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Sen. Ron Wyden: My Letter to the Internet

by Sen. Ron Wyden on January 18, 2012

Huffington Post…

Dear Friends: Today, thousands of websites have chosen to voluntarily go offline or modify their home pages with public service information. Some have called this a stunt. I say it’s a brave and poignant reminder that we can’t take the Internet for granted. The Internet has become an integral part of everyday life precisely because it has been an open-to-all land of opportunity where entrepreneurs, thinkers and innovators are free to try, fail and then try again. The Internet has changed the way we communicate with each other, the way we learn about the world and the way we conduct business. It has done this by eliminating the tollgates, middle men, and other barriers to entry that have so often predetermined winners and losers in the marketplace. It has created a world where ideas, products and creative expression have an opportunity regardless of who offers them or where they originate. Protect IP (PIPA) and the Stop Online Piracy Act (SOPA) are a step towards a different kind of Internet. They are a step towards an Internet in which those with money and lawyers and access to power have a greater voice than those who don’t. They are a step towards an Internet in which online innovators need lawyers as much or more than they need good ideas. And they are a step towards a world in which Americans have less of a voice to argue for a free and open Internet around the world. Proponents of these bills say these arguments are overblown, but I say any step towards an Internet in which one person’s voice counts more than another is a step in the wrong direction. These are bills that should give us pause. These are bills that should be studied and debated. Congress should consult experts and consider alternatives and make 100% sure that any step it takes to police the Internet doesn’t change the Internet as we know it. This is why I put a hold on the Protect IP Act and its predecessor over a year ago and introduced a bipartisan alternative last month. The Senate, however, has scheduled a vote for Tuesday, January 24 at 2:15 PM to override my hold and move the Protect IP Act towards passage. This will be the deciding vote that determines whether PIPA and SOPA move through the Congress or are turned back for more sober discussion. We are up against a group of the biggest, most powerful, well-funded and well-organized interest groups in Washington. No one thought millions of Internet users would speak up or that those voices could overcome the power of these interests. Today you showed that the Internet is not just a platform for ideas, commerce, and expression, but also for political action that will defend those principles. Your voices must continue to be heard. Thank you for standing up for what’s important, for continuing to speak out and for demonstrating that we should always stand up for what we think is right regardless of the odds. This is an opportunity to reshape the way Washington operates, not just responding to narrow interests but hearing the voices of millions of Americans whose rights and livilihoods are affected by our actions. Sincerely, Ron Wyden United States Senator

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Sen. Ron Wyden: My Letter to the Internet

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Huffington Post…

Sen. Scott Brown (R- Mass.) denounced House Republicans for rejecting a payroll tax cut deal on Tuesday, and accused his colleagues of putting politics before the needs of American families. “It angers me that House Republicans would rather continue playing politics than find solutions,” Brown said in a statement released shortly after the House voted to block the bipartisan bill. “Their actions will hurt American families and be detrimental to our fragile economy. We are Americans first; now is not the time for drawing lines in the sand.” The Senate bill would have prevented the payroll tax cut from expiring on January 1, 2012 by ensuring a two-month extension. Republicans in the House opposed to the bill argued in favor of a year-long extension or no extension at all, claiming that approving a bill for just two months would create uncertainty. Brown’s criticism followed harsh comments he made on Monday, when he called the GOP’s refusal to compromise “irresponsible and wrong.” Brown — who is up for re-election in 2012 — is preparing for what will likely be a challenging race against Democratic Senate candidate Elizabeth Warren. A recent poll spelled good news for Warren, showing her leading Brown 49 to 42 .

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Scott Brown: House GOP Would Rather Play Politics Than Find Solutions

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Oscar Statuette Manufacturers Hope Hollywood Can Help In Worker Wage Battle

December 7, 2011

CHICAGO — A stalemate between the company that manufactures the Oscar statuettes and its workers could amplify the drama at February’s Academy Awards if an agreement on wage and benefit disputes is not reached. Fifty Teamsters are holding their ground in contract negotiations with R.S. Owens & Company, the long-time producer of the statuettes awarded at the Oscars and Emmys , according to a release issued by the union Tuesday. The company froze wage increases from 2007 to 2011 and proposed renewing the policy for the next three years, leaving employees with nearly a decade of stagnated pay, the union alleges. The company also proposed cuts to vacation and bereavement benefits and increases in health care costs, according to the union. The union reports that Owens generated $31 million in revenue this year, a number the company’s president, Scott Siegel, disputes. “The workers have been trying to help the company for the last 10 months by working shorter hours, even with more demanding work, and we really feel that’s something the company should take into consideration as contract negotiations progress,” said Will Petty, a spokesman for the Teamsters Union. “The workers can only take so much, can only give so much, and right now they’re giving so much it’s starting to hurt. We want the company to recognize that.” Teamsters Local 743 , which represents the workers, announced plans to seek federal mediation Tuesday. Petty says production has not been interrupted, but a strike could be on the horizon if an agreement is not reached. Since the company’s statuette production schedule extends through January, a strike could spell trouble for the Feb. 26 awards show. Siegel expressed a desire to work things out with the union, and has two negotiation meetings scheduled with them this week, he said. He says Local 743 had two opportunities to reopen their last contract and negotiate pay increases, but failed to take advantage of those opportunities. Siegel also said he’s disappointed that they’ve made their side of this dispute so public–especially because the avenues the Teamsters have used to promote their cause could be better used to combat larger problems facing his industry. “We’re the only unionized [award] manufacturer in the United States,” Siegel said. “We have seen one after another entertainment award that we manufactured being moved to China. At no point have the Teamsters, or members of other unions, put pressure on all the entertainment organizations to buy union-made awards and U.S.A.-made awards. Part of the predicament [R.S. Owens & Company is] in right now is because most of the main awards are now being made in China.” Coincidentally, film crews are on site at the production company this week to shoot “behind the scenes” footage of the statuettes’ production for the ceremony. Petty says those visitors and others like them in the film industry could be a huge help by advocating on behalf of Owens employees. “From the Screen Actors Guild to the Directors Guild of America, most celebrities who get an Oscar are in a union themselves,” Donnie Von Moore, president of Teamsters Local 743, which represents the R.S. Owens & Company workers, said in a statement. “They know how crucial unions are to protecting livelihood. What the workers at R.S. Owens need now is union support.” This story has been updated to include a response from R.S. Owens & Company.

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Laura Kiss: Professor Monti, It Could Be Better for Italy

December 6, 2011

Professor Monti is a smart, prepared, well educated and charming Italian man. Nothing in comparison with what Italians have had to suffer with Berlusconi for the past 17 years. He is one of the best economic brains of Europe and has adopted a very appreciated low profile in running the country. So low that he announced to Italians that, as a personal decision, he is renouncing his salary as Prime Minister and Minister for the Economy. Being so smart, he is also very aware that his government is a technical one and has to look for the approval of the parliament in order to survive. And, as we know, the Italian parliament is not an easy entity with which to deal. In recent days, in order to try to save Italy from default, Professor Monti has tried to assure Italians with three key words: recovery, equity and growth. We had hoped that “equity” would be kept in first place in his financial mesaures contained in the austerity package, but as it has been presented, people have noticed that equity has been left far behind. It is true, all categories of Italians are effected by these measures. The country is so destroyed after Berlusconi that we are all aware that we have lived beyond our means and that something has to be changed. But, excuse me Professor, some distinguo would not hurt. If I have a pension of 1.000 euros a month, or if I have 5.000 euros a month makes a big difference. Not to mention the new law that reintroduces the tax on properties: all houses, no matter if you own 1 or 50, will be taxed. Correct, but what about the Vatican that owns the most valuable properties in this country? Does Professor Monti know that religiouse buildings, convents, institutes, residences are very often being transformed into hotels? That religious orders run regular commercial activities related to tourism and that the revenues of religious tourism are a big part of the Vatican State GDP? And what about the costs of the political system in a country that is facing the worst financial crisis since the second world war? The austerity package makes mention only of the life annuity of parlamentarians (millions of euros every year) which will be a subject for discussion in the next legislature. The number of the councillors at the provincial government level will decrease but not one word about the number of parlamentarians (the second highest in Europe after UK, 951 in Italy, 1477 in UK), or the cost of their salaries and benefits. We know, Professor Monti, that your job is really difficult and we understand that you have to find a decent compromise in order to obtain the parliament vote of confidence. And we also know that the time has expired for Italy if we don’t want to face further recession. But please, for the future of this country, try to be more fair and give us a stronger sign of social justice.

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Olympus Report To Be Released Next Week, Opening Way For Possible Criminal Complaints

December 4, 2011

TOKYO – An expert panel appointed by Japan’s Olympus Corp to look into an accounting scandal at the disgraced firm will release its findings on Tuesday, Kyodo news agency said in a weekend report, opening the way for possible criminal complaints against former company executives. Olympus has admitted to using murky M&A deals to hide losses on investments stretching back two decades. Its current management has blamed ex-president Tsuyoshi Kikukawa, former executive vice president Hisashi Mori and former internal auditor Hideo Yamada for the scheme and said it was ready to take legal action against those found responsible. The 92-year-old maker of cameras and endoscopes is battling to remain listed on the Tokyo Stock Exchange, but if the panel finds involvement of organized crime syndicates — as has been speculated — that outcome would be difficult. Tokyo police, prosecutors and the Securities and Exchange Surveillance Commission (SESC) have launched a rare joint investigation of the scandal, and are likely to step up their probe after the panel report is released. Potential criminal charges could include filing false financial statements, fraud and aggravated breach of trust — an offence that can include embezzlement — although proving breach of trust could be difficult because of the need to show that the offence had been committed for personal gain. Olympus also needs to meet a December 14 deadline to file its financial results for the six months to September in order to avoid an automatic delisting. Former Olympus CEO Michael Woodford, who blew the whistle on accounting tricks at the company after his sacking from the top job in October, has launched a campaign to oust the current board and replace it with his own team of candidates led by him as nominated CEO. That has set up a battle between Woodford, an Englishman who was a rare foreign CEO in Japan, and current Olympus President Shuichi Takayama, who plans to stay on, at least in the short term, to try to get the company back on track. The Olympus affair has fanned doubts about corporate governance generally in Japan as well as revived concerns about ties between “yakuza” gangsters and companies. Attention will also be focused on what the panel, led by a Supreme Court judge, has to say about the role of outsiders in the scandal, including Akio Nakagawa, a banker with lengthy ties to Olympus and whose firm Axes received a mammoth advisory fee in the purchase of U.K. medical equipment maker Gyrus in 2008. (Reporting by Linda Sieg; Editing by Edwina Gibbs) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Morgan Stanley CFO: Raise Taxes On The Rich

December 4, 2011

The movement to raise taxes on the wealthiest Americans has gained an ally at the top of one of the United States’ largest banks. Ruth Porat, executive vice president and chief financial officer at Morgan Stanley, said on Saturday at the Economist’s World in 2012 summit that the government needs to raise taxes on the rich to address its budget deficit. “The wealthiest can afford to pay more in taxes. That’s a part of the deal. That makes sense. I don’t know anyone that doesn’t agree with that,” Porat said. “The wealth disparity between the lowest and the highest continues to expand, and that’s inappropriate.” “We cannot cut our way to greatness,” she added. President Obama has said he would like to raise taxes on millionaires , but many Republicans oppose such a tax. Most millionaires , on the other hand, say that they would like to pay more in taxes. Porat said that the global markets are more stressed now than they have been since the financial crisis in 2008. She said bank debt is now less trusted than other corporate debt, borrowing costs for European countries such as Italy have reached record highs, and banks have become less confident lending to one another. Since banks around the world now are focused on paying down their debt, they are less likely to lend to businesses and consumers, she said. Porat said she expects global economic confidence to hit bottom next year and that the eurozone ultimately will avert a breakup by becoming more fiscally integrated. “The optimistic scenario is low growth, and we only have that if in fact we see this conscientious move toward greater fiscal integration,” she said. Porat said that there is potential for an economic recovery in the U.S. to gain momentum next year, once companies become confident enough in the economic climate to make more investments. “Where there’s any sort of sense that we’re turning the corner, you’ll see a lot of cash coming in,” she said. “There is this cash on the sidelines waiting to be put to work.” But Porat said that with the extreme level of political polarization in Congress, “right now there doesn’t seem to be a path forward,” suggesting more “slow growth” in the future.

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Ted Kaufman: The Emperor Has No Clothes

November 3, 2011

Much of the recent media coverage and Internet chatter about financial industry reform has focused on the Occupy Wall Street movement. If we ever end up with the kind of reforms needed, that movement would certainly deserve some of the credit. If we look back on the Fall of 2011 a few years from now, however, I suspect we may trace the beginnings of real reform from two events that occurred last week with little fanfare. The first of the two events was when Federal District Court Judge Jed S. Rakoff refused to approve a settlement with Citigroup that the S.E.C. had proposed. The second was the lawsuit filed by Delaware Attorney General Beau Biden in the Delaware Court of Chancery accusing the Mortgage Electronic Registration System (MERS) of deceptive trade practices. (Full disclosure: I have been a friend of Beau’s his entire life.) Together, these two initiatives do the equivalent of exposing that the emperor has no clothes. Judge Rakoff had earlier refused to approve an S.E.C.-endorsed settlement of $33 million with Bank of America. When he finally did approve a $150 million settlement, he described even that as ” inadequate .” Last week, he dropped a second shoe on the major banks. Refusing to approve the S.E.C.’s $285 million settlement with Citigroup, which was accused of fraud in the sale to investors of $1 billion of Collateralized Debt Obligations, Judge Rakoff demanded that, before any settlement was approved, the S.E.C. first answer a number of questions. They are great, commonsense questions — exactly the ones that should have been asked in a whole strong of prior big bank settlements. Among them : • Why should the Court impose a judgment in a case in which the S.E.C. alleges serious securities fraud, but the defendant neither admits nor denies wrongdoing? • Why is the penalty in this case to be paid in large part by Citigroup and its shareholders rather than by the ‘culpable individual offenders acting for the corporation? … If the SEC was for the most part unable to identify such alleged offenders, why was this? • What specific ‘control weaknesses’ led to the acts alleged in the Complaint?… How will the proposed ‘remedial undertakings’ ensure that those acts do not occur again? • How can a securities fraud of this nature and magnitude be the result simply of negligence? Do you think for a moment that the average target of an investigation would get a deal that did not include answers to these questions? Stay tuned. Merscorp was founded in 1995 and is owned by the major financial institutions involved in the mortgage market, including Citigroup, Chase, Bank of America, Wells Fargo, FNMA, FMAC and others. MERS tracks mortgages and was established to reduce the charges of recording home ownership in local communities, thus making the widespread securitization of residential mortgages possible. AG Biden’s suit is the result of concerns he and New York AG Eric Schneiderman have expressed for some time about the potential settlement between the banks and the 50 State AGs. Those settlement talks began after the exposure of widespread problems with MERS and the banks’ foreclosure procedures, including the practice of filing affidavits in court in which the lenders’ employees claimed they had personal knowledge when they did not. Many documents had been “robo signed” or signed without being read. Essential documents were lost or destroyed. Files simply disappeared. Evidence of falsified documents is widespread. A lot of the AGs seem to be willing to impose some monetary penalties on the banks and reach a settlement without any more investigation. That settlement would allow the banks to move on without any admission of guilt or wrongdoing. Biden, Schneiderman and a few other AGs see it differently. They have been insisting on further investigations before any settlement is reached. The charges in Biden’s suit against MERS include a series of allegations based on his investigations to date. Among them : • Hiding the true mortgage owner and removing that information from the public land records. • Creating a systemically important, yet inherently unreliable, database that created
 confusion and inappropriate assignments and foreclosures of mortgages. • Failing to ensure the proper transfer of mortgage loan documentation to the securitization
 trusts, which may have resulted in the failure of securitizations to own the loans upon which
 they claimed to foreclose. (This is called “securities fail” and is the theory that allows put backs that crush the bank/originators.) • Initiating foreclosures in the name of MERS without authority to do so or without appropriate
controls to ensure the actions were being carried out by the actual owner of the mortgage. • Allowing the entry and management of data by those MERS members who are identified as 
owners or servicers in the MERS System, instead of controlling entry and management itself. • Initiating foreclosure actions in which the real party in interest was hidden, thus preventing
homeowners from ascertaining who owned their mortgage in order to challenge whether or not 
they had a right to foreclose and limiting their legal defenses. Again, stay tuned. Together, Judge Rakoff and Attorney General Biden are finally demanding much of the information we need to truly reform Wall Street.

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Pat Buchanan: Occupy Wall Street Is ‘Going To End Very, Very Badly’

October 30, 2011

Pat Buchanan issued a stern warning to Occupy Wall Street this weekend. In a round-table discussion on ‘The McLaughlin Group’, host John McLaughlin asked panelists about the future of the movement. “It’s going to end very, very badly with these folks in the winter and they’re not going to be getting publicity and they’re going to be acting up and acting badly like the worst of the demonstrators in the 60s,” Buchanan said. “They’re going to start fighting with the cops.” Occupy Wall Street took a violent turn this week as Oakland police unleashed tear gas on protesters and injured an Iraq war veteran. On Saturday, scores were arrested in Denver after protesters clashed with local law enforcement. When cops began to spray Mace on the crowd, several protestors reportedly retaliated by kicking and pushing police. Watch Buchanan on ‘The McLaughlin Group’, courtesy of the Daily Caller.

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Public College Students Going Public With Frustrations At Occupy Wall Street

October 28, 2011

NEW YORK — Wednesday evening, three college students descended on lower Manhattan’s Zuccotti Park with the hope of unfurling their sleeping bags and staying the night. All three men mentioned the rising cost of higher education as their main motivation for leaving the comfort of their own beds to instead pass the rainy night in a show of solidarity with fellow Occupy Wall Street protesters. “Given everything that’s been going on here, I decided there were bigger things at stake,” said Jorge Javier, 22, who majored in history and political science at Lehman College, part of the City University of New York system, before dropping out two weeks ago. He lives in the Bronx. “I decided to leave it all behind. I decided to drop out in solidarity with this movement.” Citing increasing amounts of student loan debt and the skyrocketing cost of tuition , many college students have gravitated toward the Occupy Wall Street movement . Nationwide, an estimated 150 campuses have staged formal protests and walkouts — with additional teach-ins planned for the middle of next week . For students attending public colleges, fears over financing education are particularly acute. A study released yesterday by the College Board found that average costs at four-year public universities have more than tripled over the past three decades. Further, average tuition rates have increased by 8.3 percent just in the last year alone. Public college students living in New York — a city that contains a number of public institutions — are personally flocking to Zuccotti Park to make their demands known and their voices heard. Another student in the group, James Duarte, scoured the overcrowded park for a place to sleep. Nearly a month ago, Duarte joined the movement after tiring of the fight to stay afloat. He’s a 20-year-old junior at the City University of New York. “Every step I take to try and educate myself in this country is a constant struggle. I just wanted to be educated. It shouldn’t be this difficult,” said Duarte, a Bronx native. His mother emigrated to the U.S. from the Dominican Republic in order to make a better life for her family. As her first child, Duarte said he carries the weight of her expectations on his young shoulders. “I need to be the first college-educated person in my family and we’re in this time of crisis,” Duarte said. He didn’t qualify for federal loans and his mother and stepfather both recently lost their jobs, leaving him scrambling. Currently, Duarte works part-time and lives paycheck to paycheck. He wonders: “Where’s the relief?” As a Latino, Duarte said he sees surprisingly little diversity among his fellow Occupy Wall Street protesters. Lately, he dreams of harnessing the momentum from Zuccotti Park and expanding it northward — all the way to the Bronx. “For the first time, we can talk about an Arab spring, a European summer and an American autumn,” Duarte said, his enthusiasm is undiminished despite the threat of cooler temperatures. “We are at the forefront of something. We are at the beginning.” While Duarte and Javier are regulars who visit the park routinely, their friend Brian Aquino sat looking wide-eyed, simply trying to take it all in. Aquino, 22, who is a sophomore at New York City College of Technology, a CUNY school, paid his first visit to Occupy Wall Street on Wednesday night. Come graduation day, he faces more than $40,000 in student loans. Later in the night, all three men participated in a march that snaked through lower Manhattan protesting recent acts of police brutality in Oakland, Calif . Javier said he personally travels to Zuccotti Park to interact with like-minded people and gain inspiration. Javier’s mother moved to New York from the Dominican Republic when she was pregnant with him. While his stepfather is currently unemployed, his mother is a city employee and local grassroots leader who previously ran for elected office in the Bronx . Since both of his parents have college degrees, Javier’s recent decision to drop out has come as quite a shock. Many of his professors are similarly pleading that he reconsider. “It’s been a big issue, to reject this standard that we’ve all been aspiring toward,” said Javier, who took out about $15,000 in student loans to finance his degree. “In comparison to the $200,000 some people are taking out maybe it doesn’t sound like much. But if you don’t have a way to pay for it, you don’t have a way to pay for it. Our system, it is faltering.”

