisdom, pursuing two, seemingly opposed objectives simultaneously often produces a better outcome than choosing one option over another. In business, for example, leaders are benefitting from efforts to simultaneously pursue disruptive and sustaining innovation, established and emerging markets, and existing and new business models. Similarly, sports teams have benefitted from developing individual superstars and promoting better team play. Could consumers do the same when it comes to protecting themselves online? Absolutely–so long as they accept the idea that choosing ease of use over peace of mind–or vice versa–is a mistake. Fortunately, there are plenty of places where consumers can find help increasing their security without compromising their convenience. Carnegie Mellon School of Computer Science , for example, has an online service that can help technology users create passwords that are easy to remember and nearly impossible to crack. So does Purdue University . In addition, numerous media reports provide practical advice . While the tips are helpful, the key to making a positive change is understanding the consequences of making a foolish tradeoff–and not just when it comes to cyber security, but in all aspects of life. When faced with a choice between pursuing one objective or another, a better approach often is doing both instead. Inder Sidhu is the Senior Vice President of Strategy & Planning for Worldwide Operations at Cisco , and the author of Doing Both: How Cisco Captures Today’s Profits and Drives Tomorrow’s Growth . Follow Inder on Twitter at @indersidhu .

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Saul Friedman: Consequences of Unequal Distribution of Wealth: The Rich Get Richer…

