government

Joseph Gordon-Levitt Talks Emotional, Inspiring Experience In NYC

November 16, 2011

When the massive production caravan hauling “The Dark Knight Rises” descended upon lower Manhattan last month, there was speculation that the Batman epic’s director, Christopher Nolan, would work to somehow incorporate the Occupy Wall Street protesters into his film. And while that didn’t quite come to pass , one of the movie’s stars decided to take a camera down to Zuccotti Park and explore the scene on his own. Joseph Gordon-Levitt’s timing couldn’t have been any better. As it turned out, the 30-year old star found himself Tuesday in the thick of the volatile struggle between protestors and the New York Police Department, which raided the park earlier in the morning and cleaned out the nearly-two-month-old makeshift tent city. Gordon-Levitt ended up shooting about three hours worth of footage at the scene, he told The Huffington Post Tuesday night at the premiere of “50/50″ co-star Bryce Dallas Howard’s new short film for Canon’s “Project Imagin8ion” . Despite the fevered pitch at the protest sites, he was very encouraged by what he saw. “I had a lot of long conversations with all sorts of people — kids, older people, some cops — I talked to some people who look really rebellious, I talked to some people who were wearing a suit,” the star said. “I talked to all sorts of people and everyone’s just feeling really positive and optimistic. They look around and they see people who are on the same page, and they’re not going to just sit around and say, ‘Oh, there’s nothing I can do,’ and it’s reassuring, it’s exciting.” He said he was moved in particular by the call and response public address system dubbed the people’s mic by protesters. It was “beautiful to see,” he said. It’s no surprise that the makeshift open platform appeals to Gordon-Levitt, who runs an online collaborative production company, HitRecord . Just getting the message out, he said, was a major improvement over his last round of First Amendment-flexing pavement pounding. “You know, when I was like, in college say, I remember when in 2003, when the United States started bombing Iraq, and we marched in protest, and no one gave a fuck man. No one paid attention; no one wanted to talk about it,” he remembered, growing animated. “Now, for various reasons, I guess because partially things have gotten so bad and I think partially because of the Occupy movement, it’s become a topic of conversation and people are willing to talk about it.” Check out Gordon-Levitt’s initial post about the experience on his website .

Read the full article →

Chinese Leader: Chinese Currency Not Causing U.S. Economic Woes

November 13, 2011

BEIJING (Reuters) – U.S. trade and employment problems would not be solved by even a major appreciation of China’s yuan versus the dollar, Chinese President Hu Jintao was quoted as saying on Sunday. “The trade deficit and unemployment problems are not caused by the yuan exchange rate. Even a major appreciation of the yuan would not resolve the problems facing the United States,” Hu was quoted as saying on Chinanews.com. Chinanews said Hu made the comments when he met U.S. President Barack Obama at the Asia Pacific Economic Cooperation (APEC) group summit in Hawaii. A subsequent statement on the website of China’s Foreign Ministry carried the same comment. Hu’s comments follow those of China’s Commerce Minister Chen Deming, who said at the recent G20 summit in Cannes that the yuan was at a reasonable level versus the dollar and was not the root cause of U.S. economic imbalances. China’s yuan currency — also known as the renminbi — has gained about 40 percent in real effective exchange terms since Beijing abandoned its peg to the U.S. dollar in 2005. The yuan has rallied almost four percent against the dollar in nominal terms this year. Hu also called on Washington to relax restrictions on high-tech exports to China and make it easier for Chinese firms to invest in the United States. Officials in Beijing say that a quick way for the U.S. to cut its trade deficit with the world’s second largest economy would be through lifting curbs on high-tech exports Washington considers sensitive. Hu made a similar point at a meeting with U.S. business leaders on the sidelines of the APEC summit on Thursday. The leaders of the world’s two biggest economies also spoke about Iran and North Korea, the Chinese foreign ministry said on its website. It said Hu and Obama “exchanged views”, but gave no details. (Reporting by Chris Buckley and Judy Hua; Editing by Nick Edwards and Robert Birsel) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

Alexander Howard: Apps for Entrepreneurs Looks to Accelerate Startups With Open Data

November 12, 2011

If you’re a developer or entrepreneur and want to help others in that space, you may find a new challenge of interest: Apps for Entrepreneurs . If you’re unfamiliar with the idea of challenges, read up on collaborative innovation in open government . The big question that such contests are helping to answer is whether the vision of participatory democracy outlined by Thomas Jefferson, where citizens collaborate with government to solve the nation’s most difficult problems, can be updated to the 21st century. Over the last year, agencies have been trying to crowdsource their way out of problems. Now, the Small Business Administration is trying the mechanism. “The goal of the Apps for Entrepreneurs is to give small businesses and entrepreneurs those better tools through this challenge format,” Ahson Wardak, senior advisor within the Investment Division at the Small Business Administration, told me via email. “For most entrepreneurs and small businesses, the federal government has useful programs and services, but it can be hard to identify, engage and navigate federal websites,” he wrote. “Often, small businesses do not know that the Federal government already offers a program that they would find useful. Entrepreneurs and small businesses need better tools to navigate the federal government’s vast resources — including programs, services, and procurement opportunities.” The short video embedded below explains more.: Here’s the raw material for developers to use in the challenge: Datasets at http://sba.gov/api include a loan and grants search API and a city/county-level government website catalog. Datasets at http://sbir.gov/api and http://green.sba.gov/api include SBIR award data, SBIR solicitation data, SBA program catalogue, SBA office locations, and “green” government opportunities The challenge opened on November 5 and closes on November 20, so you’ve got another week to get cracking. Full disclosure: I’m one of the judges, so I’m hoping to see some great entries.

Read the full article →

Richard Lee Colvin: A Sensible Solution to Student Loan Debt

November 12, 2011

The college class of 2010 now has a dubious distinction. Its graduates who had student loans owed a record-high average of $25,250, up 5.2 percent from the previous year, according to a new report from the Project on Student Debt , a nonprofit advocacy group. Last month, President Obama announced a plan to make it a little easier for 1.6 million college graduates to repay their government loans, recognizing the drag that $1 trillion in student debt is placing on the economy. In the early 1990s, most college students did not need to take out loans. But in 2009-10, 56 percent of full-time undergraduates at public colleges were borrowers. At private nonprofit schools, 65 percent had loans. For the first time in our history, student loan debt has exceeded credit card debt. One reason is that over the last 25 years, tuition has risen four times faster than the Consumer Price Index. In California, public universities enacted the highest average tuition increase, 21 percent, of any state last year, according to the College Board. With states putting up less money to subsidize higher education, more of the cost burden has shifted to students. The federal government is trying to accommodate the demand, pouring $104 billion into loans last year. At the same time, students are becoming less able to repay. The percentage of borrowers defaulting (and thus ruining their credit) rose 25 percent last year. High debt loads affect career choices and cause many graduates to defer getting married, buying homes and having children. Starting with next year’s graduating class, Obama wants to reduce payments to 10 percent of discretionary income for graduates who apply to the government’s income-based repayment plan. That is an immediate reduction from the 15 percent that is in effect today. But that only accelerates the phase-in of repayment terms that would have gone into effect in 2014 anyway. Under Obama’s plan, after 20 years of payments, the rest of the loan, if any is still unpaid, would be forgiven. Today, graduates are expected to pay for a maximum of 25 years. The administration also is offering minor changes in repayment terms for those who graduated earlier. This is welcome. But it doesn’t go far enough. The president should be talking about the effect of student loan debt on the economy as he campaigns for his jobs agenda. Even more important, he should take advantage of the pressure from the Occupy Wall Street protests for relief on this debt and send Congress legislation that offers a much bolder, systemic and long-term solution: income-contingent loan repayment . Under such a proposal, loans would be offered at a single interest rate for all borrowers; payments would be automatically withheld from the borrowers’ paychecks by their employers and would be managed by the IRS, just as income taxes are collected. As in the president’s proposal, 10 percent of a borrower’s earnings would go toward their student loans. The more they earn, the faster they would repay their debt. Such a system would not only help graduates manage their student loans, it would save the government money because it would drastically reduce delinquencies and be far easier and less expensive to administer. Right now when students need to borrow, they and their parents have to navigate a maze of financing options and an alphanumeric soup of loan types, limits and interest rates. Once students graduate, they face an equally baffling range of repayment options that involve various private sector “servicers” such as Sallie Mae. The income-based repayment option that Obama wants to accelerate was a step in the right direction. But it requires borrowers to apply every year and write one or more checks every month. Only 450,000 of 36 million borrowers take advantage of that program. In contrast, income-contingent loans would be universal and automatic. Everyone who took out a student loan would be put into the program and, because their loans would be tied to their Social Security numbers, the repayments would come out of their paychecks, just as their income, Social Security and Medicaid taxes are withheld. Australia and Britain have had great success with their income-contingent loan programs. In Britain, more than 98 percent of loans are repaid. This idea is not entirely foreign to the United States. Child support payments are routinely withheld by the IRS. Two decades ago Rep. Tom Petri (R-Wis.) remarked in a congressional hearing that an income-contingent loan repayment system would be “far simpler for schools and the government to administer, far simpler for students at application, and more manageable and supremely flexible during repayment, at the same time virtually eliminating the default problem and saving immense amounts of money.” Back then, the IRS was just moving to electronic processing of tax payments and wasn’t interested in taking on the new challenge of collecting on student loans. Now, however, the technological barriers are gone and, with the large increases in student debt burden, the political climate for reform is ripe. There is a moral hazard, however. Income-contingent loans could encourage money-hungry colleges to boost tuition even further, so Congress should also provide incentives to colleges to keep costs down. Loans awarded by colleges that didn’t keep tuition hikes within limits could be barred from the income-contingent loan program, which could drive students away. At a recent congressional hearing, Republicans and Democrats alike expressed great concern over student debt load and default rates. Petri, still a member of the House Education and the Workforce Committee, proposed revisiting his 2-decades-old income-contingent loan idea. Obama’s proposal is certainly a step in the right direction, but we need Congress to go further. With nearly $1 trillion in student debt on the line, the country can’t afford not to act. This commentary first appeared in the Los Angeles Times, November 10, 2011.

Read the full article →

Soren Petersen: Creating Paradigm Shifting Insights Using Co-Creation and Crowd Sourcing

November 11, 2011

Cowritten by Tina Santiago, Tanja Aitamurto, Richard Spencer and Dr. Jaewoo Joo. Coming up with creative ideas that can change mental and technical contradictions into progress and profit are among the toughest challenges in business today. Without previous mental or technical references from which to extrapolate we rely on inspiration and intuition when applying new processes. The key to success is operating with a comprehensive combination of systematic and random searches, the alternative being to rely on “old fashioned luck.” The biggest obstacle to the realization of paradigm shifting insights is our current thinking. Our assumption of what works or does not work will bias and prevent us from seeing solutions that might actually be very close at hand. For example, it took two thousand years to challenge the Greek idea that heavy and light objects fall at the same speed, though it is readily observable that they do not. Often we cannot even count on our customers to recognize game changing ideas. As the adage goes: “If Henry Ford has asked his customers what they wanted, they would have asked for a faster horse.” One challenge is that people tend to surround themselves with those who think more or less as they do and they are also unconsciously drawn towards reading articles and watching news programs with which they already agree. We unconsciously construct narratives of the past to make sense of the world we live in and these narratives exist because we filter out all evidence that fail to support them. We then use those narratives to predict the future, from a past that never existed. With the emergence of the new social and news media, changing one’s environment in the blink of an eye is now possible. So, working in or engaging with diverse cultures and professions can significantly help us to see a new perspective in old situations. It is no longer necessary to rely on individuals in your immediate surroundings to generate novel ideas, when you can proactively engage with thousands of people. If they share your passion and find your challenge interesting, they may even ask provocative questions and share some radically different thoughts and insights with you. Generating breakthrough methods and processes for improving idea generation and implementation is the main focus at the Stanford Center for Design Research and it’s newly formed Design Quantification Lab initiative. Design researchers at Stanford have developed methods for identifying and measuring innovation performance for the past two decades. Lately, they have been improving organizational creativity though alternately asking divergent and convergent questions and reframing and quantifying design, using objective Design Quality Criteria metrics. Their recent studies in the co-creation and crowd sourcing of challenges, suggest some remarkable new possibilities. The process currently being developed is that of successively alternating between formulating a challenge, gathering ideas from global crowds of people and then reformulating the challenge. Using a mix of online social and news media, the process begins by asking broad open-ended questions and harvesting diverse concerns, thoughts and ideas, which is followed by reformulating the questions. By inviting strangers in to co-author, without proclaiming to have all the answers, unquestioned assumptions are challenged and new knowledge injected. These steps are conducted three times, refining and narrowing the scope with each pass. After the last iteration, an Inspirational Design Brief is created, balancing key Design Quality Criteria. In addition to providing useful and effective framing of an opportunity, the process generates buzz and grows an invested and engaged ecosystem of problem solvers. Co-creation cycle, alternating between expert evaluation and generating ideas with people from all over the world. It is commonly accepted that the “wisdom of the crowd” outperforms even the crowd’s smartest member. The key to successful co-creation and crowd sourcing is making the result a common good and then openly sharing the outcome. You might think that this would remove your competitive advantage, however, by shifting your paradigm from zero-sum thinking to that of enlarging the pie and creating “win-win” situations, everyone makes out like a bandit. As Einstein said: “Problems cannot be solved at the same level of awareness that created them.” Our intention is to explore how this approach can help to create “New Research Paradigms for Business Progress.” Special thanks to Tina Santiago, Tanja Aitamurto, Richard Spencer and Dr. Jaewoo Joo, for researching and co-writing this article.

Read the full article →

Robert Reich: Trigger Happy: Why Deficit Cuts Should Be Triggered Only When Unemployment Drops to 5 Percent

November 11, 2011

On planet Washington, where reducing the federal budget deficit continues to be more important than creating jobs, everyone is talking about “triggers” that automatically go into effect if certain other things don’t happen. Yet no one is talking about the most obvious trigger of all — no budget cuts until the official level of unemployment falls to 5 percent, its level before the Great Recession. The biggest trigger on the minds of Washington insiders is $1.2 trillion across-the-board cuts that will automatically occur if Congress’s super committee doesn’t come up with at least $1.2 trillion of cuts on its own that Congress agrees to by December 23. That automatic trigger seems likelier by the day because at this point the odds of an agreement are roughly zero. Here’s the truly insane thing: The triggered cuts start in 2013, a little over a year from now. Yet no one in their right mind believes unemployment will be lower than 8 percent by then. The cuts will come on top of the expiration of extended unemployment benefits, the end of a payroll tax cut, and continuing reductions in state and local budgets — all when American consumers (whose spending is 70 percent of the economy) will still be reeling from declining jobs and wages and plunging home prices. Even if Europe’s debt crisis doesn’t by then threaten a global financial meltdown, this rush toward austerity couldn’t come at a worse time. In other words, what will really be triggered is a deeper recession and higher unemployment. Democrats on the super committee are acting as if they haven’t met an unemployed person. They’re proposing $2.3 trillion in deficit reductions — half from spending cuts (including $350 billion from Medicare), half from tax increases. To make the tax increases palatable to Republicans, Democrats want to give Congress a chance to find the new revenues by overhauling the tax code. If that effort fails, automatic tax increases would be triggered. The top tax rate won’t rise (another bow to Republicans) but top earners’ itemized deductions will be limited. Oh, and by the way, under the Democrats’ proposal, spending cuts and tax increases, triggered or not, would start in 2013. The President (remember him?) is still hawking his $450 billion jobs bill, but he’s having a hard time being heard above the deficit-reduction din — in large part because he himself is simultaneously calling for deficit reduction, and most people outside Washington can’t make sense of how we do both. The public is confused because they don’t get it’s a matter of sequencing. We need to do more spending now in order to bring back jobs and growth, then do less spending in the future — after the economy is once again generating jobs and growth. That’s why it make more sense for Democrats to propose a deficit reduction plan that goes into effect only when jobs are back. The trigger should be the rate of unemployment — and a 5 percent rate would signal we’re back on track. True, the unemployment rate is an imperfect measure of how bad things are (it doesn’t include everyone who’s working part-time but needs a full-time job, and those too discouraged to look for work), but at least it’s a useful way of comparing how much worse or better we are than we’ve been. And it can’t be fiddled with (the Bureau of Labor Statistics guards the calculation like gold in Fort Knox). Deficit hawks in both parties fear if we put off the spending cuts we’ll never do them. But if we cut now, the ratio of deficit to the total economy just gets worse — because the economy stagnates and the swelling ranks of unemployed don’t pay taxes. So the best of all worlds is to have a big jobs plan now, and also commit to automatic cuts triggered when unemployment falls to 5 percent. The hawks should find this acceptable. Reasonable Republicans (if any are left) will, too. Democrats, if they still care about jobs, should lead the way. Robert Reich is the author of Aftershock: The Next Economy and America’s Future , now in bookstores. This post originally appeared at RobertReich.org .