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State Sees Little Urgency To End Shutdown

July 9, 2011

ST. PAUL, Minn. — Instead of sending Minnesota’s elected leaders into a frenzy of activity, the nation’s only state government shutdown has deepened the political paralysis that led them to their budget standoff. Top Democrats and Republicans have given no sign when they will talk again about how to resolve the stalemate. After blowing May and June deadlines to agree on a budget, Democratic Gov. Mark Dayton and Republican legislative leaders have met only twice – once for less than 30 minutes – and have made no apparent progress since most of state government closed July 1. There’s little sense of urgency, even with 22,000 state employees idled, 100 road projects stopped, 66 state parks barricaded, an assortment of services discontinued and the state’s top credit rating tarnished. The lack of action contrasts with what’s been happening in Washington, where an Aug. 2 deadline to raise the debt ceiling has lawmakers scrambling for a deal that would keep the U.S. from a potential default on its debt. President Barack Obama has summoned leaders for a rare weekend session and aides are trading proposals behind the scenes. While the consequences of the state’s inaction hardly reach that scale, that’s little consolation for public workers who won’t be getting paychecks or people with disabilities who have lost social services. “My thoughts would just be to encourage them to continue to meet and talk and try to work on a compromise that will benefit the entire state of Minnesota,” said Mary Nienow, who directs a child care advocacy organization, Child Care Works. She said her group is getting dozens of emails a day from families worried that they will lose their child care assistance. The key players had one brief session at midweek that ended with the two sides accusing each other of taking a step backward. Speaking to reporters after each session, they have said nothing that suggests progress. “Sometimes no news is good news, but in this case I’m not sure,” said former Minnesota House Minority Leader Marty Seifert, who represented Republicans in budget talks from 2007 until 2009. “In this case, no news is no news because it means there probably is nothing to report and it means nothing is going on.” He added: “Really, I’m not sure that it’s any different than where they were on Jan. 8. It must be an incredible sense of frustration on both sides, and the general public is rather frustrated, too.” The courts have taken some of the worst sting out of the shutdown. Decisions by a judge and a special master have restored services like special education payments to schools, state aid for training for the blind, and emergency crisis aid for the poor. More such rulings are likely on the way. But some groups’ requests have been rejected, so the shutdown means continuing pain for them. Arc Minnesota, a St. Paul nonprofit that helps people with disabilities, has suspended 90 percent of a housing service since losing its state funding. The program helped more than 200 people, including some who were homeless and others who were institutionalized, find their own housing in the past 18 months. “We really worry about what those people will do,” CEO Pat Mellenthin said. The shutdown’s effects are wide-ranging. It has closed historical sites and rest stops, shut down the state lottery, made it tougher to get a driver’s license and halted the issuance of hunting and fishing licenses. Much of the political dispute comes down to differences over how much to spend on health programs and social services and how to pay for it. Republicans want to eliminate a $5 billion deficit by cutting projected spending and holding the two-year state budget to $34 billion, the amount projected to come in without new revenue. But the state’s budget is being squeezed as enrollment and costs for public schools and health care programs grow and as the state, like others, copes with the loss of federal stimulus dollars. Dayton wants to soften cuts by raising another $1.4 billion; his latest offer relies on either a temporary income tax increase on top earners or higher cigarette taxes. House Speaker Kurt Zellers and Senate Majority Leader Amy Koch have rejected both options. Both sides are dug in. Each says it’s up to the other to move. In 2005, a more limited partial government shutdown ended after eight days when lawmakers and then-Gov. Tim Pawlenty, now a presidential candidate, agreed on a 75-cents-a-pack cigarette charge they called a “health impact fee.” During that shutdown, leaders of a divided Legislature met frequently and traded substantive offers. Back then, the leaders and Gov. Tim Pawlenty’s chief of staff spent part of a Fourth of July weekend in talks; this year, the weekend was a long cooling-off period. It appears that a solution this year will require some form of new revenue, just as 2005 did. Dayton has more room to operate than Koch and Zellers, who have to line up votes from a caucus that includes a new, powerful faction of lawmakers dead-set against spending increases and others who hope for a quick way out of the shutdown. “If they make a deal and they don’t have the votes to pass it, that’s a difficult position to be in, obviously,” said Rep. Kurt Daudt, a first-term Republican from Crown who opposes tax increases and gambling.

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Michael Roth: Our Desperate Need for Honest Leadership

July 9, 2011

What a week it has been! On Monday the New York Times ‘ conservative columnist, David Brooks, was criticizing the Republican Party in the harshest terms. On Friday, the paper’s liberal economist, Paul Krugman, was attacking President Obama for adopting the conservative fiscal agenda and betraying his core progressive creed. What’s going on? For Brooks, we are faced with what he called “the mother of all no-brainers.” We now have broad agreement in Congress that we must deal with the long-term deficit, and this itself is a victory for the Republicans. They control the political discourse, and they can achieve many of their economic goals. But in a move that recalls the Dems’ ability to snatch defeat from the jaws of victory, the Republicans refuse to make a deal that would reduce the deficit by trillions. Brooks is scathing: But we can have no confidence that the Republicans will seize this opportunity. That’s because the Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative. And he goes on: Members of this tendency have taken a small piece of economic policy and turned it into a sacred fixation. They are willing to cut education and research to preserve tax expenditures. Manufacturing employment is cratering even as output rises, but members of this movement somehow believe such problems can be addressed so long as they continue to worship their idol. He concludes that if the talks on the debt ceiling fail, it will be clear that the Republicans are not fit to govern. Krugman is just as exercised by what he sees as Obama’s failure to apply either progressive values or sensible economic principles in his approach to dealing with the Republican deficit hawks: But let’s be frank. It’s getting harder and harder to trust Mr. Obama’s motives in the budget fight, given the way his economic rhetoric has veered to the right. In fact, if all you did was listen to his speeches, you might conclude that he basically shares the G.O.P.’s diagnosis of what ails our economy and what should be done to fix it. And maybe that’s not a false impression; maybe it’s the simple truth. For years, Krugman has viewed Obama’s compromises as an abdication of his responsibilities, and he speculates that the president is trying a Clintonesque maneuver that may have political sense but is an economic disaster. In a period of anemic job growth, Obama’s channeling of Herbert Hoover’s economic philosophies will only prolong the experience of dire recession for millions of Americans. Brooks and Krugman both see that the Republican Party has been enormously successful in focusing attention on fiscal responsibility, which is resulting across the country in massive cuts to spending. These cuts will necessarily cause most pain to the most vulnerable — those who depend on government services. If the GOP were really serious about fiscal responsibility, its members would complement the cuts already won with increased revenue from those who have reaped the greatest rewards from our economic environment. This is what a political party ready to govern should do. Meanwhile, we have an epidemic of unemployment, and nothing that the government is now doing is addressing this issue. Where is the enormous intellectual and political energy that Obama’s team displayed in preventing a banking system collapse, and that saved a large segment of the American automobile industry? Why has the president not had the courage of his convictions? Can he really believe that an imaginary bipartisan political pragmatism will trump economic realities? Sensible government seems to have become a contradiction in terms. Democratic leaders have no ideas of their own, while Republican leaders are dedicated to protecting the rich — not to fiscal responsibility. Republican “non-starter” talk about additional revenue is an ideological fixation, not an economic theory. Democrats pandering to their base with calls to maintain the entitlement status quo won’t produce a sustainable health care system. Protecting the least vulnerable remains the Republican’s highest priority, while protecting their political future seems to be what concerns Democrats. Where can we find honest leadership worthy of the name? We desperately need it.

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John Boehner Signals Contentious Issue ‘Under Discussion’ In Debt Talks

July 7, 2011

WASHINGTON — House Speaker John Boehner (BAY’-nur) says proposals to reform the tax code are “under discussion” as part of budget talks with President Barack Obama, but he promises that any such proposals won’t “raise taxes on the American people.” The Ohio Republican spoke before heading to the White House for talks on cutting the budget deficit. The White House is signaling that Obama is hoping to expand the parameters of an agreement beyond the $2 trillion or so discussed in recent talks led by Vice President Joe Biden. Democrats and some Senate Republicans want to claim some of the money gained from closing tax loopholes and other tax breaks to help defray the deficit. House Republicans want all such savings to be devoted to lowering rates.

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Orrin Hatch: The ‘Poor’ Should Do More To Cut Nation’s Debt

July 7, 2011

WASHINGTON — Sen. Orrin Hatch (R-Utah) voted against beginning debate on a measure that would have the Senate declare the rich should share the pain of debt reduction Thursday, a day after arguing that it’s the poor and middle class who need to do more. “I hear how they’re so caring for the poor and so forth,” Hatch said in remarks on the Senate floor Wednesday, in reference to Democrats. “The poor need jobs! And they also need to share some of the responsibility.” Hatch’s comments were aimed at a motion that passed 74 to 22 to start debating a non-binding resolution that says millionaires and billionaires should play a more meaningful role in reducing the nation’s debt. Just one Democrat, Sen. Ben Nelson (D-Neb.), voted against having the debate. Sen. Jeff Sessions (R-Ala.), who had previously called the resolution “rather pathetic,” nevertheless voted to move ahead on it. But it was Hatch whose remarks Wednesday raised the idea that the wealthy are already doing too much, even as the nation’s effective tax rates are at modern lows since the Bush administration slashed rates in 2001 and 2003. In his view, it seems, the middle class and poor should be picking up the slack. “The top 1 percent of the so-called wealthy pay 38 percent of all income tax. The top 10 percent are paying 70 percent of all income tax,” Hatch said. “The top 50 percent pay somewhere near 98 percent of all income taxes. 51 percent don’t pay anything,” Hatch said, suggesting the payroll taxes that the poor and middle classes pay towards Social Security yields them an especially generous benefit. “Democrats say they [the 51 percent] pay payroll taxes. Well, everybody does that because that’s Social Security. They pay about one-third of what they’re going to take out over the years in social security,” Hatch railed. “Obamacare — a family of four earning over $80,000 a year — gets subsidies. Think about that. That’s what we call the poor?” Hatch hedged that the the poorest of the poor shouldn’t have to pay taxes. But he was clear that people who qualify for subsidies because they can’t afford things like health care should dig deeper. “Now, we don’t want the really poor people who are in poverty to have to pay income taxes,” he said. “But 51% of all households. And that’s going up, by the way, because of our friend down in the White House and his allies.”

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Obama Aide On Social Security Cut Story: It ‘Overshoots The Runway’ (UPDATED)

July 7, 2011

WASHINGTON — The Obama administration is pushing back against a Wednesday night report that the president is prepared to offer cuts to Social Security as part of a deal to raise the debt ceiling. “The story overshoots the runway,” said a senior administration official. “The President said in the State of the Union that he wanted a bipartisan process to strengthen Social Security in a balanced way that preserves the promise of the program and doesn’t slash benefits.” “While it is definitely not a driver of the deficit,” the official added, “it does need to be strengthened.” The response, sent via email to The Huffington Post, provides a measure of assurance to Democrats who were taken aback by the abrupt news, broken by the Washington Post , that Social Security reform was now on the debt-ceiling table. Still, the devil is in the details, and the idea of “strengthening” the entitlement program remains the vague standard for reform. Making Social Security means tested , for instance, could be pitched as a way to improve the program’s solvency, even if doing so would drastically undermine its founding purpose, as some experts warn. There are also several smaller alterations that have been proposed. Last week, advocates expressed concern over news that lawmakers were considering changes to the way the government calculates the rate of growth for benefits people receive. Confusing the debate even more are the political implications of putting Social Security or any other entitlement reform at the heart of debt-ceiling negotiations. Democrats believe they can use Republicans’ votes for a Medicare voucher program earlier this spring as a potent political weapon. But by signing off on cuts of their own — the thinking goes — Democrats would lose any political advantage they’ve gained by saying they are protecting Medicare while the GOP is trying to fundamentally change or do away with the program. UPDATE 10:38 a.m: White House spokesman Jay Carney commented on the reports concerning Social Security cuts Thursday morning. “There is no news here,” Carney said. “The President has always said that while social security is not a major driver of the deficit, we do need to strengthen the program and the President said in the State of the Union Address that he wanted to work with both parties to do so in a balanced way that preserves the promise of the program and doesn’t slash benefits.”

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Surprising New Study Offer Clues On How Health Reform Might Affect Key Group

July 7, 2011

WASHINGTON — Signing up for Medicaid could improve your overall health and financial security, says a surprising new study that offers clues on how President Barack Obama’s health care overhaul might affect millions of low-income uninsured Americans. The findings run counter to a widespread perception that having a Medicaid card is no better than being uninsured, and maybe even worse. Led by economists at Harvard and MIT, and released Thursday by the National Bureau of Economic Research, the study found that having Medicaid significantly increased the chances people will perceive their health as being good to excellent, while decreasing the likelihood they’ll have to borrow money or skip paying other bills because of medical expenses. Medicaid is a federal-state program for low-income and severely disabled people now covering about 60 million Americans. Starting in 2014, it will also pick up about half the more than 30 million uninsured people gaining coverage under the new health care law. Since it pays doctors far less than Medicare and private insurance, some experts have questioned whether Medicaid coverage will translate into medical care that people need. The study provides a partial answer, but it’s encouraging. “The bottom line is that Medicaid really matters in people’s lives,” said MIT economist Amy Finkelstein, lead author of the report. “There is a large concern out there about whether Medicaid actually makes a difference, and now we actually have evidence.” The study looked at 10,000 Oregonians who won a state-sponsored lottery for Medicaid in 2008, and compared them to those who applied but weren’t picked and remained uninsured. The random way that the two groups were selected gives the study a high degree of validity, similar to what’s required for deciding whether or not to approve a new drug. The study found that people with Medicaid were 70 percent more likely to have a regular medical office or clinic for their basic care, and 55 percent more likely to have a personal doctor. Medicaid enrollees were also more likely to get preventive care, such as mammograms and cholesterol screening. There was no real difference between the two groups in emergency room use, but people with Medicaid were significantly more likely to use inpatient and outpatient services, as well as prescription drugs. “It gives important evidence that expanding Medicaid improves access to care and use of preventive services,” said study co-author Katherine Baicker, an economist at the Harvard School of Public Health. “It makes a huge positive difference in the lives of the people who gain access to the program.” The study used seven distinct measures to try to distinguish differences in health between those on Medicaid and those who remained uninsured. These ranged from screening for depression to asking whether overall health is the same, better or worse over the past six months. People with Medicaid did significantly better on all seven measures. One reason they might feel better: fewer medical bills sent to a collection agency. There are some caveats, however. Adding 10,000 people to the Medicaid rolls in one state involves much less strain on the health care system than bringing in 15 million to 17 million people nationwide in 2014, as the health care law envisions. If there aren’t enough doctors at that time, patients who just gained coverage could have a hard time finding a provider, or face long waits for an appointment. “One always has to be careful about extrapolating,” said Finkelstein. “But I think it’s the best evidence we have to date.”

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Report: Skinny Women Make More Money

June 19, 2011

For women constantly battling to drop a few pounds, a new study could be hard to swallow. From TIME : According to a study in the Journal of Applied Psychology, women who are “very thin” earn nearly $22,000 more than their “average weight counterparts.” The study was conducted by Timothy A. Judge from the University of Florida and Daniel M. Cable, from the London Business School, who examined the relationship between income and weight in men and women. The study, which included 23,939 participants, also finds that, while women are financially punished for any weight gain, very thin women receive the most significant drop in pay for the first few pounds of weight they put on. For American women who were below average weight, gaining 25 pounds produced an average salary decrease of $15,500. Once women reach an average weight, the report finds, further weight gain is penalized less, “presumably because the social preferences for a feminine body have already been violated.” Very thin men actually receive less than their average weight counterparts. They are rewarded for weight gain until they become obese, the study finds.

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Raymond Heard: In the Beginning, the Idea, the Word, Then Babble

June 18, 2011

Most of us believe that, in the beginning, there was the Word. The provocative proceedings at ornate Koerner Hall on the Royal College of Music campus in Yorkville suggest otherwise — that, in the beginning, was the Idea. Surely, one must suppose, God, in her infinite wisdom, had the idea of creating planet earth and, indeed, the multiverse, before her six days of labour began. Words, after all, are the byproducts of ideas. Words, or images, explain ideas to us in conversation, writing, music, art, science and maths. Ideas can be shared today in milliseconds in cyberspace, which is essentially the new marketplace for ideas. Indeed, we live in an idea-driven economy in which, when asked if he has anything to declare at customs, a Bill Gates (with Microsoft in his brain) can reply with a straight face “I have absolutely nothing to declare!” In his relentless pursuit of finding new ideas for changing times, Moses Znaimer, the prescient creator of upstart Citytv, hosts ideacity in Toronto each year, inviting 50 out-of-the box presenters and staging three parties at trendy restaurants for the 600 people who fork out $1,000 each (plus an extra $150 to attend a party), to be seen if not Heard, at the three-day event. Scripted speeches are outlawed; presentations cannot exceed 17 minutes; there is no single topic.There are singers, actors, dancers, jugglers and clowns; architects, bankers, doctors, technology gurus (a surfeit of them, perhaps), agitators, devil’s advocates, and, of course, scribes. Many of them have books to promote to a captive audience that thrives on new ideas. Schmoozing, networking, is the order of the day. So let’s offer up a somewhat surrealistic narrative of what struck us about this year’s ideacity, which wound up Friday night with a raucous soiree at the Rosewater supper club. This being a Moses Znaimer event, nobody was surprised when the disputatious Ottawa Citizen columnist Dan Gardner, who has written the best-seller, Future Babble , gave a lecture on — get this! — bullshit, which is what his book is all about. Gardner sought to show us that, in this era of endless conspiracy theories, even those who say they do not believe in bullshit are actually bullshitting themselves. He then gave us a fascinating case study about the great, but now largely forgotten, British historian Arnold Toynbee, whose mammoth 12 volume Study of History series was required reading when I was at Harvard in the 60s. Toynbee’s thesis, discredited by most other historians, was that great civilizations, like Greece, Rome and Britain, decline, fall and sometimes renew themselves, followed by eras of religious revival. He loathed modern nationalism, which created the Nazis and fascists, calling it a false god. I suspect that Pierre Trudeau’s contempt for nationalism, may have stemmed from reading Toynbee, some of whose high-blown contributions to the London Observer I edited with delight in the 1970s. Just how false a prophet Toynbee was came in his confident assertion that, in today’s world, human beings would lose all interest in — get this, too! — technology. To my mind H.G. Wells, in his book The Outline of History , which also required reading in my academic generation, did a better job than Toynbee, and with less bullshit, when he explored the hitherto neglected Asian civilizations, and concluded than history is combat between tyranny and education. Wells’s science fiction epic, War of the Worlds , was also more prophetic than anything Toynbee wrote, but I doth digress, as always. Let’s rewind again, to 1967. Children around the world, including the preteen Heards in Virginia, laugh, cringe and cry when they see the movie Dr. Doolittle , starring the great but very moody Rex Harrison, as the unconventional, itinerant British vet who sought, in the Academy Award-winning title song, to “Talk to the Animals.” In the movie, based on the Hugh Lofting novel, he was taught animal language by Polynesia, his pet parrot, a unique member of her species; she did not repeat what she heard, but told people new things. Fast forward now to a Thursday session at ideacity we are introduced to the space age Dr. Doolittle, who just may be very close to talking to possibly the most intelligent, caring animals on our threatened planet, dolphins, Diana Reiss, a cogitative psychologist at Hunter College in New York and the National Aquarium, Baltimore. In studying dolphins for 30 years, now using sophisticated Internet technology, Dr.Reiss has discovered how close they are to humans, different as the bodies may be. Like humans and the great apes, dolphins can recognize themselves in mirrors, which amuses them for hours. They have acute sonar, as well as eye, vision. Like us, they protect their young, hunt and play in groups (i have surfed with them in South Africa and Hawaii). Most importantly, Dr. Reiss shows us, dolphins speak to each other in a language of at least 100 distinct signals. (An important distinction between dolphins and us, I believe, is that they do not kill their own kind.) It is Reiss’s mission to crack the code of the dolphin dictionary, or keyboard. She has already succeeded in getting them to read images on an underwater keyboard. She ended her presentation with quite the most horrific images seen at ideacity: a clip from the mass slaughter of dolphins by Japanese fisherman from the Oscar-winning movie, The Cove , for which she was an adviser. Pointing out that not even laboratory rats can be treated this way, she urged us, as citizens of the world, to protest this annual massacre to the Japanese authorities. Then there was the alarming dissection of one of the most pernicious ideas and practices in modern society — honour killings, in which girls and women are killed for affecting Western garb and customs — by the outspoken National Post sage, Barbara Kay. She ridiculed the fashionable view that these are just examples of family violence. They are nothing of the sort, she insisted.They are dismal examples of “social terrorism,” acts of “collective murder.” At least a dozen Canadian female were victims of honour killings in recent years. Then she took a shot at the Slut Marches that began in Toronto and have become fashionable around the world –or at least countries that will tolerate them. “There is no honour in being a slut,” she said. A highlight of the event, though he very elegantly said nothing really new, was Conrad Black, the only presenter who needed no introduction from Moses, professing his innocence on tape and arguing that, given our relative prosperity in this deep recession, this may indeed be the long awaited Canadian century. Given that Friday June 17 was the centenary of the birth of the first idea-based corporate titan, IBM, which pioneered the development of many of the computer elements we take for granted, not to mention Watson which won against humans on Jeopardy, the timing of ideacity was astute. For the agenda, varied and unpredictable as might have been, was underpinned by ideas — and the slogan of Thomas Watson, the control-freak founder of IBM, was, of course, THINK.

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Newt Gingrich Charity Paid Cash To Gingrich For-Profit Business

June 14, 2011

A non-profit charity founded by Newt Gingrich to promote freedom, faith and free enterprise also served as another avenue to promote Gingrich’s political views, and came dangerously close, some experts say, to crossing a bright line that is supposed to separate tax-exempt charitable work from both the political process and such profit-making enterprises as books and DVDs.