August 8, 2010

Shirley Sherrod had it about right when she said, “Y’all, it’s about poor versus those who have. It’s really about those who have versus those who don’t. And they could be black, they could be white, they could be Hispanic…” That wasn’t exactly the whole truth, for she and her husband Charles were ardent, longtime civil rights activists who understood that years of racism played a large role in perpetuating the ignorance and poverty in the South among blacks as well as whites. (Racism is here defined as the belief among many whites, supported by the law, that non-whites were inferior. Only in America did the Supreme Court, in Dred Scott , hold that black slaves were chattel, less than human.) Overcoming that sad heritage, Ms. Sherrod, who has spent a lifetime helping in the struggles of the poor, of all shades, put her finger on a fundamental human problem in much of the world — especially the United States — the unequal distribution of wealth among too many of us. That is the subject of a new book that has become the rage among social scientists and activists in Europe, especially Britain. It’s called The Spirit Level: Why Greater Equality Makes Societies Stronger , written by British public health researchers Richard Wilkinson and Kate Pickett, who have produced an unprecedented rediscovery of the causes of so much of today’s anger towards the institutions of government and finance. The book was called to my attention by a Canadian reader, Dr. Rob Dumont, a PhD, from a prominent and wealthy family. In a reply to one of my pieces on poverty, he quoted from the book to tell me that according to its central thesis, the growing gap in many countries between the haves and the have-nots, is responsible for more than the misery of poverty. According to the book, such health and social problems as “Obesity, Mental illness, drug and alcohol abuse, homicides, imprisonment rates, lowered life expectancy, over consumption of resources, teen pregnancy and the lack of social mobility,” all have in common strong links to inequality of wealth. Interestingly, the authors, who have exhaustively documented their work, do not denounce the wealthy. Rather they point out that the most affluent citizens as well as the most wealthy countries also suffer from these ills. Their analysis mocks the American Declaration of Independence which proclaimed, “all men are created equal.” The original sin of slavery gave lie to that promise and the lack of equality has taken a toll in this nation even today. As one knowledgeable Amazon reviewer, Dr. Nicholas P. G. Davies, a Briton, wrote, “Inequality issues are often presented as being about the poor, but this book shows we are all poorer for living in more unequal societies. Inequality is as bad for the rich as it is for the poor. Society is poorer as inequality becomes greater.” AWilkinson and Pickett make this clear with dozens of graphs, which rate the nations based on the problems that come with inequality. As they say, “The impacts of inequality show up in poorer health, lower educational attainment, higher crime rates, lower spending of social capital, lower cooperation with and trust of government.” One graph, showing that “health and social problems are worse in more unequal countries,” makes these points: “The U.S., Portugal and the United Kingdom rate high in the mount of income inequality. For the U.S., low taxes (by international standards), a weak trade union movement, low minimum wage and a tradition of individualism have resulted in a high level of income inequality.” Indeed, the U.S., with its obsession with the market economy, has modest social programs, Social Security and Medicare, while most of the other 20 nations listed are Social Democracies with a broad array of social insurance benefits, including universal health care. Canada is roughly in the middle of the pack, along with France, Spain and Switzerland. Japan and the Scandinavian nations have the lowest income inequality; offering cradle-to-grave social programs. Some critics suggest that the book cherry picks its statistics and the alleged problems to prove their point. But who could argue with the graph that puts the U.S., the richest country, almost off the charts that show the relationship between a huge income gap — perhaps the highest among civilized countries — and such health and social problems as infant mortality, higher than most European nations, homicide and imprisonment rates, the highest in the world, obesity, child well-being (poverty among children has reached new heights) and drug and alcohol addiction? Any thinking American can verify the sad truth in another graph that shows these health and social problems are worse in more income unequal states. With the rise of unfettered rapacious, anti-labor capitalism, which touted sweatshops and child labor, income inequality rose to criminal leves. And today, as you might expect, the southern states, namely Mississippi, Louisiana, Alabama, Texas, Tennessee, Kentucky, West Virginia and Florida “have high levels of income inequality and much poorer outcomes in the health and social areas.” These states also have the highest levels of poverty, and the lowest levels of education attainment, and in the last couple of years, income inequality has become worse throughout the United States, especially in the industrial north, as a result of the 2008-9 recession, which has increased home foreclosures, personal bankruptcies, and the numbers of Americans — nearly 50 million — struggling against poverty or near poverty. Yet at the same time, the rich are becoming obscenely richer. Michelle Singletary reported in the Washington Post last month that while the average income for the top one percent of earners rose 281 percent, or $973,000 per household, in the last decade, the bottom fifth saw their incomes increase 16 percent, or $2,400 per household. Former Labor Secretary Robert Reich, who wrote the forward for the American edition of the book, noted that today’s CEOs are paid more than 350 times that of the average worker. Surely we’ll see the results of such inequality in health and social problems in the next few years.. In his inaugural speech, President Obama said “The nation cannot prosper long when it favors only the prosperous.” But that’s exactly what has happened, as bankers have made huge profits and gotten scandalous bonuses while real unemployment reached towards 15 percent. Franklin Roosevelt fought the economic royalists of his day to help Shirley Sherrod’s Georgia get electricity and survive the Great Depression with the Tennessee Valley Authority and the Works Progress Administration. What has Obama done? One can blame the Republicans or the U.S. Senate, but where is the leadership of the President? It won’t do to give Ms. Sherrod a job. Platitudes like “I feel your pain” are not true. It might help to use the powers of his federal government to put Americans to work. But as she said, “Folks with money want to stay in power and they’ll do what they need to do to stay in power…It’s always about money, y’all,” You can find out more about “Spirit Level,” at the excellent British web site Equality Trust . Write to saulfriedman@comcast.net Friedman also writes for www.timegoesby.net

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Tax Holidays: States Gamble On Back-to-School Shopping Deals To Stimulate Consumer Spending