Read the full article →

Shadow Economy World’s Second Largest

November 7, 2011

By Freakonomics : In 2009, the OECD concluded that half the world’s workers (almost 1.8 billion people) were employed in the shadow economy. By 2020, the OECD predicts the shadow economy will employ two-thirds of the world’s workers. This new economy even has a name: “System D.” In a new article (accompanying photoessay here ) for Foreign Policy , Robert Neuwirth explains: System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them debrouillards. To say a man is a debrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. Read the entire post here, or more Freakonomics content below: – Read more from Freakonomics here : – How Far Along Are We Towards Reducing Healthcare Spending? – The Pricing Strategy Of Omelets

Read the full article →

Greek Prime Minister Survives Critical Confidence Vote

November 5, 2011

ATHENS, Greece — Greek Prime Minister George Papandreou survived a confidence vote early Saturday, calming a vicious revolt in his Socialist party with an emotional pledge to step aside if necessary and seek a cross-party government lasting four months to safeguard a new European debt agreement. Papandreou won the critical parliamentary confidence motion 153-145 after a week of drama in Athens that horrified Greece’s European partners, spooked global markets and overshadowed the Group of 20 summit in the French resort of Cannes. The threat of a Greek default or exit from the common euro currency has worsened the continent’s debt crisis, which is already struggling under bailouts for Greece, Ireland and Portugal. Finance Minister Evangelos Venizelos, who warned that the debt-ridden country still faced “mortal danger,” said the new government would last until the end of February. But conservative opposition leader Antonis Samaras demanded immediate elections. He did not say whether he would join coalition talks, due to be formally launched later Saturday when Papandreou meets the country’s president. “The masks have fallen,” Samaras said. “Mr. Papandreou has rejected our proposals in their entirety. The responsibility he bears is huge. The only solution is elections.” Midway through its four-year term, Papandreou’s government came under threat after his disastrous bid this week to hold a referendum on a major new European debt agreement. The idea was swiftly scrapped Thursday after an angry response from markets and European leaders who said any popular vote in Greece would determine whether the country would keep its cherished euro membership. They also vowed to withhold a critical euro8 billion installment of loans from an existing bailout deal that Greece needs urgently to stave off an imminent and catastrophic default. Papandreou’s shock referendum gamble, and the hostile international response, horrified many of his own party stalwarts. It prompted an open rebellion with senior socialists saying they would only back the confidence vote if he pledged to seek a cross-party coalition with a mandate to secure the new debt deal and the disbursement next bailout loan installment. Struggling to face down the revolt, Papandreou insisted his only priority was to save the country. He insisted he was not concerned with retaining the premiership, but warned that elections now would have been “catastrophic,” jeopardizing Greece’s continued bailout funding, the new debt deal and the country’s euro membership. He sought the vote of confidence “to safeguard a steady course for the country – with no power vacuum, without being dragged to election,” he said. “We must proceed in an organized way. And regardless of developments, the country must be governed tomorrow without turbulence.” Several thousands supporters of Greece’s Communist Party protested outside parliament just ahead of Friday’s vote to demand elections, in a rally that ended peacefully. Government officials said they were not deterred by an initial hostile response by opposition parties to the coalition offer. “We will keep inviting (Samaras), and re-inviting him, again and again until we have a result,” Agriculture Minister Costas Skandalidis said. After seeing nearly two years of harsh austerity measures that spurred crippling strikes, violent demonstrations and street attacks against his lawmakers, Papandreou insisted the burden of painful reform could not be carried without help from opposition parties. “We, the Socialist party deputies, carried the cross of reform … But one group in Parliament is not enough,” he said. “This great task requires sincere and broad support.” Greece has been surviving since May 2010 on a first euro110 billion bailout. But its financial crisis was so severe that a second rescue was needed as the country remained locked out of international bond markets by sky-high interest rates and facing an unsustainable national debt increase. The new European deal, agreed on Oct. 27 after marathon negotiations, would give Greece an additional euro130 billion ($179 billion) in rescue loans and bank support. It would also see banks write off 50 percent of Greek debt, worth some euro100 billion ($138 billion). The goal is to reduce Greece’s debts to the point where the country is able to handle its finances without relying on constant bailouts. In return for bailout money, Greece was forced to embark on a punishing program of tax hikes and cuts in pensions and salaries that sent Papandreou’s popularity plummeting and his majority in parliament whittled down from a comfortable 10 seats to just two. ____ Associated Press writers Demetris Nellas and Nicholas Paphitis in Athens contributed to this report.

Read the full article →

Oakland Mayor Under Fire Over Occupy Protests

November 4, 2011

OAKLAND, Calif. — Oakland Mayor Jean Quan made history in January when she became the first Asian American woman to lead a major U.S. city. Less than a year later, the Democratic mayor is quickly losing support on all sides of the political spectrum, mostly over her handling of the city’s Occupy Wall Street protests that drew heavy scrutiny. Quan’s critics say she has struggled to formulate a coherent response to the Occupy encampment that has overtaken the plaza in front of Oakland City Hall for the past few weeks. Police raided the camp last week and fired tear gas during skirmishes with marchers before Quan allowed protesters to return a day later. “It was sort of remarkable that she was able to alienate both sides,” said University of San Francisco political scientist Corey Cook of Quan’s relationship with protesters and police. “She has no friends at this point.” The Occupy movement, which began six weeks ago in New York City to decry corporate influence in government and wealth inequality, has spread to cities large and small across the country and around the world. Demonstrators have spent weeks camped out in parks, wearing at the patience of city officials – even those like Quan who have expressed some level of support for their cause. Quan, 62, a former school board president and city council member, was surprisingly elected mayor last year, succeeding Ron Dellums. She defeated the heavily favored front-runner, former state Senate President Pro Tem Don Perata, in a narrow race thanks to the city’s ranked-choice voting system. Since then, Oakland’s city attorney and police chief have both quit over philosophical differences with Quan and dozens of residents have recently signed a petition seeking to recall her. But Dan Siegel, Quan’s unpaid legal adviser and longtime friend, says she’s doing an admirable job under the circumstances. Siegel, who teamed with Quan and her husband in the fight to create an ethnic studies program at the nearby University California, Berkeley in the 1960s, said the mayor hasn’t gotten enough credit for balancing a budget, working with local unions seeking some concessions and hiring a reputable new city administrator. “These are not ordinary times,” Siegel said. “It’s difficult, but that’s what she signed up for.” Quan told reporters last week that being mayor definitely has been challenging. “This is a pretty complex job, so I have to take everybody into account,” Quan said. Quan said she and the city support the Occupy Oakland movement and its planned general strike Wednesday, when protesters plan several large gatherings through downtown, culminating in an early evening march to the Port of Oakland. City offices are to remain open Wednesday, but City Administrator Deanna Santana said workers can use vacation or other paid time off to participate in the strike. Quan said she hoped Wednesday’s strike would be peaceful and that she was working with police to ensure the protesters’ issues are “front and center.” “The pro-99 percent activists – whose cause I support – will have the freedom to get their message across without the conflict that marred last week’s events,” Quan said in a statement Tuesday. “Although getting the balance right is never an easy task, in Oakland we are committed to honoring free speech and protecting public safety.” Despite Quan’s vocal support for the Occupy movement, protesters heckled and booed her when she tried to speak to the group last week, sending her retreating into City Hall. “You need a true leader. This is all too much for her. It’s not her time,” said Ken Houston, an Oakland resident who owns a local construction business and has spent several nights at the Occupy encampment. The initial crackdown has led prominent liberals to call for her resignation, and last week a group of Oakland residents filed a petition seeking to recall Quan, saying she’s ignoring public safety as the city’s most pressing issue. Quan fired back Monday, saying that “the last thing we need is a divisive and expensive recall campaign. In 20 years of serving Oakland, my only agenda has been to work hard for our diverse city.” Yet, her stance on the Occupy Oakland protests has further strained her thin relationship with the city’s police force. Police are upset they were asked to clear the protesters’ encampment a week ago, only to have the camp return the next day. Last week’s raid, along with the tear gas-clouded standoff with marchers and other law enforcement actions related to the protest, cost Oakland $1 million, the police union said in an open letter to Quan on Tuesday. The letter also questioned why the city plans to beef up its police presence for Wednesday’s strike while giving other city workers leeway to participate. “Is it the City’s intention to have City employees on both sides of a skirmish line?” the letter asked. The latest salvo by police comes weeks after popular former Chief Anthony Batts resigned last month after just two years on the job. Batts cited frustration about not getting the resources needed to do his job. Joseph Haraburda, who heads the Oakland Chamber of Commerce and has been publicly critical of Quan over the city’s high crime rate, said Tuesday that her decision to allow protesters back into the plaza was a “grave error” that is hurting downtown stores, banks and restaurants. “It’s an intolerable situation,” Haraburda said. “There needs to be an end game. When will this end? As long as this continues, the impact on business is going to be a downward spiral.” ____ Associated Press writer Marcus Wohlsen in San Francisco contributed to this report.

Read the full article →

Report: Greek Prime Minister Agrees To Step Down

November 3, 2011

ATHENS/CANNES, France (Reuters) – Intense European pressure forced debt-stricken Greece to seek political consensus on a new bailout plan instead of holding a referendum after EU leaders raised the prospect of a Greek exit from the euro to preserve the single currency. Fast-moving events in Athens overshadowed the first day of a summit of the Group of 20 major economies on the French Riviera on Thursday, with anxious world leaders urging Europe to act to stop contagion from its sovereign debt crisis. Greek Prime Minister George Papandreou bowed to cabinet rebels and agreed to step down and make way for a negotiated coalition government if his Socialists back him in a confidence vote on Friday, government sources told Reuters. “He was told that he must leave calmly in order to save his (PASOK) party,” one source said on condition of anonymity. “He agreed to step down. It was very civilized, with no acrimony.” Papandreou, son and grandson of left-wing prime ministers, hinted he was ready to quit for the sake of national unity, telling parliament he was not wedded to his job. G20 leaders meeting in Cannes discussed increasing the International Monetary Fund’s resources and building a financial firewall to protect vulnerable euro zone economies Italy and Spain from a possible Greek default. Papandreou said his call this week for a referendum, which sparked panic on global financial markets and infuriated European partners, “was never a purpose in itself”, and he would be happy if the vote were not held. Papandreou told PASOK lawmakers he had agreed to talks with the center-right opposition on a transitional government to implement a new EU/IMF bailout program agreed last week, and pave the way for early elections. At a bruising meeting in Cannes on Wednesday night, French President Nicolas Sarkozy and German Chancellor Angela Merkel warned him that Athens would not receive a cent more in aid until it met its commitments to the euro zone. Greece was due to get a vital 8 billion euro installment this month and says it will run out of money in mid-December if it does not get the loan. Despite the turmoil in Athens and uncertainty over the euro zone, European stock markets and the euro rallied in volatile trading as the likelihood grew that Greece would not hold the highly risky referendum. The European Central Bank also provided a surprise boost by cutting interest rates by 25 points to 1.25 percent and saying its policy of buying euro zone government bonds would continue for now with limited scope to support its monetary policy. The leaders of China, Russia and the United States pressed the Europeans to move more swiftly to contain the debt crisis, with Washington urging Germany to relent and let the ECB play a greater role in financial firefighting, G20 sources said. “Europe should aid itself. The European Union has everything for that today — the political authority, the financial resources and the backing of many countries,” Russian President Dmitry Medvedev said. Canadian Prime Minister Stephen Harper said the leaders had discussed contingency plans if Greece were to leave the euro zone, “but my expectation is that cooler heads will prevail and the package will be accepted (by Greece)”. ITALY NEXT Italy was next in the euro zone firing line, facing fierce pressure to make good on long delayed economic reforms. European G20 leaders along with U.S. President Barack Obama, IMF Managing Director Christine Lagarde and new ECB President Mario Draghi met on the sidelines to press Italian Prime Minister Silvio Berlusconi for a timetable for key labor market, pension and privatization measures, EU sources said. Berlusconi failed to win agreement from his divided center-right cabinet for the reforms just before flying to Cannes. A draft plan agreed with the G20 on Thursday includes a commitment by Italy to get its budget deficit “near balance” by 2013 and to rapidly reduce its debt-to-GDP ratio, sources told Reuters. That is less ambitious than Italy’s promise only last month to balance its budget in 2013. EU leaders are concerned that if Italy cannot get its finances in order, the economy — the eurozone’s third largest — could go the way of Greece, Ireland and Portugal in needing a bailout from the EU. GREECE REVOLT In Athens, Finance Minister Evangelos Venizelos led the revolt against Papandreou, saying Greece’s euro membership was a historic achievement and “cannot depend on a referendum”. Dissident PASOK lawmakers called for a temporary national unity government, which some suggested could be led by former ECB vice-president Lucas Papademos. Signaling for the first time a will to compromise, opposition leader Antonis Samaras called for a transitional government to lead Greece to early elections within weeks and said parliament should first ratify last week’s 130 billion euro ($178 billion) bailout deal. European Union leaders have long called for national unity in support of painful austerity measures required to cut the country’s crippling debt, expected to reach 160 percent of gross domestic product this year. Sarkozy told a news conference the tough message delivered by France and Germany to Greece’s political class was starting to bear fruit. “Things are progressing,” he said, welcoming Samaras’ support for the bailout plan. Euro area leaders talked openly of a possible Greek exit from the 17-nation currency area, seeking to maximize pressure on Athens and preserve the euro in case of a “no” vote. Merkel repeated that the stability of the euro had priority for Germany over Greece’s euro membership, touching a popular nerve at home. Germany’s best selling Bild newspaper railed against Greece and demanded it be ejected from the euro. A telephone poll found 86 percent of Germans want Greece out of the currency. The chairman of euro zone finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, said policymakers were working on possible scenarios for a Greek exit. The specter of a possible hard Greek default and euro exit hung over the G20 summit, highlighting Europe’s frailty and divisions just when Sarkozy had hoped to showcase his leadership of the world’s major economies. The summit had been meant to focus on reforms of the global monetary system and steps to rein in speculative capital flows and regulate commodities markets, but the shockwaves from Greece upended the talks. Obama said Europe had taken some important steps toward a comprehensive solution to its debt crisis but now needed to flesh out and implement the plan quickly. A disorderly Greek default would reverberate across the euro zone, engulfing big economies like Italy and Spain, and potentially plunging the global economy into a recession. CREDIT LINES? Euro zone finance ministers are working to accelerate implementation of an anti-crisis package agreed on October 27. That plan, which includes debt relief for Greece, a recapitalization of European banks and a leveraging of the bloc’s rescue fund, was meant to stem the two-year old crisis before Papandreou’s referendum call cast the bloc into turmoil. Officials said the meeting focused on speeding up the creation of a firewall to protect other vulnerable euro zone states from the fallout from Greece. The risk premium on Italian bonds over safe-haven German Bunds has hit euro-lifetime highs this week, despite European Central Bank buying of its bonds. Spain had to pay its highest yield since 2008 at a bond auction on Thursday. The G20 is considering an IMF proposal to create a new short-term line of credit to help countries that are facing economic shocks beyond their control, a G20 official familiar with the talks said. British finance minister George Osborne said leaders discussed increasing the global lender’s resources, which China strongly backed, and he had heard no dissenting voices. (Additional reporting by Lefteris Papadimas in Athens, David Ljungren, Abhijit Neogy, Giselda Vagnoni, Catherine Bremer, Gernot Heller, Daniel Flynn, Luke Baker, Gui Qing Koh and Alexei Anischuk in Cannes; Writing by Paul Taylor; Editing by Janet McBride) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

Restaurant Near Occupy Wall Street Lays Off 21 Employees

November 2, 2011

Steel police barricades near the Occupy Wall Street protests in New York’s Zuccotti Park are hurting some nearby businesses — and have led at least one restaurant owner to lay off employees . Marc Epstein, owner of Milk Street Cafe, said the metal barriers are reducing foot-traffic and forced him to lay off 21 of his 120 workers last week amidst plummeting sales . The restaurant’s troubles have not been uncommon . Several small businesses in the vicinity of New York’s protests and near similar gatherings in city centers across the country have reported that they are feeling the effects of the Occupy movement, as the protests prompt local police to erect barriers and take security measures that may be deterring customers . “The barricades have created a siege mentality down here that is bad for business,” said Epstein, whose cafe is located across the street from where protesters first started camping out six weeks ago. Since then, Epstein said he has seen his restaurant’s sales plummet by more than 30 percent, as the metal barriers police use to cordon off protesters block easy access to the cafe’s front door. His repeated calls to police to remove the blockades have gone unanswered. Paul Browne, a spokesman for the New York Police Department, did not immediately respond to e-mails requesting comment. “The police concerns about safety are legitimate,” Epstein said. “I just wish that, in their desire to maintain the peaceful environment, we not be the sacrificial lamb.”

Read the full article →

WATCH: ‘Oil Zombies’ Fight Keystone XL Pipeline

October 31, 2011

On Halloween night, protesters are assembling in Austin, Texas to demonstrate against the Keystone XL pipeline … and have a little holiday fun while they’re at it. KVUE news reports the protesters, who have been dubbed “oil zombies” will take to the streets around Austin City Hall. Their protest is focused on the proposed Keystone XL Pipeline, which would stretch from Canada to Texas and deliver up to 700,00 barrels of oil daily. Over the weekend, two dozen other ” zombies” in Dimock Township , Pennsylvania protested natural gas drilling and the recent decision to let a natural gas company “stop supplying fresh bottled and bulk water to township residents whose well water has been tainted with methane,” according to The Scranton Times Tribune . The Obama administration is expected to make a final decision on the pipeline’s approval by the end of this year. Last week, Obama announced that his government had not yet reached their final decision. The pipeline supporters say that it will lessen U.S. dependence on foreign oil and create jobs. Opponents counter that the oil that the pipeline will pump is more polluting than other sources, and a leak in the pipeline could cause environmental problems for an important Midwestern water source. Thousands of protesters have signed up to join Tar Sands Action for another pipeline protest at the White House on November 6th. WATCH:

Read the full article →

Qantas Grounds Entire Fleet

October 29, 2011

CANBERRA, Australia — Qantas Airways grounded its global fleet Saturday, suddenly locking out striking workers after weeks of disruptions an executive said could close down the world’s 10th largest airline piece by piece. Australia’s government called an emergency arbitration hearing that lasted nearly two hours before the judges adjourned it to issue a decision later Saturday night. At least 60 Qantas flights were in the air and continued to their destinations, and at least one taxiing flight stopped on the runway, a flier said. Among the stranded passengers are the 17 world leaders attending a Commonwealth summit in the western city of Perth. When the grounding was announced, 36 international and 28 domestic Australian flights were in the air, said a Qantas spokeswoman, who declined to be named citing company policy. She could not confirm an Australian Broadcasting Corp. television report that 13,305 passengers were booked to fly Qantas international flights within 24 hours of the grounding. Bookings already had collapsed after unions warned travelers to book with other airlines through the busy Christmas-New Year period. Booked passengers were being rescheduled at Qantas’ expense, chief executive Alan Joyce said. He told a news conference in Sydney the unions’ actions have caused a crisis for Qantas. “They are trashing our strategy and our brand,” Joyce said. “They are deliberately destabilizing the company and there is no end in sight.” Union leaders criticized the action as extreme. Qantas is the world’s 10th largest airline and among the most profitable, but its unions have been striking and rejecting overtime out of worry a restructuring plan would be a means to move some of Qantas’ 35,000 jobs overseas. The grounding of the largest of Australia’s four national domestic airlines will take a major economic toll and could disrupt the national Parliament, due to resume in Canberra on Tuesday after a two-week recess. Qantas’ budget subsidiary Jetstar continues to fly. Prime Minister Julia Gillard said her government would help the Commonwealth leaders fly home after 17 were due to fly out of Perth on Qantas planes over the next couple of days. “They took it in good spirits when I briefed them about it,” Gillard told reporters. British tourist Chris Crulley, 25, said the pilot on his Qantas flight informed passengers while taxiing down a Sydney runway that he had to return to the terminal “to take an important phone call.” The flight was then grounded. “We’re all set for the flight and settled in and the next thing – I’m stunned. We’re getting back off the plane,” the firefighter told The Associated Press from Sydney Airport by phone. Crulley was happy to be heading home to Newcastle after a five-week vacation when his flight was interrupted. “I’ve got to get back to the other side of the world by Wednesday for work. It’s a nightmare,” he added. Qantas offered him up to 350 Australian dollars ($375) a day for food and accommodation, but Crulley expected to struggle to find a hotel at short notice in Sydney on a Saturday night. The government had called an emergency arbitration court hearing on Saturday night to rule on the strike action and the airline’s response. Prime Minister Julia Gillard said her center-left government, which is affiliated with the trade union movement, had “taken a rare decision” to call an emergency arbitration court hearing on Saturday night to terminate the strike action. “I believe it is warranted in the circumstances we now face with Qantas … circumstances with this industrial dispute that could have implications for our national economy,” Gillard told reporters. The tribunal’s three judges adjourned the hearing after almost two hours and were deliver their decision sometime later Saturday. Transport Minister Anthony Albanese described the grounding as “disappointing” and “extraordinary.” Albanese was angry that Qantas gave him only three hours’ notice. All 108 aircraft in as many as 22 countries will be grounded until unions representing pilots, mechanics, baggage handlers and caterers reach agreements with Qantas over pay and conditions, Joyce said. “We are locking out until the unions withdraw their extreme claim and reach agreement with us,” Joyce said, referring shutting staff out of their work stations. “This is a crisis for Qantas. If the action continues as the unions have promised, we will have no choice but to close down Qantas part by part,” he added. Staff will not be paid starting Monday, and Joyce estimated the grounding will cost the airline $20 million a day. It already had reduced and rescheduled flights for weeks. Richard Woodward, vice president of the pilot’s union, the Australian and International Pilots Association, accused Qantas of “holding a knife to the nation’s throat” and said Joyce had “gone mad.” Steve Purvinas, federal secretary of the mechanics’ union, Australian Licensed Aircraft Engineers Association, described the grounding as “an extreme measure.” The recent strike action has most severely affected Qantas domestic flights. In mid-October, Qantas grounded five jets and reduced domestic flights by almost 100 flights a week because aircraft mechanics had reduced the hours they were prepared to work. Qantas infuriated unions in August when it said it would improve its loss-making overseas business by creating an Asia-based airline with its own name and brand. The five-year restructure plan will cost 1,000 jobs. Qantas announced in August that it had more than doubled annual profit to AU$250 million, but warned the business environment was too challenging to forecast earnings for the current fiscal year.