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Minnesota Sends Layoff Notices To 36,000 Workers Ahead Of Possible Government Shutdown

June 10, 2011

MINNEAPOLIS — In preparation for a potential shutdown of state government, Minnesota sent layoff notices on Friday to more than 36,000 state workers, according to the governor’s office. With Democratic Governor Mark Dayton and the Republican-controlled Legislature unable to agree on a spending plan, the state could face closing down services on July 1, the start of the fiscal 2012-13 biennium. Dayton called the notices “a grim reminder of a deadline that is just 20 days away.” “I continue to hope that the Legislature will join me in compromising, in finding a balanced solution to our budget, and in standing up for Minnesotans,” the governor said in a statement. On May 24, Dayton vetoed budget bills passed by the Legislature, which rejected his $37.1 billion, two-year budget and its income-tax hike on wealthy residents to help erase a $5 billion deficit. Republicans instead opted for spending cuts even after Dayton offered to cut down his tax proposal. On Monday, Republican leaders agreed to match the governor’s spending levels for education, public safety and the judiciary. The governor and leaders continued to negotiate on the budget in the hope of avoiding a shutdown, according to Katharine Tinucci, Dayton’s spokeswoman. She added that a state judge will ultimately decide which jobs are critical and should continue during a government shutdown. The last time that a budget impasse closed portions of Minnesota government was a nine-day shutdown in 2005. (Reporting by Karen Pierog in Chicago and David Bailey in Minneapolis; Editing by Jan Paschal ) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Adele Scheele: How to Prepare for the Interview

June 10, 2011

Once you’ve got an interview scheduled, what do you do next? The common advice is to do your homework , but the term homework is a misnomer. In school, it means answering an assignment for which there are right answers. But in real life, particularly in an interview, you have to prepare much more extensively. No mean task. No winging it. You get the job (pass) or you don’t (fail). Here are some ways to begin that preparation successfully. No matter the level or profession you are interviewing for, you can expect the inevitable questions to arise. Assume they don’t remember your resume, and prepare yourself to answer the following: – Why should we hire you? – What are your skills? – What are your strengths and weaknesses? – What happened in your last job? – Give examples of when you took initiative, overcame obstacles, exerted leadership, set and met a goal, tried something and failed, motivated other people, anticipated potential problems and developed responses to prevent them. – Talk me through your resume. – Do you have any questions for us? For every question, come up with a quick response. Practice answering with a smile on your face and in a strong, yet understanding voice. Often when we are thinking, we look away and unconsciously frown. By practicing even in a mirror, you will overcome that nervous response. Think of a television anchor or host you admire, imagine how that person would answer, and imitate that tone and pitch until it suits you. In responding, fully describe the situations that you were in and their outcomes, using facts and data whenever you can. Then sum up with a positive statement. When you get a difficult question or one you aren’t prepared for, you can say, “that’s difficult, let me think for a moment.” Or give an example of something that’s close to it, even if it isn’t exactly that. In addition to answering the basics, you have to do a self-evaluation so that you can explain what makes you qualified as a professional match for the company. Prepare examples for why they should hire you — citing your talent, proven track record in accomplishing goals, working cooperatively with your team and contributing to the organization. Don’t be overly modest. Don’t talk as a team — say “I” instead of “we.” Remember to breathe, smile and make eye contact. This will help you be more relaxed. Remember: this is not a test . There is no right answer. Essentially, you’re telling a story about yourself and the way you have approached work and relationships. The word interview means that which you can see between the two of you. It’s not a one-way street. You can ask what happened to them in their career. Try to fully engage with the interviewer by following up on something they said earlier or commenting on something hanging on their walls. If you want the job, you have to create a bond. In addition to presenting yourself, you must show that you know about the organization and position you are applying for. To start that, visit the company’s website and become familiar with its content. Note the “careers” or “about us” section to get an idea of who is already employed there and what they might be looking for from future employees. Next, do a more comprehensive online search of the company and read annual reports, press releases and any other relevant articles. Use this material to come up with questions to ask the interviewer about the future of the company and how the position you’re applying for fits in. And of course, don’t overlook the simple things. These may seem like silly reminders, but don’t underestimate how important it is to: – Find out the location and know exactly how to get there, including where to park – Allow plenty of time to get there — don’t be late – Find out how they dress, and use this as your guide for grooming yourself – Print and bring along multiple copies of your resume and any work samples – Prior to the interview, check in with people that you are planning to list as references – Gather the contact information of anyone you should send a thank you note to, and do so as soon as possible after your interview So far away from a test, consider the interview as a courtship or dance. If you’re prepared and relaxed, you’re more likely to develop enough chemistry to land the job. Make your luck happen!

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Eliot J. Lazar, MD, MBA: Policy Must Examine the Complexity of Hospital Readmissions

June 10, 2011

Healthcare and government officials share the common goal of reducing hospital readmissions to improve medical care and better manage medical resources. But new regulations to back this mission must be supported by real-world experience to prevent unintended consequences to hospitals that serve the neediest communities. Readmission regulations are meant to encourage hospitals to do more so patients do not come back to the hospital soon after discharge. Hospitals will not be reimbursed by Medicare for readmission within 30 days of discharge for patients with heart attack, heart failure, or pneumonia if the hospital’s readmission rate is higher than predicted. This applies regardless of whether the patient returns to the same hospital or another hospital. There is potential for tremendous benefit to patients and for Medicare. But the reasons for readmissions are complex and the study of how to reduce them is truly a nascent science. We do know readmissions are costly. Medicare spends about $15 billion a year on readmissions to hospitals, according to the Medicare Payment Advisory Commission, and about $12 billion of those readmissions may be preventable. A successful nationwide campaign to end unnecessary readmissions would improve outcomes for patients as well as allow those resources to go to training, research, care innovation, expanding coverage and access to care. Not every readmission is preventable, but rates across the country and the experience of many hospitals suggest that hospitals can do better. In fact, many hospitals are rethinking and redesigning their approach. Led by the work of researchers like Eric Coleman, MD and Mary Naylor, RN, hospitals are providing greater support for the patient during the transition from the acute care hospital to home. Nurses are coaching patients to manage their condition better. Follow-up calls to patients are helping them keep appointments and medication management programs are helping them stay on regimens. Other programs are improving coordination between primary care offices, hospitals and nursing centers. The new regulations need amendments to prevent unintended harm to hospitals that are following these steps and others to reduce readmissions. It should start with proper risk adjustment of readmissions data. Risk adjustment is common in hospital outcomes data. A hospital that sees heart patients who have no other co-morbidities, for example, will see different results than a hospital that treats heart patients with multiple, serious complications. Readmission risk factors can include social isolation, financial barriers to medications and supplies, limited health literacy, limited access to outpatient and primary care providers, as well as common co-morbidities like depression. These are exactly the conditions that are most severe in communities of need. It would be an undesired and unintended consequence of the readmissions rules to cut payments to hospitals whose patients are disadvantaged, creating greater inequity. If these factors are not incorporated into risk adjustment models, a misleading impression may occur about a hospital’s readmissions. Indeed, a hospital may have a higher than average readmission rate, but still be managing readmissions well and to the benefit of patients, when compared with peer institutions caring for similar patient populations. Regulations also should focus on conditions where evidence suggests readmissions can be reduced. These conditions include congestive heart failure and asthma, where following care guidelines and implementing post discharge care management can prevent relapses. These reasonable changes will improve the goal of reducing hospital readmissions, allow hospitals to maximize their efforts and resources on readmissions they can control, and provide balanced measures that all hospitals can follow. Focusing on readmissions can be a strong impetus for positive change, healthcare system redesign, and improved health status for patients. But it only works if we design our intervention and measurement approaches with careful consideration of what patients need, what is fair, and what has been proven through medical studies. Eliot J. Lazar, MD, MBA, is Senior Vice President, Chief Quality & Patient Safety Officer at NewYork-Presbyterian Hospital. Karen A. Scott, MD, MPH, is Vice President, Quality and Patient Safety for NewYork-Presbyterian Hospital.

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State Department: Hillary Clinton World Bank Report Is Untrue

June 10, 2011

WASHINGTON — The State Department shot down a report Thursday that Secretary of State Hillary Rodham Clinton has been in discussions with the White House about heading the World Bank. “The story is completely untrue,” Clinton spokesman Philippe Reines said in the United Arab Emirates, where Clinton was involved in international talks on Libya. He said Clinton has not had any conversations with President Barack Obama, the White House “or anyone else about moving to the World Bank. She has expressed absolutely no interest in the job. She would not take it if offered.” Reuters, citing sources familiar with the discussions, said her discussions involved leaving the State Department next year to lead the World Bank. The current bank president is Robert Zoellick, whose term does not end until 2012. The bank declined to comment Thursday. But at a news conference Wednesday in Olso, Norway, Zoellick was asked whether it’s right that an American should lead the institution. “I think this really is a decision for shareholders, and I think there are many talented non-Americans and Americans,” he said. He added, “I think it’s good for the U.S. to also have some responsibility, to have some of its nationals be engaged in multinational institutions.” Clinton has said she doesn’t want to stay in her job if Obama wins a second term in 2012. The nation’s top diplomat also has said she neither has plans for a second White House bid nor interest in other posts, such as vice president or defense secretary. “I am doing what I want to do right now and I have no intention or any idea even of running again,” she told CNN in March. “I’m going to do the best I can at this job for the next two years.”

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Hillary Clinton In Discussions About Leaving Job For New Role

June 9, 2011

WASHINGTON (Reuters) – U.S. Secretary of State Hillary Clinton has been in discussions with the White House about leaving her job next year to become head of the World Bank, sources familiar with the discussions said on Thursday. The former first lady and onetime political rival to President Barack Obama quickly became one of the most influential members of his cabinet after she began her tenure at State in early 2009. She has said publicly she did not plan to stay on at the State Department for more than four years. Associates say Clinton has expressed interest in having the World Bank job should the Bank’s current president, Robert Zoellick, leave at the end of his term, in the middle of 2012. “Hillary Clinton wants the job,” said one source who knows the secretary well. A second source also said Clinton wants the position. A third source said Obama has already expressed support for the change in her role. It is unclear whether Obama has formally agreed to nominate her for the post, which would require approval by the 187 member countries of the World Bank. The White House declined to comment. A spokesman for Clinton, Philippe Reines, denied she wanted the job or had conversations with the White House about it. Revelations of these discussions could hurt Clinton’s efforts as America’s top diplomat if she is seen as a lame duck in the job at a time of great foreign policy challenges for the Obama administration. However, the timing of the discussions is not unusual given that the United States is considering whether to support another European as head of the World Bank’s sister organization, the IMF. The head of the IMF has always been a European and the World Bank presidency has always been held by an American. That unwritten gentleman’s agreement between Europe and the United States, is now being aggressively challenged by fast-growing emerging market economies that have been shut out of the process. The United States has not publicly supported the European candidate for the IMF, French Finance Minister Christine Lagarde, although Washington’s support is expected. Neither institution has ever been headed by a woman. If Clinton were to leave State, John Kerry, a close Obama ally who is chairman of the Senate Foreign Relations Committee, is among those who could be considered as a possible replacement for her. Clinton’s star power and work ethic were seen by Obama as crucial qualities for her role as the nation’s top diplomat, even though she did not arrive in the job with an extensive foreign policy background. She has embraced the globe-trotting aspects of the job, logging many hours on plane trips to nurture alliances with countries like Japan and Great Britain and to visit hot spots like Afghanistan and countries in the Middle East. She has long been vocal on global development issues, especially the need for economic empowerment of women and girls in developing countries. She has made that part of her focus at State. Her husband, Bill Clinton, has also been involved in these issues through his philanthropic work at the Clinton Global Initiative. The World Bank provides billions of dollars in development funds to the poorest countries and is also at the center of issues such as climate change, rebuilding countries emerging from conflict and recently the transitions to democracy in Tunisia and Egypt. (Editingby Kristin Roberts and David Storey) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Hillary Clinton Reportedly Seeking World Bank Presidency

June 9, 2011

*”Hillary Clinton wants the job,” source says *Timing of move would be 2012 when Zoellick’s term ends *Clinton would be first woman head of World Bank By Lesley Wroughton WASHINGTON (Reuters) – U.S. Secretary of State Hillary Clinton has been in discussions with the White House about leaving her job next year to become head of the World Bank, sources familiar with the discussions said on Thursday. The former first lady and onetime political rival to President Barack Obama quickly became one of the most influential members of his cabinet after she began her tenure at State in early 2009. She has said publicly she did not plan to stay on at the State Department for more than four years. Associates say Clinton has expressed interest in having the World Bank job should the Bank’s current president, Robert Zoellick, leave at the end of his term, in the middle of 2012. “Hillary Clinton wants the job,” said one source who knows the secretary well. A second source also said Clinton wants the position. A third source said Obama has already expressed support for the change in her role. It is unclear whether Obama has formally agreed to nominate her for the post, which would require approval by the 187 member countries of the World Bank. The White House declined to comment. A spokesman for Clinton, Philippe Reines, denied she wanted the job or had conversations with the White House about it. Revelations of these discussions could hurt Clinton’s efforts as America’s top diplomat if she is seen as a lame duck in the job at a time of great foreign policy challenges for the Obama administration. However, the timing of the discussions is not unusual given that the United States is considering whether to support another European as head of the World Bank’s sister organization, the IMF. The head of the IMF has always been a European and the World Bank presidency has always been held by an American. That unwritten gentleman’s agreement between Europe and the United States, is now being aggressively challenged by fast-growing emerging market economies that have been shut out of the process. The United States has not publicly supported the European candidate for the IMF, French Finance Minister Christine Lagarde, although Washington’s support is expected. Neither institution has ever been headed by a woman. If Clinton were to leave State, John Kerry, a close Obama ally who is chairman of the Senate Foreign Relations Committee, is among those who could be considered as a possible replacement for her. Clinton’s star power and work ethic were seen by Obama as crucial qualities for her role as the nation’s top diplomat, even though she did not arrive in the job with an extensive foreign policy background. She has embraced the globe-trotting aspects of the job, logging many hours on plane trips to nurture alliances with countries like Japan and Great Britain and to visit hot spots like Afghanistan and countries in the Middle East. She has long been vocal on global development issues, especially the need for economic empowerment of women and girls in developing countries. She has made that part of her focus at State. Her husband, Bill Clinton, has also been involved in these issues through his philanthropic work at the Clinton Global Initiative. The World Bank provides billions of dollars in development funds to the poorest countries and is also at the center of issues such as climate change, rebuilding countries emerging from conflict and recently the transitions to democracy in Tunisia and Egypt. (Editing by Kristin Roberts and David Storey) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Pressure Builds As Biden-Led Debt Limit Talks Resume On Capitol Hill

June 9, 2011

WASHINGTON — Vice President Joe Biden and GOP negotiators sparred over taxes Thursday in a private meeting that exposed their wide differences as the clock ticks on negotiations to let the government resume borrowing more than $100 billion a month to pay its bills. Both sides hope to pass the measure well before an early August deadline to avoid a first-ever, market-rattling default on U.S. obligations. It was the sixth meeting between Biden and top lawmakers. With the talks moving slowly, they agreed to pick up the pace with three meetings next week. In the 2 1/2-hour meeting, Biden and Treasury Secretary Timothy Geithner made a pitch for more revenue. Republicans resolutely oppose anything that could be called a tax increase. “Any balanced packaged has to end big loopholes like subsidies for the oil and gas industry,” said Rep. Chris Van Hollen, D-Md., one of two House Democrats participating in the talks. Last month, Biden told reporters: “I’ve made it clear … revenues have to be in the deal.” Republicans involved in the talks, however, say they believe Biden is mostly going through the motions. Still, the White House push for revenues is noteworthy because Democrats will have to provide votes to get the final measure passed because many tea party-backed House Republicans are likely to oppose any measure to increase the debt limit. The vote is already so unpalatable for Republicans that it’s difficult to imagine GOP negotiators going along with new taxes and risk the wrath of the tea party and anti-tax activists even if it means Democrats will offer up larger spending cuts. Rep. Eric Cantor of Virginia, who’s representing House Republicans in the talks, told the administration that tax increases can’t pass the GOP-controlled House. Republicans have complicated the talks with a demand that any increase in the borrowing limit be matched with spending cuts of equal or greater size, though the cuts could be over the next decade or more. Under current estimates it’ll take at least $2.4 trillion in new borrowing simply to could keep the government afloat until 2013 and guarantee that lawmakers wouldn’t have to make another politically difficult vote before next year’s elections. There’s no sign the group is discussing cuts of that magnitude. Biden has said he thinks the group can come up with more than $1 trillion in deficit savings. Senate GOP Leader Mitch McConnell of Kentucky has pledged that any deal that wins his vote will have to wring savings from Medicare. Defending the politically sacrosanct program, however, is emerging as a hot issue in Democratic efforts to retake the House and keep control of the Senate. Negotiators say the meetings have been constructive, but no agreements are in place despite calls by both President Barack Obama and House Speaker John Boehner, R-Ohio, for one by early July. Cantor said the meetings next week would demonstrate “if we can get a result.” Spokesman Brad Dayspring said Cantor remains hopeful. Cantor and Sen. Jon Kyl, R-Ariz., are trying to keep the focus on spending cuts. “We believe that many of the problems surrounding the lack of job creation and growth in this country have to do with the fact that there isn’t a credible plan to manage down the debt and deficit in this country,” Cantor said. Biden left without making any comment. Failure to raise the nation’s debt ceiling could lead to a first-ever U.S. default on its obligations, sure to roil stock markets and, economists warn, possibly push the teetering economy back into recession.

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Financial Ignorance and Denial High But Preparedness Low, Study Says

June 9, 2011

NEW YORK — Americans are mired in debt they don’t understand, according to a new working paper. Not only do many Americans not have a financial plan in place for emergencies or even foreseeable expenses, but a “sizable” number also don’t understand the terms of their own mortgages and credit cards, the National Bureau of Economic Research report found . And it seems Americans are also ignorant of their financial ignorance. Although many haven’t mastered basic economic concepts, such as inflation, nearly 40 percent of gave themselves high scores when asked to rate their own financial literacy. Just 14 percent rated their knowledge level three or worse on a seven point scale. The chart below shows how Americans judge their own level of financial knowledge: The study, released this week, isn’t the first to point to the limits of the average American’s financial literacy . It echoes other findings that suggest financial ignorance and a lack of emergency savings made many American families vulnerable to the economic shocks unleashed during the Great Recession. The report finds the average American family has very little financial breathing room; almost half of the population has trouble covering monthly expenses. And just over half of the population lacks a household rainy-day fund that could cover three months of living. Nearly 30 percent of American have no savings account at all. Nearly that same share have at least four credit cards. Yet the report finds very few American consumers compare credit cards or other financial goods across the market before choosing a product. The report also found one in five Americans borrowed money in the most expensive ways — from a pawn shop, a pay day lender or through a tax return advance. And then there’s mortgages. The study found that 20 percent of those with home loans did not know whether they held an interest-only mortgage or a loan that includes this option. Another 10 percent did not know their interest rate at all, and 12 percent did not know how much money they had put down on their homes. The evidence indicates many Americans have difficulty protecting themselves financially. But the move to create an agency to defend consumers from abuse faces a slow, difficult political track. Republicans have made clear their opposition to appointing Elizabeth Warren, an outspoken consumer advocate and Harvard law professor, to head the newly-created Consumer Financial Protection Bureau. Warren conceived the agency and is currently shaping it as an appointed adviser. Last month, a group of nearly 45 Senate Republicans also sent President Obama a letter indicating they would not support any nominee for the CFPB chair position until Congress is given more oversight of the agency, The New York Times reported . Republicans fear the agency will be able to exercise too much control or place too many limits on financial businesses and the way they interact with customers.

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Brent Budowsky: American Jobs NOW

June 9, 2011

President Obama should address the nation from the Oval Office, calling for a bipartisan deal to create more jobs in 2011 and lower the deficit beginning in 2012. He should do this now. Leaders lead. Strong presidents use the bully pulpit to define the debate and rally the nation to action and confidence. The president should champion a Made in the USA jobs plan that would restore the housing tax credit and create an expanded jobs credit for American companies hiring American workers this year. He should back the proposal of Sen. John Kerry (D-Mass.) with Republican support including that of Sen. Kay Bailey Hutchison (Texas) to create an infrastructure rebuilding bank and support proposals by Rep. Frank Wolf (R-Va.) to reward American firms that repatriate jobs to America. As part of a longer-term deficit deal, the president should propose a one-time 2011 cash bonus payment to police, firefighters and military families of those who served since 2001. This should be enacted before the 10th anniversary of the Sept. 11 attacks, to thank the bravest among us and create demand to help the economy grow. Last Thursday I wrote a column titled “Jobs: An angry dissent.” I have seen little since then that suggests progress for proposals to create jobs. There are two secret “gangs” meeting about the budget. I know of nothing being discussed in these secret chambers that would be a serious jobs initiative. Last Friday, new devastating jobless numbers were announced, yet everyone continues to act in character. I expect next month’s jobs numbers to be equally ugly. The public relations about jobs grows louder. The programs to create jobs or limit foreclosures remain puny. Senate Minority Leader Mitch McConnell (R-Ky.) continues his war against jobs by destroying the ability of the Senate to act, with his historic abuse of the filibuster to pursue his No. 1 goal, which is not to create jobs but to politically destroy the president. The president spent last Friday and Saturday praising himself for a job well done. His economic adviser told the nation to disregard the jobless report. The Washington Post reports his powerful Treasury secretary has advised against doing more to help the jobless. The National Journal reports President Obama and Fed Chairman Ben Bernanke believe the right way to help the jobless is to stay the course, and do nothing substantial today. Many Republicans now suggest the way to help the jobless is to fire 10 percent of the federal workforce. They claim they help the jobless by firing police and closing police stations while our police protect citizens from rapists and murderers. They claim they help the jobless by firing firefighters and closing firehouses while firefighters rush into burning buildings to save children from raging flames and neighbors from terror attacks. They claim they help the jobless by firing teachers, closing schools and cutting aid to education. While these travesties continue, voters’ rage rises. Joblessness plagues the land. The president still refuses to champion policies worthy of the great change president I worked so hard to elect. McConnell continues to abuse Senate rules to pursue his war against jobs programs. House Republicans threaten to trigger a global crash by voting down the debt-ceiling increase unless Washington surrenders to their drive to destroy more jobs. I came to Washington inspired by Robert Kennedy. I am in the Democratic wing of the Democratic Party. I learned my politics by working for Democratic leaders including Tip O’Neill and Lloyd Bentsen, who both reached major bipartisan deals with President Reagan and conservative Republicans. It can be done. I will not sell the jobless out, sell the jobless short or sell the jobless down the river. I am appalled, sickened, angry, disgusted and outraged by the shameful neglect of jobless Americans that corrupts this capital and poisons our economy while small minds say we have no options, and cold hearts ignore what is happening to our people. For Democrats and Republicans running in 2012, I warn you: The great reckoning is coming. This column was originally published at The Hill .