July 30, 2010

Today kicks off the first tax holiday for the back-to-school shopping season, but low consumer morale may end up causing a further drain on state governments instead of stimulating the retail industry. With the lure of 7-percent savings on clothing and footwear, Mississippians will head to the malls today and tomorrow to stock up on fall clothes and new shoes, but several municipalities opted out of the holiday this year due to economic concerns over lost sales tax revenue. According to Kathy Waterbury, spokesperson at the Mississippi Department of Revenue, the holiday is intended to “give a break to consumers” right before the start of the school year, but the waived tax may not be enough to rev up shopping. “I think consumers are still being very cautious,” said Lynn Franco, Director of Consumer Research Center at the Conference Board. “They will weigh those spending decisions very carefully.” The Conference Board’s Consumer Confidence Index had been increasing since a low in February, but confidence in the economy started to slip due to low job growth. The index dropped from 54.3 to 50.4 in July, which is only a slight improvement over last July’s level of consumer confidence. When asked whether the back-to-school tax break would spur shopping, Franco replied, “while it will definitely help sales, I don’t think, in of itself, it will be sufficient.” About a decade ago, states began to suspend taxes on school-related items at the end of the summer to help residents out with school expenses, and now more than ever consumers need all of the help that they can get. In fact, Maryland and Illinois have hopped on the bandwagon this year by designating tax-free days in August, and Florida is reviving their event after a two-year lapse. “Illinois has a high unemployment rate, and people have lost wages because their hours have been cut,” said Susan Hofer, Communications Manager for Governor Quinn. “We’ve seen retail stores throughout the summer really suffering with low traffic.” Governor Quinn coordinated with the Illinois Retail Merchants Association to encourage retailers to offer additional discounts during the tax break to incentivize consumers to spend even more during the holiday. Though offering discounts may lure reluctant shoppers to the mall, there is concern among state governments that the loss of tax revenue may hurt their ailing budgets. After several years of hosting a back-to-school tax break holiday, the Georgia legislature opted not to renew it. According to Bert Brantley, spokesperson for Governor Perdue, the state “loses” approximately $13 million in tax revenue during the holiday. “There is a decent argument to be made that people do all of their shopping in that one weekend,” said Brantly. “I don’t know that they really spend any more. People may even spend less to get the same.” Some analysts, however, are more optimistic about the back-to-school shopping season in the wake of last year’s massive spending cutback. The National Retail Federation’s annual Consumer Intentions and Actions Back to School survey predicts that each American household will spend on average $606.40 on back-to-school items, compared to the estimated $548.72 spent last year. “Most parents just ‘made do’ with the supplies that they had last year,” said Ellen Davis, Vice President and Spokesperson at the NRF. “Parents can’t make do with everything again this year. There is more of a pent-up demand situation.” Regardless of the level of success of the back-to-school shopping this coming month, even minimal increases in spending will be a positive sign of recovery and improvement in the retail industry; after all, “we are not looking to break any retail records this year,” added Davis.

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Tax Holidays: States Gamble On Back-to-School Shopping Deals To Stimulate Consumer Spending

July 30, 2010

Today kicks off the first tax holiday for the back-to-school shopping season, but low consumer morale may end up causing a further drain on state governments instead of stimulating the retail industry. With the lure of 7-percent savings on clothing and footwear, Mississippians will head to the malls today and tomorrow to stock up on fall clothes and new shoes, but several municipalities opted out of the holiday this year due to economic concerns over lost sales tax revenue. According to Kathy Waterbury, spokesperson at the Mississippi Department of Revenue, the holiday is intended to “give a break to consumers” right before the start of the school year, but the waived tax may not be enough to rev up shopping. “I think consumers are still being very cautious,” said Lynn Franco, Director of Consumer Research Center at the Conference Board. “They will weigh those spending decisions very carefully.” The Conference Board’s Consumer Confidence Index had been increasing since a low in February, but confidence in the economy started to slip due to low job growth. The index dropped from 54.3 to 50.4 in July, which is only a slight improvement over last July’s level of consumer confidence. When asked whether the back-to-school tax break would spur shopping, Franco replied, “while it will definitely help sales, I don’t think, in of itself, it will be sufficient.” About a decade ago, states began to suspend taxes on school-related items at the end of the summer to help residents out with school expenses, and now more than ever consumers need all of the help that they can get. In fact, Maryland and Illinois have hopped on the bandwagon this year by designating tax-free days in August, and Florida is reviving their event after a two-year lapse. “Illinois has a high unemployment rate, and people have lost wages because their hours have been cut,” said Susan Hofer, Communications Manager for Governor Quinn. “We’ve seen retail stores throughout the summer really suffering with low traffic.” Governor Quinn coordinated with the Illinois Retail Merchants Association to encourage retailers to offer additional discounts during the tax break to incentivize consumers to spend even more during the holiday. Though offering discounts may lure reluctant shoppers to the mall, there is concern among state governments that the loss of tax revenue may hurt their ailing budgets. After several years of hosting a back-to-school tax break holiday, the Georgia legislature opted not to renew it. According to Bert Brantley, spokesperson for Governor Perdue, the state “loses” approximately $13 million in tax revenue during the holiday. “There is a decent argument to be made that people do all of their shopping in that one weekend,” said Brantly. “I don’t know that they really spend any more. People may even spend less to get the same.” Some analysts, however, are more optimistic about the back-to-school shopping season in the wake of last year’s massive spending cutback. The National Retail Federation’s annual Consumer Intentions and Actions Back to School survey predicts that each American household will spend on average $606.40 on back-to-school items, compared to the estimated $548.72 spent last year. “Most parents just ‘made do’ with the supplies that they had last year,” said Ellen Davis, Vice President and Spokesperson at the NRF. “Parents can’t make do with everything again this year. There is more of a pent-up demand situation.” Regardless of the level of success of the back-to-school shopping this coming month, even minimal increases in spending will be a positive sign of recovery and improvement in the retail industry; after all, “we are not looking to break any retail records this year,” added Davis.