Read the full article →

European Official: EU Banks Need To Raise $140 Billion

October 22, 2011

BRUSSELS — EU finance ministers neared agreement Saturday on forcing banks to raise just over euro100 billion ($140 billion) to ensure they have enough cushion to weather further losses on their Greek bonds as well as market turmoil, a European official said. In order to help Athens dig out of its debts – and hopefully keep a cap on the amount of money they have to loan Greece – the 17 countries that use the euro agreed Friday to ask banks to take bigger writedowns on Greek bonds. A new report suggests the value of Greek bonds might need to be slashed as much as 60 percent. Taming Greece’s debts is an important part of the euro debt crisis puzzle, but it could make banks across the continent – not just in the eurozone – more vulnerable at a time when they’re already facing declining stock prices and finding it difficult to get regular loans for their day-to-day operations. So when the eurozone finance ministers decided to reopen negotiations on Greek debt with the banks, the EU had to force its banks to reinforce their rainy-day funds. Strengthening banks and slashing Greece’s debts are critical to solving Europe’s crisis, which is now threatening to engulf larger economies like Italy and Spain and is blamed for dampening growth across Europe and even the world. “The crisis in the eurozone is doing real damage to many of the European economies, including Britain,” George Osborne, Britain’s chancellor of the exchequer, said as he headed into Saturday’s meeting. “We have had enough of short-term measures, sticking plasters that get us through the next few weeks.” The European official said EU leaders meeting Sunday should sign off on forcing the continent’s biggest banks to raise just over euro100 billion in capital. The official spoke on condition of anonymity because the discussions between ministers were still ongoing. The figure is likely to disappoint some analysts. A report by the International Monetary Fund has called for up to euro200 billion ($280 billion) to be poured into banks. The new rules would force systemically important banks to raise their core capital ratios to 9 percent, compared with just 5 percent to 6 percent they needed to pass EU stress tests this summer. The ratio measures the amount of capital banks hold compared to their risky assets. Greece, of course, has it far worse: The country is struggling through a third year of recession and record unemployment, which reached 16.5 percent in July. Deep anger is building against the Socialist government’s repeated rounds of new austerity measures. A two-day general strike against the new cuts and taxes shut down much of the country this week and led to violent protests on the streets of Athens. Pressure to contain the Greek crisis ramped up Friday after a new report from the country’s debt inspectors – the European Commission, the European Central Bank and the IMF – showed that its economic situation had deteriorated dramatically even since the summer. If banks don’t take bigger losses, the report said, Greece’s debt would peak at a massive 186 percent of economic output in 2013 and only decline to 152 percent by the end of 2020. That would prevent Greece from raising money on the markets until 2021 and require the eurozone and the IMF to fund an extra euro252 billion ($350 billion) in new loans to Greece through 2020, according to the report, which was marked confidential but was seen by The Associated Press. Those funds would be in addition to Greece’s first bailout of euro110 billion ($152 billion), which has been keeping the country afloat since May of last year, and another euro109 billion ($150 billion) rescue agreed to in July. The report said that Greece’s debts would have to be cut by 60 percent if the eurozone wants to avoid lending it more money. It did not make policy recommendations, and the European Central Bank opposes cutting Greece’s debts further. But finance ministers are clearly paying close attention to the experts’ document. Austrian Finance Minister Maria Fekter told journalists Saturday that the eurozone’s chief negotiator, Vittorio Grilli, had been asked to restart negotiations with banks. That means the July deal, under which banks would have taken writedowns on their Greek bond holdings of about 21 percent, is definitively off the table. Despite that significant progress, agreement on arguably the most important measure has remained elusive to eurozone leaders: boosting the firepower of the currency union’s euro440 billion ($600 billion) bailout fund to keep the crisis from spreading. Increasing the effectiveness of the fund – called the European Financial Stability Facility – is meant to help prevent larger economies like Italy and Spain from being unable to afford to borrow money from markets. That’s exactly what happened to Greece, Portugal and Ireland and why those three EU countries needed bailouts. Germany and France still disagree over how to do that and failed to make much progress on that front Friday night. German Chancellor Angela Merkel and French President Nicolas Sarkozy are meeting Saturday evening in the hopes of moving toward a deal. The Greek crisis and its threat of contagion have led to calls for more robust intervention when it becomes clear that an EU country is in financial trouble. German Foreign Minister Guido Westerwelle said Saturday that the EU along with the IMF should be able to directly intervene in the budgets of member states if they are receiving financial aid but failing to meet fiscal targets. But not all EU nations share his view. The foreign ministers of Luxembourg and Finland cautioned that changing the EU treaty is too big a task to tackle now and the bloc should try instead to strengthen budget rules through existing channels. Significant changes to the EU treaty would require national referendums in some countries, and winning approval for the current treaty from 27 nations took 10 years. ___ Elena Becatoros contributed to this report from Brussels.

Read the full article →

Ismael Hossein-zadeh: What Quantitative Easing Really Means

October 21, 2011

Stripped from its fancy (and mystifying) jargon, quantitative easing (QE) simply means increasing the quantity of money supply, or easing credit conditions — in the hope of stimulating a stagnant economy. This is usually done by having central banks inject a predetermined quantity of money into the coffers of commercial banks in return for the purchase of their financial assets, which consist largely of government bonds. Although it is typically done electronically, or on paper, its practical effect is the same as printing money. This is supposed to be an expansionary monetary policy designed to promote economic recovery. The rationale behind the policy is that the addition of new funds to the capital base of the commercial banks (at, or near, zero interest rates) will enable them to, in turn, extend new credit to businesses and/or manufacturers at reasonably low rates so that they would, then, be encouraged to borrow, to expand, to hire and, therefore, create growth and prosperity. While under certain circumstances (when money supply or capital markets are tight, interest rates are too high and effective demand or purchasing power is strong) this may work, under the current market conditions (where there is no shortage of capital, low interest rates or the cost of borrowing is already low, and effective demand is very weak) it is bound to fail — as it has actually failed miserably. Borrowing and investing in the production of goods and manufactures is weak not because there is a shortage of investible funds (corporations are sitting on more than $2 trillion in cash but not hiring) or because the cost of borrowing is too high, as is implicitly assumed by the QE gurus, but because the macro-level purchasing power is too weak, and the uncertain market conditions do not warrant investment and expansion. Furthermore, corporations prefer to produce not at home but where the labor is cheapest globally. Likewise, the reluctance on the part of banks to extend credit to manufacturers is not because they lack capital, but because they find it more profitable to invest in speculation, that is, in buying and selling of assets and/or securities such as bonds, stocks, commodities, real estate, currencies, and the like — destabilizing activities that tend to create asset price bubbles, inevitably followed by bursts. Parasites discovered long time ago that it is easier to suck the existing blood out of the body of living organisms than producing it from scratch. Karl Marx used an even better metaphor to characterize parasitic finance capital, “The complete objectification, inversion and derangement of capital as interest-bearing capital…It appears as a Moloch demanding the whole world as a sacrifice belonging to it of right.” This explains why instead of increasing industrial production and raising employment the $1.2 trillion dollars of money that the Federal Reserve Bank has pumped into the coffers of commercial banks through two rounds of QEs has simply resulted in further financialization of the economy; which goes to explain the significant bubbling of some asset prices of the past few years, especially the considerable rise in certain share prices as well as the drastic rise in the price of a number of important commodities such as rice, wheat, and oil. By the same token, it also explains why the QE policy has further exacerbated income and wealth inequality, both in Europe and the United States, as it has helped only the financial elite without any help to the public. “The evidence suggests that QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it,” reports Dhaval Joshi of BCA Research. Joshi further points out that real wages — adjusted for inflation — have fallen in both the U.S. and UK, where QE has been used to promote growth. “The shocking thing is, two years into an ostensible recovery, [UK] workers are actually earning less than at the depth of the recession. Real wages and salaries have fallen by £4 billion. Profits are up by £11 billion. The spoils of the recovery have been shared in the most unequal of ways.” In Germany, meanwhile, where there has been no quantitative easing, real wages have risen. It is not unreasonable, therefore, to conclude that the financial oligarchy is using QE essentially as a legal, policy tool to further enrich itself at the expense of everybody else. Not only were the Wall Street gamblers able to bail themselves out by means of $16 trillion of taxpayers’ dollars, but now they are also showering themselves with additional trillions of QE dollars to grow even richer and bigger. Let us assume for a moment that, as the Federal Reserve and the government claim, QE is honestly designed to be an expansionary monetary policy intended to stimulate the economy. If so, why is then the government at the same time pursuing a fiscal policy that is contra-actionary, that is, moving in the opposite direction of the monetary policy by cutting social spending at all levels of the public sector? The answer is that while from the viewpoint of national or public interests the two policies contradict each other, they are quite consistent from the viewpoint of Wall Street gamblers; both the supposedly expansionary monetary policy and the brutally austere contra-actionary fiscal policy serve the nefarious interests of the financial aristocracy. It is hard to believe that economic policy makers do not see the obvious: that their monetary and fiscal policies contradict each other. But, then, it is perhaps not so much a matter of economic know-how or policy expertise as it is of wicked preferences and warped loyalties to the powerful special interests to be served. Ismael Hossein-zadeh is Professor Emeritus of Economics, Drake University, Des Moines, Iowa. He is the author of The Political Economy of U.S. Militarism (Palgrave-Macmillan 2007) and Soviet Non-capitalist Development: The Case of Nasser’s Egypt (Praeger Publishers 1989).

Read the full article →

Messages From Occupy Wall Street

October 15, 2011

NEW YORK — The Occupy Wall Street protests are hitting a nerve. A dearth of jobs, overwhelming student loans and soaring health-care costs are just three major issues protesters have targeted. And regardless of politics, economic data suggests they’re not alone in their frustrations. It may be why the protests have spread to other cities – including Boston, Cincinnati, Seattle and Washington, D.C. – after taking root in downtown New York nearly a month ago. Take for example the unemployment rate, which has been stuck near 9 percent since the recession officially ended more than two years ago. When counting those who settle for part-time work or have quit looking, that rate rises to about 16.5 percent. A crippled labor market also shifts bargaining power to employers, giving workers less leverage to seek raises. That could help explain why pay was nearly 2 percent less in August than it was a year earlier when adjusted for inflation. Student loans are another common rallying point for protesters – as expressed in one sign that read “Want demands? How about student loan bailouts?” The struggle to keep up with payments is clear; about 320,000 borrowers who entered repayment in 2009 defaulted on their student loans by the end of 2010, according to the Institute for College Access & Success. That’s up about 33 percent from the previous year. Meanwhile, the cost of annual health insurance premiums for family coverage rose 9 percent this year and surpassed $15,000 for the first time, according to the Kaiser Family Foundation and the Health Research and Educational Trust. Some don’t have to worry about the uptick; an estimated 16 percent of the population does not have health insurance. It’s that economic backdrop that has driven a diversity of protesters to the streets While a few hundred have been camping out in Manhattan’s Zuccotti Park, many more join in for a few hours or a day to add their voices. Here’s a look at some of the protesters who ventured by in the past week, and the financial issues they’re dealing with: ____ John Smith, 31, of Brooklyn, N.Y., works part time at Trader Joe’s because he hasn’t been able to find work in his field for over a year, despite having a master’s degree. He has about $45,000 in student loan debt. His girlfriend, Meropi Peponides, 27, a graduate student at Columbia University, will have about $50,000 by the time she graduates. “I don’t know in the end what exactly this will achieve, if anything. But if it makes people wake up just a little bit, it’s worth it,” Peponides said. “The potential is huge. That’s why I’m here. I felt the potential somehow.” Smith said he has sent out about 200 resumes in his search. He’s looking mainly for work with non-profit organizations. “The jobs that I’ve been applying for are all entry level jobs in my career field. I don’t think I’m shooting for the stars trying to get those jobs.” Smith said, noting that five years ago, before grad school, he was able to get work at that level. He was carrying a sign that said, “I am the 99 percent,” a slogan that resonated with him. “It’s true. I am one of the many people that are having a lot of trouble finding ways to make it through things right now.” ___ Tracy Blevins, 41-year-old Manhattan resident, has a doctorate in biomedical science but lost her job as an adjunct professor at Touro College this spring. She’s since been getting by on odd jobs; most recently, she acted as a cross-country driver for $2,000. “I’m earning money off a license I got when I was 16, and still paying off the loans I had to take out to get my degree,” she said. Even after nine years of paying down her loans, Blevins said she owes $10,000. She’s current on payments now, but said the loans have crippled her credit score and even prevented her from getting work in the past. “I have paid and paid and paid and I still owe $10,000. It’s the interest that keeps me in debt,” she said. ____ Steve and Barbara Diamond traveled nearly 100 miles to take part in the protest. They were motivated mainly by what they see as a disappearance of the middle class; and a connection between the economic problems of recent years and the amount of influence money has on politics. He held a sign criticizing the 2010 Supreme Court ruling known as Citizens United, which overturned a previous ban on corporate spending in federal elections. “Our government is being bought by wealthy people and corporations,” said Steve Diamond, a physician. “Unless you get the money out of the elections, you’ll end up with an oligarchy in this country.” “My father used to say when he came to here from Europe that this was the `Golden Land,’” he said. But he’s not telling that to his own children: “This is what’s happened inside two generations.” ___ Joe Foley, a 48-year-old freelance cinematographer living in Manhattan, finished paying off his $45,000 in student loans just five years ago. His girlfriend has $120,000 in student loans. Foley said work has been fairly steady in recent years, but he worries that he doesn’t have any retirement savings or health insurance. He rents an inexpensive apartment and doesn’t carry a big credit card balance, but realizes he’s one broken leg away from being in serious debt. “I was really hoping there was going to be a public option,” he said of the federal health care reforms. “It was pretty disappointing that it didn’t happen.” For now, he considers himself lucky that he’s never had any health issues. His approach has been to “drink lots of water and miso soup and do yoga.” ___ Ben Bear, 56, a San Francisco resident visiting his daughter in New York, works at a food bank and feels his job is secure. “Unfortunately I’m doing well because I’m in a growth industry,” Bear said. “The demand for food keeps going up. Everyone’s got this image of who accesses a food bank as a homeless person. But it’s families and the working poor.” ___ Susan Knauss, 55, from upstate Livingston, N.Y., worked in the telecommunications industry for the past 25 years. But she was laid off a few weeks ago from the New York State Department of Transportation. She plans to get by on unemployment checks for the time being. “But in two weeks, I won’t have health insurance,” she said. She’s also worried about her retirement savings. Even after making maximum contributions for most of her career, she worries that she hasn’t saved enough and that the volatile market could eat away at the value of her 401(k). “Where can you put your money where it doesn’t go away?” ____ Maureen McMahon, 62, of Manhattan, a former school teacher, works part time by choice at a museum. She pointed to problems like the high number of uninsured as among the concerns that brought her out to protest; noting that the disparity in health care reflects that the economic system doesn’t treat everyone equally. “I’m an investor, I have stock,” she said with some irony, as she held a sign that said “Tax Wall Street.” “I believe that corporations can be very useful and very compassionate,” she said, adding that unfortunately, that kind of corporate responsibility seems to have diminished lately. ____ Katy Ryan, 35, of Jersey City, N.J., made a good living for years as a makeup artist, but since the downturn has struggled to make ends meet. She’s getting fewer clients and having to cut her rates. These days she even has to take some work as a bartender so she and her 8-year-old daughter can get by. “I didn’t have to do that for years.” Her main concern is that the widening gulf between the rich and poor, and the notion that a better life is slipping out of reach for those who aren’t wealthy. She noted that her mother was a long time member of the United Auto Workers, and that she saw her benefits and wages chiseled away over the years.

Read the full article →

Why Do We Have Such A Shortage Of Drugs?