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Dan Solin: Vanguard’s Strategy for "Beating the Market"

June 8, 2011

Vanguard is known primarily for its excellent, low management fee index funds, and justifiably so. I recommended Vanguard funds in my books and blogs. It remains my view that investors could achieve returns that would likely place them in the top 5 percent of all professionally managed money by simply purchasing three Vanguard index funds. I set forth the basis for this view in The Smartest Investment Book You’ll Ever Read , in my subsequent books and in this blog , among others. Vanguard’s low fee structure has been very successful. It manages $1.7 trillion in assets, of which $960 billion is in index funds (56 percent) and $750 billion is in actively managed funds (44 percent). I have always been intrigued by the fact that Vanguard is a vociferous proponent of indexing, yet it offers both index and actively managed funds to investors. This seems incongruous to me. If Vanguard had the ability to select fund managers who could consistently beat the market, why wouldn’t all its funds be managed in that manner? Index funds merely track a given index and achieve the returns of that index, less low transaction costs. The vast resources and expertise of Vanguard make it an excellent case study. It can direct a huge flow of assets to active managers, making it one of the most desirable clients in the world. It has the ability to do extremely sophisticated research on all aspects of the performance of the active managers it is considering. With this in mind, I asked Vanguard how it went about selecting active managers for its actively managed funds. A Vanguard spokesman summarized its impressive methodology as follows: “We don’t employ ‘average’ managers. Firms like Wellington, PRIMECAP, and Barrow, Hanley, Mewhinney & Strauss are world-class firms that follow well-defined strategies, executed with discipline and efficiency. And we exert considerable effort and resources selecting and overseeing these managers to improve the odds. And, most importantly, we acquire their skills at a very low cost and thus reduce the hurdle for outpacing the market. The average expense ratio for Vanguard’s active equity funds is 0.41%.” When I pressed for more details, I was advised that Vanguard employs a “rigorous process that incorporates both quantitative and qualitative analysis.” So, how have these actively managed performed? Vanguard provided me with the following statistics for the ten year period ending April 30, 2011: 54 percent of their active equity funds outperformed their relevant benchmark; 46 percent of their active equity funds underperformed their relevant benchmark. Many of the underperforming funds came close to their benchmark returns, but that is small consolation to investors who could have achieved benchmark returns, less transaction costs, with certainty. This data is quite striking. One of the largest and most sophisticated fund families in the world, employing the most advanced models and cutting-edge analysis available, has approximately the same chance of picking an outperforming actively managed fund as you have in calling heads or tails in a coin toss. When I dug deeper, it got worse. I asked Vanguard how investors could tell which of its actively managed funds would likely outperform in the future. Here’s what I was told: “Identifying which active managers are likely to beat their respective benchmark going forward is the $64,000 question.” Nevertheless, I was advised that Vanguard believes its due diligence and the lower cost of its actively managed funds give its funds an edge. I am a proponent of low costs, but a closer look at the data indicates that predicting which of Vanguard’s actively managed funds is likely to outperform is impossible because it is random. I took the ten year period used by Vanguard for its performance calculations and divided it into two five year periods. Here’s what I found: Of the 17 actively managed funds that outperformed in the first 5 years, only 7 (41 percent) continued their outperformance in the second five years. Of the 9 actively managed funds that underperformed in the first 5 years, only 3 (33 percent) continued their underperformance in the second five years. This data tells you the obvious: Past performance does not predict future performance. Vanguard agrees, noting that it “…believes that consistently outperforming the financial markets is extremely difficult.” If Vanguard can’t pick actively managed funds with a consistent record of outperformance, what are the chances you and your broker will fare any better? Vanguard investors who have $750 billion invested in its actively managed funds would most likely achieve higher returns if they transferred those assets into a globally diversified portfolio of its low management fee index funds. The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

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GOP Presidential Candidates Seek To Hammer Obama Hard On Key Issue

June 8, 2011

WASHINGTON (Reuters) – The slow-forming 2012 Republican race for the White House is starting to gain focus, with candidates competing to see who can hammer President Barack Obama the hardest for his economic leadership. Republicans have launched a volley of attacks on Obama’s economic policies in the last week, hoping to capitalize on what polls show is broad public dissatisfaction with how he is handling the economy and the budget deficit. Next week’s nationally televised debate in New Hampshire gives Republicans their best forum so far to make their case on what promises to be their central argument in 2012 — that Obama should be fired for his economic stewardship. “Given the state of the economy and the public’s economic exasperation, this election is going to be about one thing — who can fix the economy. Because Obama hasn’t done it,” said Republican strategist Kevin Madden, an aide on Mitt Romney’s 2008 White House campaign and now an informal Romney adviser. Former governors Romney of Massachusetts and Tim Pawlenty of Minnesota lead a Republican field with few ideological differences that has been united in attacking Obama for tax and spending policies they say stifled the economic recovery. Pawlenty offered his own economic prescription on Tuesday, presenting a plan that would restructure and slash taxes for individuals and corporations and include a Constitutional amendment requiring a balanced budget. “He has spent three years dividing our nation, fanning the flames of class envy and resentment to deflect attention from his own failures and the economic hardship they have visited on America,” Pawlenty said of the president in a speech at the University of Chicago, where Obama once taught. Democrats were quick to ridicule the plan as a giveaway to the wealthy and corporations that would explode the deficit. “It’s a prescription for economic disaster that would fall squarely on the backs of seniors and working families,” said Debbie Wasserman Schultz, chairwoman of the Democratic National Committee. FEW DIFFERENCES ON ECONOMY Romney and the other Republican candidates — former House of Representatives Speaker Newt Gingrich, former Senator Rick Santorum, former pizza executive Herman Cain and Representative Ron Paul — have offered their own economic critiques of Obama as they jockey for Republican primary support. Former U.S. Ambassador to China Jon Huntsman, who served two terms as governor of Utah, and Representative Michele Bachmann also have traveled to early voting states and are expected to enter the race in the next few weeks. Santorum, a staunch social conservative, formally launched his campaign on Monday with a broadside against Obama that accused him of wrecking the economy. The Republican contenders are all conservatives who want to cut spending and reduce taxes, and all have pledged allegiance to Representative Paul Ryan’s proposal to restructure the Medicare health program for the elderly. But they offer sharper differences in experience and perspective. Romney, Pawlenty and Huntsman hope to highlight their executive experience as governors handling budgets. Romney and Huntsman will feature their business backgrounds. Bachmann, Santorum and Cain will vie for the backing of social and religious conservatives, but the growth of the Tea Party and the coming clash in Congress over the debt ceiling has made that bloc more responsive to economic arguments. A Washington Post-ABC News poll published on Tuesday found the country broadly pessimistic about the economy. Obama received record high disapproval ratings on the economy and deficit, with about 6 in 10 voters disapproving. The poll found Obama leading five of the six Republican candidates surveyed in a head-to-head matchup — Gingrich, Hunstman, Pawlenty, Bachmann and Sarah Palin — but slightly trailed Romney among registered voters. Seven months before the first nominating contest, the field of contenders for the right to challenge Obama in 2012 is largely set. But polls show lingering unhappiness among some Republicans about their choices, leading to continued intrigue about other high-profile names that might enter the fray. Palin, the former vice presidential nominee, ignited a frenzy of speculation about her plans with last week’s publicity-grabbing East Coast bus tour, and Texas Governor Rick Perry now says he is thinking about a potential bid. But time is running short to organize. The failed White House campaigns of Democrat Wesley Clark in 2004 and Republican Fred Thompson in 2008 showed late-starting candidates are often better in concept than in practice. “The magical non-candidate is only magical as long as they stay out of the race,” said Republican Dan Schnur, an aide to John McCain’s 2000 presidential race who is now at the University of Southern California. (Editing by Cynthia Osterman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Activists Target Target Stores Over Corporate Political Donations

June 7, 2011

There are many fronts in the battle to reign in unlimited corporate spending on political campaigns. One involves using shareholder groups to pressure companies to adopt policies that prohibit such donations. Activists this week are taking aim at Target Corporation, where shareholders on Wednesday are meeting for the first time since the company became the poster child for political-donation blowback. Facing widespread criticism and calls for a boycott , Target was forced to apologize in August after it donated $150,000 from its treasury to a group that ran an ad for a candidate in the Minnesota governor’s race who was an outspoken opponent of gay rights. Target reviewed and revised its policy on political contributions after that incident. Mike Dean, executive director of Common Cause Minnesota, said the Minneapolis-based company took some positive steps, such as requiring the trade associations to which it contributes not to spend its money on campaign contributions. But Dean said that the new rules, which still allow spending directly from its corporate treasury, aren’t specific enough. “Target has really failed to learn the true lessons from this controversy,” he told HuffPost. As a result, citizens’ lobby Common Cause, the United Steelworkers Union and the pro-gay-rights Delta Foundation of Pittsburgh have combined forces to demand at the Target shareholder meeting in the city on Wednesday that the company stop spending any of its corporate funds on political campaigns. And they have brought big gun to Western Pennsylvania: a trustee of a $40 billion public-employee pension fund. Ever since the Supreme Court’s dramatic Citizens United ruling in early 2010 freed companies to spend as much as they want on political advertising, New York City Public Advocate Bill de Blasio, a trustee of the New York City Employee Retirement System, has been lobbying companies to choose to refrain from doing so. He’s had success with companies such as Goldman Sachs , JPMorgan, Citigroup and Morgan Stanley. On Tuesday, de Blasio sent a letter to the New York City comptroller about Target. He suggested that the fund withhold its support from Target directors “in the absence of a change in policy on political spending.” “The company’s experience in political spending, and the lack of effective reforms taken by the company after the controversy surrounding the company’s 2010 corporate political spending make the company a leading candidate to receive a shareholder resolution regard political spending from the funds,” de Blasio wrote. Dean said activists will be at Wednesday’s shareholder meeting in full force. Inside the meeting, which is being held in a new Target store in Pittsburgh, activist shareholders intend to question Target executives about their policies. Outside, there will be a rally. The meeting is scheduled for 1:30 p.m. ET and will be webcast to the public . Target’s policy continues to take a toll, costing the company a sweet deal earlier this year. Pop phenom Lady Gaga decided against an exclusive Target special edition of her latest album on account of the company’s continued political activity. Dean said corporate spending in elections “is bad for our democracy” and he said Target, of all companies, should be aware of “the reputational risk posed by this type of involvement.” Shareholders, he said, should ask: “What is the real reward that Target gets out of making them?” — and then ask if corporate political donations are worth the possible downsides.

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Major Obama Fundraiser Benefits From Millions In Federal Loans