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GM’s Chevy Volt Electric Car Will Cost $41K

July 27, 2010

DETROIT — General Motors Co. said Tuesday its Chevrolet Volt electric car will cost $41,000 when it goes on sale in November. While the price is about $8,000 more than its closest rival, the Nissan Leaf, GM said it will offer a $350-per-month lease deal that’s essentially equal to the Leaf’s. That will put the battery-powered Volt within reach of many people, GM said. Both cars also are eligible for a federal tax credit that will cut their prices by $7,500. The Volt’s price would fall to $33,500 while the Leaf’s would drop to $25,280 from $32,780. Some states, such as California, Georgia and Oregon, offer additional tax breaks that lower the price further. The Volt, a 4-door sedan, runs on battery power for up to 40 miles but has a small gasoline engine to generate electricity once the battery runs down. The gas engine can generate power to run the car another 300 miles. That’s a big selling point because some drivers worry about the battery going dead during trips. This so-called “range anxiety” dogged GM’s experimental EV-1 electric car in the 1990s. To give the car wider appeal, drivers must know “they’re not going to get stranded,” said Joel Ewanick, GM vice president U.S. marketing. Nissan’s Leaf, which goes on sale in December, can go up to 100 miles on a charge. The car doesn’t have a gas engine and must be recharged once its battery is depleted. Nissan spokeswoman Katherine Zachary said the Leaf itself emits no pollution and is designed for people whose daily travels are within its range. GM’s $350-a-month lease deal is for 36 months with $2,500 down. Nissan’s lease plan is $349 a month over the same period with $1,995 down. The lease deals are particularly appealing because they are close to those offered with conventional cars. But depending on how far they drive, drivers would not have to pay for gasoline. GM said it would cost about $1.50 worth of electricity to fully recharge the Volt each night. GM earlier this month offered an eight-year, 100,000 mile warranty on the Volt’s battery to allay fears that owners could get stuck with the hefty price of replacing the power pack. Nissan matched that warranty Tuesday, a day that saw competing electric car announcements from the two automakers. GM will sell the Volt first in California, then move to New York, New Jersey, Connecticut, Washington, D.C., Michigan and Texas. Orders are being taken at 600 Chevrolet dealers in those states. But in 12 to 18 months, dealers nationwide should offer the cars. Nissan said Tuesday that 17,000 people have placed orders for the Leaf so far in the U.S. Buyers in California, Washington, Oregon, Arizona and Tennessee will get the first Leaf deliveries in December. The Leaf will go on sale in other markets through 2011 and be available nationwide by the end of next year.

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U.S. Bank Failures In 2010 Surpass 100