October 14, 2011

Two years into an escalating shortage of life-saving cancer drugs, regulators and lawmakers are still unable to identify why it is happening, let alone how to solve the problem. Hospitals and doctors across the country are postponing care or using second-best or more costly alternatives. The shortages have also forced delays in clinical trials for cancer, which use these drugs as a baseline to test the effectiveness of novel therapies. While work-arounds can help for a while, what is perhaps most worrying is that the officials in charge of addressing the problem are no closer to identifying the underlying causes. In the balance are hundreds of thousands of patients, and potentially millions, who may not get the full care they need. “Anybody who is sure they know the answer to this question is probably kidding themselves,” said Peter Lurie, a senior adviser in the Food and Drug Administration (FDA) Office of the Commissioner, who works on public health issues, including drug shortages. “There appear to be multiple factors that are playing in it and it’s very difficult to identify which one is most important,” Lurie told Reuters. Drug shortages have been around for years in the United States, but they were previously intermittent and largely temporary, pharmacists and doctors say. They have shot up in a very short time, with a record of over 200 scarce medicines this year alone, up from 56 in 2006, according to FDA data. Health providers say the companies who make these drugs, long sold in generic form, have a diminishing interest in ensuring a strong supply. After a wave of consolidation, only five to seven companies produce 80 percent of these medicines, and stricter reimbursement policies have cut into the profits. But a group representing companies such as Watson Pharmaceuticals Inc and Sandoz, a division of Novartis AG, blames the FDA for introducing unnecessarily strict inspections and shutting down manufacturing facilities for minor issues. The finger pointing and lack of answers is leaving health providers and patients exasperated. “Something has to be done soon in order to try to alleviate this problem,” said Dr. Michael Link, the current president of the American Society of Clinical Oncology (ASCO), a non-profit group of cancer doctors and other providers.. “Right now we’re already seeing patient care suffering… I think you’re seeing a groundswell of concern.” In the meantime, distributors in the so-called “gray market” are exploiting the situation to peddle the drugs at hundred-fold mark-ups, according to lawmakers investigating the situation. Senator Chuck Schumer, a Democrat from New York, has called for an investigation by the Federal Trade Commission. And last week, Representative Elijah Cummings, the top Democrat in the House Committee on Oversight and Government Reform, asked five companies in the gray market to provide information on their sales and how they obtain the drugs. PATIENTS IN THE BALANCE In a July survey of 820 hospitals by the American Hospital Association, more than four-fifths of hospitals said they had to delay treatment and more than half could not provide patients with the recommended drug for their disease. Sixty-nine percent of patients had to settle for a less effective drug. The non-profit Institute for Safe Medication Practices (ISMP) has reports of at least 15 patients dying from drug shortages since last September. In the most high-profile case, nine patients died from contaminated IV fluid in Alabama this past March, when the typical supply was unavailable. Of the 140,000 patients diagnosed with colorectal cancer each year, about 80,000 are expected to rely on typical treatments such as fluorouracil or leucovorin, both currently in short supply, said Nancy Roach, a board member at the patient group Fight Colorectal Cancer. The government is trying to create a better notification system for shortages, which could address some of the most immediate issues for patients. Senator Amy Klobuchar, a Democrat from Minnesota, along with Robert Casey, a Democrat from Pennsylvania, introduced a bill in February that would force drug companies to inform the FDA about looming shortages. The FDA said early notification helped it prevent 99 shortages so far this year. But the bill does little to prevent shortages in the long-term. “People aren’t in agreement on how to solve it in the long term, and not a lot of bills are going through Congress,” Klobuchar told Reuters. MARKET PERFECT STORM The FDA began tracking drug shortages closely in 1999. Over a decade later, they have only gotten worse. Sterile injectables such as the cancer drugs, make up the lion’s share and accounted for 132 out of 178 shortages in 2010. Most are generic and have been around for years, meaning profit margins are lower. The FDA can explain the immediate causes of the shortages — in 2010, over half of them came from product quality and “significant” manufacturing problems such as metal shavings found in vials or fungal contamination, said Sandra Kweder, deputy director of the FDA’s Office of New Drugs. But these reasons fail to address why these problems have gotten so much worse, officials and industry analysts said. Industry consolidation and lower inventory levels could exacerbate the problem, leaving less slack in the system to deal with shortages when they arise, the FDA said. The agency has also blamed an increasing number of production issues on older facilities that need to be renovated as manufacturers in the low-margin generic market avoid investments in maintenance. Makers of sterile injectables Teva, Hospira and Bedford Laboratories, part of privately-held Boehringer Ingelheim, have all had manufacturing issues in the past few years, shuttering production on multiple drug lines. The FDA also acknowledges some manufacturers may have less financial incentive to make older, cheaper generic drugs. In 2010, 11 percent of shortages were due to companies that stopped making a certain drug, usually for business reasons. Manufacturers are loathe to make a connection between the financial incentives and producing older medicines. Several, including Teva Pharmaceuticals and Hospira, say they are building new facilities as a back-up for future shortages. The industry lays part of the blame with the FDA. The Generic Pharmaceutical Association (GPhA) said the agency has become more focused on enforcement in the past three years, shutting down factories for smaller problems that would have been dealt with less drastically in the past. STALLED PROPOSALS Various proposals to address the long-term problem have stalled, not least because of the disagreement over the cause. They include creating a national stockpile for emergency injectables — just like for vaccines — or offering tax incentives for manufacturers of low-cost but life-saving products. But those are unlikely to gain favor as the U.S. government is scrambling to cut costs and reduce the national debt, lawmakers and industry players said. The International Monetary Fund and the U.S. Department of Health and Human Services are both investigating the issue, and a Government Accountability Office report is due to come out in November, according to a congressional staffer. In the meantime, doctors like Steven Abrams, at Texas Children’s Hospital in Houston, work to make sure newborn infants with intestinal damage have enough calcium and phosphates. These essential minerals – manufactured by APP Pharmaceuticals, a company in the Fresenius Kabi Group, and Hospira – have been in short supply since April, Dr. Abrams said, forcing him to ration treatment to those most in need. “Our task is to continue to advocate for long-term solutions,” he said. “And the second is to manage this problem day to day. That’s just what we have to do, … to make sure the babies get the medicine they need.” Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

Jared Dillian: The Tomb Is Sealed

October 14, 2011

Earlier last decade, Alan Greenspan initially opposed (and later supported) what would eventually become a sweeping tax cut. In case you forgot, the government was running a sizable surplus and the logic was that the surplus would be returned to the taxpayers. The government, after all, is generally not in the business of running a profit. Right-leaning people were pretty upset with Greenspan. If you’re ever going to cut taxes, that was the time to do it. Lots of people thought that Greenspan was going all moonbat in his advanced age. He took a not inconsiderable amount of heat from the right for his radical idea that surplus tax revenue should be used to pay down deficits. But Greenspan knew then what people today still do not understand: it’s not the absolute size of government that’s important, it’s whether it can finance itself. Today, unhappily, the United States spends more than half again as much as what it takes in. This is not uncommon in the developed world. Japan’s national debt is about twice the size of its entire economy, the worst in the world. The bond market has so far declined to impose any discipline in the G10 world (except Italy) which causes people to be exceedingly glib about the situation. Liberals generally think that the deficit is not a big deal; a fiction dreamed up by the right to deprive services to those in need, and conservatives are in the absurd position of advocating tax cuts amidst pornographic deficits to oppose any further growth of the state. The only people who really understand how grave the situation is are the financial people, and there are hundreds of protesters camped out on their doorstep. It is a big deal. Few people understand that to balance the budget, or even to bring down the deficits to the rate of growth would require cutting the size of government by at least half and/or nearly eliminating entitlements. It really is true. People like Glenn Beck (and others) were very early in this trade, which was actually unhelpful , because Beck’s other polarizing views did not help anyone to achieve a greater understanding of how serious the problem actually was. You can’t have unserious people have a serious discussion about debt. The reason why ridiculously large deficits are dangerous is not because we (or anyone else) would ever default. As we are finding out with Greece, it is hard to have a meaningful restructuring because too much of it sits on bank balance sheets. If a country goes bankrupt, so do the banks, and that means depression — unless you can find another way out. The other way out is to monetize the debt, which is to say that the central bank will print money to buy government bonds. The central bank finances the government, becoming the lender of last resort. Consequently, there is more money sloshing around the economy, which will lead, in time, to very high rates of inflation. I cannot think of one historical example of a country that monetized its debt and everything worked out peachy, with low inflation (Japan does not count — that story is not yet written). People have heard of Zimbabwe and Gideon Gono, but it remains an abstraction to most, because it is hard to believe that something like that could happen here. It can and it will. The laws of economics are not to be conned. In Europe, the authorities are currently trying to find a way to restructure Greece so that if it defaults, it will default gently. Who knows — they might be able to do it. But even if they can, that still leaves Portugal and Italy and Spain , which are far too large to restructure and which have zero chance of growing their way out of it. Imagine a fancy chess game, where, once checkmated, you can hit the eject button, and launch off the chess board to safety. That’s what debt monetization is, and it can be very attractive. There are protests in New York, which is unsurprising, because people are usually only against capitalism when capitalism fails to produce the desired results — you didn’t see any protests in 1999. If you see ants, it is likely there is a picnic nearby. But if you think this is bad, wait until you see how upset people get when there is inflation, which will hit poor people disproportionately. The whole debt ceiling argument was about something known as austerity, where we would make an honest attempt to balance the budget. It is too late for that. The tomb is sealed, and we don’t even realize it yet. Such a thing is not even possible, and it may not even be desirable. We are too far gone. The only option left for us is to aggressively monetize the debt, and hope that the inflation of the century never arrives, like it has every other time in history.

Read the full article →

Slovakia’s Government Falls After Losing Confidence Vote

October 11, 2011

BRATISLAVA, Oct 11 (Reuters) – Slovakia’s government lost a confidence vote called on a plan to bolster the euro zone’s EFSF rescue fund, but the package was expected to go through in a later re-vote because the outgoing prime minister planned to ask for help from the opposition. The result had been anticipated after a junior party in the coalition said it would abstain. All of the 16 other euro zone countries have already ratified the plan to give more powers to the European Financial Stability Facility (EFSF). Slovakia’s main opposition party, the leftist Smer, has said it would be willing to discuss supporting the EFSF deal after the government has fallen. Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

WATCH: Beck’s Dark, Gruesome Occupy Wall Street Warning

October 10, 2011

Glenn Beck made several gruesome predictions about where the Occupy Wall Street movement is headed. Speaking on his radio show Monday, Beck made his already-crystal-clear disdain for the protests, which have spread across the U.S., even more plain. He took a slightly surprising turn, though, in warning establishment Democrats like Nancy Pelosi (who has voiced her support for the movement ) as well as any rich backers of the protests not to trust anyone in Occupy Wall Street. “Nancy Pelosi, you really think these people are your friends?” Beck asked. “Are you that stupid? People around Nancy Pelosi, are you this stupid? Do you really think that you’re going to be able to somehow or another control these people?” Beck then made the first of his dark analogies. Saying that the only thing that could control the movement would be a forceful crushing from “the top,” he added, “It will be the Night of Long Knives. It will be a purging of this country.” This was a seeming reference to the political murders carried out by the Nazis in 1934 . Beck then turned to “capitalists,” and here his warning was even starker and more graphic: “Capitalists, if you think that you can play footsies with these people, you’re wrong. They will come for you and drag you into the streets and kill you…they’re Marxist radicals…these guys are worse than Robespierre from the French Revolution…they’ll kill everybody.” WATCH:

Read the full article →

Robert Reich: The Wall Street Occupiers and the Democratic Party

October 9, 2011

Will the Wall Street Occupiers morph into a movement that has as much impact on the Democratic Party as the Tea Party has had on the GOP? Maybe. But there are reasons for doubting it. Tea Partiers have been a mixed blessing for the GOP establishment — a source of new ground troops and energy but also a pain in the assets with regard to attracting independent voters. As Rick Perry and Mitt Romney square off, that pain will become more evident. So far the Wall Street Occupiers have helped the Democratic Party. Their inchoate demand that the rich pay their fair share is tailor-made for the Democrats’ new plan for a 5.6 percent tax on millionaires, as well as the President’s push to end the Bush tax cut for people with incomes over $250,000 and to limit deductions at the top. And the Occupiers give the President a potential campaign theme. “These days, a lot of folks who are doing the right thing aren’t rewarded and a lot of folks who aren’t doing the right thing are rewarded,” he said at his news conference this week, predicting that the frustration fueling the Occupiers will “express itself politically in 2012 and beyond until people feel like once again we’re getting back to some old-fashioned American values.” But if Occupy Wall Street coalesces into something like a real movement, the Democratic Party may have more difficulty digesting it than the GOP has had with the Tea Party. After all, a big share of both parties’ campaign funds comes from the Street and corporate board rooms. The Street and corporate America also have hordes of public-relations flacks and armies of lobbyists to do their bidding — not to mention the unfathomably deep pockets of the Koch Brothers and Dick Armey’s and Karl Rove’s SuperPACs. Even if the Occupiers have access to some union money, it’s hardly a match. Yet the real difficulty lies deeper. A little history is helpful here. In the early decades of the twentieth century, the Democratic Party had no trouble embracing economic populism. It charged the large industrial concentrations of the era — the trusts — with stifling the economy and poisoning democracy. In the 1912 campaign Woodrow Wilson promised to wage “a crusade against powers that have governed us … that have limited our development … that have determined our lives … that have set us in a straightjacket to so as they please.” The struggle to break up the trusts would be, in Wilson’s words, nothing less than a “second struggle for emancipation.” Wilson lived up to his words — signing into law the Clayton Antitrust Act (which not only strengthened antitrust laws but also exempted unions from their reach), establishing the Federal Trade Commission (to root out “unfair acts and practices in commerce”), and creating the first national income tax. Years later Franklin D. Roosevelt attacked corporate and financial power by giving workers the right to unionize, the 40-hour workweek, unemployment insurance, and Social Security. FDR also instituted a high marginal income tax on the wealthy. Not surprisingly, Wall Street and big business went on the attack. In the 1936 campaign, Roosevelt warned against the “economic royalists” who had impressed the whole of society into service. “The hours men and women worked, the wages they received, the conditions of their labor … these had passed beyond the control of the people, and were imposed by this new industrial dictatorship,” he warned. What was at stake, Roosevelt thundered, was nothing less than the “survival of democracy.” He told the American people that big business and finance were determined to unseat him. “Never before, in all our history, have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me, and I welcome their hatred!” By the 1960s, though, the Democratic Party had given up on populism. Gone from presidential campaigns were tales of greedy businessmen and unscrupulous financiers. This was partly because the economy had changed profoundly. Postwar prosperity grew the middle class and reduced the gap between rich and poor. By the mid-1950s, a third of all private-sector employees were unionized, and blue-collar workers got generous wage and benefit increases. By then Keynesianism had become a widely-accepted antidote to economic downturns — substituting the management of aggregate demand for class antagonism. Even Richard Nixon purportedly claimed “we’re all Keynesians now.” Who needed economic populism when fiscal and monetary policy could even out the business cycle, and the rewards of growth were so widely distributed? But there was another reason for the Democrats’ increasing unease with populism. The Vietnam War spawned an anti-establishment and anti-authoritarian New Left that distrusted government as much if not more than it distrusted Wall Street and big business. Richard Nixon’s electoral victory in 1968 was accompanied by a deep rift between liberal Democrats and the New Left, which continued for decades. Enter Ronald Reagan, master storyteller, who jumped into the populist breach. If Reagan didn’t invent right-wing populism in America he at least gave it full-throated voice. “Government is the problem, not the solution,” he intoned, over and over again. In Reagan’s view, Washington insiders and arrogant bureaucrats stifled the economy and hobbled individual achievement. The Democratic Party never regained its populist footing. To be sure, Bill Clinton won the presidency in 1992 promising to “fight for the forgotten middle class” against the forces of “greed,” but Clinton inherited such a huge budget deficit from Reagan and George H.W. Bush that he couldn’t put up much of a fight. And after losing his bid for universal health care, Clinton himself announced that the “era of big government” was over — and he proved it by ending welfare. Democrats have not been the ones to engage in class warfare. That was the distinct product of right-wing Republican populism. Anybody recall the Republican ad in the 2004 presidential election describing Democrats as a “tax-hiking, government spending, latte-drinking, sushi-eating, Volvo-driving, New York Times -reading, body-piercing, Hollywood-loving, left-wing freak Show?” Republicans repeatedly attacked John Kerry as a “Massachusetts liberal” who was part of the “Chardonnay-and-brie set.” George W. Bush mocked Kerry for finding a “new nuance” each day on Iraq — drawing out the word “nuance” to emphasize Kerry’s French cultural elitism. “In Texas, we don’t do nuance,” he said, to laughter and applause. House Republican leader Tom DeLay opened his campaign speeches by saying “Good morning or, as John Kerry would say, Bonjour.” The Tea Party has been quick to pick up the same class theme. At the Conservative Political Action Conference of 2010, Minnesota Governor Tom Pawlenty attacked “the elites” who believe Tea Partiers are “not as sophisticated because a lot of them didn’t go to Ivy League Schools” and “don’t hang out at … Chablis-drinking, Brie-eating parties in San Francisco.” After his son Rand Paul was elected for Kentucky’s Senate seat that May, Congressman Ron Paul explained that voters want to “get rid of the power people who run the show, the people who think they’re above everyone else.” Which brings us to the present day. Barack Obama is many things but he is as far from left-wing populism as any Democratic president in modern history. True, he once had the temerity to berate “fat cats” on Wall Street, but that remark was the exception — and subsequently caused him endless problems on the Street. To the contrary, Obama has been extraordinarily solicitous of Wall Street and big business — making Timothy Geithner Treasury Secretary and de facto ambassador from the Street; seeing to it that Bush’s Fed appointee, Ben Bernanke, got another term; and appointing GE Chair Jeffrey Immelt to head his jobs council. Most tellingly, it was President Obama’s unwillingness to place conditions on the bailout of Wall Street — not demanding, for example, that the banks reorganize the mortgages of distressed homeowners, and that they accept the resurrection of the Glass-Steagall Act, as conditions for getting hundreds of billions of taxpayer dollars — that contributed to the new populist insurrection. The Wall Street bailout fueled the Tea Party (at the Utah Republican convention that ousted incumbent Republican Senator Robert Bennett in 2010, the mob repeatedly shouted “TARP! TARP! TARP!”), and it surely fuels some of the current fulminations of Occupy Wall Street. This is not to say that the Occupiers can have no impact on the Democrats. Nothing good happens in Washington — regardless of how good our president or representatives may be – unless good people join together outside Washington to make it happen. Pressure from the left is critically important. But the modern Democratic Party is not likely to embrace left-wing populism the way the GOP has embraced — or, more accurately, been forced to embrace — right-wing populism. Just follow the money, and remember history. Robert Reich is the author of Aftershock: The Next Economy and America’s Future , now in bookstores. This post originally appeared at RobertReich.org .