March 31, 2011

By Ronnie Greene and Matthew Mosk The Center For Public Integrity In connecting green technology startups with government money, Silicon Valley venture capitalist Steve Westly boasts of a special touch. “We believe that with the Obama administration, and other governments … committing hundreds of billions of dollars to clean tech, there has never been a better time to launch clean tech companies,” says his company website. “The Westly Group is uniquely positioned to take advantage of this surge of interest and growth.” Uniquely positioned, indeed. One of President Barack Obama’s most prolific fundraisers, Westly was among guests at January’s state dinner for the president of China. A month later, he dined with Obama again at an exclusive San Francisco Bay area gathering for prominent high tech CEOs, including the leaders of Facebook, Google and Apple. He visits White House staff and, as a member of a government advisory board on energy policy, has the ear of Energy Secretary Steven Chu, whose department hands out the sort of seed money sought by companies in The Westly Group portfolio. He even has hosted the president at fundraisers in his Northern California home, and co-hosted events for three of Obama’s most influential advisors. All the while, Westly’s four-year-old green business has boomed. Since June 2009, four companies in his venture firm’s portfolio have received more than half a billion dollars in loans, grants or stimulus money from the Obama Energy Department, a review by the Center for Public Integrity and ABC News has found. Relatively few companies succeed in winning such benefits. More than 90 percent of applicants have failed to secure funding in two programs benefiting three Westly-backed firms. Securing government aid helps attract investors and can make corporate stars of even small startups. Funding for The Westly Group firms occurred prior to his joining the government advisory board, though an Obama administration proposal after Westly’s appointment immediately boosted the stock price of one company. Westly’s ability to straddle the worlds of big time fundraising, government advising and private financing for startup companies tells a larger story about how business and politicking intertwine at an Energy Department flush with $35 billion in stimulus money. “It looks like kind of the classic Washington hands washing each other,” said Mary Boyle, a spokeswoman with Common Cause in Washington. “He’s politically active, he gives money, he gets noticed, he lands on an energy board. … Firms that he backs are landing these lucrative energy contracts.” It’s the very cycle of money, influence and access that Obama vowed to break when he came to Washington but which persists two years into his presidency. Westly, a former public official in California, declined repeated requests from the Center for interviews and walked away without comment when questioned by an ABC reporter at a Washington event earlier this month. He isn’t the only politically active investor whose portfolio firms win energy grants. John Doerr, a California billionaire who made a fortune investing in Google, hosted Obama at February’s dinner for Westly and the other high tech executives at his secluded estate south of San Francisco. His venture firm, Kleiner Perkins Caufield & Byers, backs green tech firms, several of which secured DOE funding, records show. Doerr and Kleiner Perkins executives have contributed more than $1 million to federal political causes and campaigns over the last two decades, primarily supporting Democrats, and Doerr serves on Obama’s Economic Recovery Advisory Board. Doerr did not respond to multiple interview requests about his dinner with Obama. Another beneficiary of Energy Department aid is Solyndra Inc., a California solar power firm whose financial backers include Oklahoma oil billionaire George Kaiser, a bundler who raised at least $50,000 for the president’s campaign in 2008. Solyndra, a recipient of a $535 million 2009 loan guarantee to help create jobs, laid off some 180 temporary and fulltime workers the following year, prompting questions in Congress over whether its new manufacturing plant will spur the 1,000 fulltime U.S. jobs the company promised. Company spokesman David Miller said Solyndra, which first applied for the guarantee during the Bush administration, won it on merit. “Over time,” he said, “yes, we believe we will meet those goals.” Obama’s focus on environmentally promising technologies while gaining support from clean tech titans comes at a time when the Energy Department’s handling of government largesse is gaining scrutiny. The Government Accountability Office, the investigatory arm of Congress, raised concerns in a report last year about favoritism in the awarding of some loan guarantees. The Energy Department’s inspector general told Congress this month that some stimulus contracts may have been steered to “friends and family.” A GAO report to be released this week is expected to focus on a specific automotive loan program that benefited five companies, including two supported by the Westly and Doerr venture firms. There’s no indication in public records that any of those investigations focus on Westly, Doerr, Kaiser or their firms. “A lot of these contracts are really being pushed out the door with no oversight,” said Rep. Cliff Stearns, R-Fla., chairman of the Energy and Commerce oversight subcommittee. In an interview, Stearns pointed to the Solyndra contract as an example of poor government oversight. “I think what happens is, they give some of this money out to people who are either contributors or strong supporters.” A TRAIL OF LOANS, GRANTS AND TAX BREAKS The Obama administration’s efforts to reduce pollution, especially from coal-powered plants, and to lower dependence on foreign oil has unleashed an unprecedented wave of federal aid to clean energy startups. The federal dollars help clean tech firms expand their products and grow their bottom line. Four companies in The Westly Group portfolio received Energy Department loans, grants and stimulus money: Tesla Motors, RecycleBank, EdeniQ and Amyris Biotechnologies. Two of those firms, Tesla and Amyris, went public with stock offerings in 2010. The government largesse started with $465 million in loans that helped Tesla develop electric cars that cost $54,700 each. Four months later came a $700,000 federal grant, crucial to expanding a RecycleBank program in Philadelphia. In December 2009, the Energy Department awarded stimulus grants of $20.4 million for an EdeniQ bio-refinery and $25 million for Amyris to develop a diesel substitute through the fermentation of sweet sorghum, both projects in California. Over the last four years, Westly emerged as something of an entrepreneurial superstar in the clean technology movement. Then, in August, he gained a seat at the table when it comes to national energy priorities that affect his business interests. On the White House’s recommendation, Chu appointed him to his 12-member Advisory Board, a government-stamped seal of approval as The Westly Group pursues a $175 million round of fundraising to expand its portfolio. Westly cites that appointment on his company bio. Meeting minutes show he is leading a Chu subcommittee exploring “building energy efficiency.” In his venture capital firm, Westly is actively investing in energy efficient building materials, an area he describes as something of a new investment frontier. This February came perhaps the prized jewel for a Westly investment, when the Obama administration proposed to stimulate sales of electric cars by offering consumers a $7,500 federal rebate at the dealer. Stock in Tesla, the Silicon Valley electric car maker that went public last year, rose 6 percent with the news. Westly sat on Tesla’s board for more than two years, and though his firm recently sold its nearly 2.5 million shares, he personally remains a shareholder. “I think Tesla’s best days are ahead of it,” he told Bloomberg West TV March 11. Some executives of companies financially supported by Westly’s venture firm acknowledge that his activities — which include arranging introductions for them and helping them navigate bureaucracies in Washington even as he serves as an advisor to those bureaucracies — create the potential for a conflict of interest. But they say involving industry expertise is unavoidable, even necessary as the government strives to spur adoption of new technologies. “This is the sort of conflict the DOE and USDA and other agencies run into when they take a step — which I think is a good one — in trying to involve people from industry in helping to advise and set direction,” said Kinkead Reiling, co-founder of Amyris Biotechnologies, which landed a $25 million Energy Department stimulus grant in 2009. The White House and Energy Department deny that political supporters of the president have any edge as they compete for funding. “Grants and loans are competitively awarded on the basis of merit,” said Reid Cherlin, a White House spokesman. The Energy Department said it sees no conflict in his dual roles, saying Westly is an unpaid member of a board that is “advisory in nature.” A spokesman noted that the loans and grants came before his appointment. Because he is not a federal employee, Westly is not required to file disclosure or conflict of interest forms. The DOE said he made it aware of his investment activity and potential conflicts. Asked to release that information, the department said it was confidential. Over the course of two months, Westly — who has often sought attention for political candidates he supports, and for the green energy movement he is part of — declined to answer questions for this story or respond to multiple requests for an interview through his company and via email. “We’ve decided not to comment,” said Michael Kaufman, a Westly Group principal. When Westly came to Washington for Democratic fundraising events in March, he turned his back to ABC News and was escorted away by party officials. Those who have worked with Westly over the years say his greatest assets are as public cheerleader — and tour guide to help companies navigate political terrain. “He is a true believer in green technology at a time frankly when that was not very obvious,” said Marc Tarpenning, one of the founders of eight-year-old Tesla Motors. “Steve was always a supporter and a true believer in it. He’s not really a technologist.” Industry should embrace government, not fear it, Westly told Tesla. “‘Government is not always bad and especially for something that is going to affect your business, you should be involved with it,’” Tarpenning quoted Westly. “He encouraged us to think about Washington.” As a businessman, Westly is in the vanguard of a movement to transform the nation through clean technology, a key initiative of Obama, who is backing his pledge with billions of federal dollars. The push already has benefited a rash of innovative technology companies, including The Westly Group, one of the largest clean tech venture firms in the U.S. According to its website, the venture “has done very well” on a current $127 million investment fund, and is pushing ahead with a new round of financing targeted at $175 million. As a chief fundraiser for the president, he’s also at the vanguard of another development — the need to raise unparalleled sums of money for the 2012 re-election campaign. As a top fundraiser, Westly is in elite company: 52 so-called bundlers who raised more than $500,000 on Obama’s behalf in the 2008 race, according to records maintained by Public Citizen. By hosting fundraisers and making calls to wealthy associates and acquaintances, bundlers from Florida to California raise the millions that help candidates pay for increasingly expensive campaigns. Their work can prove pivotal in contentions races, and they often are rewarded with prestigious posts such as ambassadorships. Obama has continued a long tradition, tapping bundlers as ambassadors to Norway, France and Japan. More than 100 bundlers for the GOP’s George Bush landed government posts, from Cabinet slots to ambassadorships to New Zealand and Portugal. Westly’s success is striking for the string of victories by companies in his portfolio, and for his timing in tapping into a rare area of government growth: Alternative energy, infused with more than $8 billion for research and development in Obama’s budget. He has become the green bundler with the golden touch — and the president’s ear. Companies whose investors include The Westly Group and that have won federal subsidies say the benefits of an association with Westly owe more to his insights than any help on specific Energy Department grants. They say he has made introductions in Washington, where he once worked under Jimmy Carter, and that his background in energy and financial matters was fruitful. “We found that Steve is very helpful and insightful in understanding the political landscape, especially from the energy side,” said Reiling, who also serves as senior vice president of Amyris, which The Westly Group backed until it went public last year. “Because of his past in D.C., he has been able to get some introductions. Once he introduces us, it’s our job to actually do the work and show whoever he has introduced us to the value we can bring.” The Westly Group’s political connections distinguish the firm from many other venture outfits. “One of the things the firm pledges that differentiates The Westly Group from other venture capitalists is they help companies navigate the political landscape,” said Eric Wesoff, a senior analyst who specializes in renewable energy and financing for Greentech Media, which covers news and analysis about the green tech market. “If the premise is that The Westly Group is able to pull some strings to get their companies federal funding, that might actually be part of his business plan.” “Why is this man smiling?” asked the sub-headline on a Wesoff profile of the company. “Three of this investor’s portfolio firms listed on the Nasdaq in 2010.” Westly is quoted as saying he and his team are “experts in helping portfolio companies with their interactions with government — federal, state and local.” Entrenched energy and oil firms have long banked on political connections and policy know-how to secure federal money. Now startup clean tech ventures, following the same playbook, are simply trying to run with the giants. “They are fighting incumbents like oil, gas and coal, and they need every advantage they can possibly extract. And that’s why the DOE is giving out this money to provide some type of kick start to these non-incumbent technologies,” Wesoff said. “This is the way energy works. This is the way business works. And here are these enormous amounts of stimulus funds.” Added Wesoff: “This is the way power brokers broker power.” A POWER BROKER FROM THE START Westly, 54, stepped into politics early. He worked on Capitol Hill and in Carter’s Energy Department Office of Conservation and Solar before returning to California to become special assistant to the president of the California Public Utilities Commission. After earning an MBA from Stanford’s Graduate School of Business in 1983, he stepped into the business world, including a stint at Sprint Telecommunications. His most fortuitous career move: Becoming one of eBay’s early executives in 1997, where he helped the circle of young techies keep their eye on the bottom line in his role as Senior Vice President of Marketing, Business Development, M&A and International. “People were saying things like, ‘Well, you don’t really have to be profitable,’” he told The (San Francisco) Chronicle. His message: “You must be profitable.” The company was. And after Westly cashed out with riches in 2000, he quickly put his eye back on politics. With $5 million of his own money, he narrowly won election as California controller in 2002. Four years later, he sought the Democratic nomination for governor, infusing his campaign with $40 million from his personal fortune — and lost. Westly returned to his business roots and continued to wield influence from the heart of Democratic Party fundraising. By early 2007, he founded The Westly Group, a Menlo Park venture created to tap into the mushrooming clean tech movement by linking companies with green ideas to big money to back their projects. The firm soon hit significant pay dirt, completing a vision its founder set from the start. “We believe that clean-energy innovation can achieve the dual aims of protecting our environment and generating economic opportunity,” Westly wrote in a piece he co-authored in November 2007 for the Progressive Policy Institute, a think tank affiliated with the Democratic Leadership Council. In March 2007, just as The Westly Group was getting off the ground, he joined the board of directors of Tesla, the California electric-car start-up then poised to introduce its first model — a sporty two-seat Roadster with a base price of $109,000. That same month, March 2007, Westly gave $2,300 to Obama, part of a series of federal contributions to political causes. Westly co-chaired California’s Obama for President Campaign, a fact also noted on his company website, and has personally contributed more than $360,000 to Democratic campaigns and causes since 1998, according to federal election records compiled by the Center for Responsive Politics. “I’m here to tell you Obama is the candidate with the momentum. Obama is the candidate of vision, and Obama is the candidate who is going to inspire a new generation of Democratic voters,” Westly, speaking before a “Change We Can Believe In” banner, implored a crowd as Obama battled Hillary Clinton for the Democratic nomination in the 2008 election. “Are you ready to fire it up?” he asked. After Obama’s election, Westly was rumored to be on the short list to become the president’s energy secretary, according to media reports. The slot went instead to Chu. Westly firms quickly tapped into the giant pot of federal money earmarked to the clean tech industry. In winning the 2009 energy department loan, Tesla landed in rare company — just 5 of 130 applicants for the loan pool have received funding, records obtained by The Center show. The department said not all applicants were eligible or a good fit. The GAO has chided the Energy Department for its handling of other loan programs geared toward new technologies and reducing emissions, finding last year that the department “had treated applicants inconsistently in the application review process, favoring some applicants and disadvantaging others.” It said the department fast-tracked approvals for some applicants, and sometimes committed money before all its reviews were finished, “allowing these applicants to receive conditional commitments before incurring expenses that other applicants were required to pay.” Separately, the Energy Department’s inspector general, Gregory Friedman, said his office has 64 open investigations centered on stimulus spending. They include “the directing of contracts and grants to friends and family,” Friedman told the House Subcommittee on Oversight and Investigations. The department has one of the biggest pots of recovery money anywhere in the government – $35 billion. With just one third of that money spent so far, “we expect that our efforts in this area will continue for some time,” Friedman said. Now, a new, pending GAO report is focusing on the Advanced Technology Vehicles Manufacturing (ATVM) loan program that aided Tesla and four other car firms. Documents obtained by the Center for Public Integrity under a Freedom of Information Act request show that one of the firms turned down for funding in that loan pool complained of unfair treatment and being ignored. In a five-page letter to Chu, dated Sept. 21, 2009, the company said it had been given no reason for its rejection and had to call the Energy Department multiple times simply to learn what happened. “DOE reviewers never even talked to the founder, inventor, engineers, project leads or primary contractors to obtain additional information,” said the letter from the California electric car maker, XP Vehicles, Inc. “Why was staff at DOE during the course of the year positive about the outcome and never asked for additional information?” Other firms shut out from the car program have expressed similar frustration, James Taylor, CEO of Ohio’s Amp Electric Vehicles, said in a Q & A last week on Edmunds.com. “These are companies trying to get off the ground and are just like us, starving for cash, looking for investors,” Taylor said. The government money is “not falling through the funnel and getting out to us.” For upstart firms, such loans make a huge difference. Tesla’s came in two parts. The biggest chunk — $365 million — was earmarked to bankroll a manufacturing facility for the $57,400 Model S sedan, which is expected to hit the road in 2012. “The all-electric sedan consumes no gasoline and runs entirely on electricity from any conventional 120V or 220V outlet,” the department said. The other loan “will support a facility to manufacture battery packs and electric drive trains to be used in Teslas and in vehicles built by other automakers, including the Smart For Two city car by Daimler.” “We don’t simply make code that we put out on the Web. You have to buy big pieces of mechanical infrastructure,” Diarmuid O’Connell, Tesla’s Vice President of Business Development, said in an interview. He said the financing, coming at a time commercial bank investments were drying up, was crucial to helping develop the Model S. Consumers will benefit, O’Connell said, as the lower cost Model S is nearly half the price of the Roadster. Versions with longer battery lives will cost $10,000 to $20,000 more, Tesla recently announced. “It’s not at all about the Tesla Roadster or toys for rich boys,” he said. As for Tesla securing funding sought by many but won by few: “Frankly, as a taxpayer I feel pretty good there’s been a high degree of analysis” in the award process. O’Connell said Westly aided the company on big picture issues — “he was a helpful sounding board” — but not the application itself. He said Tesla first explored government funding under Bush, though it secured its loans from Obama. Westly’s biggest role, he said, has been as tireless public cheerleader for Tesla, citing the multiple green energy forums in which Westly has appeared. “He’s a huge advocate of the company.” Now, with his latest blueprint for federal spending, Obama wants to hand consumers a $7,500 rebate when they buy an electric car, helping push his long-shot goal of 1 million electric vehicles on the road by 2015. Tesla, with the Roadster already on the road and the Model S coming next year, could be among electric car makers to reap a windfall from that subsidy. If the rebate goes through, the Obama administration will have aided Tesla at the front and back ends of its production line: The June 2009 loan package, given while Westly served on Tesla’s board of directors, helped the company build a manufacturing hub for the Model S. Now, the administration’s Cash for Clunkers-like rebate — eyed for cutting-edge electric vehicles — could help Tesla sell those cars to buyers wary of the sticker price. Until now, consumers buying hybrid and electric vehicles could pocket a tax credit of up to $7,500, but would have to wait until they filed their tax returns to benefit. Now, the break would come at purchase. The rebate could make a “huge difference” for consumers and electric car makers, said Will Beckett, membership chair of the Electric Auto Association. He said not everyone qualifies for the current tax credit. So, handing a rebate at the dealer could draw in many more buyers — adding to other subsidies already available. In his home state of California, for instance, the state already gives a $5,000 rebate to buyers of electric cars. Tesla’s O’Connell agrees the front-end rebate could lure more consumers. “Any economist will tell you that that’s the best place to stimulate the buyer’s decision,” he said. “It’s helpful on the margins. Will it be decisive? The market will prove that out.” In February, Tesla opened a showroom for its Roadster on K Street, Washington’s lobbying corridor. The Roadster accelerates from 0 to 60 mph in 3.7 seconds without gas and travels 245 miles on a charge. Tesla said 1,500 of the cars are on the road in 30 countries. “We’re excited to bring this spirit of innovation to the nation’s capital,” the company said. While The Westly Group website said the company is no longer a shareholder in Tesla, Westly continues to be, and his venture firm’s relationship ended recently. When Tesla went public in June 2010, Westly Capital Partners Fund sold more than 70,000 shares valued at $1.2 million, a minuscule portion of its nearly 2.5 million shares, according to SEC filings and the VentureBeat publication. The company, which once held more than 3 percent of Tesla, wasn’t fully divested until late last year. Westly sat on Tesla’s board from March 2007-December 2009. ENERGY GRANTS FLOW TO VENTURE-BACKED FIRMS The other energy department grants to Westly-backed firms ranged from several hundred thousand dollars for recycling programs to more than $20 million for green-tech work in California. A $700,000 Energy Efficiency and Conservation Block Grant, filtered to Philadelphia in 2009, helped RecycleBank expand its recycling benefits program in the city. “We can stand on our own two feet. The Westly Group, they’ve helped us in a billion ways, but never in a municipal contract,” said Matt Tucker, RecycleBank’s president. “He’s very focused on financials for us.” In December 2009, Westly-backed EdeniQ landed a $20.4 million Energy Department grant in partnership with Logos Technologies to “modify and operate a pilot-scale bio-refinery plant to produce low-cost ethanol bio-fuel from cellulosic feedstock,” the companies said. “It keeps a good company alive. It gives us more of a runway to develop new technologies,” said Will Gardenswartz, an EdeniQ contractor on the grant, who said the link with long-established Logos was important. That same month, Amyris Biotechnologies landed $25 million in stimulus money that will help the company convert simple sugars into fuel. “On this particular grant there wasn’t a need to bring in the big guns, but he has been very helpful generally,” Reiling said. “He has a good insight into where the political momentum is going and he has made certain introductions to us. … The best idea should win, but he’s been helpful in getting us to the forum.” Logos/EdeniQ and Amyris were two of 19 projects funded under an Energy Department program that attracted over 300 applications. The department said the projects were reviewed by independent experts and that nearly half of the applicants failed to meet eligibility criteria. At least two other companies that later joined The Westly Group portfolio, Amonix and CalStar Products, secured Energy Department funding just before their financial pact with the venture capitalist. Amonix, which makes solar panels, won $9.5 million in stimulus funding in January 2010 for manufacturing work in Nevada and Arizona. Three months later, Amonix announced a $129.4 million round of financing that included The Westly Group. In July, with Amonix in the Westly fold, President Obama spoke alongside Amonix executives during a speech at the University of Nevada at Las Vegas, using the setting to press Congress to pass a $5 billion extension to the administration’s clean energy manufacturing tax credit. The White House said it did not make any trips at Westly’s suggestion. Amonix executives did not respond to interview requests. Doug Koplow, founder of the energy consulting firm Earth Track, which tracks government energy subsidies, said investments to venture capital projects raise important questions. “Is the venture capital firm itself still having a lot of risk and money on the table?” Koplow asked. “When you get easy federal money, it actually can crowd out and worsen the discipline and due diligence.” READY ACCESS TO THE WHITE HOUSE, OBAMA, CHU From California, Westly frequently finds his way to the nation’s capital. In October 2009, he spent two days visiting The White House, records show , the first a meeting with Nancy Hogan, Director of the Office of Presidential Personnel. Hogan’s office referred calls to the White House, which said Westly met her “to discuss potential opportunities for service within the Administration related to green energy policy.” The next day, Oct. 27, Westly spent 30 minutes with Chief Technology Officer Aneesh Chopra, whose duties include job creation. Chopra said he had met Westly in California, and that the venture capitalist came mostly to hear about Chopra’s new role in government. “He shared with me in that meeting he’s very passionate about clean energy and clean technologies,” Chopra said. “He mostly listened. He wanted to hear what I was doing.” Chopra said they didn’t discuss grants or loans. “The White House does not intervene at all on any particular grant programs, procurement activities. We are policy advisors,” said Chopra. White House records also list Westly among the president’s guests at the June 2, 2010 Gershwin Award ceremony honoring Paul McCartney. The concert, in the East Room of the White House, included tributes from Stevie Wonder and Emmylou Harris. In August 2010, Westly was appointed to the Secretary of Energy Advisory Board, along with academics and current or former executives from Lockheed Martin, IBM, DuPont and United Technologies Corp. “They will be providing their expertise and experience at a critical time for our country as we chart a new course toward a clean energy future,” Chu said in a statement. The White House said it “identified the board as a potential fit for Westly, communicated that to DOE staff, and referred Westly to the Department,” wrote spokesman Cherlin. In the board’s introductory meeting in September, Westly was in attendance as the discussion included a DOE presentation on how the Recovery Act “has positioned the Department of Energy to take a different role in Clean Energy Deployment” — and how the department needs to leverage grants, tax incentives and loans, the meeting minutes show. Then Jan. 20, Westly led a subcommittee exploring ways to incentivize building energy efficiency. “Member Westly will compile a menu of options for overall building efficiency and bring it back to the group for discussion,” the minutes say. In his interview with Bloomberg West TV, Westly was asked where his company was putting its money. “But one of the areas that is perhaps least talked about that we like most, is energy efficient building materials, green building materials,” he said. “You are going to see a revolution in clean building materials.” He is backing that talk with investments. In February, The Westly Group took part in a $10 million round of financing for Soladigm, a developer of energy-efficient glass for buildings. A Westly Group managing partner joined Soladigm’s board of directors. As a member of Chu’s Advisory Board, Westly is allowed to discuss policy issues that could impact venture capitalists like himself. Energy department policy states only that he is not to take part in matters that would directly affect The Westly Group. The department said it sought Westly’s expertise as a venture capitalist. Asked about his investment in green building materials even as he leads Chu’s committee on the topic, the department said Westly’s investments were factored in when deciding his role. “The Secretary of Energy Advisory Board is meant to provide advice to the Secretary on energy policy and on the overall direction of the Department of Energy,” spokeswoman Stephanie Mueller wrote in January. Chu did not respond to an interview request in January, and on March 10 said he had no time to talk. “The Secretary’s schedule is unfortunately packed for the next several weeks so he won’t have time for this,” the department wrote. The Center filed a Freedom of Information Act request for correspondence between Westly and the Department of Energy. While the department released some records last week, it cited privacy concerns as reasons for withholding three pages of Westly’s personal financial information, as well as much of the contents of emails detailing discussions between Westly and the Energy Department’s legal counsel. The records do show that the Obama administration asked Westly to co-host events in March 2010 for Chu and senior advisor Valerie Jarrett, each of whom had spoken that month at Stanford University, and for Jim Messina, Obama’s 2012 campaign manager — and that Westly wasn’t shy about mentioning his connections. “Please forgive the delay on this, but the Administration has asked me to co-host events for Valerie Jarrett (last Thursday) and Jim Messina and Secretary Chu (both of which are tomorrow) so things have been a bit busy on this end,” Westly wrote to Sue Wadel, the Energy Department lawyer conducting his conflict of interest review for the board. “The good news is that we will have good turn-outs for all events!” said Westly’s March 2010 email. In October, two months after his appointment to the energy board, Westly helped Obama once more, as Democrats nationwide struggled to win seats amid the battered economy. At a guesthouse on his Atherton property, 30 miles south of San Francisco, Westly raised money for San Francisco District Attorney Kamala Harris’ successful bid to become state attorney general. Then, at his main home that October evening, Westly sought funds for the Democratic National Committee. “It’s an extraordinary honor to host the president at your home,” Westly told local reporters. “And I’ve never seen the president more pumped up.” Westly and his wife rubbed shoulders with the President and Mrs. Obama at the Jan. 19 state dinner featuring a menu of poached Maine lobster, dry-aged rib eye and “An Evening of Jazz.” Then, Westly connected with Obama again Feb. 17 as the president dined in Northern California with high-tech wunderkinds at fellow venture capitalist Doerr’s estate. The meeting, a White House official said, was “part of our ongoing dialogue with the business community on how we can work together to win the future, strengthen our economy, support entrepreneurship, and get the American people back to work.” The president and high tech executives broke bread over “our shared goal of promoting American innovation,” the White House said, along with Obama’s “commitment to new investments in research and development, education and clean energy.” Westly sees only good things ahead. “For our firm, we had three companies go public last year alone. It was a banner year,” he told Bloomberg West TV. “And I think this year is going to be better.”

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Chris Martenson, Ph.D.: Egypt’s Warning: Are You Listening?

February 10, 2011

One day, a fruit and vegetable seller was arrested in Tunisia, sparking social unrest, and a few weeks later the government of Egypt was set to topple.

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Chris Martenson, Ph.D.: Egypt’s Warning: Are You Listening?

February 10, 2011

One day, a fruit and vegetable seller was arrested in Tunisia, sparking social unrest, and a few weeks later the government of Egypt was set to topple.

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Rebecca Solnit: Iceberg Economies and Shadow Selves: Further Adventures in the Territories of Hope

December 22, 2010

Crossposted with TomDispatch.com . After the Macondo well exploded in the Gulf of Mexico, it was easy enough (on your choice of screen) to see a flaming oil platform, the very sea itself set afire with huge plumes of black smoke rising, and the dark smear of what would become five million barrels of oil beginning to soak birds and beaches. Infinitely harder to see and less dramatic was the vast counterforce soon at work: the mobilizing of tens of thousands of volunteers, including passionate locals from fishermen in the Louisiana Oystermen’s Association to an outraged tattoo-artist-turned-organizer, from visiting scientists, activist groups, and Catholic Charities reaching out to Vietnamese fishing families to the journalist and oil-policy expert Antonia Juhasz, and Rosina Philippe of the Atakapa-Ishak tribe in Grand Bayou.

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David Isenberg: Will the Real Hillary Clinton Please Step Forward?

December 18, 2010

It appears that the old Hillary Clinton, the one who ran for president of the United States has managed to travel forward in time and merge with the current Hillary Clinton, the one who is Secretary of State. For those who don’t remember, the old Clinton vowed to ban the use of private security contractors. As perennial PMC critic Jeremy Scahill of The Nation reported back in July, “”These private security contractors have been reckless and have compromised our mission in Iraq,” Clinton said in February 2008. “The time to show these contractors the door is long past due.” Clinton was one of only two senators to sponsor legislation to ban these companies. Scahill was upset that Clinton had since moderated her views and that she was “presiding over what is shaping up to be a radical expansion of a private, US-funded paramilitary force that will operate in Iraq for the foreseeable future–the very type of force Clinton once claimed she opposed.” But on Wednesday the State Department and the US Agency for International Development (AID) unveiled the much-awaited Quadrennial Diplomacy and Development Review entitled ” Leading Through Civilian Power .” The report seeks to put some distance between State and the private sector. • Fundamentally change our management approach by turning to the expertise of other federal agencies where appropriate –before engaging private contractors. This will help all federal agencies build lasting relationships with foreign counterparts and reduce our reliance on contractors. (p. vi ) As obligations in the frontline states expanded and overall staffing levels stagnated, the State Department and USAID increasingly came to rely on outside contractors to supplement their ranks. While grants and contracts do have certain benefits, we need to restore government capacity and expertise in mission critical areas. We will: • Create a more balanced workforce to ensure we have the appropriate mix of direct-hire personnel and contractors, so the U.S. government has the capacity to set priorities, make policy decisions, and properly oversee grants and contracts. • Leverage the experience and expertise of other agencies with the skills to advance U.S. objectives, before turning to outside contractors. • Ensure that our approach to procurement advances America’s development objectives and saves money by fostering more competition for our contracts and using host-country businesses and NGOs where possible. ( p. xvii) More specifically, State will enter into interagency agreements, consistent with existing law, to draw on the skills, expertise and personnel of other federal agencies before turning to private contractors where State determines that building in-house government capability or promoting bilateral working relationships furthers our foreign policy priorities. ( p. 33) In particular, given the national security implications of security sector assistance, State will look first to the Department of Justice, the Department of Defense, and the Department of Homeland Security to implement State programs involving counterterrorism capacity building, foreign law enforcement, or strengthening justice and interior ministries. State and USAID will similarly look to the Department of Health and Human Services to build on existing long-term relationships with ministries of health in partner countries. State will use private contractors for non-governmental functions when other agencies lack appropriate skills or are otherwise unwilling or unable to provide the services needed in an effective manner. In the long-term, partnering with and building on the assets of other agencies will offer net policy gains to the U.S. government and reduce overall program implementation costs. This is a significant departure from current practice, one that we believe will save money, improve the U.S. government’s ability to advance American interests, and strengthen State’s engagement across the interagency. (p. 34) While those recommendations are for State they also apply to AID. USAID must expand its human resource talent to include more experts in evaluation, planning, resource management, and research. And it must rebalance its workforce to build internal capacity, reduce its dependency on contractors, improve oversight and accountability, and expand engagement with other development stakeholders. (p. 108) And although there is more, let me finish with this quote; particularly relevant, given the perennial contractor claims of cost-effectiveness over their public sector counterparts: In-source positions more appropriately performed by direct-hire personnel. Creating a more balanced workforce at State and USAID is necessary to ensure that both agencies are supported, not supplanted by contractors. To this end, State will build on the results of its Office of Management and Budget pilot projects, which developed a framework that will be replicated in other bureaus within the Department. The framework identifies which functions are inherently governmental, critical, or essential to the mission of each organization. In our pilots conducted within two select offices from one regional and one functional bureau, we identified nearly a quarter of the contractor workforce performing work that was closely associated with inherently governmental or mission-critical functions. We also found that another 10 percent should be in-sourced for cost efficiencies. The average estimated cost savings in these pilots was $33,000 per position.