July 24, 2010

WASHINGTON — U.S. bank failures this year have surpassed a bleak milestone of 100 as regulators shut down banks in Georgia, Florida, South Carolina, Kansas, Nevada, Minnesota and Oregon. The seven bank seizures announced Friday bring to 103 the failures so far in 2010. The pace of bank closures this year is well ahead of that of 2009, which saw a total of 140 banks shuttered amid the recession and mounting loan defaults. That was the highest annual tally since 1992, at the height of the savings and loan crisis. The pace has accelerated as banks’ losses mount on loans made for commercial property and development. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers. The Federal Deposit Insurance Corp. said it took over Crescent Bank and Trust Co., based in Jasper, Ga., with about $1 billion in assets; Sterling Bank of Lantana, Fla., with $407.9 million in assets; Williamsburg First National Bank of Kingstree, S.C., $139.3 million in assets; Thunder Bank of Sylvan Grove, Kan., $32.6 million; SouthwestUSA Bank, with one branch in Las Vegas, $214 million; Community Security Bank of New Prague, Minn., $108 million; and Home Valley Bank of Cave Junction, Ore., $251.8 million. Renasant Bank, based in Tupelo, Miss., agreed to assume the assets and deposits of Crescent Bank and Trust. Iberiabank of Lafayette, La., is acquiring the assets and deposits of Sterling Bank. First Citizens Bank and Trust Co. of Columbia, S.C., is assuming the assets and deposits of Williamsburg First National Bank, while Bennington State Bank in Salina, Kan., is taking the assets and deposits of Thunder Bank. Roundbank of Waseca, Minn., is assuming those of Community Security Bank. Plaza Bank, based in Irvine, Calif., is acquiring the deposits of SouthwestUSA Bank and $137.3 million of the assets. The FDIC will retain the rest for eventual sale. South Valley Bank & Trust in Klamath Falls, Ore., is assuming the assets and deposits of Home Valley Bank. The failure of Crescent Bank and Trust is expected to cost the deposit insurance fund about $242.4 million. The resolution of Sterling Bank is estimated to cost $45.5 million; that of Williamsburg First National Bank, $8.8 million; Thunder Bank, $4.5 million; SouthwestUSA Bank, $74.1 million; Community Security Bank, $18.6 million; and Home Valley Bank, $37.1 million. By this time last year, regulators had closed 64 banks. The number of bank failures is expected to peak this year and be slightly higher than the 140 that fell in 2009. Twenty-five banks failed in 2008, the year the financial crisis struck with force, and only three succumbed in 2007. The growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, and its deficit stood at $20.7 billion as of March 31. The number of banks on the FDIC’s confidential “problem” list jumped to 775 in the first quarter, from 702 three months earlier, even as the industry as a whole had its best quarter in two years. A majority of institutions posted profit gains in the January-March quarter. But many small and midsized banks are likely to continue to suffer distress in the coming months and years, especially from soured loans for office buildings and development projects. The FDIC expects the cost of resolving failed banks to total around $60 billion from 2010 through 2014. The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to replenish the insurance fund. Depositors’ money – insured up to $250,000 per account – is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul legislation signed this week by President Barack Obama.

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David Isenberg: The GAO Transcripts, Part 17: Use of PSC is Cost Prohibitive