Read the full article →

Seasoned Activists Critique Wall Street Protests

October 9, 2011

NEW YORK — To veterans of past social movements, the Occupy Wall Street protests that began in New York and spread nationwide have been a welcome response to corporate greed and the enfeebled economy. But whether the energy of protesters can be tapped to transform the political climate remains to be seen. “There’s a difference between an emotional outcry and a movement,” said Andrew Young, who worked alongside the Rev. Martin Luther King Jr. as a strategist during the civil rights movement and served as U.S. ambassador to the United Nations. “This is an emotional outcry. The difference is organization and articulation. The nearly four-week-old protest that began in a lower Manhattan park has taken on a semblance of organization and a coherent message has largely emerged: That “the 99 percent” who struggle daily as the economy shudders, employment stagnates and medical costs rise are suffering as the 1 percent who control the vast majority of the economy’s wealth continues to prosper. Labor unions and students joined the protest on Wednesday, swelling the ranks for a day into the thousands, and lending the occupation a surge of political clout and legitimacy. President Barack Obama said Thursday that the protesters were “giving voice to a more broad-based frustration about how our financial system works;” some Republicans have been seeking to cast Occupy Wall Street as class warfare. The growing cohesiveness and profile of the protest have caught the attention of public intellectuals and veterans of past social movements. “I think if the idea of the movement is to raise the discontent that a lot of people from different walks of life and different persuasions have on the economic inequity in this country – it’s been perfect,” said the Rev. Al Sharpton, who plans to broadcast his nationally syndicated radio show from the park on Monday and five days later lead a jobs march in Washington, D.C. He said he felt it was necessary to be there to talk about how blacks and Latinos are also buffeted by the economic difficulties. “I think it is more a movement to show dissatisfaction. I think that is effective and useful,” he said. The Rev. Jesse Jackson said the protest was a growing success. “There is a legitimacy to their demands for economic reconstruction,” he said, with the analysis of the problems in the economic system “dead on,” as he wrote in a commentary. He said the protest could become a powerful movement if “it remains disciplined, focused and nonviolent – and turns some of their pain into voting power.” History is littered with social movements that failed to emerge as political forces to create lasting change – including mass labor protests to end unemployment and to call attention to job injustices, said Immanuel Ness, a professor of political science at Brooklyn College and the editor of the “Encyclopedia of American Social Movements.” He compared it to the tea party movement, saying both were raising concerns about general anxieties over the economic system. “The messaging is directed at working people,” he said. “Both the tea party and Occupy Wall Street are arguing that something needs to change. The question is, What is the source of the problem?” In the late 1990s, a global movement to reject corporate-driven globalization took to the streets, most famously in the U.S. by shutting down the 1999 meeting of the World Trade Organization in Seattle. In spite of several actions aimed at summits by world institutions, the “movement of movements,” as it soon came to be known, faded away. Much like the Occupy Wall Street protests, one of the main criticisms was that it lacked a cohesive message. Todd Gitlin, an author and former president of the Students for a Democratic Society in the mid-1960s, attended Wednesday’s rally and said the emerging movement was different. The demands of the protesters were crystallizing around calls to tax the wealthy to address inequality, he said. “`We are the 99 percent’ is a clear message,” he said. “It is unfair and in fact disgusting that the American political economy is run for the benefit of a plutocracy. I don’t see how that can be misunderstood.” But he said the movement was still evolving and it remains to be seen whether it can evolve as an effective organization. “This is the new order of movements. They’re informal and ragged, and yet if they’re well-timed, they touch a nerve and get translated by actually existing political forces,” he said. U.S. Rep. Jim Clyburn of South Carolina, the third-highest ranking Democrat in the House, is convinced the movement will bring about political change. “I consider this movement really to be the most heartwarming thing I’ve seen since President Obama’s election,” he told The Associated Press in a phone interview Friday. “I hope nobody gets discouraged. I think the impact could be very significant on the psyche of the country as well as on the disposition of members of Congress.” He disagrees that it lacks a coherent message and said many of the people he marched with during the civil rights era likely wouldn’t have been able to put into words their reasons or frustrations, either. “They all knew something was wrong,” he said. “They knew that it just wasn’t right to have to get up out of your seat and give some white person your seat on a bus. They may not be able to explain to you exactly why I’m out here marching; they may not even be able to relate that lunch counter to that city bus or to a ride on the train or to walking down the sidewalk having to step off the sidewalk when approached by a white person, which was the order of the day.” Ambassador Young said that to be effective, the protests need a serious discussion component and that leadership needs to emerge. “I can understand people being frustrated with Wall Street, but this just needs to be more than people voicing their frustrations and a few leaders having their 15 minutes of fame,” he said. “It is important for those who have thought through their values and objections to somehow be heard.” Naomi Klein, whose writings helped shape the anti-neoliberal globalization movement that emerged in the late 1990s, made an appearance Thursday at Zuccotti Park, where she delivered a speech to the protesters. In a version of the talk posted on her website, she offered praise and a warning. “It is a fact of the information age that too many movements spring up like beautiful flowers but quickly die off,” she said. “It’s because they don’t have roots. And they don’t have long-term plans for how they are going to sustain themselves. So when storms come, they get washed away.” ___ Associated Press writers Errin Haines in Atlanta and Seanna Adcox in Columbia, S.C., contributed to this report.

Read the full article →

Occupy Wall Street: Egyptian Activist Goes ‘From Liberation Square To Washington Square’ (VIDEO)

October 8, 2011

Thousands of Occupy Wall Street supporters gathered in Washington Square Park on Saturday afternoon for a General Assembly intended to spread the movement’s message. After several introductory speakers, the crowd lit up when an Egyptian activist named Mohammed Ezzeldin explained what he saw was the connection between Occupy Wall Street and the protests against Hosni Mubarak. “I am coming from there — from the Arab Spring. From the Arab Spring to the fall of Wall Street,” Ezzeldin said, his voice echoed by the crowd of thousands. “From Liberation Square to Washington Square, to the fall of Wall Street and market domination, and capitalist domination.” His passionate speech, which even included a reference to Karl Marx, made a startling comparison between what happened in Egypt earlier this year and what is now happening in the United States. “Many things separate us,” he said. “National borders. Homeland insecurities. Armies, corporations and police. They have their laws. They have their debts. And we have our revolution. We are the 99 percent.” Ezzeldin, a 28-year-old self-described “leftist activist” who is currently living in Jackson Heights and studying at the City University of New York’s Graduate Center, told HuffPost he was camped out in Tahrir Square just a few months ago and is now spending days in Zuccotti Park. “There are some differences,” he said, but he believes “any success for the struggle in the United States is helpful for the rest of the world.” Ezzeldin argued that making the protests more confrontational and bringing in labor unions will be critical for the success of the movement in the United States. “There is an illusion about freedom — about freedom of speech and freedom of organization in this country,” he observed, pointing to New York’s laws against tents and megaphones. “What I thought the image exported to the rest of the world… Well, it’s not completely false but there are many obstacles.” As for the NYPD’s response to demonstrations so far, Ezzeldin was philosophical. “Police is the police, in Egypt, in the United States. Police is the police. There is no good cops and bad cops, they are all cops,” he said. Relations between police and demonstrators at Saturday afternoon’s gathering were cordial .

Read the full article →

Wall Street CEOS May Be Held Accountable If Their Bank Breaks Rule

October 8, 2011

WASHINGTON (Dave Clarke) – Regulators are considering holding Wall Street chief executives legally liable if they allow certain types of proprietary trading on their watch. Regulators due to reveal the Volcker rule proposal next week are expected to ask whether CEOs should have to certify, or “attest,” that their bank has put in place the proper systems to make sure no proprietary trading is taking place. The idea is that holding CEOs personally accountable will add a strong deterrent effect to the Volcker rule. The rule, called for in last year’s Dodd-Frank financial oversight law, bans banks from trading for their own profit in securities, derivatives and some other financial instruments. The bank industry is already balking at the legal burden and compliance headache that would come with a CEO certification. “The whole Volcker rule proposal envisions having an army of nannies overlooking the work of the people who actually work with customers,” said Wayne Abernathy, a senior official with the American Bankers Association. “How much more does an attestation bring that that doesn’t bring?” A CEO certification approach may be similar to 2002′s Sarbanes-Oxley law. That law, put in place after major accounting scandals at Enron and Worldcom, has the power to send executives to prison and make them pay multimillion-dollar fines for submitting false certifications on corporate disclosures. It is unclear if regulators will seek CEO imprisonment or hefty fines as potential penalties for violating the Volcker rule. Whatever regulators might put in place, fines would be a far more likely punishment if any are ever doled out, banking lawyers said. Supporters of the proposal contend it would force the CEO to be more involved and accountable. “Placing personal and legal responsibility directly with a corporation’s top executive is key to ensuring financial firms comply with the Volcker Rule and stop engaging in the risky activities that led to billion-dollar taxpayer bailouts,” Sen. Carl Levin said in a statement to Reuters. The crackdown on proprietary trading, which has some exemptions, is known as the Volcker rule after former Federal Reserve Chairman Paul Volcker, who championed the reform. The rule will mostly impact large banks including Goldman Sachs, JPMorgan Chase and Citigroup. Supporters contend that large banks whose customers receive deposit insurance from the government should not be engaging in risky trading activities that could put these deposits in jeopardy. Despite banks’ concerns, regulators may go easier on the issue of CEOs’ legal liability than the industry’s worst fears. In January the Financial Stability Oversight Council, the panel of regulators headed by the Treasury Department, released recommendations for enforcing the Volcker rule. Included in this list was requiring a CEO to certify their compliance efforts’ “effectiveness.” A draft of the rule to be considered next week by regulators does not explicitly call for a CEO certification and instead solicits feedback on whether it should be in a final rule. The draft, first posted online by the American Banker on Wednesday, could be changed before the Federal Deposit Insurance Corp meeting on Tuesday and the Securities and Exchange Commission meetings on Wednesday on the proposal. Banking lawyers say the certification could work similarly to Sarbanes-Oxley. “The idea is they want to have a human being on the line saying it is true,” said Bradley Sabel, a partner with Shearman and Sterling law firm. But even some critics of the banking industry who argue the government has not done enough to respond to the 2007-2009 financial crisis question whether upping a CEO’s legal responsibility will make much of a difference. “I count myself among those who would like some CEOs’ heads on a stick but I don’t think this is the right way to go about it,” said Cornelius Hurley, director of Boston University’s Morin Center for Banking and Financial Law. “At the end of the day he is going to rely on the representations of his advisers anyway and all this does is make sure he doesn’t sleep at night.” (Reporting by Dave Clarke, Editing by Matthew Lewis) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

10 Job Slashers That Benefited From A Tax Holiday

October 8, 2011

More money doesn’t always mean more jobs. Take when the U.S. government last imposed a tax holiday on offshore profits in 2004. Those companies that benefited most saved an estimated $64 billion, but cut nearly half a million jobs in the following years, according to a new report from The Institute for Policy Studies (IPS) . Indeed, the Tax Holiday mostly benefitted a small handful of companies. In total, 58 corporations accounted for nearly 70 percent of all funds repatriated as a result of the Tax Holiday. And two of the companies that slashed the most jobs in the following years, Citigroup and Bank of America, received massive bailouts only a few years later. Nor is it only the recession that’s to blame. According to one government study cited in the report, 13 of the top beneficiaries from the tax break cut 67,000 American workers in the two years following it. Now major corporations, such as Apple, Cisco Systems and Pfizer, are again lobbying for a similar tax holiday. On Friday, Senators John McCain (R-Arizona) and Kay Hagan (D-North Carolina) introduced a repatriation bill with the idea it would spur job creation. Yet it’s possible that the corporations that would most benefit aren’t the ones that need the money: 58 corporations that benefited most in 2004 already sit on $450 billion in cash reserves, IPS reports. The idea of a tax holiday even faces opposition from the right. Conservative think tank The Heritage Foundation, for one, no longer says a tax holiday would lead to job growth , reversing it’s prior position. Here are the recipients of the 2004 repatriation tax holiday that cut the most jobs from 2004 to 2011, according to the Institute for Policy Studies :

Read the full article →

Alan Grayson: Where’s Your $50,000?

October 8, 2011

The Government Accountability Office (GAO) says that our government has handed out $16 trillion to the banks. Let me repeat that, in case you didn’t hear me the first time. The GAO says that our Government HAS HANDED OUT $16 TRILLION TO THE BANKS. That little gem appears on Page 131 of GAO Report No. GAO-11-696 . A report issued two months ago. A report that somehow seems to have eluded the attention of virtually every network, every major newspaper, and every news show. How much is $16 trillion? That is an amount equal to or more than $50,000 for every man, woman and child in America. That’s more than every penny that every American earns in a year. That’s an amount equal to almost a third of our national net worth — the value of every home, car, personal belonging, business, bank account, stock, bond, piece of land, book, tree, chandelier, and everything else anyone owns in America. That’s an amount greater than our entire national debt, accumulated over the course of two centuries. A $16 trillion stack of dollar bills would reach all the way to the moon. And back. Twice. That’s enough to pay for Saturday mail delivery. For the next 5,000 years. All of that money went from you and me to the banks. And we got nothing. Not even a toaster. I have been patiently waiting to see whether this disclosure would provoke some kind of reaction. Answer: nope. Everyone seems much more interested in discussing whether or not they like the cut of Perry’s jib. Whatever a jib may be. In the next few weeks, I’m going to be writing more about this. But right now, I wanted to keep this really simple. Just give folks something to talk about when they’re standing next to the coffee maker. The government gave $16 trillion to the banks. And nobody else is talking about it. Think about it. Think about what that means.

Read the full article →

Report: Plan To Aid Jobless Homeowners Fails To Give Out All Its Money

October 7, 2011

A government program aimed at helping unemployed homeowners avoid foreclosure ended with more than half its money unspent . The Emergency Homeowners’ Loan Program ended last month and the government will use only $432 million of the $1 billion it set aside for the program , according to USA Today . The reason? Officials charged with administering the program couldn’t approve enough applicants in time to receive the aid. The Department of Housing and Urban Development approved 11,832 of the 100,000 applications for the program, which was enacted as part of the Dodd-Frank regulations passed in response to the financial crisis, according to USA Today . Officials initially said that the program would provide $50,000 to 30,000 unemployed or underemployed homeowners in order to avoid foreclosure. One of the reasons for the low number of approved applicants could be the strict requirements of the program. In order to receive a loan, applicants had to prove that their income had fallen by at least 15 percent due to the economic downturn , according to The Washington Post . In addition, applicants had to prove that once the loan disappeared — it has a maximum of two years or $50,000 — they’d be able to resume paying their mortgage. Organizations across the country reported having difficulties finding applicants who qualified as the deadline for the loan neared at the end of last month, The New York Times reported. At a community development corporation in Minnesota’s Twin Cities of St. Paul and Minneapolis, 31 out of 250 applicants received approval , according to the NYT . A non-profit in California faced a similar uphill battle; the organization deemed 25 of the 1,200 applicants qualified and of those 25, five were approved as of Sept. 28, The Times reported. The Emergency Homeowners’ Loan Program is just one of the Obama Administration’s loan modification programs that haven’t reached their goals , according to Propublica. Others include the Home Affordable Refinance Program, which aimed to help 4 to 5 million homeowners refinance their mortgages at low interest rates and a plan that gave money to state governments to experiment with programs for helping homeowners. The Home Affordable Modification Program — a plan also passed as part of the Dodd-Frank reforms that aimed to use subsidies to push bailed-out banks to modify home loans — has also had less than stellar results. When Obama first introduced HAMP in 2009 he said it would help 3 to 4 million homeowners; instead, the program has helped less than 700,000. Despite the deluge of programs aimed at helping homeowners and the housing market, the industry that precipitated the recession has yet to recover. A surplus of foreclosed properties is continuing to push home prices down and millions of homeowners owe more on their homes than they’re worth .

Read the full article →

Celebrities Help Occupy Wall Street

October 2, 2011

The Occupy Wall Street movement is a populist sit-in demonstration against what protestors charge are the corrupt practices of the financial industry, and the bought government complicity, that are helping drive the majority of the nation’s citizens into ruin.A collective that amplifies its voice with a passed-around Peoples’ Microphone, they have gained more attention over the past few weeks, culminating Saturday with a mass arrest of protestors on the Brooklyn Bridge. While the movement claims representation over the “other” 99% of the nation — those not making millions of dollars a year — they have received support from a number of left-leaning actors and entertainers, who, despite their high incomes, believe that government policy is skewed toward big business and the wealthy. Mark Ruffalo showed up over the weekend and tweeted non-stop his support, while last week, Roseanne Barr gave a speech that called for a combination of capitalism and socialism and a system based not on “bloated talk radio hosts” and “that goddamn Aynn Rand book.” Here’s a look at some of the celebs who have lent their voice — or at least investigated — the case. PHOTOS/VIDEOS:

Read the full article →

Many government retirees also get public paychecks

October 2, 2011

DALLAS — Double-dipping – the well-established practice of public workers collecting government pensions and salaries at the same time – has become a hot topic for lawmakers struggling with strained budgets. Even as some states have begun curbing the practice, a review by The Associated Press found tens of thousands of state and public school employees drawing government salaries along with their pensions. In five states alone – California, New York, Texas, Florida and Michigan – at least 66,000 government retirees also receive taxpayer-funded paychecks. One is engineer Maury Roos, who retired from the California Department of Water Resources with an annual pension of more than $113,000. He returned part-time within weeks. Roos says he uses the extra money to go to engineering conferences and the state gets an experienced engineer.

Read the full article →

Van Jones: Progressives Launching ‘October Offensive’ To Rival Tea Party

October 1, 2011

Former White House adviser Van Jones says that progressives are going to launch an “October offensive” to rival the Tea Party, in the spirit of the Arab Spring protests across the Middle East. “Everybody should hold onto their seats. October is going to be the turning point when it comes to the progressive fight back. You can see it coming,” Jones said this week on MSNBC’s “The Last Word” with Lawrence O’Donnell. “When Warren Buffett comes out and says, look, we’ve got to do something to raise taxes and to do better by America, and you’ve got these young kids who are going out there on Wall Street,” Jones said, referring to the members of Occupy Wall Street , who have been camped out in Zuccotti Park in Manhattan’s financial district for the past several weeks, “There’s a generation of Americans who are looking around and saying ‘What is the American Dream going to look like for me?’ They’re going to be standing up.” “You are going to see an American Fall, an American Autumn, just like we saw the Arab Spring,” Jones continued. “You can see it right now with these young people on Wall Street. Hold onto your hats, we’re going to have an October offensive to take back the American dream and to rescue America’s middle class.” WATCH: Jones, who served as President Barack Obama’s green jobs czar until resigning in September 2009, launched the progressive group Rebuild the Dream in June to focus on job creation and countering the influence of the Tea Party in American politics. “We are going to build a progressive balance of power to the Tea Party,” Jones told O’Donnell Thursday night. Rebuild the Dream is hosting a conference in Washington, D.C. next week. Jones also praised the Occupy Wall Street protesters in a blog post on The Huffington Post this week. Wall Street has long been the home of the biggest threat to American Democracy. Now it has become home to what may be our best hope for rescuing it,” Jones writes. “A new generation has gone to the scene of the crimes committed against our future. The time has come for all people of good will to give our full-throated backing to the young people of the Occupy Wall Street movement.”