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Jonathan Weiler: Face Value: Deficits as Code for Tribal Fears

November 25, 2010

It’s obvious, of course, that the right’s new concern with deficits is not really about deficits, per se (any more than their new-found concern with government tyranny can be viewed with a straight face). Little fuss was heard from right-wing precincts during the Bush years, when the decider quickly burned through Clinton-era surpluses and ran up large deficits by pursuing reckless fiscal and military policies. And it would be hard to square American conservatives’ conferring of sainthood on Ronald Reagan with their now profound, deep, over-riding concern with deficits, given that Reagan oversaw dramatic increases in deficit spending . If deficits are the ultimate measure of irresponsibility, out-of-control government and a failure to live prudently and within one’s means — all values conservatives claim to hold dear — lionizing as the very embodiment of greatness and true leadership a President who behaved fiscally irresponsibly would simply make no sense. For some in Washington and its media environs, deficits do mean, roughly, something related to spending too much money. Erskine Bowles, co-chair of the deficit commission, believes that there is a threshold for spending money beyond which very bad things will happen( though Bowles has failed to come up with a coherent rationale for explaining what that threshold is ). And people like CNN ‘s Gloria Borgen, who recently insisted that the voters’ message on November 2 was that they wanted deficits reduced ( despite data showing how utterly laughable that claim is ) probably have nothing more in mind when it comes to deficits than what they hear at cocktail parties. But for the movement that has made the biggest issue out of deficits, the Tea Party, broadly speaking, deficits mean more than arbitrary numbers on a balance sheet or stupid mischaracterizations of what Americans actually care about. And because they’ve so powerfully shaped political discourse in the past eighteen months, it’s worth understanding what the underlying meaning of their concern with deficits is really all about. Yes, Wall Street, bondholders, banking interests and central bankers care about deficits for their own reasons, and these matter, of course, for what’s on the political agenda ( including Bowles himself ). But as a galvanizing emotional issue, deficits are a big deal in 2010 because they pack the kind of emotional punch and dog-whistle politics that once made crime and welfare such potent wedge issues. Deficits have become code. And the code is quite clear, once you think about it for a moment — that when government acts, it always acts to help the undeserving and, in doing so, hurts real Americans who are faithful to real American values. In this code, America is awash in free-loaders and law-breakers — poor, illegal, grubby-handed “losers” who are ruining everything that once made America great. Deficits are government’s way of indulging, coddling and abetting these losers. Crime and welfare had an obvious “face” — an African-American face. And politicians from Nixon, to Reagan to the elder Bush self-consciously exploited that racial code to win elections, as Lee Atwater , among others, openly acknowledged. But the code is more diffuse now. It’s not strictly about race any longer. It’s about every sort of un-nerving difference. Yes, swarthy skin is still a surefire way to set off the terror that has galvanized the Beck-istas and the dittoheads — Muslims and illegal immigrants being easy focal points of the hatred du jour. But it all runs together now — embodied in what Sarah Palin during the 2008 campaign, when she spoke of the “real” America — a place of exclusion, fear, resentment and desperation to defend their besieged communities from the tax collector and all those menacing representations of difference on whose behalf the tax collector serves. This is why, as I’ve said before, though Obama’s skin color, name and background are highly relevant to the right-wing’s insane and misplaced hatred of him (he’s cut taxes for nearly everybody, presided over record corporate profits, expanded our military operations and continued the most repressive features of the Bush national security apparatus) — the skin color issue also misses the deeper-seated motives behind that hatred . Had Hillary Clinton been president and pursued similar deficit-spending policies, she would have been subject to similar attacks. It’s what deficits represent that matters most — a hand out to people who are worthy of nothing but hatred and contempt, who have bespoiled “our” fragile community, who are responsible for the dread and insecurity we feel – because what those deficits mean is that the government will help and defend “them,” but not “us.” In sum, deficits are code for government taking sides in a tribal war, with the one good tribe — the real Americans — under siege from all the tribes of venality, dissipation and filth. We can debate the significance of long-term deficits for our economic well-being and, yes, I am well aware that, in the long run, most economists agree that this is a significant policy problem that we need to tackle. But this fairly technical policy debate is not what’s mobilizing the tea party to scream about deficits in 2010, after having watched quietly while their putative conservative heroes acted with fiscal abandon from 1980 on. Spending money on their own kind is one thing (and the Reagans and Bushes can be reliably counted on to do that) — an affirmation of the natural, acceptable state of things. Spending it on all those “others” out there is something else entirely. People are entitled, of course, to believe that they and their kind are more deserving than others. But we’re under no obligation to take their anger about deficits at face value, when it’s so clear that something much deeper lurks behind the crying over spilled red ink. Jonathan Weiler’s second book, Authoritarianism and Polarization in American Politics , co-authored with Marc Hetherington, was published last year by Cambridge University Press.

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Michael Moore: They Said They Would Push Me "Off a Cliff"

November 17, 2010

Yesterday, on the TV and radio show Democracy Now hosted by Amy Goodman, the former Vice President of CIGNA, one of the nation’s largest health insurance companies, revealed that CIGNA met with the other big health insurers to hatch a plan to “push” yours truly “off a cliff.” The interview contains new revelations about just how frightened the health industry was that Sicko might ignite a public wave of support for “socialized medicine.” So the large health insurance companies came together over a common cause: Stop the American people from going to see Sicko — and the way to do that was to cause some form of harm to me (either personally, professionally or… physically?). Take a look at this stunning section of the interview with Wendell Potter: WENDELL POTTER [former executive, CIGNA]: …We were concerned that the movie [ Sicko ] would be as successful as Fahrenheit 9/11 had been. And we knew that if it were, it really would change public opinion about our health care system in ways that would be harmful to the profits of health insurers. So, it was very important for this [attack] campaign to succeed. At one point during a strategy meeting, one of the people from [the insurance companies' public relations firm] APCO said that if our efforts, our initial efforts, were not successful, then we’d have to move to an element of the campaign to push Michael Moore off a cliff. And not meaning to do that literally, but to — AMY GOODMAN: Are you sure? WENDELL POTTER: Well, I’m not sure. To tell you the truth, when I started doing what I’m doing [as a whistleblower], I was concerned about my own health and well-being, maybe just from paranoia. But these companies play to win. And we’re talking about some big bucks at stake here — billions and billions and billions of dollars. AMY GOODMAN: So what were they talking about when they said, “If this doesn’t work, we’re going to push him off the cliff”? WENDELL POTTER: Well, it would be just an incredibly intense PR effort, if necessary, to spend more premium dollars to defame Michael Moore, to discredit him even more as a filmmaker. AMY GOODMAN: So, were you doing research on him? WENDELL POTTER: Oh, yeah. Oh, yeah. AMY GOODMAN: You were going — personally? WENDELL POTTER: Well, I was a part of the effort. I didn’t — that was part of the reason for hiring APCO and to work with a trade association, is that it relieved me of the responsibility of doing that kind of work. You paid for it to be done by people who were experts in doing that kind of research. AMY GOODMAN: But they were doing an investigation into him personally? WENDELL POTTER: Well, absolutely. We knew as much about him probably as he knows about himself. AMY GOODMAN: About his wife, about his kid, about — WENDELL POTTER: Oh, yeah. You know, it’s important to know everything that you might be able to use in some kind of a campaign against someone, to discredit them professionally and often personally. AMY GOODMAN: And did you use that? WENDELL POTTER: You use it if necessary. The interview goes on as Potter reveals how his front group was able to get its talking points and smears into stories in the New York Times and CNN. It is a chilling look inside how easy it is to manipulate our mainstream media — and just how worried the health insurance companies were that the American people might demand a true universal health care system. In particular, Potter talks about how they may have succeeded in influencing CNN to run a factually untrue story about Sicko by its reporter, Sanjay Gupta (which led to my infamous encounter with Wolf Blitzer and later, an apology from CNN for getting their facts wrong). Potter believes his work to defame Sicko succeeded, as the film didn’t end up posting Fahrenheit 9/11 grosses. To be clear, Sicko went on to become the 3rd largest grossing documentary of all time at that point. And as the release of Sicko in June of 2007 was the first time since the defeat of Hillary Clinton’s healthcare bill in 1994 that the issue of health insurance was brought to the forefront of the national media, I believe it helped to reignite the issue during the 2008 election year by exposing millions of Americans to the truth about the health insurance industry. More than one person on Capitol Hill will admit that Sicko was a big help in rallying public support for the compromise bill that eventually passed earlier this year. But I agree, their smear campaign was effective and did create the dent they were hoping for — single payer and the public option never even made it into the real discussion on the floor of Congress. (There was really only one reason Sicko didn’t sell as many tickets as Fahrenheit and that was because of a felony that was committed — a felony that I will discuss for the first time in the coming weeks or months ahead on my website . Stay tuned.) Please read or watch the entire interview with Wendell Potter. It’s a fascinating peek behind the curtain of how corporate America really runs this country. And how if any of us get in their way, then those people must be stopped. It begs the question: Seeing how there’s more of us than there are of them, how long will we let their takeover of our democracy continue? God Bless the Ruling Class, Michael Moore P.S. Over the next few days I will continue this examination of the Wendell Potter revelations on Democracy Now and in his new book. Please check in at my website .

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Mark Engler: Tax Cuts and Trade: Is Obama Triangulating?

November 13, 2010

It was about this far into his first term, back in late 1994 and early 1995, when President Bill Clinton truly fell under the spell of malevolent strategist Dick Morris. Stung by the heavy losses brought on by the “Republican Revolution” in the 1994 midterms, Clinton began to believe that his only route to reelection was to tack to the right and steal some of the conservatives’ thunder on issues like welfare reform and federal deficits. Morris, who was only forced out of the White House after a sex scandal and who has since exposed his true political stripes as a Fox News commentator , thought triangulation both a brilliant political strategy and a generator of fine public policy. The remaining liberals in the Clinton administration disagreed. As the Economist notes, George Stephanopoulos incisively labeled it “a fancy word for betrayal.” Not yet two weeks after the 2010 midterms, and just two years after Obama’s campaign of “hope” and “change,” there are troubling signs that the current president might be tempted to follow the same path as Clinton. Obama’s first move after the midterms, already much criticized by progressives, was to express his willingness to cave on Bush tax cuts for the rich. This one felt to me more like a gutless compromise than a calculated shift to the right. And, on the hopeful side, the White House is now backpedaling , indicating that the story was overblown and Obama’s pre-midterms position hasn’t changed. There’s no detectable silver lining, however, to the president’s drive to push forward the Bush-negotiated, NAFTA-style trade agreement with Korea. While it appears the deal has stalled for the time being, the denunciations of the neoliberal “free trade” program that Obama once used to attack rival candidate Hillary Clinton in the Democratic primaries are now long gone . Given the composition of the administration’s economics team, this flip-flop is not surprising. There were signs of it already back in 2008, when Obama quickly tried to moderate his earlier stances during the general election campaign. Nevertheless the maneuver is a sad one. While triangulation arguably worked for Clinton (he was reelected at any rate), rightward moves promise few benefits for Obama. A too-small stimulus meant that unemployment remained higher and anger about the economy greater than might otherwise have been the case going into the midterms. It also produced an uninspired Democratic base, resulting in a low-turnout election that favored Republicans. Likewise, the trade deals on deck with Korea, Colombia, and Panama are bad not only because they seek to expand a flawed economic model, but also because “free trade” is a political loser. The Democratic base is firmly in the “fair trade” camp, disenchanted with neoliberal policies, and an anti-NAFTA message also resonates with the wider electorate. As Public Citizen has documented , “House Democrats that ran on fair trade platforms in competitive and open-seat races were three times as likely to survive the GOP tidal wave than Democrats who ran against fair trade.” Global Trade Watch Research Director Todd Tucker has gone so far as to call compromising with the Republicans on pending trade deals a ” political death wish ” for a president who will soon be seeking reelection. After Obama’s first year in office, I gave the administration a “B” on trade policy, on the grounds that no news is good news. As long as unfinished “free trade” deals remained bogged down in negotiations and are not an administration priority, I am willing to judge the situation as no harm, no foul. But it’s a different story if the White House starts investing any real political capital in advancing these deals. Even worse would be if Obama keeps his backbone as well hidden from public view as it has been since the midterms and turns to triangulation, imagining that moving right on trade would be politically beneficial. Cross-posted from the “Arguing the World” blog at Dissent magazine.

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Timothy Karr: Who Will Head MSNBC if Comcast Takes Over?

November 9, 2010

And Why That Poses an Even Bigger Threat to Keith Olbermann Keith Olbermann is back, and for his many fans, including the 300,000 who petitioned MSNBC to reinstate him, it would seem a return to form. But Olbermann’s dispute with the brass at MSNBC may only serve as a prelude to more troubled times. MSNBC’s parent company, NBC Universal, is likely to be taken over by cable giant Comcast, should regulators sign off on the $30 billion deal. If history is any guide, this merger poses an even bigger threat to the future of MSNBC personalities like Olbermann and Rachel Maddow than the recent dustup that temporarily sidelined the host. That’s why tens of thousands have already urged the Federal Communications Commission and Department of Justice to stop the merger. They cite a multitude of reasons the takeover would bring them harm, including higher prices and fewer choices in programming and services. Indeed, such concentration of media power leads to a less vigilant news media, a muted marketplace of ideas and fewer consumer options at a time when are demanding more. Add to this the dim but real prospect that MSNBC’s new boss will be even less welcoming than the current one to commentators that rock the boat. Just consider the candidates in line to take over MSNBC: Steve Burke, Comcast’s Chief Operating Officer According to The Street , Steve Burke will take NBC’s CEO spot from Jeff Zucker should the merger be approved. In an e-mail to colleagues , Zucker said: “Comcast will be a great new steward, just as GE has been, and they deserve the chance to implement their own vision.” That vision – in the hands of Burke – might not be to the liking of MSNBC’s stable of talent. Burke has deep ties to the Republican Party. According to Public Citizen , Burke raised at least $200,000 for the Bush-Cheney re-election campaign. Prior to that, he served on the President’s Council of Advisers on Science and Technology under Bush, at a time when the administration was undermining scientific consensus on topics including climate change, stem-cell research, and even the relationship between corn syrup and rates of diabetes in children. As a top science adviser to President Bush, did Burke condone administration efforts to bury scientific findings that challenged official policy? What would he do when comments or reporting by Olbermann or Maddow challenge Comcast’s corporate dogma? Peter A. Chernin, Former Second in Command at News Corp. Peter Chernin was a major fundraiser for Sen. Hillary Clinton, according to the New York Times , which also reports that he may be on the short list to take over NBC operations should Comcast get the nod. For years, Chernin has co-owned a restaurant on Martha’s Vinyard with Comcast Chief Executive Brian Roberts. More recently, he was tapped by Roberts to become a “special adviser” to Comcast on the potential merger. Chernin’s close ties to Clinton, Roberts and Rupert Murdoch indicate his biases may be more corporate than political. But it was during his tenure at Fox that the network looked the other way as many of its personalities actively — and financially — supported Republican candidates and Tea Party causes. Chernin once asked Roberts whether he planned to interfere in editorial content at MSNBC — a question that Roberts refused to answer. Eileen Dolente, Senior Director, Comcast Multimedia Content Development Odds are slim that Eileen Dolente would be picked to head MSNBC programming. But her record at Comcast offers a disturbing glimpse into the cable company’s mindset regarding speech that interferes with business as usual. As director of programming for Comcast’s news division, CN8, Dolente fired host Barry Nolan. His crime? Nolan had protested a major award being given to Fox News Channel’s Bill O’Reilly. Nolan was “appalled” that an award would be given to O’Reilly. He dashed off e-mails stating that O’Reilly’s “indiscretions, inaccuracies, and prejudices disqualify him for such a lofty honor.” Dolente was appalled that one of her hosts would share such an opinion, and within a week of the award ceremony, she showed Nolan the door. Documents filed in a subsequent lawsuit revealed that the mutual business interests of Comcast and News Corp., which employs O’Reilly, were a major factor in Nolan’s firing. What position would Comcast take should MSNBC personalities launch a similar attack on a valued business partner? If Dolente takes the helm, past may become prologue for MSNBC.

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John Feffer: What’s So Funny About Outsourcing?

October 26, 2010

What were NBC executives thinking? The unemployment rate remains near double digits, and many Americans have simply stopped looking for work. And what does the network premiere this fall but a sitcom called Outsourced about an American manager sent to run a call center in India. The jokes revolve around funny names, unappetizing food, Sikh turbans, arranged marriages. “It’s hard to know what a normal smell is here and what isn’t,” says Todd Dempsy, the culturally insensitive manager played by Ben Rappaport, in last week’s “Touched by an Anglo” episode . And there’s indeed something fishy about a show that capitalizes on U.S. jobs going overseas during an economic downturn. On the other hand, Outsourced introduces American viewers to bhangra music and lots of Indian faces. It makes fun of the inanities of American culture (bachelorette parties, pimping cars, fake vomit). The acting is pretty good, including the very funny Sacha Dhawan and Anisha Nagarajan. An inter-cultural romance beckons on the horizon. There’s even the occasionally pointed comment, such as the assistant manager Rajiv’s aside to his American boss that “this country is just a cash register to you.” And it’s hard to remember when a prime time show took place somewhere other than the United States. If you get all of your information about the world from network television, you might not even be able to locate Canada on a map (oh, yeah, that place just to the right of Northern Exposure ). The premise of Outsourced is that Todd, the American manager, is saddled with a B team of call center employees — quirky but loveable underdogs who are just struggling to get by. In other words, American audiences are being asked to sympathize with a group of Indian workers lucky to have the jobs that Americans have recently lost. That the show succeeds in finding an audience — an average of 6.3 million viewers a week, making the show the #1 new network show so far this season — is quite an achievement. Or it’s another sign of the gulf between cosmopolitans who benefit from globalization and blue-collar workers whose wages have gone steadily downhill because of competition from abroad. Some people appreciate the 24-hour customer service line, regardless of the accent of the person on the other end. Others are strictly “Buy American.” Of course, sometimes the same person lost her job last week at the factory and this week shops at WalMart to save money by getting cheap shirts from Sri Lanka, cheap produce from Mexico, and cheap Halloween decorations from China. President Barack Obama has been on both sides of the debate. During the presidential election, as Foreign Policy In Focus contributor Roger Bybee explains in Obama’s About-Face on Trade , “both Obama and rival candidate Hillary Clinton continued to focus on free trade and the flight of jobs offshore. They felt compelled to do so to woo Democratic voters infuriated by corporations abandoning U.S. workers and communities. These perceptions are validated by data from Public Citizen estimating that the United States has lost about 4.9 million jobs and 43,000 factories because of free trade deals like the North American Free Trade Agreement and normalization of trade relations with China.” As president, meanwhile, “Obama has been waging a long-running battle against offshoring in general, and to India in particular,” writes FPIF contributor Saif Shahin in Obama: Blowing It on India . “Last year, he urged U.S. companies to ‘say no to Bangalore, yes to Buffalo.’ Two months ago, he signed into law a steep hike in the fees of some visa categories preferred by professionals working for Indian companies where information technology (IT) jobs are outsourced. The extra money will go into building a better border fence with Mexico.” But the president has also supported free-trade agreements with South Korea, Panama, and Colombia. And he pushed through bailouts for U.S. companies without conditions that would have restricted their outsourcing of jobs. He surrounded himself with a free-trade clique from Wall Street, so what did you expect? Progressives face a somewhat different dilemma on this issue. On the one hand, we have always stood with labor unions to support the creation (and retention) of good manufacturing jobs. On the other hand, we push for the radical reduction in global poverty. The rise of new service and manufacturing centers in China and India alone has pulled hundreds of millions out of poverty. “It’s possible to make the case that China’s success in bringing masses of peasants out of poverty–as many as 400 million and counting–is the single most important event in the world in the past quarter-century,” writes Robert Dreyfuss in The Nation . “To be sure, much of China’s growth since the late ’70s has come at the expense of the environment and of workers laboring under atrocious conditions.” In theory, the two positions can be reconciled. We must back trade and other policies that raise wages and provide good benefits in countries that use low-wage labor as their comparative advantage. In the case of chocolate, for instance, it’s not just low-wage labor but child labor and slavery that goes into the making of so much of the candy we hand out on Halloween, as Andrew Korfhage explains in this OtherWords op-ed. Tax policies that reduce the enormous disparity between CEO pay and the rest of the workforce would also help to level the playing field. In this way the national interest would converge with the global interest. Even if passed, however, such reforms would take some before equalizing wages and reducing the flow of jobs from the United States to India. In the meantime, the opportunity to hire a workforce that can give you “follow-the-sun” service at low wages and in English is an irresistible combination. Moreover, it’s become more difficult in an age of sustainability to make the rising-tide- lifts-all-boats argument. Environmentalists acknowledge that U.S. consumers are simply going to have to cut back on our disproportionate use of world resources if we are to have an equitable solution to the climate change problem. It’s nice to argue that the wages and benefits of workers around the world should be raised to American standards (and preferably those of the 1960s before real wages started to decline). But like a world that owns as many cars as Americans, is such a global wage regime environmentally feasible? Or will the gradual rise of wages in places like China and India necessarily involve a gradual decline in wages in places like the United States and Europe? Don’t expect Outsourced to wrestle with these difficult questions. It’s a sitcom, after all. But it remains a remarkable change in the zeitgeist that millions of Americans are willing, week after week, to watch and root for so many non-Americans (who are not kicking a soccer ball). If nothing else, Outsourced humanizes the people so often demonized for taking American jobs. Even the Buy America crowd can take some measure of solace when watching the show. Except for a few framing shots, the show is filmed in Los Angeles with American actors. However, director Ken Kwapis says that if the show is successful , he’ll do more work on location. Is Outsourced itself going to be outsourced? Subscribe to FPIF’s World Beat here . Sign up with FPIF on Facebook . Follow FPIF on Twitter. Follow John Feffer on Twitter.