July 21, 2010

This is the seventeenth 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 .” It is not clear from the transcript what government office is being interviewed here. But given that it supported all overseas operations it obviously played an important role. Among the interesting revelations are that background checks are outsourced to a corporate security office. Even more interesting, someone in government disagreed with the near constant assertion by PSC supporters that using them is more cost effective than using government personnel as illustrated by this: Under _____________ the Army is contractually required to provide force protection f _____________ To date, _____________ not had to supplement the security that the Army or Rangers provide with private security guards. Several months prior to the interview _____________ templated getting more protecti _____________ concerned that the force was getting smaller and would not have sufficient resources to provid _____________ adequate protection. Ultimately _____________ decided against it because it was cost prohibitive. In addition, , the government would have to indemnify it, further complicating matters. 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: October 27, 2084 DOC Number: 1201624 Reviewed by: Carole Coffey DOC Library: Goal 2 Job Code: 350544 Record of Interview Title Interview with _____________ Purpose To learn about _____________ Contact Method Face-to-face Contact Place _____________ Contact Date August 12, 2004 Participants _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ Steve Sternlieb, Assistant Director, GAO Carole Coffey, Analyst-in-charge, GAO Dave Grover, Senior Analyst, GAO William McPhail, Senior Analyst, GAO Kate Walker, Analyst, GAO Comments/Remarks: _____________ the _____________ in charge of the upport office for the _____________ contract. _____________ SUPPORT OFFICE SERVICES The _____________ upport Office supports all overseas operations. Currently, _____________ work in six countries: Uzbekistan, Djibouti, Georgia, Afghanistan, Kuwait, and Iraq _____________ human resource (HR) employees recruit and process employee applications. Processing new employees takes 8-10 days and HR processes about 500-600 employees every week _____________ required by contract to perform background check on all of its employees. These background checks are outsourced to a corporate security office. _____________ quires that employees pass provide updated medical physicals, passports, and training requirements. PROJECT CONTROLS _____________ ploys a number of resources to ensure that its projects are properly managed. In _____________ as a robust procurement office, a twenty-four hour operations center, a contract administration, and accounting and finance staff all dedicated to project management. CONVOY MOVEMENT Both _____________ mployees and supplies are transported in convoys. As of 19 July 2004, all _____________convoys are required to have: 1. One military platform (humvee, etc) for every five _____________ hicles 2. No more than 15 _____________ ehicles per convoy in order to keep the convoy short (The convoy standard used to be 25 _____________ ehicles.) 3. A military shooter on every third vehicle Page 1 Record of Interview _____________ has provided us with a copy of these convoy requirements. When crossing sector lines, force protection changes for supply and employee convoys; mail convoys have dedicated escorts and do not change between sectors. Army escorts can be the military police (MP). troops, combat arms, combat support (CS), or combat service support (CSS) units. _____________ reports that _____________ occasionally complain that they do not have combat arms escorting their convoys. But, he believes that this is just a grip and that CS and CSS units have provided sufficient force protection to date. _____________ had to occasionally leave a vehicle behind if it is not usable. These vehicles are typically burned so that insurgents cannot use them. If a vehicle is burned while in protected convoy transport, _____________ can submit claims for reimbursement to the PCO. _____________ ust also submit a loss, damaged, or destroyed (LDD) report to the PCO, but it must be approved by to be government property. _____________ transportation operations center at every location they have in theatre. _____________ vehicles are required to inform these transportation operations centers of their movement. Most _____________ vehicles have QualCom satellite systems that allow them to communicate with theatre transportation operation centers. _____________ vehicles also carry satellite phones. _____________ onvoys follow Army command. _____________ _____________ _____________ _____________ theatre. _____________ coordinates convoy movements with the commander in Kuwait and Anaconda in Iraq. He also works with _____________ _____________ Baghdad to coordinate movement. _____________would like to see _____________ move away from ground transportation to air transportation. CHAIN OF COMMAND _____________ finds that there is no “security chain of command” in Iraq; program managers are the chain of command. _____________ is the _____________ Middle East and Asia. _____________ is the _____________ is located at the _____________ n Baghdad. _____________ has provided us with a matrix of the chain of command fo_____________ _____________ an addition to the lack of a security chain of Command _____________also believes that technical stove piping is also a problem. FORCE PROTECTION AND SECURITY Under _____________ the Army is contractually required to provide force protection f _____________ To date, _____________ not had to supplement the security that the Army or Rangers provide with private security guards. Several months prior to the interview _____________ templated getting more protecti _____________ concerned that the force was getting smaller and would not have sufficient resources to provid _____________ adequate protection. Ultimately _____________ decided against it because it was cost prohibitive. In addition, , the government would have to indemnify it, further complicating matters. INTERNAL REPORTING The government requires that _____________ provide them with after-incident reports, daily SITREP reports (including personnel status), the death of an employee, etc, _____________ provided us with copies of some of the after-incident reports. Nearly five to ten after-incident reports are written daily. These reports go to the ACO and the PCO. Convoy incident reports initiated from theatre transportation are immediately sent to_____________ Baghdad where they are Page 2 Record of interview dispersed. The convoy commander writes a more detailed report after the conclusion of the convoy. Reports about mortar incidents are reported to an element on the camp. SUGGESTIONS Overall , _____________ elieves that s a good relationship with the military. He believes that the reserves and national units do a good job and does not think that the soldiers leave anything to want _____________ did suggest that the military acquire better technology to detect improvised explosive devices (IEDs). He did say, however, that _____________ vesting in its own hard vehicles, ballistic blankets, helmets, and vests. Page 3 Record of Interview

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