Read the full article →

United Auto Workers Overwhelmingly Vote Down Truck Maker’s Contract Offer

October 1, 2011

DETROIT (John D. Stoll) – United Auto Workers members overwhelmingly voted down a new five-year contract offer from Oshkosh Corp on Friday despite the company’s offer of a signing bonus and raise to offset higher health care costs, according to the company. The current contract, covering more than 3,000 employees in northeast Wisconsin, was set to expire at midnight. A new contract proposal from Oshkosh was put on the table as the heavy vehicle maker faces uncertainty due to budget constraints at the Department of Defense, which is Oshkosh’s biggest customer. Oshkosh and the UAW — its biggest union — are expected to now head back to the negotiating table on a revised deal that will likely omit a sizable signing bonus. The offer the UAW rejected on Friday included an 8 percent raise over the life of the contract, and a $2,000 signing bonus. In addition, Oshkosh called for a four-fold increase in monthly health care premiums for families. Oshkosh spokesman John Daggett said late on Friday the $2,000 bonus is no longer valid when the contact expires at midnight. Contract talks had been tense as workers and local union officials complained the deal was not generous enough, and that language in the contract was unfavorable to hourly workers. “We are obviously disappointed because we felt we had offered a very comprehensive proposal considering today’s market conditions and the proposed budget cuts in the Department of Defense,” Daggett said in an email to Reuters. He said the company has accepted an invitation from the union for a meeting, details of which are still being worked out. UAW officials were not immediately available for comment. Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

Jared Bernstein: The Policy Backdrop of Inequality and Its Implications for "Class Warfare"

September 23, 2011

Hey, no fair fighting back!! That’s what I hear when conservatives go on about “class warfare” in response the President’s call for balance in deficit reduction. It’s particularly grating to hear Rep Paul Ryan use the CW talking point, when the loins’ share of his deficit savings come from cuts to low-income programs and Medicare, with no offsetting revenue. Lots of posts in recent days have explored the tax side of this equation, essentially emphasizing the Buffett point that many of those who have done the best are paying a smaller share of the income in federal taxes than the middle class. That’s an important point that links directly to President Obama’s call for shared sacrifice and balanced deficit reduction. Sorry, Rep. Ryan — it can’t all come out of the spending side. But, as the figure below reveals, the increase in income inequality — one reliable metric of how different income classes have fared — is very much a pretax phenomenon. The figure shows the changes in income shares from a comprehensive income data set of the Congressional Budget Office, 1979-2007, pretax and aftertax (federal taxes only — I’ve added a table below with the levels for the most recent data year so you can see the underlying shares). Source: CBO The fact that the growth in inequality is largely a function of the pretax income distribution doesn’t mean we should make it worse with regressive, supply-side tax cuts — (economist Alan Blinder calls this move “unnecessary roughness” — amplifying pretax inequality with regressive tax cuts). To the contrary, we need balanced tax measures to generate the revenues to support programs that can help push back on this trend — initiatives like Head Start, child nutrition, educational support. But it also doesn’t mean we can meaningfully correct the problem with tax policy alone. We have be mindful of all the policies that effect the pretax distribution–the distribution of labor and capital earnings before any taxes and transfers kick in…that’s where the real inequality action is. Now, most economists argue that much of the increase in inequality is due to factors like globalization and technological change — factors that are less a matter of policy than of economic evolution. But of course their impact can be amplified or dampened by policy. For example, unfair trade practices like China currency management make give low-wage competitors an even stronger price advantage. (Trade agreements are less of a big deal as I see it–the advocates overdo how much they’ll help and visa-versa re the opponents — though the advocates are worse…). Lack of a strong, long-term public-private strategy in terms of boosting our manufacturing sector, as is standard practice in advanced (Germany) and emerging (China) countries also hurts our manufacturers compete internationally. So policy does matter — considerably — in this space. Technological change is also thought to be a significant factor behind the changes in the graph, though the evidence here is more ambiguous. (One strain of work, for example, argues that technology has increased labor demand for both high skill and low skill work, while leaving out the middle.) But to the extent that technology increases employers’ skill demands such that a college education is increasingly necessary to compete, programs that help disadvantaged kids get that opportunity play a role here too. And cuts to those programs hurt. And then there’s a bunch of stuff that directly raises or lowers the bargaining clout of middle and working class families–policy changes or missed policy opportunities that have hurt or failed to help them. – The long-term erosion of the minimum wage – The absence of legislative protection to balance the organizing playing field for those who want to collectively bargain – The inattention to labor standards such as wage and hour rules, overtime regulations, workplace safety, worker classification (this is where regular employees get misclassified as independent contractors and lose basic labor protections — and guess what? Progressive reform of this problem is in the President’s new budget plan — very cool…) – The attack on public sector employment – The lack of universal health care – The absence of comprehensive immigration reform One more biggie: full employment. It’s very much a policy variable and one, in fact, that used to be the law for the Federal Reserve — so-called Humphrey Hawkins Act mandated full employment as a policy goal of the Fed. As I stress here , the fact that our job market has run with so much slack over the very period when inequality grew is no coincidence (and visa-versa: when inequality was flat or falling, we were more likely to be at full employment). And of course, in recession, like now, by dithering on stimulus, we’re disproportionately hurting the wage, incomes, and living standards of the folks who’ve been losing income share over the years shown in the figure above. In other words, there are a lot of policy measures that have considerable impact on how the benefits of growth are distributed — before taxes even show up on the scene. When representatives of the wealthy squeal about “class warfare,” they’re not just talking about shielding their treasure from the tax system. They’re also protecting and endorsing a policy agenda that’s helped tilt growth their way for a long time. This post originally appeared at Jared Bernstein’s On The Economy blog.

Read the full article →

Government Shutdown Looms After Senate Blocks House Funding Bill

September 23, 2011

On Friday, the Senate blocked a short-term budget bill ahead of a looming deadline to keep the federal government open through November 18. This is a developing story… More information to come…

Read the full article →

Government Shutdown Looms As House Rejects Short-Term Budget Bill

September 21, 2011

WASHINGTON — The House on Wednesday failed to pass a continuing resolution to keep the federal government funded past next week, a major defeat for Speaker John Boehner (R-Ohio), who was banking on having the votes to pass a package that tied emergency disaster aid to spending cuts. The bill went down in a vote of 195 to 230. Forty-eight Republicans sided with nearly all Democrats in opposing the resolution aimed at keeping the government funded past Sept. 30, when current funding runs out, and through Nov. 18. Two factions of Republicans had major problems with the bill as they headed into the vote: Conservative lawmakers wanted more spending cuts, and GOP lawmakers affected by recent disasters were uneasy with the bill’s provision that tied $1.5 billion in emergency disaster aid to cuts to a fuel-efficiency loan program.

Read the full article →

Health Care Law Sees Nearly 1 Million Young Adults Gain Coverage

September 21, 2011

WASHINGTON — At least one part of President Barack Obama’s health care overhaul has proven popular. With the economy sputtering, the number of young adults covered by health insurance grew by about a million as families flocked to take advantage of a new benefit in the law. Two surveys released Wednesday – one by the government, another by Gallup – found significantly fewer young adults going without coverage even as the overall number of uninsured remained high. The government’s National Center for Health Statistics found that the number of uninsured people ages 19-25 dropped from 10 million last year to 9.1 million in the first three months of this year, a sharp decline over such a brief period. A separate Gallup survey reported that the share of adults 18-25 without coverage dropped from 28 percent last fall to 24.2 percent by this summer. That drop translates to roughly 1 million or more young adults gaining coverage. The new health care law allows young adults to remain on their parents’ health plans until they turn 26. Previously, families faced a hodgepodge of policies. Some health plans covered only adult children while they were full-time students. Others applied an age cutoff. Elizabeth Wilson, an aspiring opera singer who lives near Indianapolis, said her mother’s plan dropped her in the midst of a medical crisis because she had turned 23. At the time, Wilson was in the hospital under treatment for an inflammation of the pancreas. Because of the overhaul, she has been able to get back on the policy. “It means I don’t have to spend every penny I make to get health care,” said Wilson, now 24. “I can use some of it to further my studies – or buy food.” The two surveys were welcome news for the administration, which is trying to fight off attempts to repeal the law – which some GOP lawmakers and candidates call “Obamacare” – or to overturn it in court. “It’s clear that the new health reform law is making a real difference in the lives of moms, dads, sons and daughters,” said Health and Human Services Secretary Kathleen Sebelius. Repealing Obama’s law, which Congress approved in March 2010, would end the requirement that health plans cover young adults up to age 26. But some GOP lawmakers say they would include such a mandate in replacement legislation to follow. While the bleak economy has made it hard for young people to get jobs, fewer are being forced to go without medical care, defying an overall trend of rising numbers of working-age Americans who lack coverage. “While we did not see a drop-off in any other age group, we did see a drop in this age group,” said Frank Newport, Gallup’s polling director. Gallup found that the share of 26- to 64-year-olds uninsured rose from 18.1 percent in the fall of last year to 19.9 percent this summer. Public opinion remains divided about Obama’s overhaul, but coverage for young adults has proven to be a popular and relatively low-cost benefit in these days of prolonged school-to-work transitions. The provision technically took effect last fall but wasn’t implemented by most workplace health plans until Jan. 1. “The big change started in the last quarter of 2010 and continued further in the first two quarters of this year,” said Newport. “Bingo, it started going down,” he said of the percentage of uninsured young adults. Those young Americans are still more likely to be uninsured than any other age group. Some are making the switch from school to work. Others are in low-wage jobs that don’t usually offer coverage. And some in this group – sometimes termed the “invincibles”_ pass up workplace health insurance because they don’t think they’ll use it and would rather get a little extra in their paychecks. The latest surveys are in line with other findings. Mercer, the benefits consulting firm, found a 2 percentage-point increase in workplace health plan enrollment as a result of extending coverage to young adults. It’s a less expensive group to cover than middle-aged or older adults, and many companies have spread the extra premiums among their workers. Other early coverage expansions in the health care law have not worked as well, including a special program for people with health problems turned away by insurers. The law’s main push to cover the uninsured isn’t scheduled until 2014. At that time, more than 30 million people are expected to get coverage through a combination of expanding Medicaid and providing tax credits to make private insurance more affordable. And insurers will no longer be able to turn away people in poor health. Gallup surveys nearly 1,000 people daily. Its analysis includes 89,857 respondents interviewed between April 1 and June 30. The margin of error for the full sample is plus or minus 1 percentage point; it is higher for subgroups. The government’s National Health Interview Survey is one of the primary sources of information on the U.S. public, relying on detailed household interviews. The latest results are drawn from interviews with more than 20,000 people from January through March. Wednesday’s report is a smaller and more fleeting snapshot of health trends than are seen in six-month and full-year reports ___ Online: Gallup survey: http://tinyurl.com/3dy4nrk

Read the full article →

‘Credible Strategy’ To Lower Debt Must Include More Revenue: IMF

September 20, 2011

(Rachelle Younglai) – Any effort by the United States to pare its massive public debt without bringing in more revenue and tackling expensive benefit programs will lack credibility, the International Monetary Fund said on Tuesday. To show U.S. creditors and markets the government is serious about reining in the country’s $14.7 trillion debt, the IMF said so-called entitlement programs, such as the Social Security retirement program, must be reformed. U.S. credibility “could suddenly weaken if sufficiently detailed and ambitious plans to reduce deficits and debts are not forthcoming,” the fund said. “Any credible strategy will need to include entitlement reforms and higher revenues. Widening tax bases by phasing out tax expenditures would be a good place to start,” it added. The Obama administration on Monday unveiled a $3.6 trillion deficit reduction plan that steers clear of Social Security and does not make structural reforms to the Medicare health care program for the elderly. At the same time, Republicans in Congress have made clear that they would oppose any plan that raises taxes. The IMF said current low U.S. interest rates reflect the significant goodwill the United States has earned from investors even though there are fundamental weaknesses in the country’s fiscal situation, suggesting Washington could see a reversal of fortune unless it puts a credible deficit reduction plan in place. Conventional fiscal indicators such as deficits and debt ratios are no better for the United States than in many European countries that currently face significant market pressure, the fund said. A special committee of U.S. lawmakers is grappling with how to cut at least $1.2 trillion from deficits over the next 10 years. The committee must come to agreement by late November or else deep spending cuts to domestic and military programs will automatically kick in. The Obama administration would count on tax revenues for about half of its proposed budget savings. The plan, which needs congressional approval to become law, includes a minimum tax rate for people earning more than $1 million a year, a proposal that has drawn heavy fire from Republicans. The IMF’s fiscal affairs director, Carlo Cottarelli, did not condone the proposal but said that it was a legitimate tax policy goal “to make sure that the burden of taxation is distributed fairly.” (Editing by James Dalgleish) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

Widening Income Inequality Bad For Economic Growth: IMF Report

September 20, 2011

The widening gap between the wealthy and everyone else in the United States may be hindering a broader economic recovery, according to a new study. The study out of the International Monetary Fund found that greater income equality positively correlates with stronger economic growth. Released in September, the study more specifically concluded that a 10 percent decrease in inequality increased the expected duration of economic growth by 50 percent. The IMF paper, which studied a sample of countries around the world between 1950 and 2006, found that in countries with more income inequality, such as Jordan and Cameroon, the economy more frequently plunged into deeper recessions, while economic growth lasted much longer in more equal societies. Indeed, greater levels of income equality corresponded more strongly to sustained economic growth than other economic factors, including lower debt levels, according to the report. “Sustainable economic reform,” the authors write, “is possible only when its benefits are widely shared.” The United States Income inequality has grown in the United States over the past four decades and now more closely compares to the income distributions of Russia and Iran than many other developed economies. And some U.S. corporations are coming to grips with providing for a society with more rich and poor, and fewer middle class. The household-goods manufacturer Procter & Gamble, for example, has reduced its emphasis on middle-market items , instead focusing on developing luxury and bargain items, according to The Wall Street Journal . Yet mushrooming income inequality isn’t exclusive to the United States, rising 0.3 percent every year between the mid-1980s and mid-2000s in OECD countries. Some economists have attributed stagnant wages for most Americans over the past four decades in part to growing inequality , as the rich have mostly benefitted from the country’s recent economic gains . And so long as Americans don’t spend like before, the economy may not be able to fully recover. Historically the backbone of the U.S. economy, the eroding middle class has created an anemic economy , Berkeley labor economist Robert Reich recently wrote. He emphasized that the spending of the richest people alone is not enough to lead to “a virtuous cycle of more jobs and higher living standards.” Nobel Prize-winning economist Joseph Stiglitz agrees. “An economy in which most citizens are doing worse year after year — an economy like America’s — is not likely to do well over the long haul,” he recently wrote in Vanity Fair .

Read the full article →

GM labor deal heads toward UAW vote

September 20, 2011

By Bernie Woodall and David Bailey DETROIT (Reuters) – About 48,500 General Motors Co workers at U.S. factories will begin considering the details of a proposed four-year contract on Tuesday that represents the first labor deal for the automaker since its 2009 bailout by the Obama administration. Local leaders from the United Auto Workers union are scheduled to meet on Tuesday in Detroit to review and approve the deal, which will then be sent to a ratification vote by GM workers expected to be completed within a week. That clears the way for UAW President Bob King to turn to Chrysler Group LLC, the smallest of the Detroit automakers, where contract talks broke off last week on the cusp of an expected agreement. Chrysler Chief Executive Sergio Marchionne is expected to return to Detroit by Tuesday to resume talks with UAW President Bob King. The GM deal is expected to provide a rough blueprint for contracts at Chrysler and Ford Motor Co, although total compensation at the companies is expected to differ more sharply than in the past. Chrysler, which is controlled by Fiat SpA, has insisted that it hold the line near its current level of about $49 per hour in average wages and benefits. By contrast, GM and Ford are higher, at $56 per hour and $58 per hour respectively. The UAW’s four-year contracts with all three Detroit automakers expired last week. All three contracts were extended indefinitely as talks continued. At stake are wages and benefits for about 112,500 unionized U.S. auto workers at GM, Chrysler and Ford, who have gone without a base pay increase since 2003. The contracts will also set a benchmark for wages at auto parts suppliers and at nonunion plants operated by Asian and German automakers in the southern United States. The talks in Detroit have played out at a time of increasing uncertainty about the strength of U.S. auto sales and the risk of another recession. The outline of the proposed GM contract has become clear since GM and the UAW reached a deal late Friday, but details of the agreement have not been confirmed by either side. Sources with knowledge of the proposed GM contract have said it includes recalling about 570 laid off GM workers, one-time bonus payments of about $5,000 and bringing new assembly work to an idled Tennessee plant that had been the home of the Saturn brand. Workers hired at a second-tier entry level wage of about $15 per hour under the 2007 agreement between the union and U.S. automakers would also receive wage increases of about $2 per hour under the proposed deal. The bonuses and profit-sharing were offered by automakers rather than traditional wage increases to prevent the rise in fixed costs that contributed to the industry’s near collapse. The UAW gave up its right to strike GM or Chrysler as part of the government bailouts. Workers at Ford, which did not take a government bailout, have indicated that they expect a better deal than the one just negotiated with GM. Ford funded its turnaround on its own and workers retained the right to strike at the No. 2 automaker. The UAW has hoped to use new labor agreements with the Detroit automakers as a springboard to winning first-ever contracts to represent workers at U.S. factories operated by Japanese, Korean and German automakers. (Additional reporting and Kevin Krolicki in Detroit; Editing by Steve Orlofsky)

Read the full article →

Rep. Steny Hoyer: Speeding Up the Patent Process

September 16, 2011

The patent that led to the telephone was approved in one month. The patent that led to the cell phone, as former White House economic advisor Austan Goolsbee recently observed, was approved in three years. Today, patents are held up for even longer — and jobs and growth are held up with them. At this moment, more than 700,000 patents are caught in the backlog. Could one of those 700,000 new ideas be the next iPhone, the next breakthrough drug, the key to the next great American industry? We’ll have to wait a long time to find out. With millions of Americans still out of work, Democrats are working to advance a plan to rebuild American industry and create the solid, middle-class jobs our country needs. We call it the Make It In America plan: it’s a legislative program to help American businesses stay here, grow here, build more products here, and sell them to the world. And a crucial part of that effort is ensuring we are the world’s leader in innovation, so that we can outpace our competitors and stay at the job-creating forefront of the world economy. America is still the world’s most innovative country — but it’s a sobering fact that Japan has recently overtaken us in patent applications. China, too, is on pace to overtake us soon. If we want to regain our innovation edge, we have to make it easier for American inventors to patent new products here and manufacture them here. That’s why it’s so important that President Obama will today sign into law the America Invents Act, the most significant patent reform in half a century. It’s also the first Make It In America bill to become law this year. If we want to put more Americans back to work, it can’t be the last. The America Invents Act creates a markedly more efficient patent system. It significantly reduces the backlog of ideas by hiring more patent examiners, modernizing technology in the Patent and Trademark Office, and speeding up the review process. It also institutes a new, “first-to-file” system for resolving disputes over priority. Such disputes have often been bogged down in costly, time-consuming legal cases. But this new legislation cuts down on that litigation by asking a simple question: who filed for a patent first? While the old system was weighted in favor of the largest corporations with the biggest legal teams and the most money to burn, the new system levels the playing field for small businesses and individual inventors, the kind of people who gave us revolutionary ideas like the personal computer. Speeding up the patent process will get American ideas to market faster, and that unlocks tremendous opportunities for our economy to grow. But a wealth of other innovation-promoting ideas are also part of Democrats’ Make It In America plan, and Congress should build on this success by passing more of the plan into law. We should expand and make permanent the research and development tax credit, so that companies have stronger incentives to invest in new technologies here at home. We should promote high-tech, advanced manufacturing by passing the JOBS Act, which builds job-training partnerships between colleges and advanced manufacturing businesses. These partnerships will help more Americans find job opportunities in fast-growing fields — and help American businesses satisfy their demand for workers without looking overseas. We should create a more efficient corporate tax code, with lower rates and fewer loopholes. That would help businesses make decisions based on their best economic judgment, not based on maximizing their tax deductions. And we should keep pace with international competitors by creating a National Infrastructure Development Bank. It would leverage private investment in much-needed projects from energy delivery systems to broadband networks to modern ports, projects that would create jobs in the short term while laying the foundation for long-term growth. There’s no doubt that America still has the qualities that made its economy the strongest in the world — the work ethic, the competitive drive, and the innovative spirit that have made this country great. I believe in the Make It In America plan because it’s the best way of putting those qualities to work, so that we can out-build, out-educate, and out-innovate our competitors. Today’s far-reaching patent reform is a big step in the right direction. And I can’t wait to see the American innovations that come to market faster as a result.