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Bernie Sanders To Vote Against Top Obama Nominee, Citing Ties To ‘Failed Policies’

September 22, 2010

A liberal senator plans to vote against confirming President Barack Obama’s nominee for a top White House economic position. Sen. Bernie Sanders, an Independent from Vermont who works closely with Democrats, said in a statement obtained by The Huffington Post that he won’t vote to confirm Jacob “Jack” Lew, Obama’s nominee to head the Office of Management and Budget because, after meeting with Lew, the senator “found too many echoes of the failed policies of the past in his responses to my questions on trade policy, Social Security, deregulation of banks and other issues.” “It is my strong belief that President Obama needs an OMB director who is willing to stand up to corporate America and the wealthy, say enough is enough, and fight for policies that protect the working class in this country,” Sanders said in a statement. “Unfortunately, I do not believe Mr. Lew is the right man at this time for this important job.” During a confirmation hearing last week , Lew told the Senate Budget Committee that he didn’t believe that deregulation led to the recent financial crisis. Lew, who if confirmed will be returning to a post he held during the last few years of the Clinton administration, served during an era that saw the deregulation of Wall Street in the form of the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000. The two pieces of legislation repealed the law that long kept commercial banks from offering products or engaging in services more common to investment banks and eliminated virtually all regulation over the kind of derivatives that worsened the financial crisis. Experts and policymakers, including U.S. Senators, commissioners at the Securities and Exchange Commission, top leaders in Congress, former financial regulators, Democratic Party organizations and even Obama himself have pointed to the deregulatory zeal of the Clinton and George W. Bush administrations as a major cause of the worst financial crisis since the Great Depression. But during his testimony, Lew didn’t appear to agree, putting him at odds with an administration and a party that touts its efforts at re-regulating Wall Street in pitches to voters and cast blame for the crisis in part on the deregulatory policies pursued by Bush and his fellow Republicans in Congress. If the Senate confirms Lew for his post, he’ll oversee an agency that’s responsible for making sure federal rules conform with Obama’s agenda. The Dodd-Frank financial regulation bill passed in the wake of the crisis requires at least 243 new rules, according to a July 21 note to clients by the law firm of Davis Polk & Wardwell. The firm says that number is likely a “significant underestimate.” The Obama pick worked at Citigroup from 2006 until he joined Hillary Clinton’s State Department in January 2009, rising to chief operating officer of the bailed-out bank’s Alternative Investments unit, a Citi division that engaged in proprietary trading and invested in hedge funds and private equity groups. The Huffington Post reported in July that Lew’s unit invested in a hedge fund king who made billions correctly predicting that U.S. homeowners would not be able to make their mortgage payments. Lew made millions at Citi, including a bonus of nearly $950,000 in 2009, just a few months after the bank received billions of dollars in a taxpayer rescue, according to disclosure forms filed with the federal government. The bank is still partly owned by taxpayers. The Senate Homeland Security and Governmental Affairs Committee voted 9 to 0 on Tuesday morning in favor of Lew’s nomination and referred him to the full Senate. The Senate Budget Committee expects to hold its vote Thursday. READ Sanders’ full statement below: “Jack Lew has a long and distinguished career in public service and is clearly hard working and intelligent. Reluctantly, I will not vote to confirm Mr. Lew to be director of the Office of Management and Budget. “As a result of the policies of President George W. Bush, the middle class in this country is collapsing, the gap between the very rich and everyone else is growing wider and we are continuing to hemorrhage good-paying manufacturing jobs overseas. “Last week I applauded President Obama for appointing Elizabeth Warren to be the architect of the new Consumer Financial Protection Bureau. Professor Warren has a long track record of standing up for the middle class against the greed, recklessness and illegal behavior on Wall Street. We need more voices like Elizabeth Warren’s sending a clear message that the rules have changed and that the middle class in this country has a strong advocate. “Jack Lew was kind enough to meet with me last week in my office and to answer my questions at a Senate Budget Committee hearing. Frankly, I found too many echoes of the failed policies of the past in his responses to my questions on trade policy, Social Security, deregulation of banks and other issues. “It is my strong belief that President Obama needs an OMB Director who is willing to stand up to corporate America and the wealthy, say enough is enough, and fight for policies that protect the working class in this country. Unfortunately, I do not believe Mr. Lew is the right man at this time for this important job.” ************************* Shahien Nasiripour is the business reporter for the Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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Singapore, Thailand, Vietnam Added to Human-Trafficking Watchlist by U.S.

June 14, 2010

By Daniel Ten Kate and Nicole Gaouette June 15 (Bloomberg) — Singapore, Thailand and Vietnam all regressed last year in their efforts to battle trafficking of men, women and children for labor or commercial sex, according to the U.S. State Department . The three Southeast Asian countries were placed on a watch list of middle-tier countries, placing them one level above the worst offenders such as North Korea, Myanmar and Saudi Arabia, the report said. Malaysia was upgraded from the worst ranking, while Cambodia and Pakistan were removed from the watch list. The department’s 10th annual report grades 175 nations on their efforts to fight this modern form of slavery. The U.S. is listed for the first time, placed among those countries that are doing their best to comply with the Trafficking Victims Protection Act, the American law against human trade. Singapore’s government showed an “inadequate response” to sex trafficking in the city-state with only two convictions last year, the report said. Thailand and Vietnam similarly made little progress in prosecuting trafficking offenders, it said. Malaysia moved out of the worst tier with increased criminal charges against offenders, the report said. Cambodian authorities made a “significant increase” in convictions over the past year, including a public official, and Pakistan boosted efforts to combat bonded labor, the U.S. said. The U.S. is a source as well as a transit and destination country for people forced into labor, debt bondage and prostitution, the report said. The work is predominantly in manufacturing, janitorial services, agriculture, hotel services, construction, nail salons, elder care, strip-club dancing and domestic servitude, the U.S. said. ‘Tears of Families’ “Behind these statistics on the pages are the struggles of real human beings, the tears of families who may never see their children, the despair and indignity of those suffering under the worst forms of exploitation,” Secretary of State Hillary Clinton said at a State Department event to mark the release of the report yesterday in Washington. The International Labor Organization estimated there were 12.3 million victims of forced labor, sex trafficking, debt bondage and recruitment of child soldiers worldwide in 2009. In the same year, there were 4,166 successful prosecutions for trafficking, the State Department report said. The U.S. report lists three tiers of nations. Among those in the bottom section — nations that don’t comply with the law and make no effort to do so — are Zimbabwe, Cuba, Mauritania and Sudan. Japan, Israel and Oman are listed in the middle tier — nations that don’t fully meet the law’s minimum standards yet are making “significant” efforts to do so. Oil-rich Qatar is listed in between the middle and lowest tier on a watch list of countries that don’t meet minimum standards and whose progress is less certain. More Prosecutions Needed The trafficking report calls for better law enforcement, improved laws and more prosecutions for trafficking. The report changes each year, and countries can move from tier one, where the U.S. and others are, to the bottom tier. This year, 22 countries were upgraded, including Djibouti, which moved from the second tier to the first, while 19 lost ground, such as the Dominican Republic, which slipped from tier two to tier three. Sixty-two countries on the list have never prosecuted trafficking, according to the report. “Most countries that deny the existence of victims of modern slavery within their borders are not looking, trying or living up to the mandates” of a United Nations protocol mandate against trafficking, the report said. To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net ; Nicole Gaouette in Washington at ngaouette@bloomberg.net .

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Cameron Gains as Merkel Wanes With European Debts in Global Investor Poll

June 8, 2010

By John McCormick and Catherine Dodge June 9 (Bloomberg) — Newly elected British Prime Minister David Cameron enjoys the backing of investors, while Europeans are more sour on his German counterpart, Angela Merkel , a Bloomberg survey shows. Cameron, 43, the Conservative Party leader who replaced Labour’s Gordon Brown last month, gets a favorable rating of 52 percent, while 15 percent of respondents have an unfavorable opinion, according to a global quarterly poll of 1,001 investors and analysts who are Bloomberg subscribers. In Europe, his approval rating is 63 percent. That is a stark contrast to his predecessor; only about a quarter of investors had a favorable view of Brown in the previous survey in January. Merkel, 55, the German chancellor who is leading efforts to manage the euro zone’s debt crisis, is viewed unfavorably by more than half of those polled in Europe and by 40 percent worldwide. Poll respondent Clark Toews , managing director of institutional equity trading at Paradigm Capital Inc. in Toronto, said the election of Cameron is helping to give him renewed confidence in the U.K. “He is willing to make the hard decisions in getting their budget deficit under control, namely cutting spending and government services,” said Toews, 38. “Amid uncertainty, leaders often take the heat,” said J. Ann Selzer , president of Selzer & Co., a Des Moines, Iowa-based firm that conducted the survey. “Merkel appears to suffer while the newcomer, whose hands are unsullied at this point, offers promise.” Obama Slips President Barack Obama continues to see his favorability erode, most notably among European investors, the survey shows. While more than 6 of 10 Bloomberg subscribers in Europe view Obama favorably, his rating there is down 19 percentage points since January. His approval rating globally is 51 percent, though in the U.S. it is 29 percent, unchanged from January. The quarterly Bloomberg Global Poll of investors, traders and analysts in six continents was conducted June 2-3 by Selzer & Co. It is based on interviews with a random sample of 1,001 Bloomberg subscribers, representing decision makers in markets, finance and economics. The poll has a margin of error of plus or minus 3.1 percentage points. While Cameron earns praise, his countryman, BP Plc ’s Chief Executive Officer Tony Hayward , gets the worst ranking of any of the 10 public figures tested in the poll. Two-thirds of global investors say they have an unfavorable view of Hayward, whose company has struggled for weeks to plug a gushing oil well in the Gulf of Mexico that may end up causing one of the worse environmental calamities in U.S. history. ‘Poster Boy’ “Regrettably, Tony Hayward has become the poster boy for the Gulf oil spill,” said Sean Keville , 48, a mortgage-backed securities broker at ICAP Plc in Jersey City, New Jersey. “He should quit now.” Cameron may owe some of his appeal to the governing coalition he formed with Deputy Prime Minister Nick Clegg of the Liberal Democrats, said Chris Low , 45, chief economist at FTN Financial in New York. The prime minister “has been honest about Britain’s challenges and is not wed to one way of meeting them,” Low said. “He is treating the Liberal Democrats as partners, which suggests an encouraging open-mindedness and focus on results.” In a June 7 speech, Cameron said Britons should prepare for spending cuts to combat a deficit that reached 11.1 percent of gross domestic product in the fiscal year through March. ‘Decades to Come’ “The decisions we make will affect every single person in our country,” he said. “And the effects of those decisions will stay with us for years, perhaps decades to come.” Still, the popularity may not be lasting. A third of investors said they don’t yet know enough about Cameron to form an opinion. In the U.S., there is even more uncertainty, with 42 percent not yet sure what to think about him. U.K. stocks retreated for a third day yesterday as Fitch Ratings said Britain’s deficit challenge is “formidable,” fueling concern Europe’s sovereign debt crisis is spreading. The benchmark FTSE 100 fell 0.8 percent to 5,028.15 in London after earlier rising as much as 0.3 percent. Germany’s Merkel has been struggling to help her country and the European Union recover from the worst recession since World War II. The euro has fallen 17 percent against the dollar in the past six months as the debt crisis exposed cracks in the monetary union and prompted deficit cuts across Europe that may hobble the economic rebound. Merkel Cuts On June 7, Merkel’s cabinet approved levies on banks, air travel and nuclear-power plants as part of what she called an “unprecedented” round of budget cuts . The program, a mixture of spending reductions and revenue-raising steps, amounts to 81.6 billion euros ($97.5 billion) from 2011 through 2014, the government said. In the poll, Merkel does far better with respondents outside her continent. In Europe, 53 percent of investors have an unfavorable opinion of her, while in the U.S., she gets a 51 percent favorability rating, and 46 percent in Asia. Of the other figures in the poll, investors remain bullish on U.S. Federal Reserve Chairman Ben S. Bernanke , who is viewed favorably by two-thirds of respondents. His numbers are strongest in Asia, where 72 percent of poll participants have a positive view. Paul Volcker , the former Fed chairman who now leads Obama’s Economic Recovery Board, is viewed favorably by half of those in the poll. U.S. Secretary of State Hillary Clinton ’s ratings have moved higher since last measured by the poll in January, with 54 percent now having a favorable view of her. In the U.S., 47 percent have a positive view of Clinton, while 53 percent have that opinion in Europe. More than two- thirds in Asia have a positive view of the former first lady and U.S. senator. To see the methodology and exact wording of the poll questions, click on the attachment tab at the top of the story. To contact the reporters on this story: John McCormick in Chicago at jmccormick16@bloomberg.net . Catherine Dodge in Washington at Cdodge1@bloomberg.net .

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American Citizen Was Shot Dead During Israeli Raid on Flotilla, U.S. Says

June 3, 2010

By Nicole Gaouette June 3 (Bloomberg) — The U.S. confirmed that an American citizen, identified as 19-year-old Furkan Dogan, was killed by multiple gunshots during the Israeli raid on a flotilla carrying activists attempting to run a blockade of the Gaza Strip. State Department spokesman Philip J. Crowley said the U.S. has made no decision on a response to Dogan’s death. “We take the health and welfare of American citizens seriously, it’s our fundamental responsibility,” Crowley told reporters today in Washington. Israeli commandos on May 31 raided six ships carrying humanitarian aid workers and activists trying to break Israel’s blockade, in place since 2007. The operation, in which nine people died, has led to international criticism, demands for an investigation and for an end to restrictions on sea traffic. Israeli Prime Minister Benjamin Netanyahu may ease the blockade and allow an international force to check aid coming on ships, Israel’s Channel Two television news said today. Netanyahu has defended the Israeli military action as necessary to protect Israel by preventing weapons from being shipped to militant Islamic group Hamas, which has run Gaza since 2007. “Our responsibility is to examine every ship going to Gaza, to stop the weapons and to let other cargo enter,” Netanyahu said yesterday. “If we don’t do that the result is going to be an Iranian port in Gaza.” There is widespread public support in Israel for enforcing the blockade of Hamas, which is considered a terrorist organization by the U.S., Israel and European Union. Main Ship The violence during the raid took place on the Mavi Marmara, one of six ships in the flotilla. The other five vessels were intercepted without violence. The decision to use military force on the sixth ship had to do with its size, Israel’s ambassador to the U.S., Michael Oren , said yesterday. “The particular ship that did encounter the violent incident was simply too large to stop by nonviolent means,” Oren said on National Public Radio. “The others ships were not, and that is one of the reasons they were towed safely to port.” The Mavi Marmara was carrying 581 passengers, about 300 of them Turkish and the remainder from about 30 other countries including Greece, the U.K. and Algeria, Turkish Deputy Prime Minister Bulent Arinc said on May 31. Arinc accused Israel of “piracy” for boarding the vessels in international waters. New York Native Dogan was born in Troy, New York, according to Crowley. The Dogan family now has his body, which is en route to their hometown in Turkey for burial, Crowley said. Another American man sustained injuries in the flotilla raid, Crowley said, without providing details. “We’re evaluating the facts as best we can,” Crowley said. U.S. Secretary of State Hillary Clinton said this week that the situation in the Gaza Strip is “unsustainable and unacceptable” and that “ultimately the solution to this must be found in an agreement on a two-state solution negotiated” between Israel and the Palestinians. The flotilla raid and the uproar surrounding it haven’t affected talks between Palestinians and Israelis, Crowley said. U.S. Middle East envoy George Mitchell , speaking in Bethlehem, said there should be a renewed focus on the talks. To contact the reporter on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net

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Colin Powell Says Stepped Up UN Sanctions Won’t End Iran’s Nuclear Program

May 30, 2010

By Mike Dorning May 30 (Bloomberg) — Former Secretary of State Colin Powell said that proposed stricter United Nations sanctions won’t bring an end to Iran’s nuclear program. “I don’t see that this causes sufficient pain,” Powell said on ABC’s “This Week” program. U.S. Secretary of State Hillary Clinton said on May 18 that the permanent members of the UN Security Council — Russia, China, the U.S., U.K. and France — and Germany have drafted a sanctions resolution designed to pressure Iran into stopping its pursuit of enriched uranium, a material that can be used for a bomb. “The Iranians have been around for thousands of years, trading and selling and getting around various constraints and what not,” Powell said. “They’re very clever. And they know what sanctions might be coming. And I’m sure that they have done their own planning and have their own counter-sanction strategy.” Powell’s comments echoed those of a top Iranian dissident, Mohsen Kadivar, a senior cleric and a visiting professor at Duke University’s department of religion, who predicted last week that “they will not manage to isolate Iran with sanctions.” Kadivar was a student of the late Ayatollah Hossein Ali Montazeri, a top cleric and dissident whose death in December reignited anti-government demonstrations. Legitimacy of Sanctions Iran says its nuclear program is aimed at generating electricity for a growing population. It also complains of a double standard on international nuclear agreements, saying Israel hasn’t been prevented from developing atomic weapons, and has called the proposed new sanctions “illegitimate.” Iran is already under three sets of UN sanctions for defying the council’s demands to suspend the enrichment of uranium. The proposed economic sanctions would bolster an arms embargo, restrict financial transactions and enhance authority to stop and seize Iranian cargo. Iran has experience in evading sanctions, and found ways to get hold of arms during the war against Iraq in the 1980s when it was under similar restrictions, Kadivar said. It will use oil revenue to counter the new measures, boosting inflation and hurting the Iranian public, he said. Powell was secretary of state to Republican President George W. Bush during the run-up to the Iraq War and the first years of the conflict and considered running for president as a Republican candidate in 1996. In the 2008 election, he crossed party lines to endorse Democrat Barack Obama for president. He was the chairman of the Joint Chiefs of Staff during the first Gulf War against Iraq in the early 1990s. Iraq Withdrawal Powell also said on ABC that recent violence in Iraq should not dissuade the White House from proceeding with plans to reduce the U.S. troop presence in the country. “I think the president is correct to keep it on track and continue with the draw-down,” Powell said. “We cannot maintain this level of deployment forever. It not only is a burden on our troops, it is enormously expensive in a time of budget deficits and national debt.” Powell said the Iraqi government and military “is ready” to function with fewer U.S. troops. “If they continue to show the effectiveness that their army has shown recently, they should be able to contain this and hold it as we continue our withdrawal,” Powell said. Powell said the success of efforts to bring stability to Afghanistan will depend heavily on establishing an effective national army, reducing corruption and building public confidence in the government. “We can do just so much,” Powell said. “It ultimately is going to be in the hands of the Afghans.” To contact the reporter on this story: Mike Dorning in Washington at mdorning@bloomberg.net

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Mobius Is Buying BRIC Stocks on View Slump Was Correction in a Bull Market

May 27, 2010

By Mahmoud Kassem May 27 (Bloomberg) — Templeton Asset Management Ltd.’s Mark Mobius said he’s been buying stocks in Brazil, Russia, India and China in the past month and called the slump in emerging-economy shares a “correction” in a bull market. “Despite the fact that a lot of people think that we are entering into a bear market, we don’t believe so,” Mobius, who oversees about $34 billion in emerging markets as Templeton Asset Management’s Singapore-based executive chairman, said in an interview yesterday in Cairo. “This is a correction in an ongoing bull market.” The MSCI Emerging Markets Index has dropped 15 percent from an April 15 high on concern China’s steps to slow inflation and European nations’ struggle to finance their deficits will derail a global economic recovery. The measure has climbed 96 percent from a four-year low in October 2008 and gained 3.2 percent yesterday, rebounding from the steepest drop since March 2009, on speculation valuations are attractive. “When the time comes, emerging markets will recover faster and in a big way,” Mobius said. “We’ve been buying because we have had net flows into our funds. And most of the buying has been in the BRIC countries.” Templeton has also been buying equities in other nations, including Dubai and Egypt, he said. The firm hasn’t reduced holdings in South Korea because the companies it owns were “relatively inexpensive” when it purchased them and may benefit from international sales should South Korea’s economic rebound stall, Mobius said. North Korea North Korea expelled eight South Korean government workers and threatened to close the border yesterday as U.S. Secretary of State Hillary Clinton said in Seoul it’s not too late to make amends for sinking one of the South’s warships. South Korea will seek United Nations Security Council action against North Korea and halt trade with its communist neighbor over the deadly torpedoing of a warship in March that killed 46 sailors. “North Korea will pay a price corresponding to its provocative acts,” South Korean President Lee Myung Bak said in Seoul May 24. North Korea shipping will also be banned from South Korean waters, Lee said. The probability of war between the nations is “quite low” even as tensions have escalated, Mobius said in a blog posting today. Lee’s measures may accelerate change and help in opening up communist North Korea “in the long run,” he said. “In the short term, of course, there will be anxiety, which could impact the markets,” Mobius said. “Despite all the geopolitical concerns, South Korea has continued to grow.” Kim Jong Il The Kospi Index slumped 2.8 percent on May 25, driving it 11 percent below the April 26 high, after a report that North Korean leader Kim Jong Il ordered the country’s military to get ready for combat. Valuations on Kospi have dropped to 9.6 times estimated earnings, the lowest in Asia after Pakistan, according to data compiled by Bloomberg. Korean equities traded at a multiple of 16.1 a year ago. The gauge advanced 0.8 percent as of 1:31 p.m., rebounding for a second day. South Korea’s economy expanded 1.8 percent in the first quarter on stronger overseas sales and domestic spending and the Bank of Korea forecasts 2010 growth of 5.2 percent. To contact the reporter on this story: Mahmoud Kassem in Cairo at Mkassem1@bloomberg.net

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China May Shield North Korea as Lee, U.S. Seek Action

May 27, 2010

By Bloomberg News May 27 (Bloomberg) — Chinese Premier Wen Jiabao is likely to resist pressure to acknowledge that North Korea torpedoed a South Korean warship when he flies to Seoul tomorrow to meet President Lee Myung Bak and Japan’s Yukio Hatoyama . China hasn’t followed South Korea, Japan and the U.S. in blaming North Korea for the March 26 sinking of the Cheonan, which killed 46 sailors. Vice Foreign Minister Zhang Zhijun yesterday repeated a call for “restraint” by both sides and said China had no “firsthand information” on the sinking. China wants to avoid a conflict on the Korean peninsula, and is concerned that taking South Korea’s side may provoke North Korea into further escalations and even lead to war, said Shen Dingli , vice dean of the Institute of International Affairs at Shanghai’s Fudan University . “North Korea is dying, and we can make things worse,” Shen said. “We have assumed North Korea is not a rational actor.” South Korea’s navy today began exercises off its western coast, including anti-submarine operations involving the firing of depth charges, a military official said. About 10 warships are participating in the two-day drill, the official said, asking not to be identified because of security concerns. China has a big stake in stability in Northeast Asia. Japan and South Korea are China’s third- and fourth-biggest trading partners after the European Union and the U.S., with combined two-way trade reaching $485.1 billion in 2009, Chinese customs figures show. Trade Imbalance China’s two-way trade with North Korea, at $2.7 billion last year, is less than 1 percent of that total, even though the two countries share a 1,415-kilometer (880-mile) border and an alliance going back to China’s 1950 entry into the Korean War. “If our region falls into chaos it will undermine the interests of all parties concerned,” Zhang said yesterday. South Korea, Japan and the U.S. want the North to acknowledge its responsibility for the incident. An international panel on May 20 concluded North Korea was behind the attack. South Korea wants China to acknowledge the findings. “They won’t be able to ignore the truth,” South Korean Foreign Minister Yu Myung Hwan said yesterday at a joint press conference with U.S. Secretary of State Hillary Clinton in Seoul. President Lee said on May 24 that “no responsible country in the international community will be able to deny the fact that the Cheonan was sunk by North Korea.” Unified Response Clinton is also working to bring China around. “We expect to be working together with China in responding to North Korea’s provocative action and promoting stability in the region,” Clinton said May 25 in Beijing at the conclusion of two days of talks. China’s government may conclude that taking South Korea’s side will only stoke a cycle of escalation, Shen said. Wen is scheduled to have talks with Lee and meet with both Lee and Hatoyama at a three-nation summit on South Korea’s Jeju Island. He met with North Korean leader Kim Jong Il earlier this month in Beijing. China may be willing to condemn the sinking of the Cheonan in a United Nations Security Council resolution provided that North Korea is not singled out for blame, Shen said. Such an outcome may end the cycle of escalation, he said. Hand-Outs Kim’s regime, which has been relying on handouts since the mid-1990s, is suffering from worsening shortages of goods after its botched currency revaluation late last year. Academics including Rudiger Frank , professor of East Asian Economy and Society at the University of Vienna, said that was aimed at rolling back an experiment with free markets that had loosened the state’s control over jobs, food and patronage. The UN World Food Program said this month its food aid to North Korea will run out by the end of next month. UN sanctions imposed on North Korea after its second nuclear test in May 2009 caused the country’s international commerce to shrink 9.7 percent last year, according to Seoul- based trade agency, Kotra. The North doesn’t release its own trade figures. North Korea this week said it will cut all ties to the South in response to the findings of the panel. Kim ordered his military to be combat-ready, a Seoul-based dissident group said, sending the Korean won down 3 percent against the dollar on May 25, the biggest one-day drop since March 30, 2009. Radio Propaganda The South responded by resuming radio broadcasts into North Korea that it called the “voice of freedom.” The won was little changed yesterday at 1,252.28. South Korea’s broadcasting of propaganda into North Korea was “a deliberate and premeditated provocation” aimed at pushing the peninsula “to the brink of war,” North Korea’s state-run Korean Central News Agency said yesterday. In response to the sinking, the U.S. military is preparing exercises with South Korea in anti-submarine maneuvers and interdicting vessels. The U.S. has about 28,500 troops in South Korea, a legacy of its Korean War involvement in the 1950s. “China is doing the thing that best suits China’s interests and everyone’s interest,” Shen said. “China is not pushing the envelope either on the North Korean side to be aggressive or on the South Korean to punish North Korea with warfare.” — Michael Forsythe . With assistance from Bomi Lim and Nicole Gaouette in Seoul. Editors: Ben Richardson , Mark Williams . To contact the reporter on this story: Michael Forsythe in Beijing at mforsythe@bloomberg.net