Read the full article →

Federal Judge Strikes Down On Key Health Care Law Provision

September 13, 2011

HARRISBURG, Pa. — A federal judge in Pennsylvania has ruled that the requirement in President Barack Obama’s health care overhaul that individuals buy health insurance is unconstitutional. Judge Christopher Conner in Harrisburg issued the ruling Tuesday in one of more than 30 lawsuits nationwide that have been filed over the law. He says the individual mandate is an unconstitutional extension of authority granted to the federal government under the Constitution’s commerce clause. The suit was filed by a York County couple. Separate lawsuits have already reached appeals courts in Richmond, Va., Georgia and Cincinnati, with two of those courts ruling in favor of the mandate. The matter is expected to be settled by the U.S. Supreme Court. Conner was appointed to the federal bench in 2002 by President George W. Bush.

Read the full article →

Harlan Green: Where Is Harry Truman When We Need Him?

September 13, 2011

The U.S. economic outlook has “clearly” deteriorated this year, and the continued softness of economic indicators shows that the headwinds facing the country are even stronger than thought, Chicago Federal Reserve President Charles Evans said last Wednesday . “Conditions still aren’t much different from an economy still in recession,” said Evans, speaking at a seminar in London. Is there something we can do about it with our current President and Accommodator-in-Chief giving conservatives what they want, such as cancelling the new air quality regulations, without negotiating for something in return? Well yes. Bring back another “Give ‘em hell” Harry Truman, or have President Obama choose him as a model for how to weather the next year during an election season, instead of the “Give ‘em what they want” Barack we have known of late. “Give ‘em hell” Truman was given that nickname for a reason. During a 1948 campaign speech a supporter yelled out “Give ‘em Hell, Harry!” Truman replied, “I don’t give them Hell. I just tell the truth about them and they think it’s Hell.” The post-WWII economy was going through the same malaise as today. Federal debt had ballooned to 120 percent of GDP to pay for WWII (vs. 80 percent today), unemployment was high, and Republicans crying deficit reduction had triumphed in the 1946 Congress. “Republicans stand four-square for the American home–but not for housing,” he said during his 1948 campaign. “They are strong for labor–but they are stronger for restricting labor’s rights. They favor minimum wage–the smaller the minimum wage the better. They endorse educational opportunity for all–but they won’t spend money for teachers or for schools. They think modern medical care and hospitals are fine–for people who can afford them. They consider electrical power a great blessing–but only when the private power companies get their rake-off. They think the American standard of living is a fine thing–so long as it doesn’t spread to all the people. And they admire the Government of the United States so much that they would like to buy it.” Does all this sound terribly familiar, even to the Republican attacks against him? “The smear campaign on your President started in all its vile and untruthfully slanted headlines, columns, and editorials,” said Truman. “Hearst’s character assassins, McCormick-Patterson saboteurs all began firing at me, as did the conservative columnists and radio commentators. Not because they believed anything they said or wrote, but because they were paid to do it.” Truman was following one of FDR’s more well-known maxims: “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” Truman and the Democrats were alone in trying to keep the U.S. economy afloat, in other words. So instead of compromising with deficit hawks by cutting spending, he blasted the “do nothing 80th Congress of that time,” advocating Universal Health Care and extension of unemployment benefits. When the deficit hawks in Congress voted down those benefits — both ‘blue dog’ Democrats and Republicans, we might add — he was able to blame them for the continuing malaise. Then he upset heavily favored New York Governor Thomas Dewey in 1948 — it was one of the most famous comebacks in presidential history. “I have told the people that there is just one big issue in this campaign and that’s the people against the special interests. The Republicans stand for special interests, and they always have. The Democratic Party, which I now head, stands for the people — and always has stood for the people.” Why is this malaise dragging on so long? With some $2 trillion in cash sitting on S&P 500 corporations’ balance sheets, and profit margins the highest since WWII, employers are refusing to hire more workers. This is why there was zero (0) nonfarm payroll growth in August. It’s because businesses have been living in a bubble they are reluctant to leave. It is called supply-side economics, because of a succession of business-friendly administrations that believed the bulk of government benefits should be directed to business, rather than consumers. This was mainly in the form of tax breaks, which are of little benefit to consumers — most of whom pay a payroll tax that has never been cut. Business tax breaks are an indirect form of government support, but nevertheless result in reduced revenues. Yet consumers have been spending more as wages and salaries — 80 percent of the workforce — are rising and have been rising in fact since July 2009, the nominal end of the Great Recession. Consumer spending rebounded a sharp 0.8 percent after slipping 0.1 percent in June. By components, durables jumped 1.9 percent after declining 1.1 percent in June. Clearly, motor vehicle sales are up as the supply constraint related parts shortages from Japan is easing. So what is the lesson from “give ‘em hell, Harry”? Truman was not afraid to take on those who wanted to reduce government, when government was the only support for both businesses and consumers during tough times. “People are waking up that the tide is beginning to roll, and I am here to tell you that if you do your duty as citizens of the greatest Republic the sun has ever shone on, we will have a Government that will be for your interests, that will be for peace in the world, and for the welfare of all the people, and not just a few.” So the Obama the Accommodater has to turn into Obama the fearless Negotiator who is willing to attack his enemies, who are also the enemies of majority who have been hurt most by the Great Recession. Harlan Green © 2010

Read the full article →

LIVE UPDATS: Obama Outlines Jobs Plan

September 8, 2011

President Barack Obama is delivering a speech to a joint session of Congress on Thursday night to outline a new plan from his administration to create jobs. With the nation’s unemployment rate at 9.1 percent, the president will make his case on how his proposal aims to get Americans back to work. Details on the reported $300 billion package began surfacing earlier this week. Two new polls released on Tuesday show the president’s approval rating , as well as that of congressional Republicans, at an all-time low. The surveys also delivered bad news to Obama on how the public specifically views his handling of the economy and jobs. Below, a live blog of the latest news on Obama’s jobs plan and speech. RELATED VIDEO:

Read the full article →

World Markets Savaged By U.S. Recession Fears

September 5, 2011

BANGKOK — Asian markets opened lower Tuesday after fears of a worsening global economy sparked a session of free-falling losses in Europe. Oil prices fell to below $84 a barrel in Asia as investor fears of a recession in developed countries sent equities and commodities lower. The dollar was higher against the euro but lower against the yen. Japan’s Nikkei 225 index dropped 1.2 percent to 8,676.12. Hong Kong’s Hang Seng index was 1 percent down at 19,420.47. Australia’s S&P ASX 200 lost 1.1 percent to 4,095.50. South Korea’s Kospi index was 0.6 percent down at 1,774.73. The slump in Asia comes a day after European shares booked sharp losses. Britain’s FTSE 100 closed the day down 3.6 percent to 5,102.58. Germany’s DAX tumbled a massive 5.3 percent to 5,246.18, and France’s CAC-40 plummeted 4.7 percent to 2,999.54. A wave of negative sentiment was unleashed Friday by a government report that said the U.S. economy failed to add any new jobs in August. That caused European and Asian stock markets to sink sharply Monday. The August jobs figure was far below economists’ already tepid expectations for 93,000 new U.S. jobs and renewed concerns that the U.S. recovery is not only slowing but actually unwinding. U.S. hiring figures for June and July were also revised lower, adding to the gloom. The unemployment crisis has prompted President Barack Obama to schedule a major speech Thursday night to propose steps to stimulate hiring. The health of the U.S. economy is crucial for the wider world because consumer spending there accounts for a fifth of global economic activity. The U.S. imports huge amounts from Japan and China and is closely linked at all levels with the European market. Traders are hoping for signs that the Federal Reserve might take action at its September meeting to support the economy – perhaps a third round of bond purchases, dubbed quantitative easing III or QE3. Wall Street, which was closed Monday due to the Labor Day holiday, was bracing for losses Tuesday. Benchmark oil for October delivery was down $2.47 to $83.98 in electronic trading on the New York Mercantile Exchange. Crude last settled at $86.45 on Friday because U.S. markets were closed Monday for the holiday. In London, Brent crude for October delivery was steady at $110.08 on the ICE Futures exchange. In currencies, the euro weakened to $1.4074 Tuesday from $1.4187 in New York late Friday as worries mounted about Greece’s ability to meet requirements set by international lenders to stave off a massive default on the country’s debts. The dollar weakened to 76.82 yen from 76.87 yen. Last month, the dollar fell under 76 yen, which was a new post-World War II high for the Japanese currency.

Read the full article →

How China Could Help The Global Recovery

September 5, 2011

BEIJING — China can boost global economic growth by pressing ahead with reforms to promote domestic consumption and reduce reliance on exports and investment, World Bank President Robert Zoellick said Monday. Communist authorities have said repeatedly they want more self-sustaining growth based on domestic consumption. But they have made little progress, and investment as a share of China’s economy rebounded after Beijing launched a stimulus based on public works spending following the 2008 global crisis. The World Bank is working with Beijing on developing ways to rebalance the world’s second-largest economy, Zoellick told reporters after meeting with Chinese officials. “The world economy won’t get out of this hole by simply relying on austerity policies,” he told reporters. Possible changes might include relying on the market instead of the government to allocate natural resources and overhauling the relationship between state-owned and private companies, Zoellick said. Zoellick’s comments came amid mounting fears the United States might be headed back into recession after the Labor Department reported Friday the economy added no jobs in August, its worst employment report in 11 months. Coming months will be a “sensitive time” for developed economies as Europe wrestles with a debt crisis and the United States tries to shore up growth, he said. Weakening global demand might add to Beijing’s urgency in trying to promote retail spending and other domestic consumption. But analysts say the many steps required to do that will take time, such as creating more government-financed health care to reduce the need for families to save so much to pay for emergencies. China’s spending on new factories and other investment has accounted for more than 40 percent of its economic output over the past decade – several times the level of the United States, Japan and other major economies. It rose close to 50 percent in 2009 due to stimulus spending, according to the International Monetary Fund. ___

Read the full article →

Obama Previews Job Creation Ideas

September 5, 2011

DETROIT (AP) — President Barack Obama is previewing his ideas for job creation and economic growth at a Labor Day rally with union members in Detroit. Obama’s speech at the annual event sponsored by the Metropolitan Detroit AFL-CIO was serving as a dress rehearsal for the jobs address he’s delivering to a joint session of Congress on Thursday night. He arrived in Michigan mid-day. The president’s appearance follows last Friday’s dismal jobs report, which showed that employers added no jobs in August. It was the first time since 1945 that the government reported a net job change of zero. The unemployment rate, meanwhile, held steady at 9.1 percent. The disappointing report sparked new fears of a second recession and injected fresh urgency into efforts by Obama to help get millions of unemployed people back into the labor market — and help improve his re-election chances. Polls show the economy and jobs are the public’s top concerns. Public approval of Obama’s handling of the economy hit a new low of 26 percent in a recent Gallup survey. The unemployment report also gave Obama’s Republican critics, including those who want to challenge him in next year’s presidential election, fresh ammunition to pound him with. GOP presidential candidate Mitt Romney called the report disappointing, unacceptable and “further proof that President Obama has failed.” Romney is scheduled to outline his own job-creation plan in a speech Tuesday in the battleground state of Nevada. In the speech to Congress, Obama is expected to call for a mix of individual and business tax credits and public works spending. He will also press lawmakers for swift action on those proposals. The day after his address to Congress, Obama plans to visit Richmond, Va. — part of which is represented by House Majority Leader Eric Cantor, R-Va., one of the president’s fiercest critics. Obama plans to spend a “decent amount of time” traveling the country to encourage support for his job creation plan, said deputy White House press secretary Josh Earnest. “These are bipartisan ideas that ought to be the kind of proposals that everybody can get behind, no matter what your political affiliation might be,” Obama said last week. “So my hope and expectation is that we can put country before party and get something done for the American people.” Labor Secretary Hilda Solis said Monday that both political parties should get behind Obama’s efforts to improve the hiring picture. “We do need everyone to be on board,” she said on NBC’s “Today” show. Solis said Obama “is very mindful of what the needs and concerns are of those individuals who have been out of work for so long.” But she also said the jobless have a responsibility to seek training in new skills, if necessary, to better prepare themselves for the kinds of jobs available in today’s economy. Obama spent part of the holiday weekend at the Camp David presidential retreat in Maryland “putting the finishing touches” on the proposals and the speech, said spokesman Jay Carney. “That process continues over the next few days, but he’s very far along,” Carney said. In Detroit on Monday, Obama was also expected to tout his efforts to save the auto industry and millions of jobs by providing federal bailouts in 2009 for General Motors Corp. and Chrysler Group LLC. The AFL-CIO rally was being held in a GM parking lot. Obama won Michigan in the 2008 presidential election and the economically challenged state is crucial to his re-election prospects. The state unemployment rate was 10.9 percent in July, above the national average for that month. The Detroit-area jobless rate was even higher, at 14.1 percent in July.

Read the full article →

David Isenberg: War and Private Contractors: Can’t Live with Them, Can’t Live Without Them

September 3, 2011

For those who follow private military and security contracting issues, Wednesday was rubber meets the road day. By that, I mean that Aug. 31 marked the official release of the final report of the Commission on Wartime Contracting in Iraq and Afghanistan. This concluding report by the CWC is the capstone of three years of work, numerous hearings, interviews, field trips to Iraq and Afghanistan, including keeping offices in both Baghdad and Kabul, the hiring of a highly professional and qualified staff, and the smooth working of eight bipartisan and nonpartisan commissioners. As commissions go, it would be hard to find one working on such an important issue that had such impressive credentials. So what did they conclude and what did they recommend? This post deals with the first question. Let’s take a look at some of their numbers. According to the eight-chapter, 240-page final report, Transforming Wartime Contracting: Controlling Costs, Reducing Risks : Spending on contracts and grants performed in Iraq and Afghanistan in support of operations in those countries is expected to exceed $206 billion through the end of fiscal year (FY) 2011. Actual expenditures will be even higher because not all contracts that support contingency operations in Iraq and Afghanistan are identifiable as such. The number of Department of Defense (Defense), Department of State (State), and the U.S. Agency for International Development (USAID) contractor employees in Iraq and Afghanistan has varied, but exceeded 260,000 in 2010. The contractor employee count has at times surpassed the number of U.S. military personnel in the two countries. Although contract activity has taken on increasing importance, the resources devoted to managing contracts and contractors have not kept pace. The number of contract specialists — an occupation critical to the execution of contingency contracting — rose by only 3 percent government-wide between 1992 and 2009, despite an enormous increase in contracting activity during that period. That last point is a diplomatic way of saying that even after 10 years of extensive use of contractors to enable and facilitate military, diplomatic and reconstruction operations, government still doesn’t know how, or even worse, doesn’t care, to carry out due diligence on the activities it contracts out. Think I am exaggerating? Here is what the report says: Defense has promulgated important policy and doctrinal changes. However, the structure needed to force important lessons learned through the system and the authority to enable resource shifts to support the acquisition process does not exist. More than half of Defense’s contract spending is for services and not for hardware procurement. Yet Defense’s culture and processes remain focused on weapons systems. This imbalance in focus is particularly risky in the context of operations in Iraq and Afghanistan, where 66 percent of contract spending is for services. While the Pentagon is the primer offender, it is not the only one. The CWC said this about the State Department: “But State has not fully recognized or implemented many of the needed changes. Therefore, significant additional waste — and mission degradation to the point of failure — can be expected as State continues with the daunting task of transition in Iraq.” Considering that the State Department is now assuming many of the missions formerly done by the U.S. military in Iraq, this can’t be good. Given the above, this explains why the report said, “Because the heavy reliance on contractors has overwhelmed the government’s ability to conduct proper planning, management, and oversight of the contingency-contracting function, the Commission concludes that the government is over-reliant [emphasis added] on contractors.” Speaking of services, see page 23 of the report for a breakdown of the 10 most commonly acquired services, which account for 44 percent of total services obligations. Despite all the histrionics about Blackwater, DynCorp, Aegis Defence and other private security firms, guard services were a relatively small part of the total spent on services. After 10 years the CWC estimates that only $3.8 billion was spent on guard services. But if you are going to be a contingency contractor, size matters. A total of 22 individually identifiable contractors received at least $1 billion each and account for 52 percent of contract awards. You can be sure that none of these were mom-and-pop or small-business firms. Instead, say hello to: Agility DynCorp Kuwait Petroleum Corporation Fluor Intercontinental, Inc. The Bahrain Petroleum Company Combat Support Associates ITT Federal Services International The Louis Berger Group, Inc. International Oil Trading Company Readiness Management Support L-3 Communications Red Star Enterprises, Ltd. IAP Worldwide Services Environmental Chemical Corporation Perini Corporation Blackwater Lodge and Training Center Contrack International, Inc. Triple Canopy, Inc. DAI/Nathan Group, LLC Washington Group, International Bearing Point, LLC By the way, try doing a search for lawsuits and the above company names. Off the top of my head, at least 10 of the above — and I’m being conservative — have been in trouble with the government for work in Iraq and Afghanistan since 2001. Also, speaking of big firms, pause to consider the similarities between large PMCs and the financial services industry. The CWC did and found, “Because the U.S. government relies on only a handful of contractors to provide most of the support for the contingencies in Iraq and Afghanistan, this reliance potentially presents a situation analogous to the U.S. financial industry’s “too big to fail” calamity.” Interestingly, the second-highest obligations category, however, is “miscellaneous foreign contractors.” The $38.5 billion recorded for “miscellaneous foreign contractors” suggests the difficulty of compiling reliable, accurate procurement-transaction data. But this not just an issue of wasted money; it is far more serious that that. People’s lives are at stake. The report noted, “In Afghanistan, for instance, carrying out stabilization-and-reconstruction projects in insurgent-contested areas with contractor employees has led to deaths, delays, and waste.” Speaking of deaths, it was good that the report confirmed what many of us who follow the issue have long known but doesn’t get nearly enough public mention: The extensive use of contractors obscures the full human cost of war. The full cost includes all casualties, and to neglect contractor deaths hides the political risks of conducting overseas contingency operations. In particular, significant contractor deaths and injuries have largely remained uncounted and unpublicized by the U.S. government and the media. As of July 2011, that total is 2,429 contractor deaths. We all know that wars are expensive. And generally we don’t begrudge money spent if it is doing something useful. As the cliché goes, nothing is too good for our boys. But the cliché may require a corollary — “so that’s what we’ll give them, nothing” — given that the report found: U.S. operations in Iraq and Afghanistan have entailed vast amounts of spending for little or no benefit. That is waste. The Commission’s conservative estimate of waste and fraud ranges from $31 billion to $60 billion, based on contract spending from FY 2002 projected through the end of FY 2011. If the $31-billion estimate is correct, that would mean that 15 percent of the total $206 billion spent on contracts to date was wasted, and $60 billion would be 29 percent. No matter how you slice it or inflation adjust it, that’s real money. By the way, can anyone point me to a private business whose CEO still has a job when an audit reveals that comparable amounts of their revenue have been wasted? Anyone? Yes, I didn’t think so, either. But let’s take the middle of that range, say, $45 billion, or $4.5 billion a year. That works out to $12,328,767 a day, $1,875,000 an hour, $31,250 a minute and $520 per second. Clearly, if one could bring back Willy Sutton from the dead, he would be a private contractor, not a bank robber. Of course, that is not to say that most private military contractors are crooks. Perish the thought. But it does mean that there is a lot of wasted money that could be saved fairly easily. According to the CWC, “Some degree of waste and fraud has always accompanied the uncertainties of war. But much of the waste and fraud in Iraq and Afghanistan that resulted from ineffective contingency contracting was foreseeable and avoidable.” During the recent press briefing for the report, one of the CWC commissioners, Dov Zakheim, said he thought the total was closer to the upper end of the estimate. But even if you take the lower end, the eventual total will be higher. That is because the report also found: A particularly troubling outcome of the Commission’s examination of waste is that billions of dollars already spent, including spending on apparently well-designed projects and programs, will turn into waste if the host governments cannot or will not commit the funds, staff, and expertise to operate and maintain them. Second, let’s consider the geopolitics of this. The report said that the use of contractors in the United States’ earlier contingencies did not overtax agencies’ capacity to support, manage and oversee them, because the contingencies’ scope or duration were comparatively smaller or shorter than the ongoing operations in Iraq and Afghanistan. However, in every year of the past 23 years, the United States has been engaged in an overseas-contingency operation. For the past 12 years, the United States has always and simultaneously been engaged in two or more overseas regions. More recently we’ve seen the unexpected campaign executed by the United States and NATO to suppress the Libyan government’s attacks on its citizens. Unrest in Somalia and Yemen also raises the potential of a contingency operation that might require contractor support and stabilization-and-reconstruction operations. Given that kind of record, it is rather difficult to envision that the United States is going, to cite the Beatles, to give peace a chance anytime soon. That, by the way, is not a pejorative assessment of U.S. foreign policy, just a fact-driven assessment of what is likely to happen in the future. Thus, it is not hard to see why the CWC says, in its best Star Trek Mr. Spock fashion, “The logical implication of this geo-political environment is that contractors will remain a significant element of the U.S. government’s total force. The Under Secretary of Defense for Acquisition, Technology, and Logistics recently testified before the Commission, saying, ‘We’re simply not going to go to war without contractors.’” Anybody who was dreaming that that the military was going to divest itself of contractors can put that fantasy to rest. Of course, if you remember what the CWC said earlier, namely that the government is over-reliant on contractors, you can see that we have a bit of a contradiction, or, as the sheriff said in the movie Cool Hand Luke , “What we’ve got here is (a) failure to communicate.”

Read the full article →

Dave Llorens: Solyndra Was Lame and Failed, But That’s Not the End of Solar

September 2, 2011

In 2009, Solyndra was one of the first cleantech companies to reap the benefits of Obama’s cleantech stimulus package. They looked like a good investment because they’d secured billions of dollars in back-orders, had financial backing from heavy-hitting investors, and promised to keep manufacturing local. But they overestimated their market and their ability to deliver, and now, only two years later, they’re going under and the talking heads on the 24-hour news channels can’t wait to use them as an example of the perils of Obama’s stimulus package. Yes, it sucks. But Solyndra was given money because it was first in line, and the public was putting on a lot of pressure to deploy the new stimulus funds. Unfortunately the government made an investment mistake; Solyndra was not a good business. But guess what? This happens every single day to Silicon Valley venture capital firms. It’s just unfortunate that Solyndra happened to be one of the first deployments of government capital. To prevent this from happening again, we need to approach it like investors in the private sector who know their way around evaluating cleantech investments rather than doling out money to the first in line. Remember what the US did with the Internet? It highlights what this country does better than any other country: innovate and sell those innovations to the rest of the world. Cleantech is the next Internet. Ask someone who manages a hedge fund or venture capital firm and they will tell you, unequivocally, that cleantech (smartgrid, smarthome, electric vehicles, etc) is a budding trillion-dollar market, just like the Internet. The problem is that because of the current energy market, cleantech companies require hundreds of millions of dollars (instead of a few million) before they can compete with incumbents like fossil fuels. This means enormous risk: you have to put a few hundred million out there to see if it ‘works,’ and only a few groups that can do that. This is the perfect opportunity for the US government to invest, because they are big enough to absorb that risk and still get good returns. Unfortunately with big players like Solyndra taking government money only to fail two years later, we’re at risk of this turning into a Shakespearian tragedy where everybody dies in the end, no thanks to misinformation and assumption. Lots of people after this are going to point to subsidies and say they’re bad for job creation. But subsidizing clean technology in a big way is probably the single best way to create jobs in the long run. As a very small example, Germany has one solar job for every 1,000 people . The U.S. has one for every 4,000. And Germany gets less sun than Seattle. Still not feeling the subsidies? Think about this: coal would never have overtaken the place of its incumbent (wood!) if it was not subsidized, yet everyone seems to forget that. China is subsidizing the hell out of solar, and they’re flat-out kicking our ass. (Ask Solyndra, who cited the competitive pricing coming out of China as a reason that they tanked.) Second, call your senator and tell them you think America needs to lead in clean technology like we did in the glory days of the auto industry. It never hurts for them to hear it from you, the voters. On a personal note, while I appreciate the environmental benefits of cleantech, I actually got into solar because I’m a capitalist. I grew up in Louisiana, I shoot guns, and I don’t think I should be fined for not wearing my seatbelt. Yet here I am saying that if I had a magic wand and could get my great nation to do one thing, it would be to get behind cleantech in a big way now, so that in 50 years, we’re still a super power.

Read the full article →

AT&T Gears Up For Rare Antitrust Fight With DOJ

September 1, 2011

SAN FRANCISCO — The Justice Department’s rejection of AT&T’s proposed purchase of T-Mobile USA will test new federal guidelines on challenging mergers and the companies’ resolve in forming the nation’s largest wireless carrier. A courtroom battle is likely and could wring out information that the companies would prefer to keep private. Still, AT&T Inc. has a big incentive to fight: If the deal is called off, the company has to pay a $3 billion breakup fee and surrender some of its unused spectrum for wireless communications. AT&T is promising to fight the Justice Department’s decision. The department filed a lawsuit Wednesday to block the $39 billion deal, saying it would reduce competition and lead to price increases for customers. If AT&T follows through on that, it could produce the biggest antitrust showdown since business software maker Oracle Corp. squared off with the federal government seven years ago. That dispute, triggered by the government’s decision to block Oracle’s proposed purchase of rival PeopleSoft Inc., exposed several well-kept corporate secrets and required Oracle CEO Larry Ellison to testify before a packed courtroom. In the end, Oracle pulled off something few companies have done in the past 30 years: It persuaded a federal judge that the Justice Department didn’t have grounds to block its PeopleSoft deal. Oracle closed its $11.1 billion takeover four months after getting the favorable court ruling. Usually, not even the most powerful companies bother to fight government regulators in an antitrust dispute. Google Inc., for example, backed off in 2008 when the Justice Department threatened to sue to block a proposed Internet search partnership with Yahoo Inc. Microsoft Corp., the world’s largest software maker, pulled out of a deal to buy Intuit Corp. in 1995 after the Justice Department objected. The Justice Department filed 138 antitrust cases in federal courts from 1999 to 2008 and lost just four of them, according to the latest breakdown from the agency. One reason that the Justice Department has such a good track record is because it rarely challenges a deal unless it’s very confident it can win, said Joseph Bauer, a University of Notre Dame law professor and antitrust expert. Knowing AT&T would probably go to court, the Justice Department may have wanted to signal that it intends to get tougher on corporate marriages between rivals in markets with few other competitors. A union between AT&T and T-Mobile USA would leave Verizon and Sprint as the only other major cellphone carriers in the U.S. T-Mobile, a subsidiary of German telecom company Deutsche Telekom AG, is currently the No. 4 wireless carrier, while AT&T is second. Combined, AT&T would be the largest. In a sign of its confidence, the Justice Department decided to strike down the deal even though it could have taken about three more months to study the pros and cons. The timing stunned AT&T, which said it didn’t get any advance warning. “It was an aggressive and impressive move by the DOJ to take the battle right at AT&T,” said Daniel Wall, a San Francisco attorney who represented Oracle in its 2004 fight to win the right to buy PeopleSoft. “It sent a statement that the DOJ intends to fight this one all the way to the finish line.” Wall said AT&T may have a tougher time proving its case than Oracle did against the Justice Department. In the PeopleSoft deal, Wall said, antitrust enforcers seemed to be manipulating the definition of the business software market. “This time, it looks to me that they have a pretty solid market definition,” Wall said. “They don’t appear to be playing games.” University of Iowa law professor Herbert Hovenkamp said the Justice Department is being guided by a set of new guidelines, issued late last year, which make it clearer when mergers should be challenged on antitrust grounds. “I don’t think they are overreaching here,” Hovenkamp said. “If there is a broader message here, it’s that the government intends to enforce these new guidelines.” Besides being forced to divulge potentially damaging information, AT&T will face other risks if it doesn’t settle with the Justice Department. Going to trial will take months, or even years, leaving the company in a legal limbo that could depress its stock price and cause customers and key employees to defect. There’s another risk to going to trial: as they try to prove their case, antitrust lawyers sometimes obtain confidential e-mails that contain embarrassing snippets and present other evidence that can make companies look bad. Those are some of the reasons why AT&T mayl try to reach some kind of settlement with the government. If AT&T persists, antitrust experts said that it’s better off going up against the Justice Department than the Federal Trade Commission, which also handles antitrust reviews. That’s mainly because lawsuits with the Justice Department are contested in federal courts. By contrast, the threshold for the FTC to block deals is generally lower, and the ensuing legal skirmishes occur in administrative law proceedings that drag on longer. “The merging parties usually have a better shot when they are going up against the DOJ than the FTC,” said D. Daniel Sokol, a University of Florida professor specializing in antitrust law.

Read the full article →

Benedict Clements: When Reality Doesn’t Bite — Misconceptions about the IMF and Social Spending

August 31, 2011

All too often we hear the claim that the programs the IMF supports in low-income countries hurt the most vulnerable by forcing cuts in social spending. This is a misconception. Our study concludes that, contrary to these claims, IMF-supported programs boost education and health spending in low-income countries for as long as countries are engaged with the IMF. Let the numbers do the talking We based our analysis on public spending on education and health in 140 countries between 1985 and 2009. The dataset is the most comprehensive ever assembled to assess this issue. The results show the beneficial effects for social spending in program countries in several respects. First, social spending increased at a faster pace in countries with programs compared to those without, particularly for low-income countries with programs (see chart). This is true for social spending in relation to GDP and as a share of total government spending, as well as increases in per capita social spending after adjusting for inflation. Second, the benefits for social spending have accelerated over time in low-income countries. The median annual increase in education and health spending in low-income program countries since 2000 was more than double the average increase during 1985-1999. The rate of increase since 2000 implies that education and health spending, as a share of GDP, would increase each decade by 0.7 percentage points and 0.6 percentage points, respectively. Because GDP is also growing rapidly in these economies, increases in spending relative to GDP imply large increases in spending per capita. The rate of spending growth since 2000 suggests that education and health spending per person, after adjusting for inflation, would rise by about 50 percent and 60 percent, respectively, over a 10-year period. Of course, IMF-supported programs are not the only determinants of a country’s social spending. Many other factors–age profile of the population, income levels, and macroeconomic conditions–come into play. A fair test of the impact of IMF-supported programs on this spending must take these factors into account. Using statistical techniques that distill the impact of an IMF-supported program, as distinct from these other factors, we again find that IMF-supported programs have a positive, and even stronger, effect on the rate of increase in social spending in low-income countries. For example, over a five-year period with IMF-supported programs, education spending increases in low-income countries by about ¾ percentage point of GDP; and by about 1 percentage point of GDP for health spending. Facilitating social spending The IMF is committed to help protect or increase social spending in the programs it supports in low-income countries. In this regard, there are numerous channels through which programs help spur higher spending in education and health, including: Reforms that increase government revenues–on average, program countries increase revenues at a brisker pace than non-program countries–help create “fiscal space.” IMF-supported programs help countries mobilize donor financing. To the extent that programs lead to higher growth, they can help generate greater fiscal space. Finally, the emphasis in these programs on using additional resources–including those generated by debt relief–to support poverty-reducing spending contributes to rising shares of education and health spending. The results suggest that IMF-supported programs are compatible with the efforts of countries to boost critical social spending to improve social outcomes. But, it will be equally important, as many scholars have emphasized, to improve the targeting and efficiency of public spending to make it a more powerful instrument for bettering the lives of the poor. From iMFdirect blog

Read the full article →

Charles Gasparino: Who Is the Best Person to Run Bank of America?

August 30, 2011

If the saga of Bank of America, the country’s largest and most troubled bank, were to be made into a movie, its title would have to be “The Dumbest Men in the Room,” with a starring cast that features its half-witted chief executive officer Brian Moynihan and his equally half-witted board of directors. All of which wouldn’t be so bad if Moynihan and his brain-dead board weren’t running a bank with more than $2 trillion in assets and $1 trillion in customer deposits that the federal government (meaning taxpayers) might have to cover some day if Bank of America hits the skids just as it did during the financial crisis of 2008, and as it almost did in the last couple weeks. Just to recap: BofA’s share price was heading to zero as investors came to believe that all the bailout money, the billions upon billions of guarantees and zero-percent borrowing rates the government handed the bank over the past two years wasn’t working. That’s because on top of everything else, the big bank was facing a new potentially, more devastating liability: untold billions of dollars in losses tied to the sale of faulty mortgages by its Countrywide Financial unit, and Moynihan’s inability to come up with a plan to deal with the problem. The run of the stock appears to have ended last Friday when Warren Buffett pumped $5 billion into BofA in one of the most one-sided deals the market has ever seen (I don’t even need to say who got the short end of this stick), and the company began unloading prime assets like a piece of its stake in the China Construction Bank raising billions of dollars more. Investors seem to be getting comfortable that the worse is over for BofA and that Moynihan is starting to get his act together. The bank’s stock price is no longer heading toward penny-stock territory (shares are now trading at around $8 today), and market talk about another round of government bailouts has ceased, at least for the moment Will it last? Buffett says he thinks so and he’s been saying a lot of nice things about the bank and Moynihan since he announced his big investment. But Buffett’s show support should be seen for what it is: a bribe. Under the terms of the deal, he has already made more than $500 million, with many more hundreds of millions to come. His investment isn’t even a week old. For that reason, investors should remain wary that the biggest bank in the country won’t at some point become the nation’s biggest banking catastrophe. While BofA may be in a better financial position than it was before the 2008 financial crisis (it would be difficult to be any worse), or before Buffett came to the rescue, it’s far from a healthy situation. And one more thing: the bank is being led by possibly the most unqualified CEO in all of corporate America. I say this not because I dislike Moynihan; I’ve met him and he’s seems like a nice enough guy. Some smart people on Wall Street hold him in high regard for basically the same thing; if there is a CEO in financial business who wants to do the right thing, they say it’s probably Brian Moynihan. But desire aside, Moynihan has been nothing short of a klutz as a leader. Part of his problem is that he’s a lawyer by training and lawyers make lousy CEOs (remember Chuck Prince’s messy tenure at Citigroup). But at least Prince proved to be a decent lawyer who fought his way up the corporate ladder to replace Sandy Weill as Citi’s chief executive. The best you can say about Moynihan is that he got the job by default. Before he became CEO, Moynihan was a regarded as B-player at best by his colleagues. He held a variety of jobs inside Bank of America’s vast bureaucracy and failed to stand out at any of them. He was mediocrity personified. Moynihan he did have one thing going for him: he was part of a group of executives who remained at BofA after it purchased Fleet Financial in 2004 where he served as general counsel. And his Fleet lineage helped him when it mattered most. Ken Lewis, under investigation for his financial-crisis purchase of the troubled Merrill Lynch brokerage firm, had resigned. A boardroom showdown over Lewis’s successor ensued with some members wanting an outside candidate and others looking to promote one of Lewis’s cronies. At the time, Moynihan’s name was barely on the long list of candidates. But several former Fleet board members remained on the BofA board, and capitalized on the general dysfunction to promote one of their own. With that, a man least likely to succeed as a CEO became the head of the nation’s largest bank. Moynihan took over in January 2010 and began screwing up from the start. He assured investors that the feds gave BofA the green light to raise its dividend when no green light had been given because the bank’s post-crisis finances weren’t strong enough. Despite mounting evidence that BofA faces a crisis of large magnitude stemming from Countrywide, Moynihan has inexplicable downplayed the bank’s exposure right up to the moment the bank was about to announce its intention to shell out its first mutli-billion settlement to investors holding soured mortgages. In fact, Moynihan has had nearly two years to prepare for the onslaught of Countrywide related claims — one even came from his business partner, Larry Fink, the CEO of Blackrock that BofA had held a huge stake in. Yet when the trouble began earlier in the year, Moynihan didn’t have a clue about how to proceed. “He seemed lost,” one investor who met with Moynihan about the liabilities told the Fox Business Network. What’s even worse, he seems to have learned almost nothing from recent history of financial firms and their top executive assuring everything of OK when it really isn’t. Though people who know Moynihan swear he’s honest, he’s been coming across as CEO in the mold of Dick Fuld and Alan Schwartz — the guys who ran Lehman Brothers and Bear Stearns into the ground but not before assuring the markets that their firms were fine before they imploded. Moynihan’s BofA isn’t quite the house of cards of either Bear or Lehman, but he seems to be relying on the Fuld/Schwartz handbook of dissembling when he should be telling the truth. During the recent run on the stock, Moynihan and his PR staff were absurdly spinning that BofA was in absolutely no need of additional capital, downplaying reports, including an early one by the Fox Business Network on August 4, that the bank was looking to cash out of at least part of its stake in the China Construction bank. But between Buffett and the sale of the China Construction stake BofA has raised close to $13 billion in additional capital. The BofA flacks are saying that the moves won’t “dilute” shareholders and place more downward pressure of BofA shares since the bank isn’t selling new stock to come up with the money. But one of the reasons why the Buffett deal is so one-sided is because BofA basically handed the Oracle of Omaha the right to purchase some 700 million shares anytime over the next 10 years — or 7% of all outstanding BofA stock — in what will be the mother of all dilutions once that nice old man from Omaha decides to cash in his chips. Despite all of this, Moynihan’s in-house defenders will tell you that their man is working day and night to fix the bank and repair something he had very little to do with, namely Countrywide. That’s a bit closer to reality since it was his predecessor Lewis on a pre-crisis buying spree to make BofA the world’s largest bank, who snapped up Countrywide in early 2008. But Moynihan wasn’t exactly an innocent bystander in terms of Countrywide. In all those Countrywide-related meetings when he worked as part of Lewis’s management team, did Moynihan even once raise his hand and object to the purchase? The answer from what I understand is no. For all of this experience, of course, Moynihan might be the best person to run BofA for some of the more brain-dead members of the bank’s board, but investors should be demanding something better. So should taxpayers, because if Moynihan fails to fix the problems at Bank of America, they will be paying the ultimate price in the form of another massive government bailout. And all because Brian Moynihan used to work at Fleet.

Read the full article →

← Previous Entries

Next Entries →