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Obama’s National Security Strategy Puts Focus on Economic, Diplomatic Ties

May 26, 2010

By Roger Runningen May 26 (Bloomberg) — President Barack Obama ’s national security strategy, scheduled for release tomorrow, will emphasize using economic strength and diplomatic alliances alongside military power to keep the country safe. The blueprint, as outlined by Obama and his top national security advisers, shifts U.S. strategy from the “pre-emption” doctrine of his predecessor, former President George W. Bush . In its place, Obama last week set out four principles for U.S. security: a strong economy, greater engagement with other nations, bolstering old alliances and building new ones and promoting U.S. values and human rights. The administration also is putting as a top threat homegrown terrorism committed by radicalized individuals already living in the U.S., John Brennan , Obama’s top counterterrorism adviser, said. “This strategy aims to renew American leadership in the 21st century by rebuilding the fundamental sources of American strength, security, prosperity and influence in the world,” Brennan said in a speech today at the Center for Strategic and International Studies in Washington. Obama’s first-ever national security strategy is intended to provide guidance across the government by strategic priorities and outline the means of achieving policy objectives. The document is required by law under the 1986 Goldwater-Nichols Act. The strategy document marks another break from the policies of the Bush administration. For example, the Bush policy outline sent to Congress in September 2002, the Republican president pushed a policy of striking first against “rogue states and terrorists.” Evolution of Policy U.S. security policy since the end of World War II, centered largely on Russia, had been premised on deterring enemies through the concept of mutually assured destruction, as both superpowers possessed nuclear weapons. The U.S. “can no longer rely on a reactive posture” because “rogue regimes” are seeking nuclear, chemical and biological weapons, the Bush document said. By contrast, Obama said in his May 22 commencement speech U.S. Military Academy at West Point, New York, that the U.S. must act to “shape an international order that can meet the challenges of our generation.” “We will be steadfast in strengthening those old alliances that have served us so well,” he said. “As influence extends to more countries and capitals, we also have to build new partnerships, and shape stronger international standards and institutions.” Alliances He said the burdens of meeting the challenges of terrorism, nuclear proliferation and sustained global economic growth “cannot fall on American shoulders alone.” He warned that U.S. foes would like to see the country weakened by overextending its resources. Secretary of State Hillary Clinton will take the lead in presenting the strategy. She is scheduled to speak on the subject at 1:30 p.m. at the Brookings Institution in Washington to elaborate on the major points, such as preventing nuclear proliferation, terrorism and dealing with al-Qaeda, along with use of military force, economic development and diplomacy, a Brookings announcement said. The strategy has been under development since Obama took office in January 2009. National Security Adviser James Jones , in a speech at the Washington Institute for Near East Policy in April, said the first priority is the “safety and security of the American people.” U.S. ‘At War’ Brennan said today that Obama’s “strategy is unequivocal with regard to our posture. The United States of America is at war. We are at war against al-Qaeda and its terrorist affiliates.” Citing the failed Times Square car bombing and other cases of plots attempted by individuals already living in the U.S., Brennan said the U.S. is “facing a new phase of the terrorist threat.” The strategy “explicitly recognizes the threat to the United States posed by individuals radicalized here at home,” he said. Most of what is in the strategy already has been laid out by the administration through Obama’s policy decisions and speeches, such as the president’s address in Cairo last June. “No one should be surprised by what’s in the document,” Rick “Ozzie” Nelson, director of the Homeland Security and Counterterrorism Program at the Center for Strategic and International Studies in Washington, said. Few Controversies A strategy that has been hashed out after debate among many administration agencies results in a “product that becomes diluted — controversy gets taken out,” said Nelson, who served on the National Security Council under Bush in 2004 and 2005, and helped craft the maritime security section in the 2006 Bush strategy. Still, the document is closely read around the world, according to said Peter Feaver , who helped write Bush’s last document in 2006 as special National Security Council adviser for strategic planning and also worked on the manual for President Bill Clinton in 1993-1994. “Allies want to know why weren’t they mentioned earlier; the adversaries want to know how were they treated, how is the Iranian regime discussed?” Feaver, now a political science professor at Duke University in Durham, North Carolina, said. “Those are the kinds of questions answered in this document and pretty much nowhere else.” Still, any policy outline covering as broad a topic as the national security strategy is going to contain a level of ambiguity, Feaver said. “It’s not a manual for what to do if the North Koreans attack,” he said. To contact the reporter on this story: Roger Runningen in Washington at rrunningen@bloomberg.net

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Goldman Sachs, BNP Paribas Are Downgraded by Bondholders: Credit Markets

May 26, 2010

By John Glover May 26 (Bloomberg) — Bond investors aren’t waiting for ratings companies to act before downgrading Goldman Sachs Group Inc., BNP Paribas SA and the rest of the world’s biggest financial institutions. Bank debt yields 253 basis points more than government securities, according to Bank of America Merrill Lynch’s Global Broad Market Financial Index, which comprises bonds with an average rating equivalent to A1 at Moody’s Investors Service. That’s approaching the 268 basis point spread on an index of industrial company notes rated as much as five grades lower. The gap between the two benchmarks was as narrow as 11 basis points this month, down from 177 basis points at the start of 2009. Investors are marking down bank bonds on concern Europe’s sovereign debt crisis will reduce lenders’ creditworthiness and that regulatory efforts to control risk taking will crimp their profits. Banks may have a capital deficit of more than $1.5 trillion by the end of 2011 and some may require state support, according to Independent Credit View, a Swiss rating company. Debt holders are “reacting first rather than waiting for events to unfold,” said Michael Donelan , who oversees $3.5 billion of bonds as director of trading and head portfolio manager at Ryan Labs Inc. The New York-based firm cut holdings of finance company debt at the start of the month, Donelan said. BNP Paribas bonds included in the Bank of America Merrill Lynch index yield an average 438 basis points, or 4.38 percentage points, more than Treasuries. The firm is rated Aa2 by Moody’s. Those of New York-based Goldman Sachs, ranked A1, pay a spread of 340 basis points. Corporate Risk Elsewhere in credit markets, the extra yield investors demand to own corporate bonds instead of similar-maturity government debt rose 7 basis points to 196 basis points, the highest since Oct. 22, the Bank of America Merrill Lynch Global Broad Market Corporate Index shows. The spread peaked at 511 on March 30, 2009, and dropped to as low as 142 on April 21. Average yields rose 2.4 basis points to 3.997 percent. Corporate credit risk eased today as speculation of rising demand in emerging markets overshadowed European debt concerns that dragged the euro lower. Investor sentiment improved after the Organization for Economic Cooperation and Development raised its growth forecasts for this year and next as economies such as China outpace debt-burdened developed countries to drive the global expansion. Credit-default swaps on the Markit iTraxx Crossover Index of 50 mostly junk-rated European companies, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 22 basis points to 602, according to Markit Group Ltd. prices at 10:45 a.m. in London. South Korea The cost of insuring Asian bonds from non-payment fell today from a 10-month high. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 12 basis points to 160.5, according to Royal Bank of Scotland Group Plc. Credit-default swaps on South Korea dropped 11.8 basis points to 159.7, CMA DataVision prices show. They surged yesterday after a report by a defector group that North Korean leader Kim Jong Il ordered his military to prepare for conflict. In a show of support for South Korean President Lee Myung Bak , U.S. Secretary of State Hillary Clinton will visit Seoul today. Two-year interest-rate swap spreads soared to the highest in 13 months before easing back in late New York trading yesterday, and the London interbank offered rate that banks say they pay for three-month loans in dollars climbed for an 11th day. Swap Rates The difference between the two-year swap rate and the comparable-maturity Treasury note yield, known as the swap spread, widened as much as 11.96 basis points to 64.21 basis points before trading at 49.56 in New York. The spread has expanded from this year’s low of 9.63 basis points on March 24, the narrowest since 1993, as investors fled all but the safest government securities. “The two-year swap spread is the cleanest proxy to express a concern about increased systemic risk,” said Christian Cooper , senior rates trader in New York at Jefferies & Co., one of 18 primary dealers that trade with the Federal Reserve. “Every day we walk in we’re seeing another headline bomb that pushes these spreads wider.” Libor for three months advanced to 0.536 percent, the highest level since July 7, from 0.51 percent May 24, according to data from the British Bankers’ Association. Libor, a benchmark for about $360 trillion of financial products worldwide ranging from mortgages to student loans, has more than doubled this year. ‘Bigger Crisis’ “It’s all part of concern about the system, about whether the sovereign-debt crisis will morph into a bigger systemic crisis,” said Padhraic Garvey , head of investment-grade strategy at ING Groep NV in Amsterdam. “We’re not quite at a point where that’s imminent, but that risk is being priced in.” Bonds of First Data, the credit-card processor bought by KKR & Co. for $27.5 billion at the height of the takeover boom in 2007, fell after Chief Financial Officer Pat Shannon resigned. The Atlanta-based company said May 14 that earnings before interest, taxes, depreciation and amortization fell to $424 million last quarter, from $472 million a year earlier. First Data’s $2.2 billion of 9.875 percent bonds due in 2015 dropped 5.25 cents to 78.125 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt traded as high as 93.56 cents on April 15. High-Yield Debt High-yield debt has lost 3.6 percent this month, on track for the first monthly drop since February 2009 and the biggest loss since falling 8.43 percent in November 2008, Bank of America Merrill Lynch index data show. Emerging-market bonds fell as spreads widened 10 basis points to 348 from this year’s low of 230 on April 15, according to JPMorgan Chase & Co.’s EMBI+ Index. Financial company bonds have lost 0.74 percent this month on average, compared with a gain of 0.52 percent for industrial companies, based on Bank of America Merrill Lynch indexes. That would be the biggest monthly loss since March 2009, when they tumbled 1.72 percent. The companies with the 10 widest spreads in the bank’s Global Broad Market Financial Index are all in Europe, except for American International Group Inc. , the insurer that needed four bailouts amid losses on credit derivatives. Paris-based BNP has the widest spreads, followed by Societe Generale SA, whose bonds have an average gap of 420 basis points. Contagion Risk The risk is “that the contagion spreads to financials or is accompanied by renewed bank failures,” ING analysts led by Mark Harmer and Jeroen van den Broek in Amsterdam wrote in a note to clients. “The effect on the already worsening money markets is clear to see.” The study by Independent Credit View compared estimated capital needs for the end of 2011 with capital ratios reported at the end of last year. “Without state aid or debt restructuring these banks will hardly be able to raise capital,” Christian Fischer, a partner and banking analyst at Independent Credit, told reporters in Zurich yesterday. About 2 trillion euros ($2.47 trillion) of debt issued by public and private borrowers in Greece, Spain and Portugal is held outside those countries, according to RBS. Most Exposed Banks are the institutions that are most exposed to the peripheral nations, with a total of about 1 trillion euros outstanding at the end of 2009, the firm wrote. German and French lenders, with claims against the three countries totaling almost 230 billion euros each, were the most exposed. European leaders must address debt sold by nations such as Greece and Spain now to avoid a costlier bank bailout later, JPMorgan Chief Executive Officer Jamie Dimon said at the Japan Society’s annual awards dinner in New York on May 24. In the U.S., Moody’s said last week it planned to see how lawmakers implement legislation approved by the Senate before deciding whether to cut bank ratings. Francesco Meucci , a Moody’s spokesman, and Standard & Poor’s spokeswoman Lisa Nugent, both based in London, declined to comment. Spreads on Goldman Sachs bonds contained in the Bank of America Merrill Lynch index are up from 163 basis points in mid- April. Morgan Stanley’s spreads have jumped to 295 from 167, while Citigroup Inc.’s are at 306, up from 211. The average yield top-rated financial firms pay to sell commercial paper due in 90 days jumped to a daily average of 0.47 percent last week, the highest since the period ended May 1, 2009, from 0.29 percent a month ago, according to Fed data. The gap in rates on the debt and the Fed funds rate reached an 11-month high of 34 basis points on May 21. “The pressure has stepped up a notch,” said Peter Chatwell , a fixed-income strategist at Credit Agricole SA in London. “Things have taken a turn for the worse over the past month because of Europe’s sovereign debt crisis. It’s a multidimensional picture, but all the dimensions look pretty grim.” To contact the reporter on this story: John Glover in London at johnglover@bloomberg.net

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Goldman, BNP Paribas Downgraded by Bondholders: Credit Markets

May 26, 2010

By John Glover May 26 (Bloomberg) — Bond investors aren’t waiting for ratings companies to act before downgrading Goldman Sachs Group Inc., BNP Paribas SA and the rest of the world’s biggest financial institutions. Bank debt yields 253 basis points more than government securities, according to Bank of America Merrill Lynch’s Global Broad Market Financial Index, which comprises bonds with an average rating equivalent to A1 at Moody’s Investors Service. That’s approaching the 268 basis point spread on an index of industrial company notes rated as much as five grades lower. The gap between the two benchmarks was as narrow as 11 basis points this month, down from 177 basis points at the start of 2009. Investors are marking down bank bonds on concern Europe’s sovereign debt crisis will reduce lenders’ creditworthiness and that regulatory efforts to control risk taking will crimp their profits. Banks may have a capital deficit of more than $1.5 trillion by the end of 2011 and some may require state support, according to Independent Credit View, a Swiss rating company. Debt holders are “reacting first rather than waiting for events to unfold,” said Michael Donelan , who oversees $3.5 billion of bonds as director of trading and head portfolio manager at Ryan Labs Inc. The New York-based firm cut holdings of finance company debt at the start of the month, Donelan said. BNP Paribas bonds included in the Bank of America Merrill Lynch index yield an average 438 basis points, or 4.38 percentage points, more than Treasuries. The firm is rated Aa2 by Moody’s. Those of New York-based Goldman Sachs, ranked A1, pay a spread of 340 basis points. Corporate Risk Elsewhere in credit markets, the extra yield investors demand to own corporate bonds instead of similar-maturity government debt rose 7 basis points to 196 basis points, the highest since Oct. 22, the Bank of America Merrill Lynch Global Broad Market Corporate Index shows. The spread peaked at 511 on March 30, 2009, and dropped to as low as 142 on April 21. Average yields rose 2.4 basis points to 3.997 percent. Corporate credit risk eased today as speculation of rising demand in emerging markets overshadowed European debt concerns that dragged the euro lower. Investor sentiment improved after the Organization for Economic Cooperation and Development raised its growth forecasts for this year and next as economies such as China outpace debt-burdened developed countries to drive the global expansion. Credit-default swaps on the Markit iTraxx Crossover Index of 50 mostly junk-rated European companies, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 22 basis points to 602, according to Markit Group Ltd. prices at 10:45 a.m. in London. South Korea The cost of insuring Asian bonds from non-payment fell today from a 10-month high. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 12 basis points to 160.5, according to Royal Bank of Scotland Group Plc. Credit-default swaps on South Korea dropped 11.8 basis points to 159.7, CMA DataVision prices show. They surged yesterday after a report by a defector group that North Korean leader Kim Jong Il ordered his military to prepare for conflict. In a show of support for South Korean President Lee Myung Bak , U.S. Secretary of State Hillary Clinton will visit Seoul today. Two-year interest-rate swap spreads soared to the highest in 13 months before easing back in late New York trading yesterday, and the London interbank offered rate that banks say they pay for three-month loans in dollars climbed for an 11th day. Swap Rates The difference between the two-year swap rate and the comparable-maturity Treasury note yield, known as the swap spread, widened as much as 11.96 basis points to 64.21 basis points before trading at 49.56 in New York. The spread has expanded from this year’s low of 9.63 basis points on March 24, the narrowest since 1993, as investors fled all but the safest government securities. “The two-year swap spread is the cleanest proxy to express a concern about increased systemic risk,” said Christian Cooper , senior rates trader in New York at Jefferies & Co., one of 18 primary dealers that trade with the Federal Reserve. “Every day we walk in we’re seeing another headline bomb that pushes these spreads wider.” Libor for three months advanced to 0.536 percent, the highest level since July 7, from 0.51 percent May 24, according to data from the British Bankers’ Association. Libor, a benchmark for about $360 trillion of financial products worldwide ranging from mortgages to student loans, has more than doubled this year. ‘Bigger Crisis’ “It’s all part of concern about the system, about whether the sovereign-debt crisis will morph into a bigger systemic crisis,” said Padhraic Garvey , head of investment-grade strategy at ING Groep NV in Amsterdam. “We’re not quite at a point where that’s imminent, but that risk is being priced in.” Bonds of First Data, the credit-card processor bought by KKR & Co. for $27.5 billion at the height of the takeover boom in 2007, fell after Chief Financial Officer Pat Shannon resigned. The Atlanta-based company said May 14 that earnings before interest, taxes, depreciation and amortization fell to $424 million last quarter, from $472 million a year earlier. First Data’s $2.2 billion of 9.875 percent bonds due in 2015 dropped 5.25 cents to 78.125 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt traded as high as 93.56 cents on April 15. High-Yield Debt High-yield debt has lost 3.6 percent this month, on track for the first monthly drop since February 2009 and the biggest loss since falling 8.43 percent in November 2008, Bank of America Merrill Lynch index data show. Emerging-market bonds fell as spreads widened 10 basis points to 348 from this year’s low of 230 on April 15, according to JPMorgan Chase & Co.’s EMBI+ Index. Financial company bonds have lost 0.74 percent this month on average, compared with a gain of 0.52 percent for industrial companies, based on Bank of America Merrill Lynch indexes. That would be the biggest monthly loss since March 2009, when they tumbled 1.72 percent. The companies with the 10 widest spreads in the bank’s Global Broad Market Financial Index are all in Europe, except for American International Group Inc. , the insurer that needed four bailouts amid losses on credit derivatives. Paris-based BNP has the widest spreads, followed by Societe Generale SA, whose bonds have an average gap of 420 basis points. Contagion Risk The risk is “that the contagion spreads to financials or is accompanied by renewed bank failures,” ING analysts led by Mark Harmer and Jeroen van den Broek in Amsterdam wrote in a note to clients. “The effect on the already worsening money markets is clear to see.” The study by Independent Credit View compared estimated capital needs for the end of 2011 with capital ratios reported at the end of last year. “Without state aid or debt restructuring these banks will hardly be able to raise capital,” Christian Fischer, a partner and banking analyst at Independent Credit, told reporters in Zurich yesterday. About 2 trillion euros ($2.47 trillion) of debt issued by public and private borrowers in Greece, Spain and Portugal is held outside those countries, according to RBS. Most Exposed Banks are the institutions that are most exposed to the peripheral nations, with a total of about 1 trillion euros outstanding at the end of 2009, the firm wrote. German and French lenders, with claims against the three countries totaling almost 230 billion euros each, were the most exposed. European leaders must address debt sold by nations such as Greece and Spain now to avoid a costlier bank bailout later, JPMorgan Chief Executive Officer Jamie Dimon said at the Japan Society’s annual awards dinner in New York on May 24. In the U.S., Moody’s said last week it planned to see how lawmakers implement legislation approved by the Senate before deciding whether to cut bank ratings. Francesco Meucci , a Moody’s spokesman, and Standard & Poor’s spokeswoman Lisa Nugent, both based in London, declined to comment. Spreads on Goldman Sachs bonds contained in the Bank of America Merrill Lynch index are up from 163 basis points in mid- April. Morgan Stanley’s spreads have jumped to 295 from 167, while Citigroup Inc.’s are at 306, up from 211. The average yield top-rated financial firms pay to sell commercial paper due in 90 days jumped to a daily average of 0.47 percent last week, the highest since the period ended May 1, 2009, from 0.29 percent a month ago, according to Fed data. The gap in rates on the debt and the Fed funds rate reached an 11-month high of 34 basis points on May 21. “The pressure has stepped up a notch,” said Peter Chatwell , a fixed-income strategist at Credit Agricole SA in London. “Things have taken a turn for the worse over the past month because of Europe’s sovereign debt crisis. It’s a multidimensional picture, but all the dimensions look pretty grim.” To contact the reporter on this story: John Glover in London at johnglover@bloomberg.net

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